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2019 DIGILAW 456 (ORI)

Sunil Kumar Dhanuka v. State of Odisha

2019-07-16

K.S.JHAVERI, KRUSHNA RAM MOHAPATRA

body2019
ORDER : 1. By way of these Writ Petitions, the petitioners have mainly challenged the amended provision of Section 2 of the Bihar and Orissa Excise Act, 1915 (for short, 'the Act') by Orissa Act-2 of 1999, the relevant portion of which is reads thus:- "In Section-2 of the Bihar and Orissa Excise Act, 1915 (hereinafter referred to as the Principal Act), in Clause (12-a), after the words "Mohua flower", the words and molasses shall be inserted." 2. It is contended that Inclusion of the word 'molasses' in Clause (12-a) after the words "Mohua flower" is in violation of Constitutional provisions, namely, Union List Entry-84 and Entry-8 and Entry-51 of State list which are quoted hereunder for ready reference:- Entry-84 of Union List "Duties of excise on tobacco and other goods manufactured or produced in India except- (a) Alcoholic liquors for human consumption, (b) Opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." Entry-8 and 51 of State List Entry-8 "Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors." Entry-51 Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:-- (a) Alcoholic liquors for human consumption; (b) Opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." 3. In support of his contentions, learned counsel for the petitioner placed strong reliance on the judgment of the Hon'ble Supreme Court in the case of Synthetics & Chemicals Ltd. etc. Vs. State of U.P. and others, reported in (1990) 1 SCC 109 , wherein the Hon'ble Court, more particularly in paragraphs 53, 54, 65 and 67, observed as under:- 53. It was further submitted by the State that the State has exclusive right to deal in liquor. This power according to the counsel for the State, is reserved by and/or derived under Articles 19(6) and 19(6)(ii) of the Constitution. For parting with that right a charge is levied. It was further submitted by the State that the State has exclusive right to deal in liquor. This power according to the counsel for the State, is reserved by and/or derived under Articles 19(6) and 19(6)(ii) of the Constitution. For parting with that right a charge is levied. It was emphasised that in a series of decisions some of which have been referred to hereinbefore, it has been ruled that the charge is neither a fee nor a tax and termed it as privilege. The levy is on the manufacture, possession of alcohol. The rate of levy differs on its use, according to the State of U.P. The impost is also stipulated under the trading powers of the State under Article 298 and it was contended that the petitioners and/or appellants were bound by the terms of their licence. It was submitted that the Parliament has no power to legislate on industrial alcohol, since industrial alcohol was also alcoholic liquor for human consumption. Entry 84 in List I expressly excludes alcoholic liquor for human consumption; and due to express exclusion of alcoholic liquor for human consumption from List I, the residuary Entry 97 in List I will not operate as against its own legislative interest. These submissions have been made on the assumption that industrial liquor or ethyl alcohol is for human consumption. It is important to emphasise that the expression of a constitution must be understood in its common and normal sense. Industrial alcohol as it is, is incapable of being consumed by a normal human being. The expression 'consumption' must also be understood in the sense of direct physical intake by human beings in this context. It is true that utilisation in some form or the other is consumption for the benefit of human beings if industrial alcohol is utilised for production of rubber, tyres used. The utilisation of those tyres in the vehicle of man cannot in the context in which the expression has been used in the Constitution, be understood to mean that the alcohol has been for human consumption. 54. We have no doubt that the framers of the Constitution when they used the expression 'alcoholic liquor for human consumption' they meant at that time and still the expression means that liquor which as it is consumable in the sense capable of being taken by human beings as such as beverage of drinks. 