State of U.P. Vs. Synthetics &
Chemicals Ltd. & Ors  INSC 267 (19 December 1979)
CITATION: 1980 AIR 614 1980 SCR (2) 531 1980
SCC (2) 441
D 1988 SC 850 (4) O 1990 SC1927
(1,27,30,35,67,74,76,85) RF 1992 SC2169 (14)
Excise laws-"Denatured spirit" if
an intoxicating liquor-Licence fee levied on sale denatured spirit-If within
the competence of the State.
The respondents who were licensees for the
whole-sale vend of denatured spirit in their writ petitions before the High
Court contended that levy of fees on denatured spirit was not justified because
(i) the State was not providing any service to the trade and (ii) since it is
the Parliament which has the power to levy excise duty or tax on denatured
spirit, the State was incompetent to levy the fees.
Rejecting the contentions, the High Court
held that the State had exclusive privilege to deal with any intoxicating
liquor which included denatured spirit, that it had the right to vend liquor
either in retail or wholesale and that therefore its power to levy fees cannot
In appeal to this Court it was contended on
behalf of the licensees that (1) levy of vend fee on denatured spirit by the
State was without legislative competence (2) with the enactment of Industrial
(Development and Regulation) Act, 1951 the Union had taken under its control
industries including fermentation of industrial alcohol and, therefore, it is
only the Union which could levy the fees on denatured spirit or industrial
Allowing the State's appeal,
HELD: The levy of vend fee is for parting
with the exclusive right of the State with regard to intoxicating liquors and
for conferring a right on the licensees to sell such liquors. A conspectus of
the decisions of this Court establishes (i) that there is no fundamental right
of a citizen to carry on trade or to do business in liquor because under its
police power, the State can enforce public morality, prohibit trade in noxious
or dangerous goods (ii) the State has power to enforce an absolute prohibition
on manufacture or sale of intoxicating liquors pursuant to Article 47 of the
Constitution and (iii) the history of excise laws in the country shows that the
State has the exclusive right or privilege to manufacture or sell liquors.
[549 F-H] State of Bombay and Anr. v. F. N.
Balsara  S.C.R. 682 referred to.
(iv) The terms "intoxicating
liquor" is not confined to potable liquor alone but would include
alliquors which contain alcohol. [537 G] Nashirwar v. State of Madhya Pradesh
 2 S.C.R.
861; Har Shankar v. The Deputy Excise and
Taxation Commissioner  3 S.C.R. 254; State of Bombay and Anr.
v. F. N. Balsara & Ors.  S.C.R.
682; Bhola Prasad v. The King Emperor  F.C.R. 17 at p. 25 referred to.
(v) The term "liquor" used in
Abkari Acts not only covers alcoholic liquor which is generally used for
beverage purposes and which produces intoxication but would also include
liquids containing alcohols. [537 B-C] 532 Cooverjee B. Bharucha v. The Excise
Commissioner and Chief Commissioner, Ajmer & Anr.  S.C.R. 873; M/s. Guruswamy
& Co. etc. v. State of Mysore & Ors.  1 S.C.R. 548; State of
Orissa & Ors. v. Harinarayan Jaiswal & Ors.  3 S.C.R. 784; Amar
Chandra Chakraborty v. Collector of Excise, Government of Tripura and Ors.
 1 S.C.R. 533; Har Shankar & Ors. etc. v. The Dy. Excise &
Taxation Commissioner & Ors.  3 S.C.R. 254 referred to.
2(a) The power to regulate the notified
industries is not exclusively within the jurisdiction of Parliament as Entry 33
in the Concurrent List enables a law to be made regarding production, supply
and distribution of products of notified industries. The exclusive power of the
State to provide for manufacture, distribution, sale and possession of
intoxicating liquors is vested in the State. The power of the State Government
to levy a fee for parting with its exclusive right regarding intoxicating
liquors has been recognized as could be seen from the various State Acts
regulating the manufacture, sale, etc. of intoxicating liquors. [544 C, A-B]
Ch. Tika Ramji and Ors. etc. v. The State of Uttar Pradesh and Ors. 
S.C.R. 393; Baijnath Kedai v. State of Bihar & Ors.  2 S.C.R. 100
(b) The term "foreign liquor"
cannot be given a restricted meaning because the word consumption cannot be
confined to consumption of beverages only. When liquor is put to any use such
as manufacture of other articles, the liquor is all the same consumed. The State
is empowered to declare what shall be deemed to be country liquor or foreign
liquor. "Foreign liquor" is defined as meaning all rectified,
perfumed, medicated and denatured spirit wherever made. Therefore, the plea
that the Excise Commissioner had no right to accept payment in consideration
for the grant of licence for the exclusive privilege for selling in wholesale
or retail, foreign liquor which includes denatured spirit cannot be accepted.
[548 H, 549 A-B] (c) The definition of "alcohol" includes both
ordinary as well as specially denatured spirit. The specially denatured spirit
for industrial purposes is different from denatured spirit only because of the
difference in the quantity and quality of the denaturants. Specially denatured
spirit and ordinary denatured spirit are classified according to their use and
denaturants used. Therefore, the contention that specially denatured spirit for
industrial purposes is different from the ordinary denatured spirit has no
force. [551 B, 550 H-551 A]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1130 of 1976.
Appeal by Special Leave from the Judgment and
Order dated 24-3-1972 of the Allahabad High Court in Misc. Writ No. 8069/72.
