M/S.Shree Lingaraj Feeds LTD vs. State Of Orissa

Held

The Court held that while upholding the constitutional validity of the amended entries concerning molasses, the State Government's power to levy excise duty is limited. Specifically, for molasses used for purposes other than distillery, the State Government does not have the power to levy excise duty, in view of Union List Entry-84. The Court clarified that if molasses is used for cattle feed, poultry, or for the preparation of 'gudakhu', it will be exempted from excise duty. The writ petitions were allowed to this extent, with the rider 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 scenario, stating the question of the amended provision's force would not arise after July 1, 2017, as molasses is now included under GST. It directed the State Government to consider refund applications within three months, 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 regarding legislative competence, specifically Union List Entry-84 and State List Entries-8 and 51. The core of the dispute revolved around the State's power to levy excise duty on molasses, particularly when it's not used for distillery purposes. The judgment refers to a previous order of the same High Court in W.P.(C) No.2580 of 2019 and batch, which dealt with similar issues concerning the amendment of the Excise Act.

Key Issues

1. Whether the inclusion of 'molasses' in Clause (12-a) of Section 2 of the Bihar and Orissa Excise Act, 1915, by the Orissa Act-2 of 1999, is ultra vires the constitutional provisions, particularly Union List Entry-84 and State List Entries-8 and 51. Petitioner's arguments: The petitioner contended that the amendment violates constitutional provisions. They argued that Union List Entry-84 excludes 'alcoholic liquors for human consumption' from the Union's excise duty power, implying that the State's power under Entry-51 is also limited to such liquors. They relied on the Supreme Court judgment in Synthetics & Chemicals Ltd. Vs. State of U.P. to argue that industrial alcohol, and by extension molasses used for non-human consumption purposes, falls outside the State's excise levy power, as it is not 'alcoholic liquor for human consumption'. Revenue/State's arguments: The judgment notes that the learned Additional Government Advocate was not in a position to refute the petitioner's submissions, implying no specific counter-arguments were presented by the revenue.