Case: State of Uttar Pradesh, Etc Vs. Synthetics and Chemicals Limited and Others Etc

nor fee but only a levy for the conferment of the exclusive privilege. It is true that the stand taken by the Government in the earlier proceedings was different but that would not make any difference so long as the Government had a right to impose the levy. It has been found that after the addition of S. 24A by Act 30 of 1972, the Commissioner was entitled to accept payment for conferring the privilege which the State owned exclusively. The learned counsel submitted that so far as his clients M/s. Rallis Chemicals, Kanpur and M/s. Rallis India, petitioners in Special Leave Petitions Nos. 125 to 126 of 1979 are concerned they are only holders of licences for possession and are not licencees under F.L. 16. In the same class fall the appellants in Civil Appeal No. 2248 of 1 978, M/s. Synthetic and Chemicals who are only purchasers of denatured spirit. It was submitted that for this class of persons if the vend fee is for the grant of exclusive privilege of the State for sale of liquor, it cannot be recovered from the purchasers. Rule 17(1) relates to vend of denatured spirit. It empowers the Collector (1) to grant to a distiller a licence for manufacture of denatured spirit (2) to grant to approved dealers of denatured spirit a licence in form F.L. 16 for the wholesale vend of denatured spirit. Scale of fee is given in the rule which prescribes that for sales not exceeding 10, 000 litres per annum a fee w ill be of Rs. 100/- and for sales exceeding 10, 000 litres, the fee shall be increased by Rs. 500/- for every 5000 litres or fraction thereof. Subrule (2) provides that in case of issue from a distillery, a vend fee of rupee one and ten paise per bulk gallon will be payable before the spirit is issued. The fee charged is very different from the one in Rule 17(1) which provides that the distillery or an approved dealer for wholesale vend of denatured spirit may be given a licence in Form F.L. 16. The distiller and the approved dealer is to pay a licence fee for t he sales at the rate prescribed. But rule (2) speaks of levy of vend fee in case of issued from the distillery which is payable in advance before the spirit is issued. It is admitted that the petitioners and the appellants who claim as purchasers do not have a licence under F.L. 16. Therefore, sub-s. (1) has no application. The levy on persons who are purchasers is for the possession of denatured spirit in excess of the prescribed limit. The permission granted in their favour and the allo tment orders of the specially denatured spirit prescribes the terms and conditions under which the allotment is made. The licences are granted to them under form F.L. 39 and they have to abide by those conditions. The notification of the Excise Commissioner of U.P. dated 3-5-1976 provides that the licence for the possession of denatured spirit including the specially denatured spirit of industrial purpose shall be of three kinds. We are concerned with the licences for the possession for use in industries in which alcohol is destroyed or converted chemically in the process into other products and the product does not contain alcohol such as, Ethel, Styrene, Butadiene, Acetone and Polythene etc. The licence granted for th is purpose is in form F.L. 39. Rule 3(a) provides that the fee for the licence in Form F.L. 39 shall be at a rate prescribed for industry to industry by the Excise Commissioner per litre, payable on the quantity of specially denatured spirit obt ained from any distillery in Uttar Pradesh and that fee shall be realised by the Excise Inspector incharge Distillery from the licensee before issue of the specially denatured spirit from the distillery. The conditions relating to grant of a licence for issue of denatured spirit for industrial purpose are laid down in rule 4. Special conditions regarding licence in form F.L. 39, 40 and 41 are prescribed in rule 5. The appellants/petitioners having applied for and obtained licences in form F.L. 39 are bound to comply with the conditions.Lastly, it was contended that the provisions of Uttar Pradesh Excise (Amendment) (Re-enactment and Validation) Act, 1976 is invalid and confiscatory as its retrospective operation imposes an unbearable burden on the appellants/petitioners. It was stated that the licence under F.L. 39 was issued only in the year 1979 and no levy could be made regarding denatured spirit that was supplied before that date. T he answer of the State is that the levy was imposed for permission granted in their favour and allotment orders of denatured spirit issued to them from the various distilleries. The parties after having paid the fee had taken possession of t he denatured spirit from the distillery. Act 5 of 1976 has been given retrospective effect as the levy imposed under Act 30 of 1972 was found to be illegal and unsustainable by the Allahabad High Court which was reversed by this Court b y giving retrospective effect, the State has only restored the status quo enabling the collection of the levy validly made by Act 30 of 1972. 