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2007 (10) TMI 624 - SC - VAT and Sales TaxDoes Section 2 of the Industries (Development and Regulation) Act, 1951, have any impact on the field covered by Section 18-G of the said Act or Entry 33 of List III of the Seventh Schedule of the Constitution? Does Section 18G of the aforesaid Act fall under Entry 52 of List I of the Seventh Schedule of the Constitution, or is it covered by Entry 33 of List III thereof? In the absence of any notified order by the Central Government under Section 18-G of the above Act, is the power of the State to legislate in respect of matters enumerated in Entry 33 of List III ousted? Does the mere enactment of Section 18-G of the above Act, give rise to a presumption that it was the intention of the Central Government to cover the entire field in respect of Entry 33 of List III so as to oust the States competence to legislate in respect of matters relating thereto? Does the mere presence of Section 18-G of the above Act, oust the State s power to legislate in regard to matters falling under Entry 33(a) of List III ? Does the interpretation given in Synthetics and Chemicals Case 1989 (10) TMI 214 - SUPREME COURT OF INDIA in respect of Section 18-G of the Industries (Development and Regulation) Act, 1951, correctly state the law regarding the States power to regulate industrial alcohol as a product of the Scheduled industry under Entry 33 of List III of the Seventh Schedule of the Constitution in view of clause(a) thereof?
Issues Involved:
1. Legality of the levy of licence fee on the sale of specially denatured spirit. 2. State's power to regulate the manufacture and sale of denatured spirit under the Industries (Development and Regulation) Act, 1951. 3. Impact of Section 18-G of the Industries (Development and Regulation) Act, 1951, and Entry 33 of List III of the Seventh Schedule of the Constitution on State legislation. 4. Questions regarding the interpretation of Section 18-G and its effect on State legislative competence. Issue-wise Detailed Analysis: 1. Legality of the Levy of Licence Fee The writ petitioner, a holder of a licence in Form FL No. 41 under the Uttar Pradesh Excise Act, 1910, challenged the levy of a licence fee on the sale of specially denatured spirit. The petitioner argued that the fee was neither regulatory nor compensatory as no services were rendered to justify it. The High Court held the impugned licence fee to be illegal, stating that the fee was being charged for the sale/purchase of denatured spirit, which was outside the purview of the State Legislative powers as per the Supreme Court's decision in State of U.P. Vs. Vam Organic Chemicals Ltd. and Anr. The High Court directed the respondents to refund the collected fee with interest. 2. State's Power to Regulate Denatured Spirit The common challenge in all the matters was that the State had no power to regulate the manufacture and sale of denatured spirit in view of Section 2 and Section 18-G of the Industries (Development and Regulation) Act, 1961. The High Court relied on the Supreme Court's decision in State of U.P. Vs. Vam Organic Chemicals Ltd., which held that the State's power was limited to preventing the misuse of industrial alcohol as intoxicating liquor and charging fees based on the principle of quid pro quo. 3. Impact of Section 18-G and Entry 33 of List III The High Court's decision was based on the interpretation that Section 18-G of the Industries (Development and Regulation) Act, 1951, and Entry 33 of List III of the Seventh Schedule of the Constitution ousted the State's power to legislate in respect of industrial alcohol. The Supreme Court in Synthetics and Chemicals Ltd. vs. State of U.P. held that the State could regulate the use of alcohol to prevent its misuse as intoxicating liquor but could not claim exclusive rights over industrial alcohol. 4. Questions for Larger Bench Consideration The Supreme Court, while considering the submissions, formulated several questions for a larger Bench to address: - Q.1: Impact of Section 2 of the Industries (Development and Regulation) Act, 1951, on the field covered by Section 18-G and Entry 33 of List III. - Q.2: Whether Section 18-G falls under Entry 52 of List I or Entry 33 of List III. - Q.3: If the absence of a notified order under Section 18-G ousts the State's power to legislate under Entry 33 of List III. - Q.4: Whether the enactment of Section 18-G presumes the Central Government's intention to cover the entire field under Entry 33 of List III. - Q.5: If the presence of Section 18-G ousts the State's power to legislate under Entry 33(a) of List III. - Q.6: Whether the interpretation in Synthetics and Chemicals Case correctly states the law regarding the State's power to regulate industrial alcohol under Entry 33 of List III. The Supreme Court directed that these matters be placed before the Chief Justice of India for consideration and appropriate orders.
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