9911796707
TMI Blog2007 (10) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of the Uttar Pradesh Excise Act, 1910 and the rules framed thereunder. The petitioner was aggrieved by the levy of licence fee on the sale of specially denatured spirit to licencees holding licence in Form FL 41 @ 15% ad valorem on the sale made by a distillery/wholesale vendor to FL 41 licencees purportedly under the provisions of the U.P. Licences for the Possession of Denatured Spirit and Specially Denatured Sprit Rules, 1976 as amended from time to time. On behalf of the writ petitioners it was contended that the licence fee levied on a FL 41 licence is neither regulatory nor a compensatory fee because no services are rendered to the licensee which could justify it as a regulatory fee. 3. Although, on behalf of the petitioner reliance was placed on the decision of this Court in State of U.P. Vs. Vam Organic Chemicals Ltd and Anr. (2004 (1) SCC 225), such stand was held to be untenable by the High Court inasmuch as, in the said case it was held that denatured spirit is outside the seisin of the State Legislature which has jurisdiction over only potable alcohol. 4. However, the High Court held the impugned licence fee to be wholly illegal upon observing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e converted into Civil Appeals, being C.A. No. 151 of 2007, C.A. No.152 of 2007, C.A. No. 153 of 2007 and C.A. No. 154 of 2007. The remaining three matters are sill at the special leave petition stage. On 29th November, 2004, SLP(C) No. 26110 of 2004 (State of U.P. Vs. Anil Kumar Sharma) together with SLP (C) No. 26111 of 2004 (State of U.P. vs. Priyambada Jaiswal) were directed to be tagged with R.K. Sharma's case, namely, SLP(C) No. 16505 of 2004. Similarly, SLP(C) 19275 of 2004 (State of U.P. vs. Somaiya Organic (India) Ltd.) was tagged with SLP(C) No. 16505 of 2004 on 16th August, 2005. The four other matters, which were converted into appeals, were also tagged with SLP(C) 16505 of 2004 by order dated 26th April, 2007. 9. It is on account of the aforesaid orders, that all the eight matters have come up before us for final hearing and disposal. 10. When these matters were taken up for hearing, Mr. Dhruv Agrawal, Senior Advocate, appearing for the respondent in SLP(C) No. 19275 of 2005 (M/s. Somaiya Organic (India) Ltd.), submitted that this matter was different from the seven other matters since the respondent therein was the holder of licence in Form FL 39, which was mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hetics and Chemical Ltd. vs. State of U.P. (1990 Vol. I SCC 109). 16. Having regard to the aforesaid factual as well as legal position, we are unable to accept Mr. Agrawal's prayer to detach SLP(C) No. 19275 of 2004 and to hear it separately from the other matters. 17. All the eight matters before us have, therefore, been taken up for consideration together. 18.While deciding the said matters, the Allahabad High Court accepted the contention of the writ petitioners that the questions involved had been decided by this Court in State of U.P. Vs. Vam Organic Chemicals Ltd. and ors. (supra). The High Court decided the writ petitions on the basis of the decision of this Court in the aforesaid case and declared the imposition of licence fee @ 15% ad valorem vide Notification No.1327 dated 25.5.1999 under the U.P. Licences for the Possession of Denatured Sprit and Specially Denatured Sprit (Fourth Amendment) Rules, 1999, to be wholly illegal. The writ petitions were accordingly allowed and the impugned licence fee was declared illegal. 19. During the course of arguments, Mr. S.K. Dwivedi, learned senior counsel for the appellants, submitted that the Vam Organic's case (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been stated in paragraphs 63 and 64. In order to appreciate the submission made by the learned counsel, paragraphs 85 and 86 are reproduced: "85. After the 1956 amendment to the IDR Act bringing alcohol industries (under fermentation industries) as Item 26 of the First Schedule to IDR Act the control of this industry has vested exclusively in the Union. Thereafter, licences to manufacture both potable and non-potable alcohol is vested in the Central Government. Distilleries are manufacturing alcohol under the central licences under IDR Act. No privilege for manufacture even if one existed, has been transferred to the distilleries by the State. The State cannot itself manufacture industrial alcohol without the permission of the Central Government. The States cannot claim to pass a right which they do not possess. Nor can the States claim exclusive right to produce and manufacture industrial alcohol which are manufactured under the grant of licence from the Central Government. Industrial alcohol cannot upon coming into existence under such grant be amenable to States' claim of exclusive possession of privilege. The State can neither rely on Entry 8 of List II nor Entry 33 of Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol of such industry by the Union is declared by the Parliament by law to be expedient in the public interest, the Constitution Bench had not considered the said aspect and had interpreted the provisions of Entry 33 in relation to the concept of manufacture only. According to the learned counsel, what stood ousted from the legislative powers of the State was the power to legislate on matters relating to manufacture of potable and non-potable alcohol. In order to appreciate the position better, Entry 33(a) of List III is reproduced hereunder: "33. Trade and commerce in, and the production, supply and distribution of (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products." 