IR2003 SC 4650 , 2003 INSC 566 , JT2003 (8 )SC 1 , 2003 (8 )SCALE775 , (2004 )1 SCC225 , [2003 ]Supp4 SCR957 , ,MANU/SC/0833/2003Ruma Pal#B.N. Srikrishna#268SC2050Judgment/OrderAIC#AIR#INSC#JT#MANU#SCALE#SCC#SCR(Supp)Ruma Pal,Chemicals#ChemicalsSUPREME COURT OF INDIA2012-9-24Taxes not to be Imposed Save by Authority of Law,Finance,Finance, Property, Contracts and Suits,Constitution of India17166,17232,30467,30511 -->

MANU/SC/0833/2003

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 5416-5424, 5425-5426, 5427-5435/2000 and 8382 of 2003 (Arising out of SLP (C) No. 981/2001)

Decided On: 17.10.2003

Appellants: State of U.P. and Ors. Vs. Respondent: Vam Organic Chemicals Ltd. and Ors.

Hon'ble Judges/Coram:
Ruma Pal and B.N. Srikrishna

JUDGMENT

Ruma Pal, J.

1. Leave granted in the special leave petition.

2. A series of writ petitions were filed by the respondents in the Allahabad High Court challenging a notification dated 13thJanuary 1990 whereby licence fee of 15 paise per litre was sought to be imposed on the quantity of specially denatured spirit (SDS) obtained from distilleries in Uttar Pradesh under Rule 3(a) of the U.P. Licences for the Possession of Denatured Spirit and Specially Denatured Spirit Rules, 1976. All the writ petitions were allowed by the High Court. The State has questioned the correctness of the decision in these appeals.

3. The basic facts in all these appeals are substantially similar. therefore, the facts in the case of Vam Organic Chemicals Ltd. and Anr. are taken as illustrative for the purpose of our decision.

4. The respondent - company manufactures organic chemicals such as Acetic Acid, Acetic Anhydride and vinyl Acetate at its chemical plant. The main raw material for manufacture of these organic chemicals is Ethyl alcohol (industrial grade) which in turn is produced from molasses. In 1982, the respondent set up its own distillery for producing the industrial alcohol. The distillery is registered under the provisions of the Industries (Development and Regulation) Act, 1951. The entire production of industrial alcohol at the respondents' distillery as well as industrial alcohol from outside sources is used at its chemical plant for producing the organic chemicals mentioned earlier. The entire quantity of industrial alcohol is "denatured" before it leaves the respondents distillery and carried in pipes to the chemical plant it is this denatured industrial alcohol which is subjected to the disputed levy.

5. The levy of the disputed licence fee is legislatively traceable to the UP Excise Act, 1910. This Act provides for the control of and levy of excise duty on intoxicating liquor and on control of and levy of excise duty on intoxicating liquor and on intoxicating drugs in the State of Uttar Pradesh. The word "intoxicant" has been defined under Section 3(13) of the Act as meaning 'any liquor or intoxicating drug'. Liquor has in turn been defined in Section 3(11) as meaning 'intoxicating liquor been defined in Section 3(11) as meaning 'intoxicating liquor been defined in Section 3(11) as meaning 'intoxicating liquor and includes spirits of wine, spirit, wine, tari, pachwal, beer and all liquid consisting of or containing alcohol, also any substance which the State Government may by notification declare to be liquor for the purposes of this Act'.

6. Industrial alcohol with which we are now concerned is not liquor nor is it potable as such. However, it may be utilised to produce a kind of liquor if it is 'denatured'. 'Denatured' a........