1996 (12) TMI 383 - SC - Central Excise

Scope and intendment of the Amending Act - Held that - On validity of the Amending Act we are unable to see on what ground can its validity impeached. All that it does is to provide statutory basis and legislative imprimatur to the price fixation done by the Commissioner and its break-up. It also provides for recovery and deduction of the 0.70 paise component on account of maintenance charges of warehouses. It can neither be suggested that the Bihar Legislature did not have the legislative competence to enact the said Amending Act nor can it be suggested that the Act violates any of the fundamental rights enshrined in para III. The general averment of Mr. Y.V. Giri that the Act is arbitrary is too vague to merit any acceptance, apart from the fact that an act of Legislature cannot be struck down merely saying it is arbitrary. The appeals are allowed, the judgment of the High Court is set aside and it is declared that the Amending Act 9 of 1995 being Bihar Act of 9 of 1995 is neither unconstitutional nor is it ineffective to achieve the objective it set out to achieve - object set out in the Preamble.

Issues Involved:

1. Regulation and price fixation of country liquor in Bihar.
2. Validity of the Bihar Excise (Amendment and Validating) Act, 1995.
3. Deduction of warehouse maintenance charges from the cost price of country liquor.
4. Legislative competence and constitutionality of the Amending Act.

Detailed Analysis:

1. Regulation and Price Fixation of Country Liquor in Bihar:

The distribution and sale of country liquor in Bihar are governed by the Bihar Excise Act, 1915, and related rules. Initially, a two-tier system was in place where wholesale dealers supplied liquor to retailers, with prices fixed either statutorily or through negotiations. In 1989, writ petitions led to the Patna High Court directing the State to supply liquor directly to retailers, a practice that continued until March 31, 1992. On December 15, 1989, a meeting between Excise Officers and distillery representatives led to a new cost price of Rs.3.42 per L.P.L. being agreed upon, which included various components like maintenance charges for warehouses.

2. Validity of the Bihar Excise (Amendment and Validating) Act, 1995:

Following the High Court's judgment quashing the Excise Commissioner's orders on price fixation, the Bihar government enacted the Bihar Excise (Amendment and Validating) Act, 1995, to provide statutory backing to the price fixation and the deduction of maintenance charges. The Amending Act was given retrospective effect from February 20, 1990. The High Court, however, allowed writ petitions challenging the validity of this Act, stating that it did not apply to manufacturers of rectified spirit but only to country liquor.

3. Deduction of Warehouse Maintenance Charges from the Cost Price of Country Liquor:

The Excise Commissioner, on February 19, 1990, fixed the cost price of country liquor at Rs.3.42 per L.P.L., including Rs.0.70 for warehouse maintenance. This was communicated to all relevant officials and distilleries. However, on July 26, 1990, the Commissioner directed the deduction of Rs.0.70 per L.P.L. for maintenance from the cost price. Distilleries contested this deduction, arguing that they were entitled to the full Rs.3.42 per L.P.L. as initially fixed, and that the maintenance of warehouses was the State's responsibility.

4. Legislative Competence and Constitutionality of the Amending Act:

The Supreme Court emphasized the presumption of constitutionality of legislative enactments. The Amending Act, by providing statutory backing to the price fixation and deductions, was within the legislative competence of the Bihar Legislature. The Court criticized the High Court for not appreciating the legislative intent and purpose, which was clearly outlined in the Preamble of the Amending Act. The Court held that the Amending Act did not violate any constitutional provisions and was not arbitrary.

Conclusion:

The Supreme Court allowed the appeals, setting aside the High Court's judgment, and upheld the validity of the Bihar Excise (Amendment and Validating) Act, 1995. The Court declared that the Act was neither unconstitutional nor ineffective in achieving its objectives. The writ petitions filed by the respondents were dismissed.

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