TaxTMI 
TaxTMI 
2001 (3) TMI 1016
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....(Cannabia Sativa) including all forms known as Bhang, Sidhi or Ganja; (ii) charas, that is, the resin obtained from the hemp plant, which has not been submitted to any manipulations other than those necessary for packing and transport; (iii) any mixture, with or without neutral materials, of any of the above forms of intoxicating drug, or any drink prepared therefrom; and (iv) any other intoxicating or narcotic substance which the State Government may declare; by notification in the Official Gazette, to be an intoxicating drug, such substance not being opium, coca leaf or a manufactured drug as defined in the Dangerous Drugs Act, 1930 (Central Act II of 1930). (15) Liquor means intoxicating liquor and includes spirit of Wine, Spirit, Wine, Tari, Pachawar, Beer and all liquid consisting of, or containing alcohol, as also any substance which the State Government may from time to time by notification in the Official Gazette declare to be liquor for the purposes of this Act; In exercise of the powers conferred by Section 41 of the Rajasthan Excise Act 1950, the State Government framed the Rajasthan Intoxicating Spirituous Preparations, Import, Export, Transport, Possessi....
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....ution. The plea has found favour with the High Court of Rajasthan striking down the impugned notifications dated 6.11.1989 and 8.5.1990 as unconstitutional. Before we may proceed to notice the findings arrived at in the impugned judgment and the reasonings in support thereof, it would be useful to set out various relevant entries from Seventh Schedule of the Constitution: SEVENTH SCHEDULE (Article 246) List I - Union List Entry 1. Public order (but not including [the use of any naval, military or air force or any other armed force of the Union or of any other force subject to the control of the Union or of any contingent or unit thereof] in aid of the civil power). dispensaries Entry 6. Public health and sanitation; hospitals and Entry 52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. Entry 84. Duties of excise on tobacco and other goods manufactured or produced in India except__ (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparation containing alcohol or any substance included in sub-....
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....to prevent the consumption of intoxicating beverages and also to prevent use as drinks of alcoholic liquids which are not normally consumed as drinks but they could not prevent the legitimate use of alcoholic preparations which are not beverages or the use of medicinal and toilet preparations containing alcohol. The Rajasthan High Court also held that referable to Entry 52 List I, the Parliament had enacted the Industries (Development and Regulation) Act, 1951. Drugs and Pharmaceuticals were listed as item 22 in the First Schedule of the Act. Chapter III of the ID & R Act empowers the Central Government to regulate distribution, transport, disposal, acquisition, possession, use or consumption of and sale or financial transactions relating to such articles as are specified in the Schedule. Even incidental or supplementary matters relating thereto were brought within the power of the Central Government. There was yet another central enactment passed by the Parliament pursuant to resolutions passed by the Provincial Legislatures, the Drugs and Cosmetics Act, 1940, to regulate the import, manufacture, distribution by sale of drugs and cosmetics. By an amendment introduced by Act No.13 ....
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....xxxxxx Even if for a moment it is assumed that the State Government has power to make regulatory provisions apart from constitutional entries, such power would always be subject to the power of Parliament derived from an appropriate entry. Once the Parliament is found to have exercised the said regulatory provisions, resort cannot be taken by the State to the residual sovereign power for framing any regulatory provisions in respect of the covered field. The question as to the availability of the power to make regulatory provisions is totally distinct from the question as to exercise of that power in a case where the field is already covered by Central Legislation. By virtue of provisions contained in Drugs and Cosmetics Act, which is a legislation under Entry 19 of the concurrent list, and the provisions for prevention of misuse of medicinal preparations have been made and, therefore, the State Government was not empowered to frame rules in respect of medicinal preparations. The rules framed by State Government are clearly beyond the scope of its authority. It is interesting to note that while the Rajasthan High Court by its impugned judgment dated 20.12.1991 disposed of a....
