Biswanath Agarawal vs. State Of Odisha

Held

The Court upheld the constitutional validity of the amended provisions of the Act concerning molasses. 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 purposes, in view of Union List Entry-84. Specifically, if molasses is used for cattle feed, poultry, or for the preparation of 'gudakhu', it would be exempted from excise duty. The Court directed that petitioners would be entitled to a refund of excise duty paid for molasses used for purposes other than distillery, from the date of filing of the petition. The Court also addressed the applicability of the amended provision post-July 1, 2017, noting that molasses was then included under GST, making the question of State excise duty moot. The Court stipulated a process for refund applications, requiring them to be made within four weeks with supporting documents, and directed the State Government to consider them within three months, with a provision for interest and accountability 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 the division of legislative powers between the Union and the States, 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 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 (W.P.(C) No.2580 of 2019). The State's counsel was not in a position to refute the petitioner's submissions.

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 constitutionally valid, considering Union List Entry-84 and State List Entries-8 and 51? The petitioner argued that the Union List Entry-84, which deals with duties of excise on manufactured goods except alcoholic liquors for human consumption, and State List Entries-8 and 51, which pertain to intoxicating liquors and excise duties on alcoholic liquors for human consumption respectively, are violated. The petitioner contended that molasses, as industrial alcohol, is not 'alcoholic liquor for human consumption' and therefore, the State's power to levy excise duty on it is limited. The petitioner relied on the Supreme Court's decision in Synthetics & Chemicals Ltd. Vs. State of U.P. The revenue or State did not present arguments on this issue, as their counsel was not in a position to refute the petitioner's contentions.