Naveen Kumar Agrawal vs. State Of Odisha

Held

The Court upheld the constitutional validity of the amended entries concerning 'molasses' in the Excise Act. However, it clarified that the State Government would not have the power to levy excise duty on molasses if it is used for purposes other than distillery. Specifically, if molasses is used for cattle feed, poultry, or for the preparation of 'gudakhu', it would be exempted from excise duty. The Court reasoned that while the State has the power to legislate on intoxicating liquors (Entry-8, State List) and duties of excise on alcoholic liquors for human consumption (Entry-51, State List), the Union has exclusive power under Entry-84 of the Union List for duties of excise on goods manufactured or produced in India, excluding alcoholic liquors for human consumption. The Court's interpretation, drawing from the cited Supreme Court judgment, suggests that molasses used for industrial purposes or other non-consumable applications falls outside the State's exclusive excise levy power. The Court directed that if molasses is used for purposes other than distillery, petitioners are entitled to a refund of excise duty paid from the date of filing the petition. The Court also addressed the post-GST regime, stating the issue would not arise after July 1, 2017, and outlined a refund process with a three-month timeline for the State Government to consider applications, with interest payable for delays.

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 legislative competence of the Union and State Lists, specifically 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 16.07.2019, passed in W.P.(C) No.2580 of 2019 and batch. The previous order had dealt with similar challenges to amendments to excise acts concerning molasses.

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 ultra vires the Constitution, specifically in light of Union List Entry-84 and State List Entries-8 and 51? 2. Whether the State Legislature has the legislative competence to levy excise duty on molasses, considering the exclusive power of the Union under Entry-84 of the Union List for alcoholic liquors for human consumption? Petitioner's Arguments: The petitioner contended that the inclusion of 'molasses' in the definition of goods subject to excise duty under the State Act is unconstitutional. They argued that molasses, being a by-product of sugar industry and potentially usable for industrial alcohol, falls under the exclusive domain of the Union Government as per 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 relied on the Supreme Court's interpretation in Synthetics & Chemicals Ltd. Vs. State of U.P., which distinguished between industrial alcohol and alcoholic liquor for human consumption, asserting that the State cannot legislate on industrial alcohol. Revenue's Arguments: The judgment does not explicitly record arguments from the revenue or State. However, the Court's decision implies that the State's power to legislate on molasses for purposes other than distillery use was being considered.