# THE STATE OF BOMBAY v. M/S. S. S. MIRANDA LIMITED

- **Citation:** [1960] 3 S.C.R. 397
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** Civil Appeal _, No. 21 of 1956
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-bombay-v-m-s-s-s-miranda-limited-1635
- **Pages:** 10

## Headnote

Excise Duty-Imposition at successive stages of transportation of
excisable article-Validity of-Bombay Abkari Act, z878 (Bom. V of
I878), SS. IO, I9 & I9A.
. The respondent held a trade and import licence for foreign
liquor-as well as a velldor's licence under the Bombay Abkari
51
1960
March 25.
398
SUPREME COURT REPORTS
[1960]
r960
Act. It kept liquor in a bonded warehouse.
On April z, 1948,
. the appellant asked the respondent to remove the liquor from
State of Bombay the bonded warehouse after paying the necessary excise duty.
v.
The respondent paid the duty, got the transport permits and
s. s. Mimnda Ltd. took over the liquor, some of which it sold. On December 16,
1948, the appellant issued a notification doubling the duty on
foreign liquor and called upon the respondent to pay the additional duty on the liquor which was still lying in its godown.
The respondent contended that the imposition of additional duty
on the stock on which duty had already been paid at the time of
its issue from the bonded warehouse was illegal. The appellants'
case was that the respondent was bound to pay the duty prevailing on the transport of liquor at the time of transporting the
same from its premises to another place within the State of
Bombay:
Wanchoo ].
H dd, that the imposition of the additional excise duty was
illegal.• Once the duty had been paid the liquor could be transported free from any further imposition, except where it was
transported to a region where the duty was different from the
region where the duty was paid. There was no power in the
State Government to impose duty at every movement during the
course of the trade. Though there was power in the legislature
to levy duty at every movement of liquor, it had not exercised
that power ; nor had it delegated such power to the State
Government.

## Text

3 S.C.R.
SUPREME COURT REPORTS
397
any opinion on this part of the appellant's argument.
i96o
All we wish t,_o say is that we would inevitably have.
I
d
R. P. Kapur
to consider the evidence ourse ves an to appreciate
v.
it before we pronounce any opinion on the validity or State of Punjab
otherwise of the argument. It is not a· case where the
-
appellant can justly contend that on the face of the re- Gajendragadkar J.
cord the charge levelled against him is unsustainable •.
The appellant no doubt very strongly feels that on the
relevant evidence it would not be reasonably possible
to sustain the charge but that is a matter on which
the appellant will have to satisfy the ma.gistrate who
takes cognisance of the case. We would, however,
like to emphasise that in rejecting the appellant's
prayer for quashing the proceedings at this stage we
are expressing no opinion one way or the other on
the merits of the case.
There is another consideration which has weighed
in our minds in dealing with this appeal. The appellant has 'come to this Court under Art. 136 of the
Constitution against
the decision of the Pμnjab
High Court; and the High Court has refused to
exercise its inherent jurisdiction in favour of the
appellant. Whether or not ,we would have come to
the same conclusion if we were dealing _with the
matter ourselves under s. 561-A is not really very
material because in the present case what we have to decide is whether the judgment under appeal is erroneous
in law so as to call for our interference under Art. 136.
Under the circumstances of this ca§e we are unable
to answer this question in favour of the appellant.
The result is the appeal fails and is dismjssed.
Appeal dismissed.
THE STATE OF BOMBAY
v.
M/S. S. S. MIRANDA LIMITED
(P. B. GAJENDRAGADKAR and K. N. WANCHOO, JJ.)
Excise Duty-Imposition at successive stages of transportation of
excisable article-Validity of-Bombay Abkari Act, z878 (Bom. V of
I878), SS. IO, I9 & I9A.
. The respondent held a trade and import licence for foreign
liquor-as well as a velldor's licence under the Bombay Abkari
51
1960
March 25.
398
SUPREME COURT REPORTS
[1960]
r960
Act. It kept liquor in a bonded warehouse.
On April z, 1948,
. the appellant asked the respondent to remove the liquor from
State of Bombay the bonded warehouse after paying the necessary excise duty.
v.
