M/S. Shubham Trading Company vs. State Of Chhattisgarh

Held

The Court held that molasses, in its raw, unfermented 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 amounts to an over-extension of legislative power. The Court reasoned that accepting such a contention would permit the State to regulate any substance capable of fermentation, which is constitutionally impermissible. The Court further held that the expression 'any other base' in Section 8(c) of the Excise Act cannot be stretched to include molasses in its raw, non-intoxicant form, as such an interpretation would override definition provisions, expand the Act beyond its object, and violate settled principles of statutory interpretation. Consequently, the Court ruled that the Chhattisgarh Excise Rules, 2022, which extend control to non-intoxicant uses and impose licensing and duty on ordinary trade activities, clearly travel beyond the scope of the Excise Act and are therefore ultra vires the Constitution. The Court noted that rules cannot enlarge the scope of the parent statute. All writ petitions were allowed, and petitioners were entitled to consequential reliefs.

Facts

The petitioners, various companies and firms involved in the production of goods like gudakhu, cattle feed, and agro-exports, filed writ petitions challenging the Chhattisgarh Excise Act, 1915, and related Rules of 2022. The core issue revolved around the State's attempt to regulate molasses, a by-product of the sugar industry, under the Excise Act. The petitioners argued that molasses, in its raw form, is not an intoxicant and thus falls outside the purview of the Excise Act. The State, however, contended that molasses could be used to produce alcohol, bringing it under its regulatory ambit. The petitions were consolidated for hearing.

Key Issues

1. Whether molasses, in its raw and unfermented form, can be considered an 'intoxicant', 'intoxicating liquor', or 'excisable article' as defined under the Chhattisgarh Excise Act, 1915, thereby falling under the State's regulatory power? 2. Whether the Chhattisgarh Excise Rules, 2022, which extend the regulatory control of the Excise Act to molasses for non-distillation purposes (such as industrial, agricultural, or cattle feed use), are ultra vires the parent Act 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 an intoxicant or excisable article is an over-extension of legislative power, as it would allow the State to regulate any substance capable of fermentation. They asserted that the Excise Act is specifically for intoxicating liquor and drugs, and bringing molasses within its fold without statutory backing is impermissible. They also argued that the Rules of 2022, by imposing licensing and duty on ordinary trade activities involving molasses for non-distillation uses, travel beyond the scope of the Excise Act. Revenue'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 justify the inclusion of molasses. They argued that since molasses can be used to produce alcohol, it falls under their regulatory power.