JUDGMENT
1. The writ petition and the writ appeal arising from an order passed in an interlocutory petition (W.M.P. 5832 of 1979) in the writ petition before us, have been Posted before a Full Bench or, account of certain conflicting decisions on the question whether methyl alcohol is an intoxicating liquor coming within the scope of Entry 8 of List II of the Seventh Schedule to the Constitution of India, and whether a State Legislature has competence to legislate with reference to the possession, transport and storage of methvl alcohol and the issue of licences and imposition of licence fees. In the writ, petition the Constitutional validity of the Madras Denatured Spirit, Methyl Alcohol and Varnish (French Polish) Rules, 1959 (hereinafter referred to as the Madras Spirit Rules) is questioned in so far as the Rules provide for the levy and collection of licence fee and/or gallonage fee. The writ appeal is directed against the order of V. Raynaswami J. dismissing the petition, W.M.P. 5832 of 1979 for impleading respondents 2 to 4 as Parties to the petition on the ground of judicial expediency.
2. In the writ Petition, the Union of India has been impleaded as the second respondent pursuant to an application filed by the petitioner.
3. 7he petitioner company has been granted an industrial licence for establishing an industrial undertaking at Ranipet for manufacture of 6000 tonnes of formaldehyde arid other organic chemicals. Methyl alcohol or methanol is the main raw material required for the manufacture of formaldehyde. The Petitioner’s factory would require annually 3000 metric tons equivalent to 37.50 lakhs litres by volume of methyl alcohol for the production of 6000 tonnes of formaldehyde. The Government of Tamil Nadu, in exercise of the powers conferred to, it by the provisions of the Madras Prohibition Act (Madras Act X of 1937), have framed the Madras Spirit Rules, 1959 and the Rules have been brought into force from 1-4-1959, In the said rules methyl alcohol is defined in Rule 2 (e) as under:
‘”Methyl alcohol means the liquid having the chemical formula CH30H Its other chemical names are rnethanol, carbonal and methyl hydrate and includes wood naphtha, wood spirit, wood alcohol, pyrogallic spirits, and pyroligneous spirits.”
Rule 6 of the said Rules prohibits the possession, transport or storage of methy] alcohol except in accordance with the terms and conditions of a licence issued by the Government for such possession or permit for transport, as the case may be, Rule 8 of the said Rules prescribes that if methvI alcohol is to be possessed and stored for purposes of use in the manufacture of specified comynodities, a licence in the form known as D.L. 2, should be obtained by the person possessing or storing such methyl alcohol on payment of the prescribed licence fee based on the quantity of methyl alcohol to be stored. The Rules also -provide for the licencee being called upon to furnish security by way of dcash deposit of such sum as may be prescribed by the Licensing Authority. Rule 10 (ix) provides for the levy of gallonage fee at the rate of 25 paise per litre on methvl alcohol obtaid by a licencee from a distillery in the State or from sources outside the State. The present scale of licence fee prescribed under Rule 8 (a) is set out hereunder-
(see table below) Quota of spirit per annum Rate of licence fee from 1-4-1973 Not exceeding 500 litres in case of educational Institutions 25 (schools, colleges, polytechnics, etc.) Not exceeding 500 litres in cases other than educational institutions. 50 Above 500, but not exceeding 1000 litres. 100 Above 1000, but not exceedingM100 litres. 200 Above 5000 but not exceeding 7500 litres. 300 Above 7500 but not exceeding 10 W litres. 500 Above 10000, but not exceeding 20000 litres. 1000 Above 20000, but Dot exceeding 40000 litres 2000 Above 40000, but not exceeding 80000 litres. 3000 Above 80000, but not exceeding 10,00,000 litres. 4000 In excess of 1,00,000 litres. 5000
(The rate of licence fee for quantities in excess of one lakh litres has been wrongly given in the petitioner’s affidavit as Rs, 5000 for each slab of 1 lakh litres in excess of the first one lakh litres). Besides the licence fee. there is an obligation to pay gallonage fee at 25 paise Per litre on the annual licenced quota Znd payment of security deposit equivalent to the gallonage fee. The effect of the combined levies, in the case of the petitioner company, it is averred, would result in payment of a sum approximately Rs. 20 lakhs per annum. The petitioner is therefore aggrieved with the Madras 6pirit Ru)e,,; 1959 and the levy of fees thereunder and has come forward with the writ petition for issue of 2 writ of mandamus or other appropriate writ or order to direct the first respondent to forbear from enforcing the provisions of the Madras Spirit Rules, 1959 in so far as they relate to the levy of licence fee and gallonage fee or frunishing of security deposit in respect of methyl alcohol purchased, stored and used lay the petitioner, from producers within or outside the State of Tamil Nadu.
