M/S.Sai Industries vs. State Of Odisha

Held

The Court upheld the constitutional validity of the amended entries in the Act. 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 or poultry, the State Government does not have the power to levy excise duty, in view of Union List Entry-84. The Court stated that if molasses is used for cattle feed, poultry, or for preparation of 'gudakhu', it will be exempted from excise duty. The Court also noted that the question of the amended provision remaining in force after July 1, 2017, in view of molasses being included under GST, would not arise. The writ petitions were allowed to the extent that petitioners would be entitled to a refund of excise duty paid on molasses used for purposes other than distillery, from the date of filing the petition, provided they apply with supporting documents within four weeks. The State Government was directed to consider such applications within three months, and if refund is delayed, interest at 8% would be payable, with the responsible officer facing recovery of interest from their salary.

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 powers 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's judgment in Synthetics & Chemicals Ltd. Vs. State of U.P. and others. The Court noted that the issues were covered by a previous order of the same High Court dated July 16, 2019, in a batch of writ petitions.

Key Issues

1. Whether the inclusion of 'molasses' in Section 2(12-a) of the Bihar and Orissa Excise Act, 1915, by the 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 the amendment violates the constitutional scheme of legislative powers. They argued that Union List Entry-84 exclusively empowers the Union to levy excise duty on alcoholic liquors for human consumption, and by extension, industrial alcohol should fall under this purview, precluding the State from levying excise duty on molasses, which can be used for distillery purposes. They relied on the Supreme Court's decision in Synthetics & Chemicals Ltd. v. State of U.P., which distinguished between industrial alcohol and alcoholic liquor for human consumption and affirmed the Union's exclusive power over the former. Revenue/State's arguments: The judgment does not record specific arguments from the revenue or State counsel in this particular instance, beyond the Additional Government Advocate being 'not in a position to refute' the petitioner's submissions based on the cited precedent.