TaxTMI 
TaxTMI 
2004 (2) TMI 744
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....363 of 1990 to be transferred to the High Court of Allahabad and Writ Petition No. 364 of 1990 to the High Court of Calcutta where these two petitions shall be disposed of in accordance with law. 2. Heard learned Counsel for the parties. 3. The prayer in the writ petition is for a writ of certiorari to quash the notification dated 23.11.1989 (Annexure-11 to the petition) issued by the Respondent seeking to levy Export-Pass Fee on the purchase of and/or transportation and/or Export of Industrial Alcohol (denatured and special denatured spirit) by the Petitioner. The Petitioner has also prayed for an order declaring Rule 10 framed under Section 40(2)(d) of the Uttar Pradesh Excise Act, 1910 and the Uttar Pradesh Excise, Import, Export, Transport and Possession of Denatured spirit (Fourteenth Amendment) Rules, 1989 as illegal and unconstitutional. 4. The Petitioner is a company registered under the Indian Companies Act having its head office in Delhi and a factory at Rishra in District Hooghly, in the State of West Bengal where it manufactures low density polythene (hereinafter referred to as LDPE). The Petitioner is challenging the alleged illegal and unconstitutional levy of Expo....
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....titutional Scheme, it was held in the 1st Vam Organic case, Vam Organic Chemicals Ltd. v. State of U.P. 1998 (4) AWC 600 : (1997) 2 SCC 715, that regulations can be framed by the State to ensure that rectified spirit is not surreptitiously diverted for use for human consumption. 13. In the 2nd Vam Organic case State of U.P. v. Vam Organic Chemicals Ltd. JT 2003 (8) SC 1, the Supreme Court observed: 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 s 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, 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 Respondent) and then converted into potable liquor this would not give the State the power to regulate it. Even according to the demarcation of th....
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....re otherwise identically situated the same relief. [See Anil Kumar Neotia v. Union of India (1998) 2 SCC 587. In the absence of any such correlation the fee under Rule 3 is not a fee at all levied for the purpose of additional regulation or for any service rendered but is really a tax in the garb of a fee. 14. It may be mentioned that when alcohol is first produced it is called ethyl alcohol or rectified spirit which contains about 95% alcohol, and hence is unfit for human consumption. However, by diluting rectified spirit with water the liquid can become fit for human consumption after a certain stage of dilution. If, however, certain chemicals called denaturants are put into the rectified spirit then even by adding water into it, it will remain a toxic substance and will not be fit for human consumption. In para 7 (ix) of the writ petition it is stated that a denaturant called Croton Aldehyde is added by the Petitioner to the rectified spirit used by it. Hence obviously the liquid becomes unfit for human consumption even after diluting it with water. 15. It is not denied by the Respondent that the denaturant 'Croton Aldehyde' is added by the Petitioner to the rectified ....
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....f the writ petition it is mentioned that to make the alcohol used by the Petitioner unfit for human consumption a chemical known as Croton Aldehyde is added to the alcohol. This is tested by the Alcohol Technologist, Government of U.P. These allegations are not denied in the counter-affidavit. What is alleged in para 21A of the supplementary counter-affidavit is that denatured spirit can be renatured. This contention has been dealt with by the Supreme Court in the 2nd Vam Organic case whose relevant observation has been quoted above. 20. In a recent short order of the Supreme Court in Civil Appeal No. 324 of 1981, Hindustan Sugar Mills Ltd. v. State of U.P., decided on 19.7.2001, the Supreme Court observed that "the levy of export pass fee on industrial alcohol was not permissible." 21. As a result this petition is allowed. The impugned notification dated 23.11.1989 imposing export pass fee on denatured and specially denatured spirit is quashed. Consequently the Respondent are restrained from realising the same. Any amount of export pass fee deposited by the Petitioner with the State Government shall be returned to it within two months along with interest at 10% per ann....