Taxation Lawyer: The state is duly empowered to levy charges on the IMFL and it requires no Quid-Pro-Quo.

Supreme Court of India

Justice A.M. Khanwilkar and Justice Ajay Rastogi

The Supreme Court {State of Jharkhand and others versus Ajanta Bottlers and Blenders Private Limited} was seized of the matter,  whereby the assail was laid down to the judgement of the High Court, by which the High Court had allowed the writ petition and struck down the state notification - holding that the state has no legislative competence to levy tax/fee on the import of rectified spirit.

The SC setting aside the judgement of the High Court upholds the impugned notification and laid down that holding of licences for import of rectified spirit and production of foreign liquor (IMFA) on payment of fixed rates does not mean that the state has surrendered all facets of its right in respect of every form of activity in relation to potable liquor.

Further held that the amended provision is an enabling provision authorising the state to levy charges or impost for ceding it's one or more of the activity in respect of foreign liquor produced by use of imported rectified spirit. The state need bear no quid-pro-quo to the services rendered to the licensees of producer of foreign liquor for levy of tax / fee. It was further held that the the impost is neither in the nature of a tax nor excise duty, but it is towards the charges for regulating the production of potable liquor to preserve public health and morality. The Appeal was, accordingly, allowed by the SC.