M/S.Koshal Ceramics PVT LTD vs. State Of Odisha

Held

The Court upheld the constitutional validity of the amended provisions of the Act concerning molasses, referencing a previous Division Bench decision. However, it clarified that the State Government's power to levy excise duty on molasses is limited. For molasses used for purposes other than distillery, such as cattle feed, poultry, or preparation of 'gudakhu', the State Government would not have the power to levy excise duty, in view of Union List Entry-84. The Court directed that for molasses used other than for distillery purposes, the petitioners are not required to pay local tax (excise duty) and are entitled to a refund of excise duty paid from the date of filing the petition. The Court also addressed the post-GST scenario, stating that the question of the amended provision remaining in force would not arise after July 1, 2017. It outlined a procedure for refund applications, requiring them to be made within four weeks with supporting documents, to be considered by the State Government within three months, with a provision for interest on delayed refunds, to be recovered from the responsible officer. Petitioners were also required to 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, which included 'molasses' after 'Mohua flower' in Clause (12-a). The petitioner argued this amendment violated constitutional provisions related to the division of legislative powers between the Union and the States, specifically Union List Entry-84 and State List Entries-8 and 51. The petitioner relied on the Supreme Court judgment in Synthetics & Chemicals Ltd. Vs. State of U.P. and others. The Court considered a previous Division Bench decision in M/s Uma Enterprises and the constitutional and statutory provisions. The judgment also addressed the applicability of the amended provision post-July 1, 2017, in light of molasses being included under GST.

Key Issues

1. Whether the inclusion of 'molasses' in Section 2(12-a) of the Bihar and Orissa Excise Act, 1915, by Orissa Act-2 of 1999, is in violation of Constitutional provisions, specifically Union List Entry-84 and State List Entries-8 and 51? The petitioner contended that the Union List Entry-84, which deals with duties of excise on manufactured goods except alcoholic liquors for human consumption, and State List Entries-8 and 51, which pertain to intoxicating liquors and excise duties on alcoholic liquors for human consumption respectively, are violated. The petitioner argued that molasses, not being directly consumable by humans, falls outside the State's exclusive domain for excise duty. The revenue or State did not record any specific arguments against this contention in the provided text, but the Court's decision implies a defence of the State's legislative competence. 2. Whether the amended provision remains in force after July 1, 2017, in view of molasses being included under GST? This issue was raised to determine the continued applicability of the State excise duty on molasses.