TaxTMI 
TaxTMI 
2011 (3) TMI 1732
X X X X Extracts X X X X
X X X X Extracts X X X X
....es. Still further it has been prayed that the respondents be directed to refund the permit fees with interest already collected on denatured spirit pursuant to the aforementioned impugned Rule 22 of the Rules and impugned notification dated 29.3.2004 (P-1). FACTS: 2. The petitioner is a public limited Company incorporated under the Companies Act, 1956. At the time of filing of writ petition, the name of the petitioner-company was 'M/s Industrial Organics Limited', however, during the pendency of the present proceedings it has been re-christened as 'IOL Chemicals and Pharmaceuticals Limited', with effect from 5.12.2006. The petitioner-company is engaged in manufacture of organic chemicals like acetic acid, ethyl acetate and acetic anhydride, which are used in pharmaceutical industry and also in manufacture of basic chemicals. In the manufacturing process of various chemicals including industrial alcohol 'denatured spirit' is used as raw material. As per its requirements, the petitioner-company procures denatured spirit from within the country and also imports the same. For procuring, possession and storage of denatured spirit either from within the country or through imports, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ules made under it unless there is something repugnant in the subject or context:- xxx xxx xxx xxx xxx xxx xxx xxx xxx (6) Excisable article. - "Excisable article" means:- (a) any alcoholic liquor for human consumption; or (b) any intoxicating durg. (6-a) xxx xxx xxx (6-b) "excise duty" and "countervailing duty" means any such excise duty or countervailing duty as the case may be as mentioned in entry 51 of list II in the Seventh Schedule to the Constitution." Section 31 of the Excise Act "31. Duty on excisable articles.- An excise duty or a countervailing duty as the case may be at such rate or rates as the State Government shall direct, may be imposed either generally or for any specified local area, on any excisable article. (a) imported, exported or transported in accordance with the provisions of Section 16; or (b) manufactured or cultivated under any licence granted under Section 20; or (c) manufactured in any distillery established or any distillery or brewery licensed under Section 21; Provided as follows:- (i) duty shall not to be so imposed or any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith such scale or equivalents calculated on the quantity of materials used, or by the degree of attenuation of the wash or wort, as the case may be, as the State Government may prescribe; (c) on tari, by a tax on each tree from which the tari is drawn: Provided further that where payment is made upon issue of an excisable article for sale from a warehouse established or licensed under Section 22(a) it shall be made- (a) if the State government by notification so directs, at the rate of duty which was in force at the date of import of that article, or (b) in the absence of such direction by the State Government, at the rate of duty which is in force on that article on the date when it is issued from the warehouse." 8. Under the Excise Act, the Rules were notified vide Notification No. 6000-E&S, dated 12.11.1932. The State of Punjab levied permit fees on denatured spirit under Rule 22 of the Rules, which reads as under:- "22. The Excise Commissioner is pleased to prescribe the following forms and conditions for the exemption permits referred to in order 18 of the Punjab Liquor Import, Export, Transport and Possession Orders:- (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irit, shall be granted by the Collector in Form L. 42-B. (f) The Collector is authorised to grant a permit for the possession of specially denatured spirit in excess of the limit specified for retail sale, to soap manufacturers for the purpose of their business. Such permits shall be in Form L. 42C and will be issued only on execution of a bond to secure the proper storage and use of such spirit. Such bond shall be in Form L. 48. (g) A fee at the rate of sixty paise per proof litre on Ethanol-Denature with 0.2% Crotonalddehyde and 4 gram Denatonium Benzoate/Denatonium Scharide per 100 litres of Ethanol shall be recovered at the time of issue of permit. (h) Deleted." 9. A bare perusal of Rule 22 of the Rules shows that different forms have been prescribed for issuance of permits and possession of ordinary country spirit, denatured spirit, rectified spirit, specially denatured spirit and Ethanol etc. to be used for different purposes. A permit for possession of denatured spirit required by a person engaged in any business requiring large quantities of denatured spirit for his business is to be granted by the Collector in Form L.42-A. As per first proviso....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... quashing Rule 22 of the Rules. However, the aforementioned writ petition was dismissed as withdrawn vide order dated 21.4.1995 passed in C.M. No. 3581 of 1995 in CWP No. 9184 of 1991. 12. In the written statement filed by the respondents a preliminary objection has been taken that the writ petition is not maintainable since the petitioner-company itself was paying permit fee for more than 10 years and, thus, could not challenge the vires of Rule 22 of the Rules merely because some increase has been made in the rates of permit fee for the financial year 2004-2005. It has further been asserted that the petitioner-company is also estopped from filing the writ petition in view of the fact that on the same cause of action earlier also a writ petition was filed by the petitioner-company which was subsequently withdrawn on 21.4.1995. It has further been claimed that the petitioner-company is confusing the terms 'Industrial Alcohol' and 'denatured spirit'. It has, thus, been explained that Industrial Alcohol is 'Ethyl Alcohol' or could be termed as 'rectified spirit', which could even be utilized for potable purposes also, with small processing, whereas 'Denatured Spirit' comes into ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the petitioner had earlier filed CWP No. 9184 of 1991, which was dismissed as withdrawn on 21.4.1995. In that regard, he has drawn our attention to the order dated 21.4.1995, which reads thus: "C.M. No. 3581 of 1995 in CWP No. 9184 of 1991 Mr. Mansur Ali, Advocate. C.M. is allowed as prayed. CWP No. 9184 of 1991 is dismissed as withdrawn. 