24. Mr. Dwivedi urged that the power of the State to legislate with regard to matters relating to Entry 33(a) in List III of Schedule 7 of the Constitution did not stand ousted merely on the basis of a declaration made under Section 2 of the Industries (Development and Regulation) Act, 1951, which was relatable to Entry 52 of List I of the Seventh Schedule. Mr. Dw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, no order having been issued by the Central Government thereunder, no question of repugnancy could arise, as repugnancy must exist as a fact and not as a mere possibility and the existence of such an order would be an essential pre-requisite for it. 26. Mr. Dwivedi submitted that the decision in the aforesaid case had not been brought to the notice of the 7 Judge Bench which decided the Synthetics and Chemicals case (supra) and it, did not, therefore, have the benefit of the reasoning which prompted this Court earlier to hold that one aspect of Entry 33 of List III was not covered by the U.P. Sugar Industries Control Act, 1938. The 7 Judge Bench did not also have the benefit of the reasoning in Ch. Tikaramji's case (supra) which had held that in the absence of any notified order under Section 18-G of the 1951 Act no question of repugnancy could arise, which Mr. Dwivedi urged, recognised the State's power to legislate with regard to matters under Entry 33 of List III notwithstanding the provisions and existence of Section 18-G in the 1951 Act. 27. Mr. Dwivedi then went on to refer to the judgment of this Court in SIEL Limited and Ors. vs. Union of India and ors. (199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence of a statutory provision for entrustment of such power by itself would result in regulation of purchase and sale of flour even if it is a scheduled industry. It may be noted that even while noting the decision of the 7 Judge Bench in Synthetics and Chemicals case (supra) the Court placed reliance on the decision rendered in the SIEL Ltd. case (supra). 29. Mr. Dwivedi also referred to the decision of a Constitution Bench in the case of Ganga Sugar Corporation Ltd. vs. State of Uttar Pradesh and others (1980) 1 SCC 223) where it was held that in pith and substance the U.P. Sugarcane (Purchase Tax) Act, 1961 was not with respect to a controlled industry namely the sugar industry and hence did not encroach upon Entry 52 of List I. 30. Various other decisions, such as the decision in Shri Bileshwar Khand Udyog Khedut Sahakari Mandal Ltd. vs. State of Gujarat (1992) 2 SCC 42; and B. Viswanathiah and Company vs. State of Karnataka and others (1991) 3 SCC 358, were also referred to by Mr. Dwivedi in support of his submission. That even after the decision of the 7 Judge Bench in the Synthetics and Chemicals case (supra) this Court had in several other judgments, including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger Bench of this Court. 33. Apart from making a submission that SLP(C) No.19275/05 State of U.P. vs. M/s Somaiya Organic (India) Limited was different from the other matters and should be dealt with independently, Mr. D. Agrawal submitted that the issue being sought to be raised on behalf of the State of U.P. in these matters was no longer res integra, since it had already been decided by the 7 Judge Bench in the Synthetics and Chemicals case (supra) which has subsequently been followed by this Court in the case of Vam Organic's case (supra), which had been relied upon by the High Court in disposing of the writ petitions from which these civil appeals and special leave petitions arise. 34. Similar submissions were made by Mr. K. D. Mishra, learned counsel appearing for the respondents in C.A. Nos.152/2007 and C.A. No.153/2007. It was also urged by him that the respondents in the said two appeals were holders of licences in Form No. FL 16 and FL 17 and deal with licensing of manufacture of denatured spirit and that the impugned levy imposed by the State of U.P. was exorbitant and excessive and was not regulatory in nature and could not be imposed on ad valorem basis as the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Benches of five Judges. 38. We, accordingly, formulate the following questions, which, in our view, may be referred to a larger Bench : Q.1 Does 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? Q.2 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? Q.3 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? Q.4 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? Q.5 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 ?; Q.6 D ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