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....ded). The Delhi High Court extensively dealt with the relevant provisions contained in the Central legislation including the provisions of Chapter IV-A of the Drugs Control and Cosmetics Act, 1940 and held : The effect of notifying the impugned drugs as intoxicants and bringing them within the ambit of the Excise Act and the ISP Rules is to regulate and control the transportation and sale of the said drugs. These drugs may be medicinal but they are capable of and are being misused and consumed as beverages as they have alcohol content of over 25 degree proof. The sale of such medicinal drugs if manufactured properly and if not misbranded, spurious or adulterated would not come within the ambit of Chapter IV-A and Section 33 EEC of the 1940 Act but the sale of same can be controlled or regulated under the ISP Rules. The provisions of Chapter IV-A of the 1940 Act do not, to our mind, overlap any of the provisions of the Punjab Excise Act or the ISP Rules. The two sets of provisions operate in different spheres and are intended for different purposes. Examining the issue from an alternative angle, the Delhi High Court further held that even if it be assumed that the provisions of t....
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....oncluded that under Entry 8 of List II it is the State Legislature which has been given power to legislate in respect of intoxicating liquors even if the said liquors are regarded as medicines. Medicinal products may also fall under Entry 19 of List III dealing with the subject of drugs and poisons which would give both the Parliament as well as the State Legislature the field to enact laws. For the purpose of excise, the medicinal product containing liquor may be covered by Entry 84 of List I but otherwise it is the State Government which will have power under Entry 8 of List II to legislate with regard to medicinal product which can be termed as liquor. The decision of Rajasthan High Court, which is impugned in these appeals, was also cited before Delhi High Court and Delhi High Court refused to follow Rajasthan High Court decision by observing that the attention of the Rajasthan High Court was not drawn to the decision of the Supreme Court in Southern Pharmaceutical & Chemicals case (supra). Though, we heard the learned counsel for the parties at length but at the end of the hearing we have formed an opinion that although the decision of Rajasthan High Court, which is impugne....
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....on arises; the attack upon the ground of legislative competence shall fail. In other words, once an enactment, in pith and substance, is relatable to Entry 8 in List II or for that matter any other entry in List II, Article 246 cannot be brought in to yet hold that State Legislature is not competent to enact that law. The judgment under appeal rendered by State of Rajasthan is liable to be set aside mainly for two reasons. Firstly, it does not take notice of the decision of this court in Southern Pharmaceutical & Chemicals case [AIR 1981 SC 1863]. Secondly, it proceeds upon wrong premises that once a field is covered by Central Legislation referable to List I, the power of State Government to legislate in the filed covered by an entry in List II is taken away without dealing with the doctrine of pith and substance and by ignoring the well settled position of law that the doctrine of covered field has to be applied only to entries in List III. This is the position of law settled by three-judges Bench decision in Mc.Dowell & Co.s case (supra). In spite of forming an opinion that the judgment under appeal does not correctly decide the issues raised therein and is therefore liabl....
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....and recover excise duty or countervailing duty on their products manufactured or brought for sale in the State of Rajasthan under Section 28 of Rajasthan Excise Act. In our opinion, such an apprehension is premature and unfounded. This we say for two reasons. Firstly, Rule 25 of Rajasthan ISP Rules provides that in the matter of duty to be paid on intoxicating spirituous preparations and not leviable under the Medicinal and Toilet Preparation (Excise Duty) Act, 1955, the provisions of the Rajasthan Excise Act, 1950 shall apply; in all other matters, not specified in these rules, the provisions of Rajasthan Excise Rules, 1956 shall apply mutatis mutandis. The rule takes care of the respondents apprehension. Secondly, the writ petitions were filed soon after the issuance of the impugned notifications. It was conceded at the Bar that till the date of the filing of the writ petitions and even till the date of hearing before us, the State of Rajasthan had not taken any steps for levy, much less for recovery, of and had not raised any demand on account of excise duty or countervailing duty from any of the respondents. We need not adjudicate upon an issue which has not even actually arise....