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2001 (3) TMI 1016 - SC - Central ExciseIn view of the fact that Division Bench decision of Rajasthan High Court was holding the field till this day, we direct that none of the respondents (i.e. the writ petitioners before the Rajasthan High Court) and no person similarly situated shall be liable to be prosecuted before a criminal court for an offence under Rajasthan Excise Act, 1956 read with Rajasthan ISP Rules and/or notification dated 8.5.1990 for any act or omission done during the period the decision under appeal was holding the field.
Issues Involved:
1. Constitutional validity of the Rajasthan Intoxicating Spirituous Preparations, Import, Export, Transport, Possession and Sales Rules, 1989. 2. Legislative competence of the State Government to issue notifications under the Rajasthan Excise Act, 1950. 3. Conflict between State and Central legislation regarding the regulation of medicinal preparations containing alcohol. 4. Applicability of the doctrine of "occupied field" and "pith and substance" in legislative competence. Detailed Analysis: 1. Constitutional Validity of the Rajasthan ISP Rules, 1989: The Rajasthan ISP Rules, 1989, were challenged on the grounds that they were beyond the legislative competence of the State Government and constituted an unreasonable restriction on the fundamental right to trade, violating Article 19(1)(g) of the Constitution. The High Court of Rajasthan found the rules and notifications unconstitutional, stating that the field of legislation concerning drugs was already covered by the Central legislation, particularly the Drugs and Cosmetics Act, 1940. 2. Legislative Competence of the State Government: The Rajasthan High Court held that the State Legislature's power under Entry 8 of List II (State List) was limited to intoxicating liquors and did not extend to medicinal preparations containing alcohol. The court noted that the Central Government had already regulated this field through various enactments, including the Drugs and Cosmetics Act, 1940, and the Industries (Development and Regulation) Act, 1951. Therefore, the Rajasthan ISP Rules and the notifications issued under the Rajasthan Excise Act were deemed to be beyond the State's legislative competence. 3. Conflict Between State and Central Legislation: The High Court of Rajasthan concluded that the Central statutes comprehensively regulated the field of medicinal preparations containing alcohol, thus precluding the State from enacting conflicting regulations. The court emphasized that the doctrine of "occupied field" applied, meaning that once the Central Government legislated on a subject, the State could not enact laws that conflicted with the Central legislation. 4. Applicability of the Doctrine of "Occupied Field" and "Pith and Substance": The Supreme Court, however, disagreed with the High Court's application of the "occupied field" doctrine. The Supreme Court referenced the decision in State of A.P. vs. Mcdowell & Co., which clarified that the concept of "occupied field" is relevant only for entries in List III (Concurrent List). The Supreme Court emphasized that the legislative competence of the State Legislature should be determined by the "pith and substance" of the legislation. If the legislation primarily falls within an entry in List II, the State Legislature is competent to enact it, irrespective of any incidental overlap with Central legislation. Conclusion: The Supreme Court set aside the judgment of the Rajasthan High Court, stating that it failed to consider the decision in Southern Pharmaceutical & Chemicals case and incorrectly applied the doctrine of "occupied field" without addressing the "pith and substance" doctrine. The Supreme Court noted that the controversy had become academic due to subsequent amendments to the Drugs and Cosmetics Rules, 1945, which prohibited the manufacture, sale, or distribution of Ayurvedic, Siddha, and Unani drugs containing more than 12% alcohol. The Court also directed that no prosecutions should be initiated under the Rajasthan Excise Act and ISP Rules for actions taken while the High Court's decision was in effect. The appeals were disposed of without any order as to costs, and the Supreme Court refrained from expressing a final opinion on the issues, considering the matter academic and pending decisions by a Constitution Bench on related issues.
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