21.4.1995 Sd/- (H.S. BEDI) JUDGE" 15. Banking upon the provisions of Order XXIII Rule 1 of the Code of Civil Procedure, 1908, and various judgments of Hon'ble the Supreme Court rendered in the cases of Surguja Transport Service v. STAT, (1987) 1 SCC 5; Upadhyay & Co. v. State of U.P., (1999) 1 SCC 81; Avinash Nagra v. Navodaya Vidyalaya Samiti, (1997) 2 SCC 534; State of Haryana v. State of Punjab, (2004) 12 SCC 673; and H.P.S.E.B. v. K.R. Gulati, (1998) 2 SCC 624, learned State counsel has sought to raise a question that if a writ petition filed under Article 226 of the Constitution has been withdrawn without permission to institute a fresh petition, can the writ petitioner file such a petition on the same cause of action or there is a bar on the ground of public policy to d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment, their Lordships has rejected a similar argument by observing as under:- "At the outset, it may be noted that in view of the subsequent amendment and the additions to the levies it cannot, in our opinion, with legitimate force be contended that the levies which are sought to be impugned in the present litigation are pre-Constitutional levies. So, these submissions on behalf of the State do not require any serious consideration." 18. It is further pertinent to notice that in para 54, it has been concluded that the vend fee in Uttar Pradesh is a pre-constitution imposition could not be accepted and it would not be subject to Article 245 of the Constitution. The present extent of imposition of vend fee is not a pre-constitution imposition, as had been noticed from the change of rate from time to time. In the present case also, the admitted position is that the rates of levy have been changed from 0.30 paisa per bulk litre to 0.60 paisa per bulk litre and now to 0.45 paisa per bulk litre. Therefore, this preliminary objection is not sustainable as the matter falls within the purview laid by the judgment of 7-Judge Bench of Hon'ble the Supreme Court in the case of Synth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of levy of any fees, the element of quid pro quo is a pre-requisite. However, the respondent State of Punjab has failed to place on record any material to justify its demand, therefore, the impugned levy is unsustainable and liable to be set aside. According to him, if any tax or fee is levied by the State without jurisdiction and in contravention of the Constitution, such a collection would amount to 'unjust enrichment' on the part of the State and the same is liable to refund. In that regard reliance has been placed on a Full Bench judgment of Bombay High Court rendered in the case of New India Industries Ltd. v. Union of India, AIR 1990 Bom. 239. While summing up his arguments, Mr. Jain has finally placed reliance on the latest judgment of Hon'ble the Supreme Court rendered in the case of Mohan Meakin Limited v. State of Himachal Pradesh, (2009) 3 SCC 157, wherein entire case law has been discussed and the instant petition is fully covered by that judgment. 21. Mr. Amol Rattan Singh, learned Additional Advocate General, Punjab, has vehemently argued that the State could lay down regulations to ensure that non-potable alcohol is not diverted and misused as a substitute for pot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it was required to obtain an import permit. It also transported some quantities of malt spirit of over proof strength from certain breweries also located in the State of Uttar Pradesh during the relevant years viz. 1997-98 and 1998-99. 23. A permit/transport fee was directed to be levied for the first time in terms of the excise policy for the year 1996-97, dated 12.3.1996. A permit fee on denatured spirit, foreign spirit and country liquor respectively became leviable. Such permit fee was payable at the time of grant of permission for transportation of liquor. It was payable by a person who made an application for grant of permission for import and/or transport of foreign liquor or country liquor or both. A demand was made by the Excise and Taxation Officer towards permit fee on the spirit imported by the appellant during the year 1996-97. Another demand was made up to 6.2.1999 for making similar import. A representation was made by the appellant in respect of the said demands contending that the State of Himachal Pradesh had no jurisdiction to levy such fee and that no services having been rendered to the appellant, a quantum jump of the licence fee in the name of such permit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e impost is also stipulated under the trading powers of the State under Article 298 and it was contended that the petitioners and/or appellants were bound by the terms of their licence. It was submitted that the Parliament has no power to legislate on industrial alcohol, since industrial alcohol was also alcoholic liquor for human consumption. Entry 84 in List I expressly excludes alcoholic liquor for human consumption; and due to express exclusion of alcoholic liquor for human consumption from List I, the residuary Entry 97 in List I will not operate as against its own legislative interest. These submissions have been made on the assumption that industrial liquor or ethyl alcohol is for human consumption. It is important to emphasise that the expression of a constitution must be understood in its common and normal sense. Industrial alcohol as it is, is incapable of being consumed by a normal human being. The expression 'consumption' must also be understood in the sense of direct physical intake by human beings in this context. It is true that utilisation in some form or the other is consumption for the benefit of human beings if industrial alcohol is utilised for production of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....impose compensatory tax and/or fee would also be limited as envisaged by Article 304(b) of the Constitution. On the question that jurisdiction of the State to impose levy on denatured spirit is limited the following observations made in para 43 of the judgment rendered in the case of Vam Organic (supra) have also been considered: "43. Considering the various authorities cited, we are of the view that the State Government is competent to levy fee for the purpose of ensuring that industrial alcohol is not surreptitiously converted into potable alcohol so that the State is deprived of revenue on the sale of such potable alcohol and the public is protected from consuming such illicit liquor. But this power stops with the denaturation of the industrial alcohol. Denatured spirit has been held in Vam Organics-I [Vam Organic Chemicals Ltd. v. State of U.P., (1997) 2 SCC 715] to be outside the seisin of the State Legislature. Assuming that denatured spirit may by whatever process be renatured (a proposition which is seriously disputed by the respondents) and then converted into potable liquor, this would not give the State the power to regulate it. Even according to the demarcation....