54. We have no doubt that the framers of the Constitution when they used the expression 'alcoholic liquor for human consumption' they meant at that time and still the expression means that liquor which as it is consumable in the sense capable of being taken by human beings as such as beverage of drinks. Hence, the expression under Entry 84, List I must be understood in that light. We were taken through various dictionary and other meanings and also invited to the process of manufacture of alcohol in order to induce us to accept the position that denatured spirit can also be by appropriate cultivation or application or admixture with water or with others, be transformed into 'alcoholic liquor for human consumption' and as such transformation would not entail any process of manufacture as such. There will not be any organic or fundamental change in this transformation, we were told. We are, however, unable to enter into this examination. Constitutional provisions specially dealing with the delimitation of powers in a federal polity must be understood in a broad commonsense point of view as understood by common people for whom the Constitution is made. In terminology, as understood by the framers of the Constitution, and also as viewed at the relevant time of its interpretation, it is not possible to proceed otherwise; alcoholic or intoxicating liquors must be understood as these are, not what these are capable of or able to become. It is also not possible to accept the submission that vend fee in U.P. is a pre-Constitution imposition and would not be subject to Article 245 of the Constitution. The present extent of imposition of vend fee is not a pre-Constitution imposition, as we noticed from the change of rate from time to time. xx xx xx 65. On behalf of State of U.P., Mr. Trivedi, learned Additional Advocate-General further submitted that Entry 52 of List I is an exceptional entry. It not only prescribes the field of legislation but also enables and empowers the Parliament to make laws to the exclusion of the State. According to him, being exclusionary in nature unlike entries merely delineating fields of legislation, Entry 52 has to be strictly and, therefore, narrowly construed. It not only prescribes the field of legislation but also enables and empowers the Parliament to make laws to the exclusion of the State. According to him, being exclusionary in nature unlike entries merely delineating fields of legislation, Entry 52 has to be strictly and, therefore, narrowly construed. The other question that has to be judged, according to him, is that whenever the Constitution intended the Parliament to assume legislative competence in respect of the entire field, a declaration of an unqualified nature is provided for, unlike a qualified provision like Entry 52 of List I. The words 'control' and 'regulation' are at times, held to be interchangeable or used synonymously, their use in the various entries either singly or jointly, indicates that they are sought to convey a different sense. The word 'control' has in the context, a narrower meaning, excluding details of regulatory nature by the State. According to him, comparing entries 7, 23, 24, 27, 62, 64 and 67 of List I with Entry 52, would demonstrate that under Entry 52 it is not the entire field which is sought to be covered but only the control of industries; and that the absence of inclusion of qualifying words like 'the control of which' cannot be brushed aside. By referring to the several decisions, he contended that in view of the declarations made in Section 2 of the IDR Act and the provisions made therein the entire field was not occupied and the vend fee or other impost by the State legislatures were not infringing in the field treated by the central legislature. xx xx xx 67. It is well to remember that the meaning of the expressions used in the Constitution must be found from the language used. We should interpret the words of the Constitution on the same principle of interpretation as one applies to an ordinary law but these very principles of interpretation compel one to take into account the nature and scope of the Act which requires interpretation. A Constitution is the mechanism under which laws are to be made and not merely an Act which declares what the law is to be. It is also well settled that a Constitution must not be construed in any narrow or pedantic sense and that construction which is most beneficial to the widest possible amplitude of its power, must be adopted. It is also well settled that a Constitution must not be construed in any narrow or pedantic sense and that construction which is most beneficial to the widest possible amplitude of its power, must be adopted. An exclusionary clause in any of the entries should be strictly and, therefore, narrowly construed. No entry should, however, be so read as not (sic) to rob it of entire content. A broad and liberal spirit should, therefore, inspire those whose duty it is to interpret the Constitution, and the courts are not free to stretch or to pervert the language of an enactment in the interest of any legal or constitutional theory. Constitutional adjudication is not strengthened by such an attempt but it must seek to declare the law but it must not try to give meaning on the theory of what the law should be, but it must so look upon a Constitution that it is a living and organic thing and must adapt itself to the changing situations and pattern in which it