The respondent paid the duty, got the transport permits and
s. s. Mimnda Ltd. took over the liquor, some of which it sold. On December 16,
1948, the appellant issued a notification doubling the duty on
foreign liquor and called upon the respondent to pay the additional duty on the liquor which was still lying in its godown.
The respondent contended that the imposition of additional duty
on the stock on which duty had already been paid at the time of
its issue from the bonded warehouse was illegal. The appellants'
case was that the respondent was bound to pay the duty prevailing on the transport of liquor at the time of transporting the
same from its premises to another place within the State of
Bombay:
Wanchoo ].
H dd, that the imposition of the additional excise duty was
illegal.• Once the duty had been paid the liquor could be transported free from any further imposition, except where it was
transported to a region where the duty was different from the
region where the duty was paid. There was no power in the
State Government to impose duty at every movement during the
course of the trade. Though there was power in the legislature
to levy duty at every movement of liquor, it had not exercised
that power ; nor had it delegated such power to the State
Government.
CIVIL APPELLATE JURISDICTION:
Civil Appeal
_,
No. 21 of 1956.
Appeal from the judgment and decree dated
August 12, 1954, of the Bombay High Court in Appeal
No. 45 of 1954, arising out of the judgment and decree
dated February 17, 1954, of the said High Court in
Suit No. 246 of 1956.
H.J. Umrigar, N. N. Keswani and R. H. Dheba1·,
for the appellant.
M. C. Setalvad, Attorney-General of India, S. M.
Dubash and G. Gopalakrishnan, for the respondents.
1960. March 25.
The Judgment of the Court was
delivered by
WANCHOO, J.-This is an appeal on a certificate
granted by the Bombay High Court. The brief facts
necessary for its disposal are these. Messrs. S. S.
Miranda· Ltd. (hereinafter called the respondent) is a
company and was holding a trade and import licence
of foreign liquor as well as a vendor's licence under
the Born bay Abkari Act (Born. V of 1878) (hereinafter
"
·...;
-
3 S.C.R. SUPREME COURT REPORTS
399
called the Act), upto the end of March 1949. It used
z960
to keep the liquor in a bonded warehouse. On April 2,
1
9
d
. c
d b
h S
f State o Bombay
1 48, the respon ent was m1orme
y t e tate o
v.
·
Bombay (hereinafter called the appellant) to remove s. s. Miranda Ltd.
the liquor from the bonded warehouse after paying
·
the necessary excise duty. In pursuance of this letter,
Wanchoo J.
the respondent paid the duty and got transport permits from the appellant. It may be mentioned that
the bonded warehouse was in the premises of the respondent itself and all that happened after the payment of the duty was that the liquor no longer
remained in bond but came into possession of the respondent. The transport permits were issued on
April 5, 1948, and thereafter the respondent took over
the liquor and some of it was sold. On December 16,
1948, a notification was issued by the appellant
(hereinafter referred to as the Notification) whereby
the duty on foreign liquor was doubled. Thereupon
the respondent was asked by the appellant to pay the
additional duty upon the liquor which was still lying
in its godown and was also told that it would not be
permitted to deal with that liquor until the additional
duty was paid. The respondent objected to this
demand but paid the duty, which came to over two
lacs of rupees, under protest. Thereafter a notice
was given by the respondent under s. 80 of the Code
of Civil Procedure to the appellant and was followed
by a suit on the original side of the Bombay High
Court.
The main contention of the respondent was that the
Notification in so far as it imposed and levied additional duty on the stock of foreign liquor on which
the duty had already been paid at the time of its issue
from the bonded warehouse was illegal, invalid and
ultra vires the Act and in particular beyond the scope
of s. 19 of the Act. The respondent therefore claimed
refund of the duty which it had paid under protest
and also interest at 6 per cent. per annum from the
date of payment till the date of recovery.
The suit was resisted by the appellant, and its case
was that the Notification was valid and that the respondent was bound to pay the duty prevailing on the
400
SUPREME COURT REPORTS
(1960]
z960
transport of the excisable articles at the time of transporting the same from its premises to another place
51"1' of Bombay within the State of Bombay.
