1993 (9) TMI 341 - SC - Central Excise

Supreme Court Validates U.P. Excise Ordinance 1972: Fee vs. Tax Debate

The Supreme Court held that the U.P. Excise (Amendment) Ordinance, 1972 was constitutionally valid as the terms 'licence fee' and 'fixed fee' did not fall ... - Issues Involved:1. Constitutional validity of the U.P. Excise (Amendment) Ordinance, 1972.2. Validity of the U.P. Excise (Amendment) Rules, 1972.Summary:Issue 1: Constitutional Validity of the U.P. Excise (Amendment) Ordinance, 1972The High Court concluded that the licence fee leviable u/s 3(i) and (iv) of the Ordinance [Section 24-A(1) and (2)] was ultra vires the Constitution because the Ordinance was not justifiable with reference to entries in List II of the Seventh Schedule to the Constitution, i.e., Entries 8, 51, 62, and 66. The Supreme Court examined whether the terms 'licence fee' and 'fixed fee' connoted a fee, tax, duty, or cess under any entry in List II. It was determined that these terms represented the consideration for parting with the State's exclusive privilege to vend foreign liquor and did not fall under the categories of fee, tax, duty, or cess. The Court held that the State Legislature had the competence to legislate on the subject under Entry 8 of List II, thus making the Ordinance constitutionally valid.Issue 2: Validity of the U.P. Excise (Amendment) Rules, 1972The High Court declared the Excise (Amendment) Rules ultra vires u/s 41(c) of the U.P. Excise Act, as the Ordinance itself was deemed unconstitutional. The Supreme Court, however, found that since the Ordinance was constitutionally valid, the Rules made pursuant to it were also valid. The Court concluded that the Excise Commissioner had the authority to determine the mode of levying and collecting the licence fee or fixed fee under the Excise (Amendment) Rules.Conclusion:The Supreme Court allowed the appeal, set aside the High Court's judgment, and dismissed the writ petition challenging the Ordinance and the Excise (Amendment) Rules. The Court directed the parties to bear their respective costs of the appeal.