2003 (11) TMI 558 - SC - Indian Laws

Import fee on beer assessed under constitutional Article 301; liquor trade rights in Article 19(1)(g) subject to clause (6)

STATE OF PUNJAB & ANR. Versus DEVANS MODERN BREWARIES LTD. & ANR.

SC held the import fee added to a countervailing duty on beer was to be assessed under constitutional provisions, not by the common-law maxim res extra ... Imposition of import fee in addition to the countervailing duty on Beer - right to carry on trade in liquor - maxim 'res extra commercium' - violation of Articles 301-304 of the Constitution - restrict trade, commerce and intercourse among the States - Doctrine of precedent​​​​​​​ - Whether the import fee levied is the price for parting with the privilege given to the respondent to import liquor into the State. Held that:- The maxim 'res extra commercium' has no role to play in determining the constitutional validity of a statute. The State, in its discretion having regard to the provisions contained in Article 47 of the Constitution of India may part with its right of exclusive privilege but once it does so, the grant being subject to the terms and conditions of a statute, the common law principle based on the maxim 'res extra commercium' shall have no application in relation thereto. (2) When the constitutionality of a taxing statute is questioned, the same has to be judged on the touchstone of the constitutional provisions including Article 301 thereof. The freedom guaranteed under Article 301 of the Constitution of India may not be considered in isolation having regard to the expression contained therein that such freedom is subject to Part XIII of the Constitution of India. The right to carry on trade in liquor is a fundamental right within the meaning of Article 19(1)(g) of the Constitution of India and the State may, however, legislate prohibiting such trade either in whole or in part in terms of Clause (6) of thereof. Article 14 is applicable in the matter of grant by the State and, thus, there is no reason as to why grantee would not be entitled to invoke the commerce clause contained in Article 301 of the Constitution of India. (5) In interpreting the constitutional provisions, the court should take into consideration the implication of its decision having regard to the international treaties dealing with countervailing duty, etc. Issues Involved:1. Whether the import fee levied is the price for parting with the privilege given to the respondent to import liquor into the State.2. Whether the imposition of import fee restricts trade, commerce, and intercourse among the States.Issue-Wise Detailed Analysis:1. Whether the import fee levied is the price for parting with the privilege given to the respondent to import liquor into the State.The Court examined the nature of the import fee levied by the State of Punjab and the State of Kerala. It was determined that the import fee is part of the privilege price for the license to trade in liquor. The Court noted that the trade in liquor is not a fundamental right but a privilege granted by the State, which can impose fees for this privilege. The import fee is considered a regulatory measure under the respective State Excise Acts, and licensees have accepted and paid these fees over the years without protest. The fee is not a tax but a consideration for the privilege granted to the licensee.2. Whether the imposition of import fee restricts trade, commerce, and intercourse among the States.The Court addressed whether the import fee imposed by the States of Punjab and Kerala violates Articles 301-304 of the Constitution, which guarantee freedom of trade, commerce, and intercourse throughout the territory of India. The Court held that the imposition of import fees does not violate these constitutional provisions as the trade in liquor is not a fundamental right but a privilege. The State has the authority to regulate this trade and impose fees as part of its regulatory powers. The Court cited previous judgments to support the view that the State can impose such fees without violating the constitutional guarantee of free trade.Conclusion:The Supreme Court upheld the imposition of import fees by the States of Punjab and Kerala, ruling that these fees are part of the regulatory measures and privilege price for the license to trade in liquor. The Court found that such fees do not violate the constitutional provisions related to free trade, commerce, and intercourse among the States. The appeals filed by the State of Punjab were allowed, and the appeals against the State of Kerala were dismissed.