has to be interpreted. It has also to be borne in mind that where division of powers and jurisdiction in a federal Constitution is the scheme, it is desirable to read the Constitution in harmonious way. It is also necessary that in deciding whether any particular enactment is within the purview of one legislature or the other, it is the pith and substance of the legislation in question that has to be looked into. It is well settled that the various entries in the three lists of the Indian Constitution are not powers but fields of legislation. The power to legislate is given by Article 246 and other Articles of the Constitution. The three lists of the Seventh Schedule to the Constitution are legislative heads or fields of legislation. These demarcate the area over which the appropriate legislatures can operate. It is well settled that widest amplitude should be given to the language of the entries in three Lists but some of these entries in different lists or in the same list may override and sometimes may appear to be in direct conflict with each other, then and then only comes the duty of the court to find the true intent and purpose and to examine the particular legislation in question. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. In interpreting an entry it would not be reasonable to import any limitation by comparing or contrasting that entry with any other in the same list. It has to be interpreted as the Constitution must be interpreted as an organic document in the light of the experience gathered. In the constitutional scheme of division of powers under the legislative lists, there are separate entries pertaining to taxation and other laws. The aforesaid principles are fairly well settled by various decisions of this Court and other courts. Some of these decisions have been referred to in the decision of this Court in Civil Appeal No. 62 (N)/70 -India Cement Ltd. v. State of Tamil Nadu [ (1990) 1 SCC 12 ]" Relying upon the discussion made in the above decision, it is contended that the State Government has no power to levy excise duty unless it is for the purpose of being referred in Entry-8 of the State List coupled with Entry-51. 4. Learned counsel for the petitioners in their respective writ petitions also relied upon another decision of the Hon'ble Supreme Court in the case of State of Bihar and others Vs. Industrial Corporation Pvt. Ltd. and others, reported in AIR 2004 SC 1151 , the Hon'ble Court, more particularly in paragraphs- 16, 17 and 18 observed as under:- "16. In the present case, what we find is that before creating a demand of penal duty or penalty, there was no adjudication by any authority as regard to the breach committed by the respondents. We also find that no opportunity of any kind was offered to the respondents before the demand as regard the penal duty was pressed against the respondents. The matter was not even examined as to what was the reason for shortfall in the production of rectified spirit. The Molasses Act does not provide for imposition of such penalty in the event of shortfall of spirit. It must, therefore, necessarily be held that the imposition of the impugned penalty being against the principles of natural justice is illegal and void. 17. The statutory authorities must act within the four-corners of a statute. The Molasses Act does not provide for imposition of such penalty in the event of shortfall of spirit. It must, therefore, necessarily be held that the imposition of the impugned penalty being against the principles of natural justice is illegal and void. 17. The statutory authorities must act within the four-corners of a statute. They could take recourse to the proceeding for levy of penalty and the recovery thereof from the respondents only in the event there existed any agreement or statutory provision therefore. Such a power did not exist in the Commissioner of Excise or the Superintendents of Excise who had issued the impugned demand notices. 18. The statutory authorities also could not have sought to levy penalty relying on or on the basis of the audit report only. They were required to apply their own independent mind for the purpose of finding out as to whether the respondents in law had committed any breach of the terms and conditions of licence or the provisions of 1947 or 1915 Acts so as to make them liable for levy of penalty. The concerned authorities acting in terms of the statutory provisions, therefore, without any further investigation could not have acted mechanically on the audit report." 