AND CIVIL APPEAL NOS 2248/78, 2191-2198/78
Appeals by Special Leave from the Judgment
and Order dated 6-10-1978 of the Allahabad High Court in Special Appeal Nos.
356, 352-355, 357-359/75.
533 AND CIVIL APPEAL NO. 245 of 1979.
Appeal by Special Leave from the Judgment and
Order dated 17-10-1978 of the Allahabad High Court in Civil Misc. Writ No.
AND CIVIL APPEAL NO. 626 of 1979.
Appeal by Special Leave from the Judgment and
Order dated 17-10-1978 of the High Court of Judicature of Allahabad in Civil
Misc. Writ (Tax) No. 824/75.
AND WRIT PETITION NOS. 4663-4664 of 1978
& 4501 of 1978.
Under Article 32 of the Constitution.
AND SPECIAL LEAVE PETITION (CIVIL) NOS.
6526-28/78, 125-126, 201 and 2533 of 1979.
From the Judgment and Order dated 6-11-1978
and 17-10- 78 and 16-11-1978 and 17-10-78 of the Allahabad High Court in Civil
Misc. Writ Nos. 89/77, 3822/73, 540/75 and 4129-30 of 1976 and C.W. No. 703/76
and C. Misc. Writ No. 41/76.
Rishi Ram, Advocate General for the State of
U.P., G. N. Dikshit, O.P. Verma, S. C. Verma and Mrs. Sadhna Ramchandran, for the
Appellant in CA No. 1130/76 and respondents in all the matters.
F. S. Nariman, Dr. L. M. Singhvi, B. G.
Murdeshwar, P. C. Murdeshwar, P. C. Bhartari, S. P. Nayar, L. K. Pandeya, N. R.
Khairan, Praveen Kumar, Miss Beena Gupta, Anip Satchthey and Mrs. Baby Krishnan
for the Appellants and Petitioners in all other matters and respondents in CA
F. S. Nariman, Talat Ansari, R. Narain and S.
P. Nayar for the Interveners (M/s J. K. Synthetics and Agarwal Spirit Supply
Co.) The Judgment of the Court was delivered by KAILASAM, J.-These batches of
Civil Appeals, Writ Petitions and Special Leave Petitions raise the same
question and can be disposed of by a common judgment.
C.A. No. 1130/76 is by the State. The other
Appeals, Writ Petitions and Special Leave Petitions are by the aggrieved
534 For the sake of convenience appellants in
Civil Appeals by Special Leave except the State would be referred as the
appellants in this judgment. Similarly the petitioners in Writ Petitions and
Special Leave Petitions will be referred to as petitioners.
The appellants in Civil Appeals by Special
Leave filed writ petitions before the High Court of Allahabad praying for
quashing the Excise Commissioner's order dated 18th September, 1974 whereby it
was provided that the vend fee be continued to be charged for the wholesale
licence dealer of denatured spirit. They also prayed for a direction to the
Excise Commissioner to refund the vend fee actually paid by the appellants for
a period of three years prior to the institution of the writ petitions.
The appellants have licenses for the
wholesale vend of denatured spirit. It was contended that the State was
providing no service to the trade of the denatured spirit and, therefore, the
levy of fee is not justified. The State, it was submitted, was not competent to
authorise a levy of excise duty or tax as it was within the jurisdiction of the
Parliament. On behalf of the State it was contended that in law the State had
exclusive privilege to deal with intoxicating liquor which included denatured
spirit and the levy of a licence fee and vend fee constituted consideration for
permitting the appellants to carry on wholesale trade of the denatured spirit.
The main point that was considered by the
High Court was whether the imposition of vend fee on denatured spirit for grant
of license for wholesale vend of denatured spirit is within the competence of
State Government. This Court in Nashirwar v. State of Madhya Pradesh and Har
Shankar v. The Deputy Excise and Taxation Commissioner, held that the State has
exclusive privilege to deal in intoxicating liquor and, therefore, the State
can auction the right to vend by retail or wholesale foreign liquor. It also
found that intoxicating liquor included denatured spirit and the validity of
the levy of the vend fee by the State cannot be questioned.
Following this view the High Court dismissed
the Writ Petitions. Against the decision, the appeals have been preferred by
special leave. A batch of Writ Petitions have been filed in this Court under
Art. 32 of the Constitution of India challenging the validity of the levy of
Apart from the grounds taken in the Civil
Appeals, the Constitutional validity of U.P. Excise (Amendment) Act 5 of 1976
has been challenged as unconstitutional and beyond the legislative competence
of the State. It is further pleaded that the provisions of the 535 Industries
(Development and Regulation) Act, 1951 has taken control of fermentation
industry and as such a right to legislate by the State with regard to denatured
spirit and industrial alcohol is beyond the competence of the State
U.P. Excise Act was enacted in the year 1910.
It empowers the State to prohibit the import and export, transport manufacture
sale and possession of liquor and all intoxicating drugs in the United
Provinces. The vend fee was first imposed by the Government of U.P. on
18-3-1937 on denatured spirit. In 1972 the State Legislature enacted the U.P.
