A) ABSTRACT / HEADNOTE

The Supreme Court in State of Bombay v. M/s. S. S. Miranda Ltd. (AIR 1960 SC 954) decisively addressed the validity of imposing excise duty multiple times on the same batch of liquor under the Bombay Abkari Act, 1878. The case revolved around whether the State Government could legally impose additional excise duty on liquor stock that had already been taxed when removed from a bonded warehouse. The State of Bombay had issued a notification doubling the rate of duty and demanded further duty from the respondent company for liquor still lying in its godown post the rate revision.

The Court held that once excise duty was paid on removal from the bonded warehouse, no further duty could be levied on subsequent movement of the goods unless explicitly permitted by law. The State Government lacked legislative backing to levy excise duty at every stage of transportation unless the law clearly delegated such authority or if the transaction came under the Explanation to Section 19 of the Act, which did not apply here. The judgment reinforced legislative intent, the limits of delegated power, and protected businesses from arbitrary impositions of tax. This ruling is a cornerstone in Indian excise jurisprudence for interpreting taxation powers under state excise laws.

Keywords: Excise Duty, Bombay Abkari Act, Double Taxation, Bonded Warehouse, Section 19, State Powers

B) CASE DETAILS

i) Judgement Cause Title: State of Bombay v. M/s. S. S. Miranda Ltd.

ii) Case Number: Civil Appeal No. 21 of 1956

iii) Judgement Date: March 25, 1960

iv) Court: Supreme Court of India

v) Quorum: Hon’ble Justices P.B. Gajendragadkar and K.N. Wanchoo

vi) Author: Justice K.N. Wanchoo

vii) Citation: AIR 1960 SC 954; (1960) 3 SCR 397

viii) Legal Provisions Involved: Sections 10, 19, 19A of the Bombay Abkari Act, 1878; Section 80 of CPC; Article 136 of Constitution of India

ix) Judgments Overruled: None

x) Law Subjects: Taxation Law, Excise Law, Constitutional Law, Administrative Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case emerged during a transitional regulatory period post-independence when states began asserting taxation powers under local excise statutes. The respondent, M/s. S.S. Miranda Ltd., a licensed foreign liquor vendor under the Bombay Abkari Act, 1878, faced demand for additional excise duty from the State. This demand arose after a notification in December 1948 doubled the excise rates. The liquor, on which duty had been paid during removal from a bonded warehouse in April 1948, remained unsold in the godown when the rate revision occurred.

The Bombay High Court ruled in favour of the respondent, holding the notification ultra vires. The State of Bombay appealed to the Supreme Court. The core of the appeal revolved around the interplay between Sections 10, 19, and 19A of the Abkari Act, and the legal interpretation of “transport” and “levy” in context of previously taxed goods. The judgment provided clarity on legislative competence, limitations on delegated powers, and taxpayer protection against retrospective and multiple taxation.

D) FACTS OF THE CASE

M/s. S.S. Miranda Ltd. held a trade and import licence and stored liquor in a bonded warehouse, which was located on its own premises. On April 2, 1948, the State directed the respondent to pay excise duty and remove the liquor from the warehouse. After paying the then-prevailing duty, the company obtained transport permits and physically took possession of the liquor.

Subsequently, on December 16, 1948, the State issued a notification under Section 19 of the Act, doubling the excise duty. The State demanded additional duty for the liquor stock still in the respondent’s possession. The company objected, claiming the stock had already been taxed, but under coercion paid the amount—over ₹2 lakhs—under protest.

The respondent served a notice under Section 80 of the Civil Procedure Code, 1908, and filed a suit in the Bombay High Court seeking refund. The trial court dismissed the suit, upholding the validity of the notification. However, the Division Bench of the High Court reversed the decision, declaring the notification illegal for taxing already duty-paid goods. The State then approached the Supreme Court under Article 136 of the Constitution.

E) LEGAL ISSUES RAISED

i) Whether the State Government was empowered under the Bombay Abkari Act, 1878, specifically Sections 10, 19, and 19A, to impose excise duty multiple times on the same consignment of liquor?

ii) Whether the December 1948 notification demanding differential duty for already taxed liquor violated the legislative intent of the Abkari Act?

iii) Whether the provisos and explanation to Section 19 could legally justify re-imposition or escalation of duty on such goods?

iv) Whether the respondent was entitled to a refund for the extra duty paid under protest?

F) PETITIONER / APPELLANT’S ARGUMENTS

i) The counsel for the appellant-State argued that Section 3(10) of the Abkari Act defined “transport” broadly, covering any movement from one location to another within the State. This, coupled with Section 10, which prohibits transportation without paying the duty, implied a fresh duty obligation at each point of movement.