29. Reliance was placed on the decision of this Court in A. B. Abdul Kadir &ors etc. v. State of Kerala for the contention that retrospective operation of an Act when it harshly operates is liable to be held as invalid. At page 706 this Court observed that the power to make a valid law would enable providing for prospective and retrospective operation of the provisions. It was observed that in judging the reasonableness of the retrospective operation of law, the test of length of time covered by the retrospective operation could not by itself be treated as decisive. On the facts of the case there could be no complaint because what is sought to be collected is levy which was legally made. 30.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In the context it is clear that the decisions proceeded on the basis that the word intoxicating liquor is not confined to potable liquor alone but would include all liquor which contain alcoholWe are unable to accept this contention for in Balsaras case after explicitly approving of the definition of word liquor in various Abkari Act s in the Provinces of India, the Court held that liquor would not only cover alcoholic liquor which is generally used for beverage purposes and produce intoxication but would also include liquids containing alcoholThough most of the cases deal t with the right of the State Government as regard auction of country liquor, in Balsaras case, Nashirwars case and Har Shankars case, the Court was concerned with the right of the State Government over foreign liquorReading various Ethyl Alcohol (Price Control) orders passed by the Government from time to time, it is clear that the order permitted the adding of the expenses incurred for transportation, payment of octroi duty etc. to the price fixed. We are unable to read the Ethyl Alcohol (Price Control) orders as explicitly or impliedly taking away the power of the State to regulate the distribution of intoxicating liquor by collecting a levy for parting with its exclusive rightsThe decision does not help the appellants for on the facts it is clear that the entire field relating to mines and minerals had been occupied and taken away from the Legislature and as such it was beyond the competence of the State to legislate on mines and minerals. In the case before us the position is different because the power of the State Legislature to legislate in respect of the intoxicating liquor and its exclusive right regarding intoxicating liquor cannot be questionedIn view of the stand taken by the State, it is unnecessary for us to go into the question as to whether the levy is a tax or a fee. We are unable to give the words foreign liquor such a restricted meaning for the word consumption cannot be confined to consumption of beverage alone. When liquor is put to any use such as manufacture of other articles, the liquor is all the same consumed. Further, S. 4(2) provides that the State may declare what shall be deemed to be country liquor or foreign liquor. The State had under rule 12 issued notification dated 30th December, 1960 defining foreign liquor as meaning all rectified, perfumed, medicated and denatured spirit, wherever made. The plea that the Excise Commissioner had no right to accept payment in consideration for the grant of the licence for the exclusive privilege for selling wholesale or retail foreign liquor which includes denatured spirit, cannot, therefore be accepted. Rule 17(2) no doubt purports to have been issued under the rule making powers conferred on the Government under S. 40(2)(d) which enables the Government to make rules for regulating the import, export, trans port for possession of any intoxicants. It may be noted that when the amended rule 17(2) was introduced on 3-11-1972, S. 24A had been amended by U.P. Act, 30/1972 and the power of the Excise Commissioner to accept payment for grant of licence for exclusive privilege cannot be deniedBy a notification the Excise Commissioner of U.P. on 3-5-1976 framed U.P. Licences for the possession of denatured spirit and specially denatured spirit Rules, 1976. In the preamble to the r ules, it is stated that the Excise Commissioner with the previous sanction of the State Government was making the rules relating to licence for possession of denatured spirit including specially denatured spirit for industrial purposes. Rule 1 (i ii) provides that specially denatured spirit means rendered unfit for human consumption in such manner as may be prescribed by the Excise Commissioner by notification in this behalf and does not include ordinary denatured spirit for general u se. Rule 2 provides that licences for the possession of the denatured spirit including specially denatured spirit for industrial purpose shall be of three kindsWe are unable to accept the contention of the learned counsel that specially denatured spirit for industrial purpose is different from the ordinary denatured spirit. The definition of alcohol under rule 12 includes both ordinary as well as specially denatured spirit.It was next contended that if the levy of Re. 1.10p per bulk gallon of denatured spirit as vend fee, is upheld it would result in violating the appellants/petitioners fundamental right to carry on their trade and business under Art. 19(1)(g) of the Constitution. According to the learned counsel, the price fixed per gallon of ethyl alcohol under the Ethyl Alcohol (Price Control) order is 59 paise, per gallon. If the levy is not considered as a tax and could not be passed on to the consumer as price fixed under the Ethyl Alcohol Amendment order, is only 59 p., it would be confiscatory in