Excise Amendment Act 13 of 1972. By a notification dt. 3-11-72 the Government
was authorised to sell by auction the right of retail or wholesale vend of
foreign liquor. New Rules were framed, the effect of which was that a vend fee
of Rs. 1.10 p. per bulk litre was imposed payable in advance on denatured
spirit issued for industrial purposes. The legality of the levy was challenged
in the High Court of Allahabad and a Bench of that Court on 24th March, 1973
held the notification was ultra vires. After the decision of the Allahabad High
Court holding that the levy was illegal, this Court in two decisions Nashirwar
v. State of Madhya Pradesh (supra) and Har Shankar v. The Deputy Excise and
Taxation Commissioner, (supra) held that the State under its regulatory powers
can prohibit every form of activity in relation to intoxicants, its
manufacture, storage, export, import and sale. The State's power to auction the
right to vend by retail or wholesale foreign liquor was upheld.
Relying on the two decisions of this Court,
State Legislature repealed and re-enacted the
U.P. Excise (Amendment) Act No. 30 of 1972 by the U.P. Excise (Amendment)
(Re-enactment and Validation) Act, 1976. The validity of the amendment Act 1976
was again challenged in the Allahabad High Court in V. P. Anand and Sons v.
State of U.P. A Full Bench of the Court held that the State has exclusive
privilege of auctioning the right of wholesale or retail vend of intoxicating
liquor and upheld the validity of the Act.
Mr. Nariman learned counsel raised several
The first main contention of the learned
counsel was that the levy of vend fee (under rule 17-para 680 of the Excise
Manual-page 200-201) on the denatured spirit is without legislative competence
as it does not fall within Entry 8 of List II of the Seventh Schedule. Even if
it is held that the exclusive right of the State to grant privilege for the
manufacture and sale of intoxicating liquor, it was submitted that the right
did 536 not extend to denatured spirit used for industrial purposes as it is
confined only to potable liquor. The second important contention raised by the
learned counsel was that after the enactment of Industries (Development and
Regulation) Act, 1951 under Entry 52 of List 1 by Parliament, the Union had
taken under its control in public interest the industries including the
fermentation of industrial alcohol and as such the Central Government alone is
empowered to provide for regulating by licence/permit or otherwise the
distribution, transport, disposal, acquisition, possession, use or consumption
of any article relatable to a schedule industry as for example denatured spirit
or industrial alcohol.
In State of Bombay and Anr. v. F. N. Balsara
& Ors. the Constitutional validity of the Bombay Prohibition Act (XXV of
1949) in so far as it restricted the possession and sale of foreign liquor was
impugned on the ground that it was an encroachment on the field assigned to the
Dominion Legislature under Entry 19 of List I. Under Entry 31, List II to the
Seventh Schedule of the Government of India Act, 1935, the Provincial Legislature
had the power to make laws in respect of intoxicating liquor that is to say the
production, manufacture, possession, transport, purchase and sale of
intoxicating liquors. The corresponding entry in the Constitution of India is
List II Entry 8 which is in identical terms. The plea that was taken was that
List I, Entry 19 conferred the power on the Dominion Legislature to make laws
with respect to import, export across customs frontiers and as such the State
Law restricting possession and sale of foreign liquor encroached upon the field
of Dominion Legislature. This Court held that the words 'possession and sale'
occurring in Entry 31 List II must be read without any qualification. In
considering the meaning of the words 'intoxicating liquor' set out in entry 31
of List II, Gwyer C.J., in Bhola Prasad v. The King Emperor, stated as
follows:- "A power to legislate with respect to intoxicating liquors could
not well be expressed in wider terms." Again the Learned Chief Justice
observed:- "It is difficult to conceive of legislation with respect to
intoxicating liquors and narcotic drugs which did not deal in some way or other
with their production, manufacture, possession, transport, purchase or sale;
and these words seem apt to cover the whole field of possible legislation on
the subject." 537 The above observations were affirmed by this Court in
Balsara's case (supra). Dealing with the meaning of word 'liquor', the Court
referred to the various Abkari cases in several provinces and found that all the
Provincial Acts of this country have consistently included liquor containing
alcohol in the definition of 'liquor' and 'intoxicating liquor' and, therefore,
the framers of the Government of India Act, 1935, could not have been entirely
ignorant of the accepted sense in which the word 'liquor' has been used in the
various excise Acts of this country and concluded that the word 'liquor' covers
not only those alcoholic liquids which are generally used for beverage purposes
and produce intoxication, but also all liquids containing alcohol. By adopting
another method of approach, the Court observed that the object of the
Prohibition Act was not merely to levy excise duties but also to prohibit the
use, consumption, possession and sale of intoxicating liquor and to enforce the
prohibition effectively, the wider definition of the word 'liquor' would have
to be adopted so as to include all alcoholic liquids which may be used as
substitution of intoxicating drinks to the detriment of the health. In
Nashirwar v. The State of Madhya Pradesh (supra), Chief Justice Ray held that
the State Legislature is authorised to make a provision for public auction by
reason of power contained in Entry B of List II of the Constitution. The
decision negatived the concept of inherent right of citizen to do business in
liquor. This Court gave three principal reasons to hold that there is no
fundamental right of citizen to carry on trade or to do business in liquor.
First, there is the police power of the State to enforce public morality to prohibit
trades in noxious or dangerous goods. Second, there is power of the State to
enforce an absolute prohibition of manufacture or sale of intoxicating liquor.
