TMI Blog2015 (8) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... t the 1971 Rules themselves are not illegal, but rather are well within the purview of the Constitutional powers of the State Government. - State Government has not undertaken any supervisory activity which would constitute a quid pro quo for the imposition of the “export permit fee” charged under Rule 15(3)(i). Any expenses incurred on such supervisory or administrative activity has perforce already been recovered or reimbursed from fees on account of storage or sale transactions on industrial alcohol. These dues paid by the Appellants are channelled towards preventing the illegal activities of unrelated third parties for which the Appellants are in no way responsible. It is evident that the intention behind this “fee” is to prevent manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as ethyl alcohol or ethanol. In exercise of powers conferred under Section 72 of the Andhra Pradesh Excise Act, 1968, the Respondent State enacted the 1971 Rules. Rules 4, 13 and 15 are laid out herein for the facility of reference; although in these Appeals it is Rule 15 which is in focus -- Rule 4: Rectified spirit shall not be issued from a distillery or a warehouse without pre-payment of administrative fee meant for industrial purposes. In case of potable purposes, rectified spirit shall not be issued from a distillery or a warehouse without pre-payment of Excise Duty except when rectified spirit is moved in bound or when payment of Excise Duty has been exempted. Rule 13: (1) No person shall be granted license for possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the application for permit to export, the Commissioner shall make such enquiry as he considers necessary and may grant in accordance with these rules as export permit, on payment of the export permit fee of Rupees Ten per bulk litre in Form R.S. VII in triplicate. (ii) Such permit shall not be granted unless an Indemnity Bond shall be submitted by the Exporter total quantity of Proof litres permitted to export, binding himself severally to pay the full duty at ₹ 15-40 per Proof litre on all losses, by way of drainage, short delivery, non-delivery of rectified spirit or otherwise over and above the admissible loss limit of 0.5% towards transit wastage with interest on all losses in transit. 3 The Appellants before the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 301 of the Constitution of India and consequently issue a writ of Mandamus directing the respondents not to interfere with the export of R.S. by the petitioners and pass such order or orders as this Hon ble Court deems fit and proper. The major premise of the Appellants is that rectified spirit/industrial alcohol is outside the purview of the Excise Act; that the State can only legislate with regard to alcohol which is fit for human consumption; and that since rectified spirit is not potable, it is only the Union Government, which is competent to legislate this activity. 4 The High Court, upon a detailed examination of the existing case law, found that the State cannot charge Excise duty on alcohol that is not fit for human consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. 5 The Appellants have now filed these Appeals before us, challenging once again the Constitutional validity of the 1971 Rules insofar as they are applicable to industrial alcohol, and in the alternative, contending that the fee charged does not satisfy the test of quid pro quo. We have contemporaneously considered the circumstances in which administrative and service charges can be recovered by a State Government along with the relevant case law in detail in our Judgment of even date in the Appeal titled as State of Tamil Nadu vs. Tvl. South Indian Sugar Mills, and shall therefore not repeat our reasoning herein in interest of avoiding prolixity. We merely reiterate that while State Governments are not competent to impose taxes/le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stensibly collected to prevent nefarious activities such as smuggling and countryside brewing, which have no causal connection with the production of industrial alcohol, would thus metamorphose into a tax. It appears to us that that the State Government has not undertaken any supervisory activity which would constitute a quid pro quo for the imposition of the export permit fee charged under Rule 15(3)(i). Any expenses incurred on such supervisory or administrative activity has perforce already been recovered or reimbursed from fees on account of storage or sale transactions on industrial alcohol. These dues paid by the Appellants are channelled towards preventing the illegal activities of unrelated third parties for which the Appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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