TMI Blog2017 (12) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose. The Supreme Court has held that the State Government has no power to regulate the former i.e. rectified spirit which is exclusively for supply to industries other than for potable purposes. The Bombay Denatured Spirit Rules, 1959 to the extent that they regulate the possession, use, sale, import, export and transport of denatured spirit viz. Rules 23 to 62 are ultra vires and unconstitutional and are struck down - There shall be no licence required under the Maharashtra Prohibition Act for sale, purchase, transport, possession, storage, dehydration, import and export of denatured spirit - petition disposed off. - WRIT PETITION NO. 8548 OF 2004, WRIT PETITION NO. 197 OF 2004, WRIT PETITION NO. 9127 OF 2004, WRIT PETITION NO. 5491 OF 2005, WRIT PETITION NO. 6179 OF 2005, WRIT PETITION NO. 378 OF 2005, WRIT PETITION NO. 10072 OF 2004 - - - Dated:- 13-12-2017 - MR. A.S. OKA AND RIYAZ I. CHAGLA, JJ. WRIT PETITION NO. 403 OF 2002, WRIT PETITION NO. 863 OF 2002, WRIT PETITION NO. 882 OF 2002, WRIT PETITION NO. 8384 OF 2004, WRIT PETITION NO. 8629 OF 2005, WRIT PETITION NO. 4116 OF 2003, WRIT PETITION NO. 9397 OF 2003, WRIT PETITION NO. 5232 OF 2005, WRIT PETITION NO. 59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I . The Petitioners supply the absolute alcohol in form of denatured, called denatured ethanol to various petrochemical companies either in the State of Maharashtra or outside the State of Maharashtra. The Petitioners also import denatured spirit from outside the State of Maharashtra. Petitioners are also exporting absolute alcohol outside the State of Maharashtra. The Petitioners state that under the Rules they have to obtain a pass issued by Respondent No.3 under 49 and 50 of the Rules for the import and export of denatured alcohol and this is granted only after paying import / export fees mentioned in Rule 52 and 59 of the Rules. The import of denatured spirit is governed by Rules 51 to 56 and the export of denatured spirit is governed by Rules 57 to 62 of the Rules. 3. The Petitioners have referred to the Industries ( Development Regulation) Act, 1951 which was amended in the year 1956 and particularly item 26 of schedule 1 which reads thus:- 26. Fermentation Industries :- 1. Alcohol 2. Other products of fermentation industries, The Petitioners have therefore, submitted that by declaration of fermentation Industries in the year 1956, the Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioners has referred to the Industries (Development and Regulation) Amendment Act, 2016 notified in the gazette of India on 14th May 2016. The first schedule of the Act has been amended and item 26 reads thus : Fermentation Industries (OTHER THAN POTABLE ALCOHOL) shall be substituted . The above amendment is retrospective i.e. on and from the commencement of the pre amended Act i.e. Industries (Development and Regulation) Act, 1951. The learned counsel for the Petitioners has accordingly submitted that from the Amendment Act it is clear that denatured alcohol, not being potable alcohol, is exclusively within the perview of the Central Government and the State Government only has control over potable alcohol. He has submitted that under Section 2 Subsection (10) of the Bombay Prohibition Act (now The Maharashtra Prohibition Act) denatured spirit is unfit for human consumption. 6. He has submitted that under the Act denatured spirit has incorrectly been included in the definition of Liquor and classified along with spirits, wine, beer, toddy and all liquids consisting or containing alcohol. This has been defined in Section 2 subsection (24) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttempting to alter denatured spirit by dilution with water or by any method whatsoever, with the intention that such spirit may be used for human consumption as an intoxicating liquor or have in his possession any denatured spirit which he has reason to believe that such adulteration or attempt has been made to alter the denatured spirit. He has further contended that the statute imposes the strict imposition of penalty under Section 67 for contravention of the provisions of Section 21 of the Act. He has also relied upon the judgment of the Supreme Court in VAM Organic (VAM II) (Supra) which has recorded the submissions of the Appellants therein, in particular the possibility to renature denatured spirit. It is in this context, he has submitted that the State has a power to take steps to ensure that denatured spirit remains denatured. He has also relied upon the judgment of this Court in the case of Hanil Era Textiles Ltd. Vs. Hindustan Petroleum Corporation Ltd. W.P. No. 6937 of 2005 along with other Petitions decided on21st February 2006. wherein this Court has observed that the tender condition of obtaining an endorsement of the name and dosage of denaturants cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. 10. We have carefully considered the submissions. We have perused the various provisions of the Act and the Rules, particularly in the context of the power of the State to regulate the possession, sale, import or export etc. of denatured alcohol. Section 2 Sub-section (10) of the Act has defined denatured as being subjected to a process prescribed for the purpose of rendering unfit for human consumption. The Act thus recognizes denatured spirit as being incapable of human consumption. This would be so despite denatured spirit falling within the definition of liquor in Section 2 Sub-section (24) of the Act as well as within the definition of spirit in Section 2 Sub-section (43) of the Act. The State power to regulate alcoholic liquors under the Constitution of India in List II item 51 is restricted to alcoholic liquors for human consumption and under List II Item 8 is only to regulate the production, manufacture, possession, transport, purchase and sale of 'intoxicating liquors'. Hence the State has no power to legislate in respect of denatured alcohol which is incapable of human consumption. Section 143 of the Act provides for the Rule making power of the State an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations of Justice Brandeis in Nashville, Chattangooga St. Louis Railway v. Herbert S. Walters 79 L ed 949 : 294 US 405 (1935). See also Nebbia V. People of the State of New York 78 L ed 940, 941 : 291 US 502. Similar is the effect of the approach of this Court in Motor General Traders v. State of Andhra Pradesh (1984) 1 SCC 222 : (1984) 1 SCR 594 : AIR 1984 SC 121 94. It is further contended that Entry 8 in List II which talks of intoxicating liquors only authorises the State legislature to enact laws to regulate but does not empower the State legislature to impose any levy and the various levies which have been imposed by the State legislature on industrial alcohol and even methylated spirit could not be brought within the ambit of regulatory duties for purposes of regulation only and therefore could not be justified under Entry 8 of List II. 110. In our opinion, therefore 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 to one for human consumption and for purpose of regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Shri Bileshwar Khand Udyog Khedug Sahakari Mandali Ltd. Vs. State of Gujarat, (1992) 1 SCR 391 : (1992 AIR SCW 554 and Gujchem Distillers India Ltd V. State of Gujarat, (1992) 1 SCR 675 : (1992 AIR SCW 1206 . 13. The Supreme Court has thus drawn a distinction between rectified spirit meant exclusively for supply to industries whether after denaturing it or without denaturing it and the rectified spirit in the process of manufacture or after manufacture being diverted or misused for potable purpose. The Supreme Court has held that the State Government has no power to regulate the former i.e. rectified spirit which is exclusively for supply to industries other than for potable purposes. This is further made clear by the Supreme Court in its decision in State of UP Vs. VAM Organics Chemical Ltd. (VAM II) (Supra) , relying on is decision in VAM I (Supra), paragraph 43 of the judgment reads thus:- 43. 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 is deprived of revenue o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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