Article 47 states that the State shall endeavour to bring about prohibition of
the consumption except for medicinal purpose of intoxicating drinks and of
drugs which are injurious to health. Third, the history of excise laws shows
that the State has the exclusive right or privilege of manufacture or sale of
liquor. After pointing out the three principal reasons, the Court followed the
decision in State of Bombay and Anr. v. F. N. Balsara holding that absolute
prohibition of manufacture or sale of liquor is permissible and the only
exception can be for medicinal preparations. 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
Mr. Nariman, the learned counsel, submitted
that the two cases-Balsara's case (supra) and the Nashirwar's case
(supra)-cannot be 538 read as to include alcohol manufactured for the purpose
of industries such as industrial alcohol. It was submitted that in both the
cases the Court was concerned only with legislation relating to prohibition and
the decisions should be restricted to liquor which may contain alcohol which is
likely to be misused as potable liquor. In support of his contention, the
learned counsel referred to two decisions A. Nageshwara Rao v. State of Madras
and Malitlal Chandra v. Emperor and submitted that if the State can exercise
any control over intoxicating liquor, it can only be restricted for the purpose
of preventing subversion of its use for defeating the prohibition policy. We
are unable to accept this contention for in Balsara's case after explicitly
approving of the definition of word 'liquor' in various Abkari Acts 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 alcohol.
We will now briefly refer to the decisions of
the Supreme Court which the learned counsel submitted were confined only to
Cooverjee B. Bharucha v. The Excise
Commissioner and Chief Commissioner, Ajmer & Anr. related to an auction
sale of liquor shop under the Excise Regulation Act, 1915. In Bharucha's case
it was held that licence may be restricted, that the restriction must be in
regard to the sale of liquor and that there may be absolute prohibition of the
sale of liquor. The Court also took into account the public expediency and
public morality and police power of State to regulate business and mitigate
In M/s. Guruswamy & Co. etc. v. State of
Mysore & Ors.
the auction related to exclusive privilege of
selling toddy from certain shops. The Court held that the auction enabled the
licensee to sell the toddy and the licensee paid what he considered to be the
equivalent value of the right. State of Orissa & Ors. v. Harinarayan
Jaiswal & Ors. related to sale by public auction of the exclusive privilege
of selling country liquor in retail shops. Amar Chandra Chakraborty v. Collector
of Excise, Government of Tripura and Ors, also related to the cancellation of
the licence by the Excise Collector 539 to establish warehouse for the storage
in bond and wholesale vend of country spirit by import and for supply to the
excise vendors in the territory of Tripura. The next case that was referred to
by the learned counsel was Har Shankar & Ors. etc. v. The Dy. Excise &
Taxation Commissioner & Ors.
Chandrachud, J. as he then was, speaking for
the Court stated:- "In our opinion the true position governing dealings in
intoxicants is as stated and reflected in the Constitution Bench decision of
this Court in the state of Bombay and Anr. v. F. N. Balsara- SCR. 682,
Cooverjee B. Bharucha v. The Excise Commissioner and the Chief Commissioner,
Ajmer and Ors.- SCR. 875, State of Assam v. A. M. Kidwai, Commissioner of
Hills Division and Appeals, Shillong- SCR. 295, Nagendra Nath Bora and
Anr. v. The Commissioner of Hills Division and Appeals, Assam and Ors.-
SCR. 1240, Amar Chandra Chakraborty v. Collector of Excise, Government of
Tripura & Ors.- 1 S.C.R. 633 and State of Bombay v. R.M.D.
874 as interpreted in State of Orissa and
Ors. v. Harinarayan Jaiswal and Ors- 3 SCR. 784 and Nashirwar Etc. v.
State of Madhya Pradesh and Ors.
Civil Appeals Nos. 1711-1721 and 1723 of 1974
decided on November 27, 1974. There is no fundamental right to do trade or
business in intoxicants. The State under its regulatory powers, has the right
to prohibit absolutely every form of activity in relation to intoxicants-its
manufacture, storage, export, import, sale and possession".
Though most of the cases dealt with the right
of the State Government as regard auction of country liquor, in Balsara's case,
Nashirwar's case and Har Shankar's case, the Court was concerned with the right
of the State Government over foreign liquor.
After considering all the decisions of five
Constitutional Benches, Chandrachud, J. as he then was summed up the position
at page 274 as follows:- "These unanimous decisions of five Constitutional
Benches uniformly emphasised after a careful consideration of the problem
involved that the State has the power to prohibit trades which are injurious to
the health and welfare of the public is inherent in the nature of liquor
business, 540 that no person has an absolute right to deal in liquor and that
all forms of dealings in liquor have, from their inherent nature, been treated
as a class by themselves by all civilised communities." Har Shankar's case
related to licensing of retail sale of foreign liquor for consumption on the
premises of the licensees. The grant of license for sale of country spirit,
foreign liquor, beer were subject to the provisions of the Punjab Act 1 of
1914. The demand by the Government for payment of large sums of money from
hoteliers or barkeepers who supply foreign liquor for consumption were
challenged as arbitrary, without authority and illegal. The provisions in the
Act which provided for a levy on retail vend of foreign liquor was held to be
valid. The decisions referred to above make it clear that the power to
legislate under List II Entry 8 relating to intoxicating Liquor comprises of
liquor which contains alcohol whether it is potable or not. The plea of the
State is that the levy is for parting with the exclusive right of the State
with regard to intoxicating liquor and the levy was for the purpose of
conferring a right on the licensees. That the State has the exclusive right of
manufacture or sale of intoxicating liquor which includes liquor containing
alcohol has been recognised.
The second most important contention raised
by Mr. Nariman is that after passing of the Industries (Development and
Regulation) Act, 1951, the claim by the State to monopoly with regard to
production and manufacture and the sale of the denatured spirit or industrial
alcohol is unsustainable. In order to appreciate this contention it is
necessary to refer to the relevant entries in Lists I and II of the Seventh
Schedule of the Constitution. List I Entry 52 runs as follows:-
"Industries, the control of which by the Union is declared by Parliament
by law to be expedient in the public interest".