5 5 M .v. da L d
Thus the only question that fell for consideration
·
·
.'.'.::
1
• was whether .the additional duty imposed and levied
Wanchoo J.
under the Notification was legally levied. The learned
judge, who tried the suit, was of the opinion that it
was competent for the legislature to impose tax on
excisable articles whenever they were transported
from one place to another and that that power was
delegated to the State Government which was thus
competent to impose a duty on excisable articles not
only once when they were transported in the beginning
but also thereafter whenever they were transported
from one place to another within the Stn.te before the
goods passed into the hands of the consumer, and
dismissed the suit.
The respondent went in appeal against the dismissal.
The appeal was heard by a Division Bench
and was allowed and the suit was decreed with interest
at certain rates. The Division Bench was of the
opinion that reading ss. 10 and 19 together it was
clear that when the duty mentioned in s. 19 had been•
paid, the prohibition contained in s. 10 must disappear
subject to the Explanation to s. 19. It also held that
the first proviso to s. 19A of the Act was really a proviso to s. 19 and determined the rate at which the
duty was to be paid and that there could be no
further imposition of duty against the terms of that
proviso by the Notification.
The main contention on behalf of the appellant
before us is that it is open to the legislature to impose
excise duty at more points than one and that that was
what has been done by the legislature in this case and
the Government when it made the Notification in
December 1948 was carrying out the provisions of the
Act.
Reliance in this connection was placed on
ss. 3(10), 10 and 19 of the Act, and it is urged that
reading these three sections together it will be clear
that the Notification was valid and within the powers
of the State Government.
The relevant portion of the Notification is in these
terms:-
..
-
3 S.C.R. SUPREME COURT REPORTS
401
"In exercise of the powers conferred by section 19
r960
of the Bombay Abkari Act, 1878 (Bombay V of 5
b
1878), and in partial supersession of all previous
tate
0~.Bom ay
orde~s and notifications issued thereunder, that is to s. s. Miranda Ltd.
say, m so far as they relate to the imposition of
excise and countervailing duties charged on the
Wanchoo J.
excisable articles specified in column 1 of Schedules
A a.nd B hereto annexed, the Government of Bombay is pleased to direct that-
.
(a) excise or countervailing duty, as the case may
be, shall be imposed on the excisable articles specified in column 1 0f Schedule A at the rate specified
in columns 2 and 3 thereof, when such excisable
articles are-
(i) imported into the Province in accordance with
the provision of sub-section (1) of section 9 of the
said Act; or
(ii) issued from any brewery, distillery or a
warehouse established under the said Act in the
Province ; or
(iii) transported from the premises of persons
holding a Trade and Import license under the said
Act to any place within the Province :
·
Provided that no such duty shall be imposed on
the excisable articles which have been imported
into British India and were liable on such importation to duty under the Indian Tariff Act, 1934, or
the Sea Customs Act, 1878 :
Provided further that if excise or countervailing
duty has already been paid-on such excisable articles
for their import, issue or transport for consumption
into, to or within any place in the Province, the
amount of duty to be imposed shall be the difference
between the amount of duty leviable at the rates
specified in the said Schedule and that already paid
on such 11rticles; and
(b) .........•...........•.•...............•..••........•....•.. ,,
Then follow the Schedules which it is unnecessary to
..-,
set out. By the notification excise duty at the rates
-r
specified in the Schedules is imposed on excisable
articles when they are transported from the pi:emises
of persons holding a trade and import licence . under
the said Act to any place within the State. The second
402
SUPREME COURT REPORTS
[1960]
proviso, however, provides that where some excise
duty has already been paid in connection with transState of Bombay port, the amount of duty to be imposed under the
v.
Notification would be the difference between the duty
I960
5· 5· Mfranda Ltd. 1 · bl
d
th N t•fi
t•
d th d t
l
d
ev1a e un er
e
o l ca 10n an
e
u y a rea y
wamhoo J.
paid.
The narrow question therefore is whether this additional duty can be legally levied by the State of
Bombay and the answer to it will depend on the three
provisions of the Act relied upon by the appellant.
Sec. 3(10) defines "to transport" to mean "to
move to one place from another place within the
State ". This definition is very wide and would cover
any movement of excisable article at any stage from
one place to another within the State.
•
Then comes s. 10, the relevant portion of which
is in these terms-
" No intoxicant and no hemp shall be exported
or transported unless-
( a) the duty, if any, payable under Chapter VI
has been paid or a bond has been executed for the
payment thereof."
