STATE OF U.P. versus M/S MODI DISTILLERY ETC. ETC.

STATE OF U.P. versus M/S MODI DISTILLERY ETC. ETC.

The State is not empowered to levy excise duty on raw materials or input in the process of being made into alcoholic liquor for human consumption; excise duty can only be levied on the final product which is consumable by humans as a beverage at the stage it becomes 'alcoholic liquor for human consumption'. The...

Source-derived case information.

Parties
Appellant: State of U.P.; Respondent: Modi Distillery and others
Jurisdiction
India
Judgment Date
29 August 1995
Procedural Posture
Civil Appeal / Supreme Court Appeal From Allahabad High Court Judgments/orders Dated 9th March 1979 and 11th October 1979
Outcome
Appeals allowed in part and dismissed in part.
Legal Topics
Excise Duty, State Taxing Powers, Alcoholic Liquor for Human Consumption, Rectified Spirit, Seventh Schedule Entry 51 List II, Manufacture and Regulation of Liquor
Constitutional Law Tax Law Excise Law Excise Duty State Taxing Powers Alcoholic Liquor for Human Consumption Rectified Spirit Seventh Schedule Entry 51 List II +1 more

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Parties

State of U.P.

Appellant

Modi Distillery and others

Respondent

Procedural Posture

Civil Appeal / Supreme Court Appeal From Allahabad High Court Judgments/orders Dated 9th March 1979 and 11th October 1979

Legal Issues

  1. 1 Whether the State of U.P. is empowered to levy excise duty on raw material/input in the process of being made into alcoholic liquor for human consumption under Entry 51 of List II and Section 3(22a), 28 of U.P. Excise Act, 1910.
  2. 2 Whether excise duty can be levied on wastage or loss at various manufacturing/transit stages, including obscure loss (obscuration) and pipeline/transit wastage.

Ratio Decidendi

The State is not empowered to levy excise duty on raw materials or input in the process of being made into alcoholic liquor for human consumption; excise duty can only be levied on the final product which is consumable by humans as a beverage at the stage it becomes 'alcoholic liquor for human consumption'. The State cannot expand its power with reference to its regulatory powers. Excise duty on wastage of IMFL exported outside U.P. is permissible, as settled by precedent, but not on losses or wastage prior to the formation of consumable alcohol (e.g., obscuration, pipeline wastage, or pre-dilution spirit).

Court Disposition

Appeals allowed in part and dismissed in part.

Orders

  • Appeals allowed only as to levy of excise duty upon wastage of IMFL exported outside the State of Uttar Pradesh; High Court’s contrary holding set aside for Group 'A'.
  • For the rest (Groups B, C, D: duty demands on wastage in transit, obscuration, pipeline loss), appeals dismissed and High Court’s judgment quashing the demands is upheld.