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It is further argued that since the interpretation given by the petitioners limits the operation of Section 5(2A) of the Act to dealers dealing in liquor only at the point at which tax is to be levied under Section 5(1) of the Act and prohibits levy of turnover tax at all points, which is actually contemplated by Section 5(2A) or 5(2C) as the case may be. Such an interpretation would go against the principles of interpretation and also against the intention of Legislature, such an interpretation cannot be accepted. According to the Government Pleader, the position is well-settled and that excise duty element will form part of the purchase turnover irrespective of the fact that excise duty had been paid by the Beverages Corporation at the time of lifting the liquor from the bonded warehouse. For this proposition, the learned counsel for the State cited the following decisions, where, according to him, identical situation had been dealt with by the courts and held that excise duty component will form part of the turnover.: (1) McDowell & Company Limited v. Commercial Tax Officer [1985] 59 STC 277 (SC) ; AIR 1986 SC 649, (2) Hindustan Petroleum Corporation Ltd. v. State of Kerala [1993] 89 STC. 106 (Ker) [FB] ; 1993 KLJ (TC) 211 (FB); (3) Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer, Madras [1997] 107 STC 212 (SC), (4) State of Kerala v. Madras Rubber Factory Ltd. [1998] 108 STC 583 (SC) and (5) Black Diamond Beverages v. Commercial Tax Officer [1997] 107 STC 219 (SC). On the question whether the liability of turnover tax from the distilleries is violative of Part XIII of the Constitution of India, Mr. Asokan submitted that this contention is untenable and that they are not correct in contending that their free trade is in any way affected by the levy of turnover tax. He would further submit that this Court has already upheld the validity of Section 5(2A) of the Act in the decision reported in Das Agencies v. State of Kerala [1988] 69 STC 44 ; (1987) 2 KLT 989, and the said decision had been rendered by this Court following an earlier Supreme Court decision reported in S. Kodar v. State of Kerala [1974] 34 STC 73 (SC) ; AIR 1974 SC 2272. According to him, in order to say a provision is hit by the mandate contained in Part XIII of the Constitution of India, only if there is a direct impact or impediment on the dealers for their free trade. He relied on the decisions in Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 and AIR 1962 SC 1406 [Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan].

32. We shall now consider few case laws on the point. McDowell & Co, Ltd. v. Commercial Tax Officer [1985] 59 STC 277 (SC) and Mohan Breweries & Distilleries Ltd. v. Commercial Tax Officer [1997] 107 STC 212 (SC) and few other cases. In the McDowell case [1985] 59 STC 277 (SC), the sale was effected by the McDowell Company, the manufacturer. Excise duty was paid by the purchaser. Since excise duty forms part of the McDowell's turnover, payment of excise duty by the purchaser was treated on behalf of the seller/manufacturer/ McDowell. The Supreme Court also referred to (Obviously the case relates to Shinde Brothers v. Deputy Commissioner, Raichur [1967] 1 SCR 548)Guruswamy & Co. v. State of Mysore [1967] 1 SCR 548. The ratio stated in that case is as follows :

Thus, the incidence of excise duty is directly relatable to manufacture but its collection can be deferred to a later stage as a measure of convenience or expediency."

In the McDowell case [1985] 59 STC 277, the Supreme Court was of the view that the duty was primarily a burden which the manufacturer had to bear and even if the purchasers paid the same under the Distillery Rules, the provisions were merely enabling and did not give rise to any legal responsibility or obligation for meeting the burden. The Supreme Court, however, did not examine this aspect any further for the change in Rule 76 of the Distillery Rules which has clearly affirmed the position that liability for payment of excise duty is of the manufacturer and that the provisions of Rules 80, 81, 82, 83, and 84 do not militate against the conclusion that the payment of excise duty is a liability exclusively of the manufacturer. The Supreme Court held that these Rules do not detract from the position that payment of excise duty is the primary and exclusive obligation of the manufacturer and if payment be made under a contract or arrangement by any other person it would amount to meeting of the obligation of the manufacturer and nothing more.

40. A close scrutiny of the above referred cases would show that McDowell's case [1985] 59 STC 277 (SC), deal with only levy at the stage of manufacture as well as the collection of duty at the time of removal from the manufactory under Rule 22 of the Manufacture Rules and Rule 15 of the Wholesale Rules. McDowell's case [1985] 59 STC 277 (SC) deal with a case of the payment being required to be made by the wholesaler (TASMAC) at the stage of removal at the time of manufacture. The case at hand and the present scheme under the Abkari Act is distinguishable from the Madras Rubber Factory case [1998] 108 STC 583 (SC), where the Rubber Act, 1947, after amendment, provided for levy under Section 12(1) at the stage of production but informed the collection be postponed in accordance with the Rules under Section 12(2) of the Act. For the same reason the judgment in Hindustan Petroleum Corporation's case [1993] 89 STC 106 (Ker) [FB], is distinguishable where the case dealt with a levy on the manufacture under Section 3. This is again a case of payment being postponed and secured by a bond executed.