In List II the entry relating to industries
is Entry 24 which is as follows:- "Industries subject to the provisions of
(entries 7 and 52 of List 1)".
Entry 7 in List I relates to industries to be
declared by Parliament by law to be necessary for the purpose of defence or for
the prosecution of war. In this case we are not concerned with Entry 7. A
reading of Entry 52 in List I and Entry 24 in List II makes it clear 541 that
the Parliament will have exclusive jurisdiction to legislate regarding
industries, the control of which by the Union is declared by Parliament by law
to be expedient in the public interest. Connected with these two entries is
entry 33 in List III Concurrent List which provides:- "Trade and commerce
in, and the production, supply and distribution of- (a) the products of any
industry where the control or 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:
(b) x x x (c) x x x (d) x x x (e) x x x"
The subject of trade and commerce in, and the production supply and
distribution of the products of any industry which has been declared by
Parliament under Item 1 Entry 52 is in the Concurrent List on which both
Parliament and State can legislate.
The Industries (Development and Regulation)
Act, 1951 was enacted by Parliament to provide for development and regulation
of certain industries. Section 2 declares that it is expedient in the public
interest that the Union shall take in its control industries specified in First
Item 26 in the First Schedule is fermentation
industries (i) Alcohol (ii) other products and fermentation industries.
Chapter II of the Act provides for
establishment of Central Advisory Council and Development Council. Chapter III
deals with regulation of scheduled industries. Section 10 requires registration
of existing industrial undertakings. Section 11 deals with the licensing of new
Section 12 deals with revocation and
amendment of licenses in certain cases. Section 14 deals with the procedure for
the grant of license or permission. Section 15 confers power of investigation
to be made into scheduled industries and industrial undertakings. Section 18(b)
confers power on the Central Government to control, supply, distribution,
price, etc. of certain articles. As considerable reliance was placed on Section
18(G) for the contention that the Central Government has the exclusive power
with regard to notified industries to control supply distribution, fixation of
price etc. it is necessary to set out the material part of the Section in full.
Section 18 (G) (1) runs as follows:- "The Central Government, so far as it
appears to it to be necessary or expedient for securing the equitable distribution
and availability at fair prices of any article or class of articles relatable
to any scheduled industry, may, notwithstanding anything contained in any other
provision of this Act, by notified order, provide for regulating the supply and
distribution thereof and trade and commerce therein." Sub-section 2 of
Section 18(G) confers certain powers without prejudice to the generality of the
powers conferred by sub-section (1) by a notified order to provide for matters
enumerated in it (a) to (h) of the sub-section.
These powers include amongst others the right
to control the price. The powers conferred under section 18(G)(1) is
exercisable by the Central Government in so far as it considers it to be
necessary or expedient. The plea of the learned counsel is that the
notification made by the Central Government excludes the power of the State
Government to fix the price of denatured spirit and rectified spirit as it has
been placed beyond the powers of the State to regulate the distribution of
licences, permits etc. The notification that is relied on is the Ethyl Alcohol
(Price Control) Amendment Order, 1975 dated 31st October, 1975. The order reads
as follows:- "In exercise of the powers conferred by S. 18(G) of the
Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central
Government hereby makes the following order further to amend the Ethyl Alcohol
(Price Control) order, 1971 namely:
1. (1) This order may be called the Ethyl
Alcohol (Price Control) Amendment order, 1975.
(2) It shall come into force on the date of
its publication in the official gazette.
2. In the Ethyl Alcohol (Price Control)
order, 1971 (hereinafter referred to as the said order), in clause 2, for the
Table the following Table shall be substituted, namely:-
____________________________________________________________ (1) (2)
____________________________________________________________ 1 Absolute Alcohol
Conforming to ISI Six hundred and Standard No. 321-1952., names for sixty eight
equivalent volume at 100 per cent rupees and v/v strength; forty one paise per
2 Rectified spirit conforming to ISI Six
hundred standard No. 323-1959 named for and twenty equivalent volume at 100 per
cent two rupees v/v strength. and twenty paise for kilo litre.
3 Rectified spirit conforming to ISI Five
hundred standard No. 323-1959 named for and eighty nine 94.68 per cent v/v
strength. rupees and ten paise per kilo litre.
543 The table prescribes the price of various types of alcohol and rectified
spirit. The price of ethyl alcohol is fixed under the powers conferred on the
Central Government under S. 18(G) (1) for securing the equitable distribution
and availability at fair price. The Ethyl Alcohol (Price Control) order, 1961
which was made by the Central Government in exercise of the powers conferred on
it under S. 18(G) of the Industries (Development and Regulation) Act, 1951
fixed the maximum ex-distillery price for industrial alcohol and rectified
spirit under cl. 1 and 2 of the Order.
