Varsha Agarwal vs. State Of Odisha

Held

The Court held that the constitutional validity of the amended entries regarding 'molasses' is upheld. However, it clarified that the State Government would not have the power to levy excise duty on molasses used for purposes other than distillery purposes, in view of Entry-84 of the Union List. The Court specified that if molasses is used for cattle feed, poultry, or for the preparation of 'gudakhu', it would be exempted from excise duty. The writ petitions were allowed to this extent, with the provision that petitioners are entitled to a refund of excise duty paid from the date of filing the petition if molasses is used for purposes other than distillery. The Court also addressed the post-July 1, 2017 period, stating that the impugned amended provision would not remain in force due to molasses being included under GST. It directed the State Government to consider refund applications within three months, with interest payable for delays, and clarified that petitioners must apply for licenses and pay fees to avail the refund benefit.

Facts

The petitioner challenged the amended provision of Section 2 of the Bihar and Orissa Excise Act, 1915, specifically the insertion of the word 'molasses' into Clause (12-a). The petitioner argued this amendment violated constitutional provisions related to the legislative competence of the Union and State Lists, particularly Entry-84 of the Union List and Entries-8 and 51 of the State List. The petitioner relied on the Supreme Court judgment in Synthetics & Chemicals Ltd. Vs. State of U.P. The Court noted that the issues were covered by a previous order of the same High Court dated July 16, 2019, passed in W.P.(C) No. 2580 of 2019 and batch. The State's counsel was not in a position to refute the petitioner's contentions.

Key Issues

1. Whether the amendment to Section 2 of the Bihar and Orissa Excise Act, 1915, by inserting the word 'molasses' into Clause (12-a), is ultra vires the constitutional provisions, specifically Entry-84 of the Union List and Entries-8 and 51 of the State List. Petitioner's arguments: The petitioner contended that the inclusion of 'molasses' in the definition of excisable goods under the State Act infringes upon the exclusive legislative power of the Union Parliament under Entry-84 of the Union List, which pertains to duties of excise on goods manufactured or produced in India, excluding alcoholic liquors for human consumption. They argued that 'molasses', as industrial alcohol, falls outside the State's power to levy excise duty, citing the Supreme Court's interpretation in Synthetics & Chemicals Ltd. regarding the distinction between industrial alcohol and alcoholic liquor for human consumption. Revenue/State's arguments: The judgment records no specific arguments from the revenue or State counsel in this particular instance, other than the Additional Government Advocate being unable to refute the petitioner's submissions.