1989 (10) TMI 214 - SC - VAT and Sales Tax

Right of the States to levy vend fee or duties in respect of industrial alcohol under different legislations in different States

Held that:- So far as the present case is concerned the State in exercise of powers under entry 8 of List II and by appropriate law regulate and that regulation could be to prevent the conversion of alcoholic liquors for industrial use into one for human consumption and for purpose of regulation, the regulatory fees only could be justified. In fact, the regulation should be the main purpose, the fee or earning out of it has to be incidental and that is why the learned counsel appearing for the State attempted to use this terminology by saying that the purpose is regulation, the earnings are incidental but frankly conceded that in fact the earnings are substantial. In fact in some of the excise laws in the States they have even used terminology relying on the doctrine of privilege and parting with privilege but it is not necessary for us to go into those questions in greater detail as we are not here concerned with the trade in alcoholic liquors meant for human consumption and, therefore, in view of clear demarcation of authority under various items in the three Lists, entry 8 of List II could not be invoked to justify the levies which have been imposed by the States in respect of alcoholic liquors which are not meant for human consumption.