The Supreme Court on Monday sought reply from the Maharashtra government on a petition filed by PepsiCo India Holding Pvt Ltd alleging that the state government had arbitrarily increased the charges for water used as a raw material for manufacturing soft drinks. A Bench headed by Justice VS Sirpurkar issued limited notice to the state government “restricted to retrospective” imposition of water charges on the soft drink major.

PepsiCo said the Maharashtra Industrial Development Corporation (MIDC) had arbitrarily and irrationally increased water charges in 2001 for the industrial consumers who use water as a raw material in the state.

?The increased rates though introduced retrospectively by MIDC in November 2001 were only implemented with effect from May 2005?The exorbitant increase from Rs 9/cubic metre to Rs 47/cubic metre without any basis, justification or rationale is unreasonable,? the petition stated.

Senior counsel Ashok Desai and Dheeraj Nair, appearing for PepsiCo, said the government was not entitled to raise demand for the revised water charges with retrospective effect as the manufacturers had already sold out the finished products considering the cost of manufacturing at the relevant point of time and the same cannot be passed on to consumers now.

Besides, the water supply agreement stipulated that any increase in water tariff should be intimated to the consumer by giving, at least, one-month notice and, therefore, increase in tariff with retrospective effect without giving any advance notice is arbitrary and should be set aside.

Relief to RIL in excise case

The Supreme Court on Monday dismissed excise department’s plea asking Reliance Industries Ltd (RIL) to pay Rs 17.57-crore differential duty on account of valuation of superior kerosene oil (SKO) and liquefied petroleum gas (LPG) cleared via oil marketing companies.

A Bench headed by Justice SH Kapadia dismissed the department’s plea seeking to levy duty on subsidy received from oil pool account cleared by RIL via oil marketing companies.

The revenue in its appeal alleged that the scrutiny of the records indicated that RIL had collected excess amounts over and above the amount on which central excise duty was paid from oil firms by using commercial invoices against the sale of goods.

It stated that the duty was paid by RIL on ex-destination price, as declared by the Oil Coordination Committee, on the petroleum cleared by the company through Indian Oil Corporation (IOC). It said RIL had transferred petroleum products through pipelines to oil companies and in certain cases the assessee had not produced re-warehousing certificate or proof of payment of duty in lieu of the re-warehousing.

The department had issued two notices in June 2005 and September 2005 demanding differential duty on account of excess collection between July 2000 and February 2005 on the ground that RIL had been clearing SHO and LPG (domestic) to the ultimate consumer via the PSU by paying duty on ex-destination price as against the transaction value.

Besides, the department while demanding differential duty to the extent of more than Rs 17.57 crore had asked the assessee to give proof of payment of duty for non-production of proof of re-warehousing certificates of clearances of petroleum products in transit.

However, the Commissioner in July 2006 while holding that the price of SKO and LPG as determined by the government cannot be the sole consideration for the sale of goods said the additional consideration flowing to the assessee was required to be added to the value of discharging duty liability. It had also confirmed the duty demand to the extent of over Rs 15.16 crore against Rs 17.57 crore. The assessee’s appeal was dismissed by the Supreme Court in May 2008.