This section thus forbids the transport of any excisable
article unless the duty payable under Chapter VI
(which deals with the subject of duties) has been paid .
Lastly, we come to s. 19 which is the charging
section and is in these terms-
" An excise duty or countervailing duty, as the
case may be, at such rate or rates as the State
Government shall direct may be imposed either
generally or for any specified local area, on any
excisable article-
( a) imported in accordance with the provision of
sub-section (1) of s. 9; or
(b) exported or transported in accordance with the
provisions of s. 10 ; or
( c) manufactured under a license granted in accordance with the provisions of section 14 or section 15;
Provided that--
(i) duty shall not be so imposed on any article
which has been imported into India and was liable
on such importation to duty under the Ind.ian Tariff
Act, 1894 or the Sea Customs Act, 1878 :
"" -
..
,..
T.
<
" .
3 S.C.R. SUPREME COURT REPORTS
403
Explanation-Duty may be imposed under this
z96o
section at different rates according to the places to
·' B
,
h. h
. bl
. l . t b
d c
State o1
omnay
w IC any exmsa e artic e IS o e remove .1.or conv
Sumption, or according to the varying strengths s. s. Mir:nda Ltd.
and quality of such article."
This section gives power to the· State Government to
Wanchoo /.
fix the rate or rates on which the duty will be levied
on transport of excisable articles. The Explanation
to the section gives powers to the State Government
to impose duties at different rates according to the
places to which any excisable article is to be remov.ed
for consumption or according to the varying strengths
and quality of such article.
The argument on behalf of the appellant is that in
view of the very wide definition of the word " transport " and the prohibition of transport contained in
s. IO without payment of duty it is clear that every
time there is transport the duty becomes payable at
the rate fixed by the State Government under s. 19
and that there is nothing in these sections which in
any way limits the power to levy duty at every stage
of transport. If this argument is accepted it will
logically mean that every time there is transport of
an excisable article duty will have to be paid till the
excisable article has been actually consumed. In other
words when for example, the excisable article is
transported from the bonded warehouse by a wholesaler he will have to pay duty on it; when a wholesaler sells to a retailer there is bound to be transport ·
from the wholesaler's premises to the retailer's premises and the duty will have to be paid again. Finally
when the retailer sells it to a consumer there will again
be transport from the retailer's place to the consumer's
place and duty will have to be paid a third time.
Further if the interpretation as urged on behalf of the
appellant is accepted, the duty will have to be paid
again and again in the cases mentioned above, even
though the rate remains the same.
The fact that in
this particular case the rate was changed and that the
State Government only demanded the extra duty will
not affect the question of interpretation of the three
provisions of the Act with which we are concerned.
Was it then the intention of the legislature when it
404
SUPREME COURT REPORTS
[1960]
r96o
made these provisions to levy duty irrespective of the
0
/
B
b
fact whether the rate was changed or not, again and
.>late o
om ay
.
. bl
t" 1
d f
h
b
v.
agam as an excrna e ar 10 e passe
rom t e
ended
s. s. Miranda Ltd. warehouse to the wholesaler, from the wholesaler to
the retailer and from the retailer to the consumer ?
Wanchoo J.
It is true that it was competent for the legislature to
make such a provision; but the question is whether
the three provisions which we have set out above,
amount to making such a provision. Sri Umrigar for
the appellant fairly admits that if the rate of duty
had not been changed there would not have been any
demand of any further duty on any sale by the respondent which might have resulted in transport and
that the practice was not to charge the same duty over
again on sale by the wholesaler to the retailer or by
the retailer to the consumer even though these sales
resulted in transport except where the Exp7anation to
s. 19 applies. If this practice is in accordance with
law when there is no change in duty we cannot see
how the excisable article which had been subjected to
duty once will be liable to further duty equal to the
difference when there is increase in the rate, (except of
course where the Explanation to s. 19 applies).
We
see nothing in s. 10 which lays down that every time
there is transport, duty must be paid even though the
duty has already been paid when the first transport
of an excisable article takes place. What s. 10 prohibits is the transport of excisable article unless
the duty has been paid thereon.
Once the duty
has been paid the prohibition under s. 10 no longer
applies, unless the case is covered by the Explanation to s. 19.