Cl. 3 permitted certain additional charges in
certain cases of alcohol supplied after denaturation with general or special
denaturants, the cost of such denaturation being allowed to be charged. Ethyl
Alcohol (Price Control) order, 1964 while fixing the maximum ex-distillery
price of ethyl alcohol under cl. 3 permitted additional charges to be levied in
certain cases such as for covering costs incurred for transport of molasses to
the distillery and any octroi duty paid or payable on molasses and when alcohol
is supplied after denaturation, to include actual cost of such denaturants plus
some octroi charges as specified in the clauses. Cl. 3(a) empowered the Excise
Commissioner of the State to determine the additional charges leviable under
3 in case of any doubt or distillery price of
ethyl alcohol provided for fixation of the price after taking into account
various factors enumerated in cl. 2(2) (a to h). Reading 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 rights. If the
powers of Parliament and the State Legislature were confined to entry 52 in
List I and entry 24 in List II, Parliament would have had exclusive power to
legislate in respect of industries notified by Parliament. The power of the
State under Entry 24, List II is subject to the provisions of Entry 52 in List
I. But we have to take into account Entry 26 in List II and Entry 33 in List
III for determining the scope of legislative power of the Parliament and the
State. Entry 26 in List II is as follows:- "Trade and Commerce within the
State subject to the provisions of entry 33 of List III." Under Entry 33
List III the Parliament and the State have concurrent powers to legislate
regarding the production, supply and 544 distribution of the products of
industries notified by the Parliament. Furthermore it has to be noted that the
exclusive power of the State to provide for manufacture, distribution, sale and
possession etc. of intoxicating liquor is vested with the State. The power of
the State Government to levy a fee for parting with its exclusive right
regarding intoxicating liquor has also been recognised as is seen from the
various State Acts regulating manufacture, sale. etc. of intoxicating liquor. A
fair scrutiny of the relevant entries makes it clear that the power to regulate
the notified industries is not exclusively within the jurisdiction of
Parliament as List II Entry 33 in the concurrent list enables a law to be made
regarding production, supply, distribution of products of a notified industry.
In Ch. Tika Ramji and ors. etc. v. The State
of Uttar Pradesh and Ors. a question arose whether Sugarcane regulation, supply
and purchase Act passed by the State Legislature and the notification issued
therein by the State Government were repugnant to the notifications made under
the Industries (Development and Regulation) Act of 1951. Two notifications were
issued by the State Government under the U.P. Sugarcane Regulations, supply and
purchase Act 1953 prohibiting the occupier of the factory to which area is
assigned from entering into an agreement to purchase cane except through a cane
growers Cooperative Society under certain circumstances and assigning different
sugarcane factories specified to certain purchase centre for supply to them
sugarcane for the crushing season were challenged as ultravires. The plea was
that the subject matter of the legislation fell within the exclusive
jurisdiction of Parliament and the impugned notifications were repugnant to the
notifications made under the Industries (Development and Regulation) Act, 1951.
On 31st October, 1951, Parliament enacted the Industries (Development and
Regulation) Act, 1951 to provide for development and regulation of certain
industries. By section 2 of the Act it was declared that it was expedient in
public interest that the Union should take in its control the industries
specified in the First Schedule which included in Item 8 thereof, the
industries engaged in the manufacture or production of sugarcane.
Industries (Development and Regulation) Act,
1951 was amended by Act 26 of 1953 by adding Chapter IIIA entrusting Central
Government with power so far as it appears necessary or expedient for securing
the equitable distribution and availability at fair price of any article
relatable to scheduled industry to provide by notified order for regulation,
supply and distribution and trade and commerce thereof. The impugned
notification which required the factories to purchase 545 their sugarcane from
the cooperative societies and assigned certain areas as cane purchasing centre
for the factories was stated to be ultra vires as they were beyond the State's
competence and covered by the notification under the Industries (Development
and Regulation) Act. Justice Bhagwati observed at page 411:- "When,
however, it came to the products of the controlled industries comprised in
Entry 52 of List I, trade and commerce in, and production, supply and
distribution of, these goods became the subject-matter of Entry 33 of List III
and both Parliament and the State Legislatures had jurisdiction to legislate in
regard thereto." The learned Judge proceeded to observe:- "That
sugarcane being goods which fell directly under entry 27 of List II was within
the exclusive jurisdiction of the State Legislature and it was competent to
legislate with regard to it and as such the impugned Act was intra vires of the
state Legislature. The power to legislate regarding production, supply and
distribution of goods is subject to provisions entry 33 List III which deals
with products and industries notified by Parliament. Entry 33 being in the
concurrent List, legislative power of the State regarding production, supply
and distribution of goods cannot be denied." The Court on the facts of the
case found that even assuming that sugarcane was an article or class of
articles relating to the notified industries within the meaning of Section
18(G) of Act 65 of 1951, no order was issued by the Central Government in
exercise of its powers vested in it and, therefore, no question of repugnancy
arose. In the case before us it cannot be discerned from the Ethyl Alcohol
Control order that the power of the State Government to prescribe a levy for
parting with its exclusive rights relating to intoxicating liquor had been
In Baijnath Kedvai v. State of Bihar &
Ors. a question arose as to whether the Bihar Legislature had jurisdiction to
enact the second proviso to section 10(2) of the Bihar Land Reforms Act, 1950
by which the terms and conditions of the lease of mines and minerals could be
substituted for the terms and conditions laid down in the Bihar Mines and
Minerals Concession Rules. On the strength of the amended section 10(2) of the
Reforms Act and amended Rules 20 the Bihar Government demanded from the
appellant rent contrary to 546 the terms of his lease. It was held that Entry
54 in Union List speaks of requirements of mines and minerals development and
Entry 23 in List II is subject to entry 54.
Once a declaration was made under entry 54
specifying the extent of vesting the competency was only with Parliament.