They further contended that Section 19 authorized the imposition of excise duty on any transportation and empowered the State to issue such a notification. The Explanation to Section 19 supported varying duties depending on the region of consumption. The Notification was thus a lawful execution of legislative intent.

They claimed the respondent had merely taken liquor into possession and had not fully “consumed” it under the law. Therefore, goods still lying in the godown after a rate revision were subject to the new duty, and the respondent had to pay the difference in duty rates as per the second proviso in the 1948 Notification.

Reliance was placed on administrative interpretation and the idea that unless otherwise exempted, tax liability was attracted afresh for each movement or transaction of excisable goods.

G) RESPONDENT’S ARGUMENTS

i) The counsel for the respondent, led by M.C. Setalvad, Attorney General of India, argued that the 1948 Notification sought to impose duty on liquor already subjected to duty, without any lawful basis in the Act. The respondent had fulfilled its tax obligations upon removal from the bonded warehouse in April 1948.

They argued that Section 19A—particularly its first proviso—made it clear that duty once imposed at the point of issue from the bonded warehouse could not be reopened. The Notification ignored this settled point of taxation and introduced retrospective taxation in the guise of a new levy.

They also emphasized that Section 19 permitted imposition only at the stages defined—i.e., import, export, transport, and manufacture—and that none applied to already taxed goods lying stationary in the vendor’s premises. The State could not reinterpret the statute through administrative notification to cover events it was never authorized to.

Furthermore, since the Explanation to Section 19 did not apply (no change in regional duty occurred), the attempt to demand the “difference” in duty lacked legal justification.

H) RELATED LEGAL PROVISIONS

i) Section 10 – Bombay Abkari Act, 1878: Bars transport of liquor without duty payment.

ii) Section 19 – Charging provision: Permits levy of duty on transport, import, export, or manufacture.

iii) Section 19A – Procedural provision: Provides the manner and time of excise duty imposition and its rate as on the date of issue from warehouse.

iv) Section 80 – Code of Civil Procedure: Requirement for notice before suing the government.

v) Article 136 – Constitution of India: Supreme Court’s special leave jurisdiction over appeals.

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Supreme Court held that once duty is paid on excisable goods at the time of removal from a bonded warehouse, the prohibition under Section 10 ceases to operate. Consequently, unless movement occurs to another region with differential duty (covered under the Explanation to Section 19), no further duty can be imposed.

The Court further held that Section 19 empowers the State Government to set the rate of duty, not to create new points of levy during every internal movement. The Notification, in demanding duty from goods already taxed, went beyond legislative authorization and was ultra vires.

Justice Wanchoo emphasized that there was no power either in the Act or delegated to the Government to impose excise duty at every stage of movement. The legislative intent, as seen in Section 19A’s proviso, was clear—duty rate is frozen at the time of removal from bond. The demand violated this.

b. OBITER DICTA 

i) The Court remarked that though the legislature had competence to allow duty at multiple transport points, it had not exercised that power. Nor had it delegated such discretion to the executive. Administrative convenience could not justify an expansion of taxation powers without statutory authority.

c. GUIDELINES 

1. Excise duty once levied on removal from bonded warehouse is final, unless regional rate variation occurs.

2. State Government cannot impose new duty via notifications unless clearly authorized by legislation.

3. Explanation to Section 19 applies only when differential regional duties are applicable.

4. Section 19A’s proviso fixes duty liability at the rate prevalent on the date of removal from bond.

5. No additional duty can be levied on unsold liquor already removed from bond under earlier duty regime.

J) CONCLUSION & COMMENTS

The decision in State of Bombay v. M/s. S.S. Miranda Ltd. stands as a pivotal precedent in defining the limits of taxation under delegated legislation. It affirms the principle that executive notifications must strictly conform to statutory boundaries. The Court’s insistence on a narrow construction of taxing statutes ensures fairness, predictability, and legal certainty in fiscal matters. The judgment also discourages retrospective imposition or indirect double taxation, aligning with constitutional values of due process and economic justice.

K) REFERENCES

a. Important Cases Referred

[1] State of Bombay v. S.S. Miranda Ltd., AIR 1960 SC 954
[2] R.P. Kapur v. State of Punjab, AIR 1960 SC 866

b. Important Statutes Referred

[3] Bombay Abkari Act, 1878, Sections 3(10), 10, 19, 19A
[4] Code of Civil Procedure, 1908, Section 80
[5] Constitution of India, Article 136