5. They further submitted that this Court in an earlier occasion in a similar case of M/s. Uma Enterprises Vs. State of Orissa and others, reported in 2012 (II) ILR-CUT-211, more particularly in paragraph-11 has not considered the decision of the Hon'ble Supreme Court in the case of Synthetics & Chemicals Ltd. (supra), for which the matter is required to be referred to the larger Bench. Reliance is also placed on paragraphs-14 and 15 of the judgment in the case of Uma Enterprises (supra), which are quoted hereunder along with paragraph-11 for ready reference. "11. Further, the State Government has contended that so far as Molasses meant for being used for potable purpose is concerned, it shall be under the exclusive control of the State from the moment it is cleared and removed for that purpose. The power to prohibit and to regulate the manufacture, production, sale, transport or consumption of liquors being ancillary there to it is therefore under the jurisdiction of the State Government and therefore no illegality has been committed by including molasses under Section 2(12-a) of the Bihar and Orissa Excise Act. xx xx xx 14. The power to prohibit and to regulate the manufacture, production, sale, transport or consumption of liquors being ancillary there to it is therefore under the jurisdiction of the State Government and therefore no illegality has been committed by including molasses under Section 2(12-a) of the Bihar and Orissa Excise Act. xx xx xx 14. Our answer to the aforesaid points is in negative for the following reasons. Inclusion of Molasses to the definition of 'intoxicant' is from Entry No. 8 interrelated to Entry nos. 6 and 51 and in the backdrop of the said inclusion it must be considered de-controlling of the molasses the Government of India Molasses order, 1961, which was framed under Section 18(g) of the Industries (Development & Regulation) Act, 1951. Further, the Government of India at the time of withdrawal of Molasses Order, 1961 the Government of India, Ministry of Chemicals and Fertilizers, Department of Chemicals and Petro Chemicals have in their letter dated 11.6.1993 advised the State Governments in the manner stated supra. The said relevant factor was taken into consideration and further the State Legislature keeping in view the Orissa Act 2 of 1999 has rightly incorporated the Molasses as an intoxicant taking into consideration the suggestions given by Justice B.K. Behera who was appointed as one-man Commission to enquire into the aforesaid liquor Tragedy in the State. In his report, he has also referred to the percentage of the Molasses that 60% alcohol goes for manufacture of potable liquor and 40% towards industrial use resulting in low capacity utilization of the alcohol based industries. Further, lot of material is collected with regard to use of Molasses manufactured liquor and selling the same is not brought under control of the Excise Act and Rules thereby the tragedies which have taken away the lives of poor and socially and economically backward class people by consuming the same. On account of deregulated Molasses being used for manufacture of illicit liquor periodical tragedy are taken place in the State of Orissa is the reason for bringing the said Molasses under the definition of Section 2 (12-a) of the Act. On account of deregulated Molasses being used for manufacture of illicit liquor periodical tragedy are taken place in the State of Orissa is the reason for bringing the said Molasses under the definition of Section 2 (12-a) of the Act. It is also rightly placed reliance upon the decision of the Supreme Court in State of Bihar v. Industrial Corporation Pvt. Ltd., AIR 2004 SC 1151 , wherein, Molasses has been defined as 'intoxicant' in other States like Bihar, U.P. and Maharashtra the vires were challenged that have been extensively dealt with and answered in the aforesaid judgment. The aforesaid decision with all fours is applicable to the present case. 15. In view of the aforesaid decision and the reasons which have been assigned by the State Government in support of the inculcation of Molasses as 'intoxicant' to the definition of Section 2 (12-a) of the Excise Act, we do not find any good ground to interfere with the same. The writ petition is devoid of merit and is dismissed as such." 6. Learned counsel for the State reiterated the stand of Government, in view of the in earlier Division Bench decision of this Court in M/s. Uma Enterprises, which has upheld the amendment of Section-12 of the Act taking note of the Entry No. 8 and Entry-6 and Entry-51. He also contended that the view of the Hon'ble Supreme Court in the case of Sitaram and Bros. v. State of Rajasthan, reported in (1995) 1 SCC 257 , paragraph-4 is also required to be considered "4. Thereby, it would appear that the Legislature intended to regulate the import, export, transport or possession of molasses. The question is whether the Amendment Act is repugnant to the provisions of the Industries Development Regulation Act or the Molasses Control Order, 1961 made by the Central Government exercising the power under Section 18-G of the Industries (Development and Regulation) Act, 65 of 1951. Clause (17-A) inserted by the Amendment Act is in pari