The attempt of the learned counsel to trace
the power to enact the second proviso to section 10 of the Act to Entry 18 of
List II was rejected. The plea of the learned counsel was that the modification
of the existing lease was a separate topic and not covered by section 15 of Act
67 of 1957. The Court rejected the plea on the ground that the entire
legislative field in relation to mines and minerals had been withdrawn from the
State Legislature. The 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 questioned.
The third contention of Mr. Nariman, is that
the vend fee levied by the State is not and was never treated by the State as
charge or rental as the consideration for granting exclusive privilege. On the
other hand the levy is excise duty or a fee which the State is not entitled to
The submission of the learned counsel was
that even though it is found that the State is entitled to make laws regarding
intoxicating liquor under List II, Entry 8, it has no power to impose any tax.
The power to tax by the State is confined only to Entry 51, List II which
empowers the State to levy duty on alcoholic liquors for human consumption and
as denatured spirit is not alcoholic liquor for human consumption, a levy of
excise duty is not permissible by the State. It was contended that the levy of
a fee was also not permissible unless it had some relation to the expenses
incurred for that purpose. According to the Solicitor- General, Mr. Kakkar, the
levy was not a tax or a fee but a levy for parting with the exclusive right of
the State in respect of intoxicating liquor. In 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.
For dealing with the contention of Mr.
Nariman that the levy was never collected in lieu of the State parting with its
rights, it is necessary to refer to the relevant provisions of the Act. The
United Provinces Excise Act, 1910 (Act 4 of 1910) was passed in 1910.
Subsequently, it was adapted and modified by the Government of India
(Adaptation 547 of Indian Laws) order, 1927 and Adaptation of Laws order, 1950
Chapter IV of the Act deals with manufacture, possession and sale while Chapter
V deals with duties and fees. The Act refers to Excise Revenue, Duty, fee, tax,
fine and payment as condition for the grant of licence for any exclusive
privilege. S. 3(1) defines Excise Revenue as meaning revenue derived or
derivable from any duty, fee, tax, fine or confiscation imposed or ordered
under the Provisions of the Act or of any law in force relating to alcohol or
intoxicating drug. Excise Duty, and Countervailing duty is defined under S. 3
and 3(a) as meaning such excise duty or countervailing duty, as the case may
be, as mentioned in entry 51 of List II of the Seventh Schedule of the
Constitution. Chapter II relates to establishment and control of the Excise
Department. Chapter III prohibits import of intoxicants. Intoxicant means any
liquor which in turn includes any liquids containing alcohol. S. 12 prohibits
import unless permission is obtained and conditions imposed by the State
Government are satisfied and any duty imposed under S. 28 is paid. S. 28 refers
to duties and fee and provides that an excise duty or countervailing duty, as
the case may be, directed by the State Government may be imposed on any
Under this section, a duty on import, export,
transport, manufacture is levied in accordance with the provisions of S. 12(1),
13, 17 and 18. The stand taken by the State before us is that the levy which is
being collected, is not in the nature of an excise duty or counter-veiling
duty. Though a duty under S. 28, Proviso II on denatured spirit was levied
after Proviso II to S. 28 was omitted by the Government (Adaptation of Indian
Law) order, 1937, no excise duty on denatured spirit was levied.
Apart from the duty that is leviable, the
Excise Commissioner is empowered under S. 30 instead of or in addition to any
duty to accept payment of a sum in consideration of the grant of licence of any
exclusive privilege under s. 24. Section 24 provides that subject to the
provisions of S. 31, the Excise Commissioner may grant any person a licence for
exclusive privilege of manufacturing or supplying or selling wholesale or
retail, any country liquor or intoxicating drug within any local area. Reading
S. 30 and 24 together, it is clear that the Excise Commissioner may accept payment
in consideration for the grant of the licence for any exclusive privilege. The
exclusive privilege under S. 24 was confined only to country liquor within a
local area. Before examining the impact of amended S. 24A by U.P. Act 30 of
1972, it may be mentioned that Chapter VI empowers the collection of fees for
licence or permits granted under the Act. A licence fee was only collected
under notification dated 22-5-1930 for licence for wholesale vend of denatured
spirit. The Excise Department on 23-1-1937 548 introduced rule 17(2) under S.
40(2)(d) imposing vend fee of Annas 7 per bulk gallon for the issue from the
This fee was not collected regarding
denatured spirit issued to industries engaged in the manufacture of synthetic
By notification dated 3rd November, 1972 the
U.P. Government amended the Excise Rules and substituted rule 17(2). The rule
is purported to have been issued under S. 40(2) (d) in exercise of the powers
conferred on the Government under S. 40(1). By the notification on the issue of
denatured spirit from a distillery a vend fee of Rs.
1.10p. per litre was made payable in advance
except regarding the issue to institutions exempted under the rule.
The Learned Counsel strenuously contended
that this levy does not purport to be in consideration of the grant of licence
for any exclusive privilege. On the other hand, the learned Counsel pointed out
that S. 40(2)(d) refers to the rule making power of the Government for
regulating the import, export, transport or possession of the intoxicants.
The power, if any, is conferred on the Excise
Commissioner under S. 41 enabling him to make rules prescribing the scale of
fees in respect of licence, permits or pass or storing any intoxicants. In 1972
U.P. Act 30/1972 added S. 24A which provides that subject to provisions of S.
