M/S.Gopal Feeds vs. State Of Orissa

Held

The Court upheld the constitutional validity of the amended provision of the Bihar and Orissa Excise Act, 1915, concerning molasses. 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 petitioners would be entitled to a refund of excise duty paid on molasses used for non-distillery purposes from the date of filing the petition. The Court also addressed the post-GST regime, stating that the issue would not arise after July 1, 2017. It outlined a procedure for refund applications, stipulating a three-month period for the State to consider them, with interest payable for delays, and noted 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, which included 'molasses' in the definition of excisable goods. The petitioner argued that this amendment violated constitutional provisions, 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. The High Court, in a previous order dated 16.07.2019, had dealt with similar issues. The present writ petition was taken up as a specially mentioned matter. The State's counsel was unable to refute the petitioner's contentions.

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? Petitioner's arguments: The petitioner contended that Union List Entry-84 exclusively empowers the Union to levy excise duty on alcoholic liquors for human consumption, and industrial alcohol, which molasses can be used to produce, is not for human consumption. Therefore, the State Legislature lacks the power to levy excise duty on molasses. They relied on the Supreme Court's decision in Synthetics & Chemicals Ltd. Vs. State of U.P., which distinguished between industrial alcohol and alcoholic liquor for human consumption. Revenue/State's arguments: The judgment does not explicitly record arguments from the revenue or State in this specific writ petition, other than noting that the learned Additional Government Advocate was not in a position to refute the petitioner's submissions, implying an absence of counter-arguments.