M/S.Trinath Traders vs. State Of Odisha

Held

The Court held that while upholding the constitutional validity of the amended entries regarding molasses, the State Government's power to levy excise duty is limited. Specifically, for molasses used for purposes other than distillery, such as cattle feed, poultry, or preparation of 'gudakhu', the State Government does not have the power to levy excise duty in view of Entry-84 of the Union List. Consequently, the petitioners are not required to pay local tax (excise duty) on molasses used for these non-distillery purposes. The Court clarified that for molasses used for distillery purposes, the State's power remains. The judgment also addressed the post-GST scenario, stating that the question of the amended provision remaining in force after July 1, 2017, would not arise as molasses is now included under GST. The Court directed that if an application for refund is made with supporting documents within four weeks, the State Government will consider it within three months, and refunds will be made immediately. Failure to refund within three months would entitle petitioners to interest at 8% from the date of filing the writ petition, with the responsible officer bearing the interest for further delays.

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 a Supreme Court judgment in Synthetics & Chemicals Ltd. Vs. State of U.P. The High Court, in a previous order dated July 16, 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 Union List Entry-84 and State List Entries-8 and 51 of the Constitution of India? Petitioner's contention: The petitioner argued that the amendment is unconstitutional. They relied on the Supreme Court's decision in Synthetics & Chemicals Ltd. Vs. State of U.P., which held that the Parliament has exclusive power to legislate on industrial alcohol under Entry-84 of the Union List, and alcoholic liquor for human consumption is excluded from this. The petitioner contended that molasses, being a by-product of sugar cane and potentially usable for various purposes including human consumption after processing, falls under the Union's domain, not the State's excise power. Revenue's contention: The judgment does not record specific arguments from the revenue or State counsel in this particular writ petition, other than noting that the Additional Government Advocate was not in a position to refute the petitioner's submissions.