Siddhi Deal Trade PVT. LTD. vs. State Of Chhattisgarh

Held

The Court held that molasses, in its raw, non-intoxicant form, cannot be equated with an 'intoxicant', 'intoxicating liquor', or 'excisable article' as defined under the Excise Act. The Court found that bringing molasses within the regulatory fold of the Excise Act without statutory backing is impermissible. The State's attempt to regulate molasses on the ground that it may be used for producing alcohol was considered an over-extension of legislative power, as accepting such a contention would allow the State to regulate any substance capable of fermentation, which is constitutionally impermissible. The Court rejected the argument that the expression 'any other base' in Section 8(c) of the Excise Act could be stretched to include raw molasses. The Court further held that the Rules of 2022, which extended control to non-intoxicant uses and imposed licensing and duty on ordinary trade activity, clearly traveled beyond the scope of the Excise Act and were therefore ultra vires. The Court reasoned that rules cannot enlarge the scope of the parent statute. Consequently, the Rules of 2022 were declared ultra vires the Constitution.

Facts

The petitioners, various businesses including M/s Kedia Trading, Agrawal Gudakhu Factory, and others, filed writ petitions challenging the State of Chhattisgarh's attempt to regulate molasses under its Excise Act and related Rules of 2022. The State sought to regulate molasses, a by-product of the sugar industry, on the grounds that it could be used to produce alcohol. The petitioners argued that molasses, in its raw form, is not fit for human consumption, does not contain alcohol, and therefore cannot be classified as an 'intoxicant', 'intoxicating liquor', or 'excisable article' under the Excise Act. They contended that the State's attempt to regulate molasses based on its potential use for alcohol production constituted an overreach of legislative power and that the Rules of 2022 expanded the scope of the parent Act beyond its intended purpose.

Key Issues

1. Whether molasses, in its raw, non-fermented form, can be considered an 'intoxicant', 'intoxicating liquor', or 'excisable article' under the Chhattisgarh Excise Act, 1915, thereby falling within the State's regulatory domain under Entry 8 of List II of the Seventh Schedule to the Constitution? Petitioner's arguments: The petitioners argued that molasses is a by-product of the sugar industry, not fit for human consumption in its raw state, and does not inherently contain alcohol. They contended that equating it with 'intoxicating liquor' or 'excisable article' without statutory backing is impermissible and an overextension of legislative power. They asserted that the State's attempt to regulate any substance capable of fermentation would be constitutionally impermissible. They further argued that Section 8(c) of the Excise Act, referring to 'any other base', cannot be stretched to include raw molasses, as this would override definition provisions and expand the Act beyond its object. Revenue/State's arguments: The State relied on Section 8(c) of the Excise Act, which refers to 'any other base' used for the manufacture of liquor, to justify bringing molasses within the regulatory fold. The State also relied on the Rules of 2022, which imposed licensing and duty and regulated ordinary trade activity related to molasses.