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File No. XIV Amending Act 21 of 2000.- Representation were made to the Government by the manufacturers, Wholesalers and Retail Traders of Liquor for Merger of Sales Tax with the Excise duty, since for payment of Sales Tax and Excise duty, the trade has to deal with two Department resulting in administrative and procedural difficulties and inconvenience. Further merger of sales tax with Excise duty will simplify the procedural complication etc. On examination of the above representations the Government considered it necessary to amend the Karnataka Sales Tax Act, 1957 and the Karnataka Excise Act, 1965, to provide for, (i) levy of additional excise duty on the value, cost or price of the excisable articles. (ii) recovery of sales tax arrears as arrears of excise revenue. (iii) treating tax or other amount due as arrears of excise revenue for the purpose of recovery of such tax or other amount due. Hence the Bill. (Obtained from L.A. Bill No. 38 of 2000) XV Amending Act 15 of 2001.- To give effect to the proposals made in the Budget Speech, it is considered necessary to amend the Karnataka Excise Act, 1965. Hence the Bill. (Vide L.A. Bill No. 11 of 2001 Filed No. SAMVYASAHE 16 SHASANA 2001) Excise [1966: KAR. ACT 21 366 XVI Amending Act 38 of 2003.- It is considered necessary to amend the Karnataka Excise Act, 1965.- i) to remove the ambiguity in the definition of "toddy" and "excise tree" by omitting the words " of which contains alcohol and " appearing in the definition of excise tree; ii) to provide for giving the interim custody of the property seized under sub-section (1) of section 43A to the owners of such property on production of a Bank Guarantee equal to the value of the seized property; iii) to provide for acceptance of money or imposition of penalty in lieu of cancellation or suspension of a license for contravention of conditions of license or of any rule made under the Act. Hence the Bill. (LA Bil No. 4 of 2003 DPAL 38 SHASANA 2003) XVII Amending Act 27 of 2004.- Section 16-A of the Karnataka Excise Act, 1965 provides for entrusting the task of manufacture and/or bottle arrack for sale to a Company or agency owned or controlled by the State Government or a State Government Department. Accordingly, at present, M/s. MSIL and M/s. Mysugar Co., have been entrusted with this task. MSIL does not have primary distillery. M/s. Mysugar Co., is not in a position to supply the required quantity as the Company is in difficult financial position. Of late, due to scarcity of molasses, which is the main raw material for providing rectified spirit, the manufacture and supply of arrack has been gradually affected. After the Government of India has rescinded Molasses Control Order and the State has no control to regulate the manufacture and sale of molasses. However, the Karnataka legislature has recently passed a bill to regulate it and the same has been sent to Government of India to get the assent of the President. Further, there is an element of non-duty paid arrack in the open market. In order to ensure supply of the required quantity of rectified spirit for manufacture of arrack, it is necessary to liberalise arrack manufacture. Presently, inspection and scrutiny of records maintained by a distillery or a brewery is the responsibility of the Excise Department. This responsibility is discharged primarily by officers posted at the distillery or brewery and through special inspections. However, more than the inspection and scrutiny of records mandated by the Karnataka Excise Act, 1965, it is necessary to form an opinion on the output produced by the manufacturer vis-à-vis the inputs consumed. The essential feature of such an inspection/audit is to correlate the input and output. This is a specialised 1966: KAR. ACT 21] Excise 367 function for which expert help is necessary. A similar requirement is mandated under section 14AA of the Central Excise Act, 1944. Section 51 of the Karnataka Excise Act, 1965 empowers Excise Commissioner, Deputy Commissioner, Excise Officer and Police Officers to enter and inspect places of manufacture and sale. In order to empower the proposed third party similarly, it is necessary to amend the Karnataka Excise Act, 1965. In the budget speech for the year 2004-05, the Hon’ble Deputy Chief Minister had announced to liberalise manufacture of arrack by allowing primary distilleries to undertake this activity. The primary objective of this policy is to eliminate ‘seconds’ or non-duty paid arrack and to thus enhance arrack revenues significantly. Further by liberalising the manufacture of arrack it will be made as market driven such that it should not be responsibility of the Government to supply arrack but rather the function of demand and supply in the market. Hence the Bill. (L.A. Bill No. 19 of 2004) XVIII Amending Act 14 of 2005.- It is felt necessary to make the excise law more stringent in order to net more revenue, check evasion of excise duties, by taking away the existing compounding powers and making the law more stringent by rendering the offences under the Act cognizable and non-bailable. Hence the Bill. [L.A. Bill No. 13 of 2005] XIX Amending Act 27 of 2007.