nature. It is seen that the right of the S tate Government to accept payment of a sum for the grant of its exclusive privilege cannot be questioned. The price fixed for ethyl alcohol is ex-distillery price and we see no impediment for the addition of Re. 1.10 as vend fee by the State GovernmentIt is true that the stand taken by the Government in the earlier proceedings was different but that would not make any difference so long as the Government had a right to impose the levy. It has been found that after the addition of S. 24A by Act 30 of 1972, the Commissioner was entitled to accept payment for conferring the privilege which the State owned exclusively. The learned counsel submitted that so far as his clients M/s. Rallis Chemicals, Kanpur and M/s. Rallis India, petitioners in Special Leave Petitions Nos. 125 to 126 of 1979 are concerned they are only holders of licences for possession and are not licencees under F.L. 16. In the same class fall the appellants in Civil Appeal No. 2248 of 1 978, M/s. Synthetic and Chemicals who are only purchasers of denatured spirit. It was submitted that for this class of persons if the vend fee is for the grant of exclusive privilege of the State for sale of liquor, it cannot be recovered from the purchasers. Rule 17(1) relates to vend of denatured spirit. It empowers the Collector (1) to grant to a distiller a licence for manufacture of denatured spirit (2) to grant to approved dealers of denatured spirit a licence in form F.L. 16 for the wholesale vend of denatured spirit. Scale of fee is given in the rule which prescribes that for sales not exceeding 10, 000 litres per annum a fee w ill be of Rs. 100/- and for sales exceeding 10, 000 litres, the fee shall be increased by Rs. 500/- for every 5000 litres or fraction thereof. Subrule (2) provides that in case of issue from a distillery, a vend fee of rupee one and ten paise per bulk gallon will be payable before the spirit is issued. The fee charged is very different from the one in Rule 17(1) which provides that the distillery or an approved dealer for wholesale vend of denatured spirit may be given a licence in Form F.L. 16. The distiller and the approved dealer is to pay a licence fee for t he sales at the rate prescribed. But rule (2) speaks of levy of vend fee in case of issued from the distillery which is payable in advance before the spirit is issued. It is admitted that the petitioners and the appellants who claim as purchasers do not have a licence under F.L. 16. Therefore, sub-s. (1) has no application. The levy on persons who are purchasers is for the possession of denatured spirit in excess of the prescribed limit. The permission granted in their favour and the allo tment orders of the specially denatured spirit prescribes the terms and conditions under which the allotment is made. The licences are granted to them under form F.L. 39 and they have to abide by those conditions. The notification of the Excise Commissioner of U.P. dated 3-5-1976 provides that the licence for the possession of denatured spirit including the specially denatured spirit of industrial purpose shall be of three kinds. We are concerned with the licences for the possession for use in industries in which alcohol is destroyed or converted chemically in the process into other products and the product does not contain alcohol such as, Ethel, Styrene, Butadiene, Acetone and Polythene etc. The licence granted for th is purpose is in form F.L. 39. Rule 3(a) provides that the fee for the licence in Form F.L. 39 shall be at a rate prescribed for industry to industry by the Excise Commissioner per litre, payable on the quantity of specially denatured spirit obt ained from any distillery in Uttar Pradesh and that fee shall be realised by the Excise Inspector incharge Distillery from the licensee before issue of the specially denatured spirit from the distillery. The conditions relating to grant of a licence for issue of denatured spirit for industrial purpose are laid down in rule 4. Special conditions regarding licence in form F.L. 39, 40 and 41 are prescribed in rule 5. The appellants/petitioners having applied for and obtained licences in form F.L. 39 are bound to comply with the conditions.Lastly, it was contended that the provisions of Uttar Pradesh Excise (Amendment) (Re-enactment and Validation) Act, 1976 is invalid and confiscatory as its retrospective operation imposes an unbearable burden on the appellants/petitioners. It was stated that the licence under F.L. 39 was issued only in the year 1979 and no levy could be made regarding denatured spirit that was supplied before that date. T he answer of the State is that the levy was imposed for permission granted in their favour and allotment orders of denatured spirit issued to them from the various distilleries. The parties after having paid the fee had taken possession of t he denatured spirit from the distillery. Act 5 of 1976 has been given retrospective effect as the levy imposed under Act 30 of 1972 was found to be illegal and unsustainable by the Allahabad High Court which was reversed by this Court b y giving retrospective effect, the State has only restored the status quo enabling the collection of the levy validly made by Act 30 of 1972On the facts of the case there could be no complaint because what is sought to be collected is levy which was legally made.