Sun And Sun Cattle Feed PVT. LTD. vs. State Of Chhattisgarh

Held

The Court held that molasses, in its raw, non-fermented form, cannot be equated with an 'intoxicant', 'intoxicating liquor', or 'excisable article' as defined under the Chhattisgarh Excise Act, 1915. The Court found that the State's attempt to regulate molasses on the ground that it 'may be used for producing alcohol' constitutes an over-extension of legislative power, as this would permit the State to regulate any substance capable of fermentation, which is constitutionally impermissible. The Court rejected the State's reliance on Section 8(c) of the Excise Act, stating that the expression 'any other base' cannot be stretched to include molasses in its raw, non-intoxicant form without overriding definition provisions and expanding the Act beyond its object. Furthermore, the Court held that the Chhattisgarh Excise Rules, 2022, which extend control to non-intoxicant uses, impose licensing and duty, and regulate ordinary trade activity, clearly travel beyond the scope of the Excise Act. Since rules cannot enlarge the scope of the parent statute, the Rules of 2022 were declared ultra vires the Constitution. Consequently, all writ petitions were allowed, and petitioners were entitled to consequential reliefs.

Facts

The petitioners, various businesses including trading companies, factories producing 'gudakhu' (a tobacco-based product), and agro-export companies, filed writ petitions challenging the State of Chhattisgarh's actions. The core of the dispute revolves around the State's attempt to regulate and impose duties on molasses, a by-product of the sugar industry, under the Chhattisgarh Excise Act, 1915, and the Chhattisgarh Excise Rules, 2022. The petitioners argued that molasses, in its raw form, is not an intoxicant or fit for human consumption and therefore falls outside the purview of the Excise Act. The State, conversely, sought to regulate molasses on the grounds that it can be used as a base for producing alcohol, thereby extending the scope of the Excise Act and its associated rules.

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 power? 2. Whether the Chhattisgarh Excise Rules, 2022, which extend control to non-intoxicant uses of molasses, impose licensing and duty, and regulate ordinary trade activity, are ultra vires the Chhattisgarh Excise Act, 1915, and the Constitution? Petitioner's arguments: The petitioners contended that molasses is a by-product of the sugar industry, not fit for human consumption in its raw state, and does not contain alcohol. They argued that equating raw molasses with 'intoxicant' or 'intoxicating liquor' is an over-extension of the State's legislative power. They further argued that the Excise Act is specifically for regulating intoxicating liquor and drugs, and bringing molasses within its fold without statutory backing is impermissible. The Rules of 2022, by extending control to non-intoxicant uses, licensing, and duty imposition on ordinary trade, travel beyond the scope of the parent Act and are therefore ultra vires. Revenue/State's arguments: The State relied on Section 8(c) of the Excise Act, referring to 'any other base' used for the manufacture of liquor, to argue that molasses, being a potential base for alcohol production, falls under its regulatory ambit. They also sought to justify the Rules of 2022 as a means to carry out the provisions of the Act.