However wide may be the definition
of " transport ", what has to be seen is whether the
prohibition under s. 10 is to apply even to those excisable articles on which duty has been paid. On a plain
reading of s. 10, the prohibition under that section
cannot apply to transport of excisable articles on
which duty has been paid. Section 19, which is the
charging section, provides for levying of duty on
transport in accordance with the provisions of s. 10.
This brings us back to s. 10 and the question again is
whether the prohibition having been removed by
payment of duty once, there fa anything in s. 10 which
' .
" r
-
-
>
r
3 S.O.R. SUPREME COURT REPORTS
405
requires that the duty should be paid again for transr960
porting the goods on which dutJ has been paid.
As Stale of Bombay
we reads. 10 we find nothing in it which requires that
v.
duty should be paid again for transport once the duty s. s. Mfranda Ltd.
has been paid and the prohibition removed subject
__
always to the Expl,anation to s. 19. Under that ExplaWanckoo J.
nation if there are different duties in different regions
and the excisable article which has paid duty of one
region is rem111ved to another region where the duty is
different the excess will have to be paid in order that
prohibition of transport in that region may be
removed. But apart from the cases covered by the
Explanation we can see no justification for reading
s. 10 as giving power to impose duty ~m the same
excisable article again and again as it moves in the
course of trade from, say, the bonded warehouse to
the wholesaler and from the wholesaler to the retailer
and from the retailer to the consumer.
Plainly,
therefore, once the duty has been paid and the prohibition under s. 10 is removed the transport of the
duty-paid excisable artjcle can take place free from
any further imposition, except where it is tra.nsported
to a region where the duty is different from the region
where the duty is paid.
Nor do we find any power in the State Government
to impose a duty at every movement during the course
of trade in the words of s. 19.
All that s. 19 em.
powers the State Government to do is to fix the rate
· of duty on transport in accordance with s. 10. There
ia no delegation to the State Government anywhere in
the Act of the power to impose duty from stage to
stage during the- movement of excisable articles in
the course of trade. It is true that the legislature has
the power if it so chooses,' to levy duty on every
movement; but as we read the three provisions on
whibh reliance has been placed we do not find any
exercise of that power by the legislature. Nor do we
find any delegation by the legislature of any such
power to the State Government. The view therefore
ta.ken by the Division Bench that once the duty
mentioned ins. 19'has been paid the prohibition contained ins. 10 must disappea.r, (subject always to the
Expl,anation to s.,,.19), and tba.t there is nothing in
~
.
406
SUPREME COURT REPORTS
[1960]
1960
s. 19 delegating any power to the Siate Government
of levying excise duty more than once and at more
State of Bombay
I
· t d
•
th
f th
' bl
v.
t ian one porn
urmg
e progress o
o exmsa e
s. s. Miranda Ltd. goods from the time they leave the bonded warehouse
till the time they reach the consumer is in our opinion
Wanchoo J.
correct.
It is not in dispute in this case that the
Explanation to s. 19 does not apply.
Turning now tothe first proviso:to s. 19-A, it may be
noticed that that section deals with the manner of
levying duty. But the first proviso goes further and
lays down that where the duty is levied on issue from
a bonded warehouse it will be at the rate in force on
the date of issue.
We agree with the Division Bench
that this proviso has no logical connectiqn with s. 19-A
and would more properly be a proviso to s. 19. It has
nothing to do with the manner of payment but is
concerned with the liability to pay at the rate prevalent on the date of issue from the bonded warehouse.
If that is so, the quantum of tax is once for all determined by this proviso subject always to the Explanation to s. 19 and cannot be increased thereafter.
Reference in this connection was made to s. 15-A also.
But that section seems to have been inserted as a
measure of abundant caution and does not appear to
go further than s. 10. It seems to determine the time
and manner of payment in cases where excisable
articles are kept in a distillery or brewery or warehouse or other place of storage established or licensed
under the Act where duty may not have been paid
before such storage. It is .not the charging section
and cannot be read to go beyond s. 19 which is the
charging section. We are therefore of opinion that
on this ground also no additional duty could be charged
from the respondent in this case ·as the Explanation
to s. 19 bas admittedly no application here.
The appeal therefore fails and is hereby dismissed
with costs.
Appeal dismissed .
•
,,