Excise

An unsatisfied quid pro quo

MANU/SC/0853/2015

12.08.2015

The Supreme Court recently deliberated on several appeals questioning the imposition of fee on a 'per bulk litre' of industrial alcohol exported from the State in which it was manufactured. Its rationale was simple: if you charge a fee, show you are providing some service for it. Thus, fee charged from producers of industrial alcohol could be expensed in covering “nefarious activities” which bore a causal connection with the production of industrial alcohol, else it would metamorphose into a tax. In other words, there must be a perceptible correlation between what is collected and what is spent: like, for instance, posting excise officials at producers' manufacturing facilities to ensure industrial alcohol is not, illegally, made fit for human consumption.

Ever-increasing claims of quid pro quo

Relevant

The series of appeals were decided largely on the principles of quid pro quo. 'What is given for that which is taken', has powered distinction between 'fee' and 'tax' for long; and it was on these long-concreted deliberations the court relied. Finding “mathematical exactitude” with the service rendered not a prerequisite, the Court nevertheless provided a judgment negating the fee, rather than a proactive assessment of what an appropriate levy may have been. Just as well, it would have then had to weigh in on the irony of levying a fee on producers of industrial alcohol, to station State officials to monitor their manufacturing activity.

Tags : excise quid pro quo fee

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