- In the Budget speech for the year 2007-08, it has been announced banning of sale of arrack in the State from 1st July 2007. Hence, it is considered necessary to amend section16A and 16B of the Karnataka Excise Act, 1965. It is considered necessary to prevent hooch tragedies which occurred in Bangalore and Hassan districts recently, claiming 45 lives and one of the main causes of these tragedies has been the sale of illicit arrack and spurious and adulterated liquor by unauthorized vendors in unauthorized places. In order to prevent recurrence of such tragedies, it is proposed to amend section 37 by introducing stringent punishment to the persons who indulge in adulteration of liquor with harmful poisonous substances or chemicals or methyl alcohol or any other poison as defined in Indian Poisons Act, 1919 or substances, which endanger human life or cause grievous hurt to human beings. Excise [1966: KAR. ACT 21 368 It is considered that public Transport vehicle belonging to the Karnataka State Transport Undertaking shall not be confiscated when an offence is reported under the provisions of the Karnataka Excise Act, 1965. Therefore an amendment to section 43 is proposed. Section 51 A is proposed to be substituted to empower the state Government to prescribe the conditions and restrictions subject to which accounts or records of every licencee shall be audited by a cost Accountant. Hence the Bill. [L.A.Bill No. 39 of 2007] [Entry 51 of List II of the Seventh Schedule to the Constitution of India.] XX Amending Act 19 of 2010.- At present under Section 67 of the Karnataka Excise Act, 1965, the State Government is empowered to exempt or reduce either prospectively or retrospectively the excise dues payable under Section 22 of any liquor sold to certain categories of institutions. Of late, more number of consulates/diplomatic agents has started functioning in the State Headquarters. The offices of Consulates of Germany, Japan, France, Britain, Switzerland, Ireland, Maldives, Finland, and Spain are established in Bangalore. It is the privilege of the State Government to extend benefit of exemption of tax on liquor to the diplomats as a matter of honouring their dignity. Therefore, it is proposed to amend Section 67(1)(i) of the Karnataka Excise Act, 1965 with an enabling provision to extend the benefit of exemption of tax on liquor to ‘diplomatic agents’. Hence the Bill. [L.A.Bill No. 41 of 2009, File No.DPAL 38 Shasana 2009] [Entry 8 and 51 of List II of the Seventh Schedule to the Constitution of India.] XXI Amending Act 26 of 2013.- The Karnataka State Beverages Corporation was established for distributing liquor for sale in the State. As the Government grants distributor licence to the Corporation and collects privilege fee from the Corporation. In order to bring clarity in the interpretation of the scheme of collection of privilege fee, it is proposed in the Budget speech for the year 2013-14 to amend section 24 of the Karnataka Excise Act retrospectively to deem always the privilege fee collected as part of State Government’s revenue. Hence, the Bill. [L.A. Bill No.14 of 2013, File No. Samvyashae 22 Shasana 2013] [Entry 51 of List II of the Seventh Schedule to the Constitution of India.] 1966: KAR. ACT 21] Excise 369 XXII Amending Act 11 of 2014.-It is considered necessary to amend the Karnataka Excise Act, 1965 to facilitate payment of all Exicse Revenue like License Fee, Excise Duty, Additional Excise Duty or any other form of fee by way of electronic remittance. Hence the Bill. [L.A. Bill No.28 of 2014, File No. Samvyashae 54 Shasana 2013] [Entry 51 of List II of the Seventh Schedule to the Constitution of India.] XXIII Amending Act 01 of 2017.- In the Budget Speech 2015-16, the Hon’ble Chief Minister, proposed to bring amendment to the Excise Act to permit members of Coconut Growers Federation to harvest ‘Neera’ in limited quantities from the coconut trees and thereby increasing the income of the coconut growers significantly. Further, Neera production is legally permitted in the States like Kerala, Tamil Nadu, Maharashtra, Goa and Union Territories of Lakshadweep and Andaman and Nicobar Islands. Therefore, it is considered necessary to amend the Karnataka Excise Act, 1965 to,- (i) remove the term “unfermented juice” from the definition of “Toddy” and to distinguish “Neera” from “Toddy”; (ii) define the term “Neera”; (iii) regulate tapping of Neera and manufacture of Neera products; and (iv) provide punishment for violation of provisions of section 13A and the rules made thereunder. Hence, the Bill. [L.A. Bill No.38 of 2016, File No. Samvyashae 53 Shasana 2016] [entry 51 of List II of the Seventh Schedule to the Constitution of India] * * * Excise [1966: KAR. ACT 21 370 1[ KARNATAKA ]1 ACT 21 OF 1966 (First published in the 1[Karnataka]1 Gazette on the Eighteenth day of August, 1966 ) THE 1[KARNATAKA]1 EXCISE ACT, 1965 (Received the assent of the President on the Third day of August,1966) (As amended by 1 of 1970, 1 of 1971, 61 of 1976, 32 of 1982, 28 of 1987, 36 of 1987, 1 of 1994, 2 of 1994, 2 of 1995, 7 of 1997, 21 of 1998, 12 of 1999, 21 of 2000, 15 of 2001, 38 of 2003, 27 of 2004, 14 of 2005, 27 of 2007, 19 of 2010, 26 of 2013, 11 of 2014 and 01 of 2017.) An Act to provide for a uniform excise law in the 1[State of Karnataka]1. WHEREAS it is expedient to provide for a uniform law relating to the production, manufacture, possession, import, export, transport, purchase and sale of liquor and intoxicating drugs and the levy of duties of excise thereon, in the 4[State of Karnataka]4 and for certain other matters hereinafter appearing; BE it enacted by the 1[Karnataka]1 State Legislature in the Sixteenth Year of the Republic of India as follows:-