31, the Excise Commissioner may grant to any person a licence or licences for
the exclusive privilege of selling by retail at shops (for consumption both on
and off the licensed premises, or for consumption off the licensed premises
only) any foreign liquor in any locality. After the introduction of S. 24A, the
Excise Commissioner is empowered to grant any person a licence for the
exclusive privilege of selling foreign liquor. Before the amendment, S. 24 was
restricted to country liquor or intoxicating drug. By the amended Sec. 24A the
Excise Commissioner may accept payment of a sum in consideration for the grant
of the licence for any exclusive privilege for selling foreign liquor. S. 31 to
which S. 24A is subject, relates to grant of licences and it does not in any
way restrict the power thus conferred by S. 24A. The plea put forward by the
learned counsel is that the word 'foreign liquor' cannot be understood as
including denatured spirit as the Section would itself indicate that the
licence is for selling for consumption which would indicate that foreign liquor
is meant for human consumption. 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 549 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, transport 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 denied.
The validity of Act 30/1972 which authorised
the Excise Commissioner to collect a vend fee for the retail or wholesale vend
of foreign liquor was challenged. The Allahabad High Court upheld the challenge
holding that the State did not have the exclusive privilege to collect the vend
fee. This view was not accepted by the Supreme Court in Nashirwar's case
(supra) and Harishankar's case (supra) which held that under the regulatory
power, the State had power to auction the right to vend by retail or wholesale
foreign liquor. As Act 30 of 1972 was struck down by the Allahabad High Court
the State came forward to validate Act 30 of 1972 as it stood when it was
passed by introducing the U.P. Excise (Amendment) (Reenactment and Validation)
Act, 1976 (U.P. Act 5 of 1976). The preamble refers to the passing of U.P.
Amendment Act, it being struck down by the Allahabad High Court and the
subsequent decision of the Supreme Court in Nashirwar's case, and states that
it had become necessary to enact the (Amendment) (Re-enactment and Validation)
Act. In the main Act, after S. 1, sub-s. (2) was introduced providing that it
shall be deemed to have been in force ever since the commencement of the United
Provinces Excise Act, 1910. After S. 24 of the principal Act, S. 24A was
introduced. S. 24A(1) re-enacts S. 24A(1) added by U.P.
Act 30 of 1972. S. 24B was introduced for
removal of doubts which declared (1) that the State Government has exclusive
privilege for manufacture and sale of country and foreign liquor; (2) that the
amount described as licence fee in cl.
(c) of S. 41 is in its essence rental or
consideration for the grant of such right or privilege by the State Government
and (3) that the Excise Commissioner as the head of the Excise Department of
the State shall be deemed while determining or realising such fee, to act for
and on 550 behalf of the State Government. S. 30 was substituted which
specifically mentioned that the Excise Commissioner may accept payment of a sum
in consideration of the grant of privilege for any exclusive or other privilege
under S. 24A.
S. 24A was not specifically mentioned in S.
30 as it stood before the re-enactment. After the introduction of S. 24A, the
Excise Commissioner had a right to grant the privilege of selling of foreign
liquor. The fact that S. 30 did not specifically mention S. 24A might not have
made any difference. But in order to remove all doubts, the new Section 30 had
been introduced. S. 41, cl. (3) was re- enacted to enable the fixation of fee
payable for the grant of exclusive or other privilege under S. 24 and 24A. S.
40 was also amended so as to give retrospective effect. S. 4 of the Act 5 of
1976 also provides that the U.P. Excise (Amendment) Act, 1972 shall be deemed
to be and always to have been as valid as if the provisions of this Act were in
force at all material times. In short the purpose of introduction of Act 5 of
1976 was to make it clear that U.P.
Excise (Amendment) Act, 1972 shall be deemed
to and always to have been valid. In view of our findings that U.P. Excise
(Amendment) Act, 1972 was valid, the effect of U.P. Act 5 of 1976 is to remove
all doubts and to give retrospective effect.
It was next contended that foreign liquor
which is defined under rule 12, as including denatured spirit, cannot apply to
specially denatured spirit. Foreign liquor was defined as including specially
denatured spirit. By 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 rules, 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 (iii)
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 use. Rule 2 provides that licences for the possession of the denatured
spirit including specially denatured spirit for industrial purpose shall be of
three kinds. The learned counsel contended that though foreign liquor is
defined as including denatured spirit, it cannot be held to include specially
denatured spirit. Denatured spirit mentioned in the rules is treated as
including specially denatured spirit for industrial purpose. Denatured spirit
has ethyl alcohol as one of its constituents. The specially denatured spirit
for industrial purpose is different from denatured spirit only because of the
difference in the 551 quantity and quality of the denaturants. Specially
denatured spirit and ordinary denatured spirit are classified according to
their use and denaturants used. We 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 State 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 Government
Dr. L. N. Singhvi, who appeared as intervener in Civil Appeal Nos. 2191 to 2198
of 1978 for the appellants and for petitioners in Special Leave Petitions Nos.
125 to 126/79 while adopting the contentions of Mr. Nariman submitted that the
stand taken by the U.P. Government in earlier proceedings in the High Court was
that the levy was in the nature of Excise Duty or a fee while the present stand
is that it is neither a duty 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
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 1978, 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 552 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 will 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 the 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
allotment 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 this 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 obtained 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 553 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. The 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 the 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 by giving
retrospective effect, the State has only restored the status quo enabling the
collection of the levy validly made by Act 30 of 1972.
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.
The result is, all the contentions raised by
the learned counsel for the appellants/petitioners fail and appeals and the
petitions are dismissed with costs one set of hearing fee. The State Appeal
C.A. No. 1130/76 is allowed but there will be no order as to costs.
P.B.R. State appeals allowed.