2016 (8) TMI 1598 - HC - Indian Laws

Demand of export pass fee on denatured spirit or specially denatured spirit - HELD THAT - This issue has already been considered and decided by a Division Bench of this Court in M/s Bindal Agro Chemical Ltd. and another versus State of U.P and others 2004 (2) TMI 744 - ALLAHABAD HIGH COURT wherein it was held that ' Impugned notification dated 23rd November, 1989 imposing export pass fee on denatured and specially denatured spirit is quashed. Consequently, respondents are restrained from realizing the same. Any amount of export pass deposited by petitioner with State Government shall be returned to it within two months along with interest at 10 per cent per annum from date of deposit/realization to date of refund.' In view of aforesaid decision, this writ petition is allowed and impugned notification dated 31.3.2004 imposing export pass fee on quantity of denatured spirit or specially denatured spirit is hereby quashed - Demand of export pass fee pursuant to aforesaid notification from petitioner is also hereby quashed - petition allowed.

Summary

Issues involved: Demand of export pass fee on denatured spirit or specially denatured spirit.

The judgment by the High Court of Allahabad involved a matter concerning the demand of export pass fee on denatured spirit or specially denatured spirit. The issue had already been considered and decided by a Division Bench of the Court in a previous case. The Court held that the regulatory fee being charged was not for ensuring that rectified spirit is not diverted for human consumption, but merely for transportation purposes. The Court referred to a Supreme Court order which stated that the levy of export pass fee on industrial alcohol was not permissible. Consequently, the Court allowed the writ petition and quashed the impugned notification imposing export pass fee on denatured spirit or specially denatured spirit. Any amount already realized as export pass fee was ordered to be refunded within a specified time frame. The judgment had attained finality after dismissal of a Special Leave to Appeal by the Apex Court.

In the detailed analysis, the Court emphasized the need for a broad correlation between the fee realized and the regulatory expenses incurred. It was noted that the State Government has an interest in realizing excise duty on potable liquor and can frame regulations to prevent the diversion of rectified spirit for human consumption. However, in the present case, the demand for export pass fee was not related to preventing such diversion but was for the transportation of denatured and specially denatured spirit. The Court highlighted that once denaturants are added to rectified spirit, even after dilution with water, it cannot be made fit for human consumption.

The Court also referred to a Supreme Court order which stated that the levy of export pass fee on industrial alcohol was impermissible. Based on these considerations, the Court allowed the writ petition and quashed the impugned notification imposing export pass fee on denatured spirit or specially denatured spirit. Any amount already realized as export pass fee was directed to be refunded within a specified time frame. The judgment had attained finality after dismissal of a Special Leave to Appeal by the Apex Court.