materia is the definition given in clause 2(a) of the Molasses Control Order, 1961 which came into effect for the State of Rajasthan with effect from 1-11-1975. Clause (17-A) inserted by the Amendment Act is in pari materia is the definition given in clause 2(a) of the Molasses Control Order, 1961 which came into effect for the State of Rajasthan with effect from 1-11-1975. The question, therefore, is whether Section 4 of the Amendment Act introducing molasses in clause (d) of sub-section (2) of Section 41 of the Rajasthan Excise Act, 1950, is repugnant to the provisions of the Molasses Control Order or any other relevant order occupied under Act 65 of 1951. The Molasses Control Order, 1961 regulate restriction on sale, clause (3), restriction on removal, clause (4), storage of molasses, clause (5), grading of molasses, clause (6) and pricing maximum for the sale regulated by clause (7). As seen the operation of the Molasses Control Order and the operation of the Amendment Act have not occupied the same field nor run into collision course. It is seen that the Amendment Act was made by the State Legislature exercising the power under Entry 33(a) of the Concurrent List read with Entry 24 of State List as molasses is a by-product of a sugar industry covered by the Industries Development Regulation Act. The Amendment Act does not enter into the occupied field of the Molasses Control Order. There is no inconsistency in their operation and that therefore both the Amendment Act and the Molasses Control Order would harmoniously co-exist and operate in their respective fields. The State Legislature had thereby made the Amendment Act regulating the import, export, transport or possession of molasses within the State of Rajasthan. Thus, we find that the Amendment Act is within the legislative competence under Article 246(3) of the Constitution. The appeals are dismissed accordingly but without costs." 7. We heard learned counsel for the parties at length and perused the case law as well as the relevant constitutional and statutory provisions. 8. So far as Division Bench decision of this Court in the case of M/s. Uma Enterprises (supra) is concerned, we are of the considered opinion that taking into consideration the power of the State Government for enacting the Act, as well as the view taken in Synthetics and Chemicals Ltd. (Supra), the matter is not required to be referred to larger Bench. However, while interpreting the amended entry regarding 'molasses', the contention of the petitioners regarding power of the State Government coupled with Entry-8 and Entry-51 save and except for consumption other than the distillery purpose, the State Government will not have power to levy excise duty, in view of Entry-84 of Union List. Therefore, while upholding the Constitutional validity of the Entries, we make it clear that the molasses, which is used other than distillery purpose, the petitioners are not required to pay local tax, i.e., excise duty. If the molasses is used for cattle feeds, poultry or for preparation of 'gutka', then it will be exempted from excise duty. 9. In that view of the matter, the writ petitions are allowed to the aforesaid extent. The provisions of the Act vis-à-vis the amendment undertaken thereto is upheld with a rider that the consumption of molasses if used other than distillery purpose, then the petitioners are not required to pay excise duty and will be entitled for refund of excise duty from the date of filing of the petition, if already paid. 10. Now, the question crops up that whether after 1st of July, 2017, the impugned amended provision will remain in force in view of Entry-1703 (Molasses), which is now included under the Goods and Services Tax. 11. In view discussion made and position of law at present, this question will not arise after 1st of July, 2017. If an application is made along with relevant documents supporting the claim for refund within six weeks with the justification of concession that the molasses is used for carrying on their business other than the distillery purpose, the State Government will consider the same within a period of three months from the date of such application and refund shall be made immediately. 11.1. It is made clear that if the refund is not made within a period of three months of such application, the petitioners will be entitled for interest at the rate of 8% from the date of filing of writ petition herein before this Court, and in case of delay in refund the amount of interest which would occur for such delay, would be collected from the salary of the Officer who would be held responsible for making delay in deciding the matter. We make it further clear that the petitioners have to apply for the licence and have to pay the licence fee, excise duty etc. to avail the benefit of refund. 12. All the writ petitions are allowed to the extent indicated above.