TaxTMI 
TaxTMI 
2007 (6) TMI 491
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....the writ petitioner being levy of tax at 20 per cent under the Act, as amended by the Amendment Act No. 6 of 2007, with which the petitioner is aggrieved. It is the apprehension of the writ petitioner that the provisions of this Act which were brought into force in terms of notification dated March 30, 2007 published by the second respondent will be an act adverse and in fact detrimental to the industrial and business activity of the petitioner and having regard to the background leading to this legislation, the petitioner has approached this court questioning the constitutional validity of the Act as amended in Amendment Act 6 of 2007 insofar as it relates to the inclusion of the denatured spirit at serial No. 4 of the Fourth Schedule t....
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....as again challenged in appeal by the very writ petitioner in the context of attempt on the part of the State to regulate the distribution of the denatured spirit manufactured by the writ petitioner. Learned counsel for the petitioner submits that the denatured spirit is essentially used as industrial alcohol which cannot be subject-matter for legislation for levy of tax or regulation by the State Government; that the denatured spirit which was being manufactured and sold by the writ petitioner found a new customer when it was found that it can be used for producing alternative fuel and as a part of it, in the manufacture of five per cent ethanol based petroleum product, which perhaps has better efficiency or is more conducive to environm....
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....arned counsel submits that the State after having failed in its attempt to directly regulate the manufacture and trade of denatured spirit by the petitioner and like persons, has now resorted to the indirect method of levying tax at an unreasonably high rate under the provisions of the Act, to stifle or control the trade in denatured spirit in an indirect way and employing the VAT Act for that purpose is nothing but a colourable exercise of the legislative power. It is submitted that the present legislation is a clear case of an instance of colourable exercise of legislative power and therefore the provision is in fact and in reality an attempt to legislate the subjectmatter beyond the competence of State Legislature and accordingly unconst....
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....itched so high so as to make it unprofitable for the petitioner to effect sale of denatured spirit, particularly, to maintain the contractual obligation with the buyers of denatured spirit. If the levy of tax in respect of any transaction is at a lesser rate, say, two per cent, three per cent, or five per cent it cannot be disputed as one not within the legislative competence. It is because the rate of tax becomes a little higher or so high so as to make it unprofitable for the petitioner to carry on its trade, the petitioner is complaining that it is unconstitutional being an instance piece of colourable exercise of legislative power. Though Sri Raghavan, learned Senior Counsel would submit that when once it is contended that the leg....