In Brief
A State-owned liquor corporation appealed income-tax assessments where the revenue disallowed gallonage fees, licence fees, shop rentals, surcharge on sales tax and turnover tax under Section 40(a)(iib) of the Income-tax Act. The Supreme Court held that gallonage fees, licence fees and shop rentals for FL-9 and FL-1 licences do fall within Section 40(a)(iib), as they are amounts levied exclusively on State Government undertakings—exclusivity applies when similar items are levied on all State undertakings, not just one. However, surcharge on sales tax and turnover tax are taxes (enhancements of basic tax), not 'fees' or 'charges', and lie outside Section 40(a)(iib). The assessments were set aside for recomputation.
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