- The Hon’ble SC, in State Of Orissa vs. Utkal Distilleries has observed that the States have the power to levy excise duty only on alcohol which is fit for human consumption.
- The instant appeal arose out of the decision of the Orissa HC which had set aside demand notice issued to the company to pay excise duty on weak spirit (which was a product of distillation), which was more than 2% allowable wastage.
- The Counsel for the respondent company argued that in the case of Synthetics and Chemicals Limited and ors. vs. State of UP and ors (1990)SCC the constitutional bench of the Apex Court has held that the State has no power to levy duty on industrial alcohol that is not fit for human consumption and the same could only be levied by the Centre.
- The Apex Court agreed with this submission and observed that it was clear that the Constitution makers distributed the term ‘alcoholic beverage’ into two categories, one that is fit for human consumption and one that is not. Alcoholic liquors which have been put in Entry 51 of List 2 (State List) authorising the State legislature to levy tax on them.
- On the other hand, alcohol that is unfit for human consumption has been put in entry 84 and that means that the Centre can levy duty on it. It was observed that what has been excluded in Entry 84 has specifically been put within the power of the State for the purpose of taxation.
- Thus, in the aforementioned case, the Constitution bench had clearly held that the State Legislature had no authority to levy duty on alcohol which is unfit for human consumption.
- The Court also referred to section 27 of the Bihar and Orissa Excise Act, 1915 and stated that the impugned Act also made it clear that the State’s power to import, export, manufacture and transport is only in only in terms of excisable articles, which means any alcoholic liquor which is fit for human consumption or any intoxicating drug as well. Thus, it was observed that even under this Statute, the State had the power to levy tax only on alcohol fit for human consumption.
- Thus, in light of the aforementioned observations, the appeal was set aside and the order of the HC was not interfered with.
"Loved reading this piece by Shweta?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"