4. In the affidavit filed in support of the writ petition, the petitioner impugns the validity of the Madras Spirit Rules 1959, in so far as they relate to methyl alcohol on the following grounds,Methyl alcohol does not fall either under Entry 8 or under Entry 51 of List II of the Seventh Schedule to the Constitution, because methyl alcohol is not alcoholic liquor as is envisaged under the Entries mentioned above, but is a totally different substance and wholly unfit for human consumption. It is not intoxicating liquor nor a liquor fit for human consumption, but on the other hand, methyl alcohol is a highly poisonous liquid, having a high rate of toxicity and consumption of even a small quantity of 30 ml, will have fatal consequences, while consumption of lesser quantities will result in blindness and other adverse consequences. Methyl alcohol is not also akin to denatured spirit but on the other hand, A is a denaturant, Methyl alcohol is a highly inflammable material and consequently, its possession, storage, transport etc. would be governed by the provisions of the Inflammable Substances Act (Central Act XX of 1952) as well as the Petroleum Act (Central Act XXXof 1934) and the Rules and Notifications issued there under. A., a consequence thereof the petitioner has obtained licences from the Chief Controller Explosives for transporting, storing and utilising methyl alcohol, In such circumstances, the State Legislature has no right to pass an Act and the State Government has no right to frame rules, treating methyl alcohol as an intoxicating liquor or as one fit for human consumption and impose restrictions or issue licences on payment of fees regarding possession transport, storage etc., of methyl alcohol. Even assuming that for some reason or other the State Government is entitled to issue licences for regulating the possession, storage etc., of methyl alcohol and to impose licence fee, such fee should be related to the cost of the service rendered by the State Government. The prescription of fees at slab rates and the fixation of a fee of Rs, 4,000 for quantities of 80000 litres, but not exceeding 1,00,000 Hires and at the exrate of Rs. 5,000 for quantities exceeding 1,60,000 litres,is unwarranted and unconscionable.
Similarly, the levy of gallonage fee on the annual licensed quota and the requirement of security deposit are also illegal. The effect of the combined levy of the various fees will result in the petitioner being obliged to pay a sum of nearly Rupees twenty lakhs per annum and this would adversely affect the petitioner’s business and make its products virtuallv unsaleable since there is no such levy in the other States in India like Maharashtra, Gujarat, West Bengal and Haryana,where also, formaldehyde manufacturing units are established.
5. The contentions of the petitioner have been refuted by the first respondent in a detailed counter affidavit filed by it. The first respondent has referred to the various provisions of the Prohibition Act which confer power upon the Government to prohibit the manufacture, traffic and consumption of liquor etc. except in accordance with the provisions of the Act, Rules and. notifications and the power of the Government to issue licences and permits on payment of fees for import, transport, manufacture and use of liquor, alcohol etc. S, 54 of the Prohibition Act has been specifically mentioned for asserting the powers of the Government to issue licences, permits etc., and for framin, 2 rules for levy and collection of duties on all kinds of liquor, intoxicating drugs: etc. It is then stated that methyl alcohol will also constitute liquor for the purpose of the Act, since See. 3 (9) of the Prohibition Act are comprehensive in nature and includes not only spirits and denatured spirits, but also all liquors consisting of or containing alcohol. Reference is made to Rule 2 (1) (e) of the impugned Rules, as it comprehends methyl alcohol also and brines it within the scope of the Madras Spirit Rules. As methyl alcohol is also an intoxicant. the State Government, it is said, is entitled to regulate the purchase, transport and storage of methyl alcohol in exercise of its powers under Entry 8 of List II of the Seventh Schedule to the Constitution. The Rules in question are said to be a continuation of the old rules, viz., the Madras Denatured Spirit Rules 1939. As the Rule is a pre-constitutional law, it is saved under Art. 372 of the Constitution. Methyl alcohol resembles ethyl alcohol very closely in appearance and is used for different purposes and when mixed with ethyl alcohol, as in the case of industrial spirit and methylated spirit, it is difficult to separate the two. Moreover, methyl alcohol is also used as an intoxicating beverage. Having regard to all these factors, the State Government is said to be entitled to exercise its powers under Entry 8 and Entry 51 of List II of the Seventh Schedule to the Constitution and regulate the use and possession of methyl alcohol by means of an appropriate licensing system and levy excise duty or countervailing duty. The licensing policy, it is claimed, is not peculiar to Tamil Nadu, but is a feature common in other States as well. The counter-affidavit then deals with the other grievance of the petitioner, viz., about the licence fee being excessive and unrelated to the nature of the services rendered by the State Government. The stand of the first respondent is that the fee is a charge not only for the special services but also for the general services rendered by the different Governmental agencies. It is pointed out that a distinct setup of departmental officers and agencies has to be maintained irrespective of the number of applicants coming forward for grant of licences under DL 2 from. The imposition of licence fee on slab rates is justified on the ground that the greater the quantity of spirit required, the greater is the need for scrutiny and inspection and consultation with other departments. It is then said that without proper check and scrutiny, the spirits and liquors mentioned in the Rules are liable to be misused by a large number of persons, as provided by experience, and it is only on account of compulsive factors, the Government have chosen to enforce the rules regarding a security deposit from 1st May, 1975. In the absence of a security deposit, it is averred; every case of contravention will have to be dealt with only by cancellation of licence or filing of criminal prosecution. The impugned Rules are applied to about 1400 licensees in the State. Taking into consideration the prohibition policy of the Government and the welfare of the public, all kinds of alcohol and spirit including methyl alcohol and varnish, have been covered by the Rules in question- As regards the levy of gallonage fee, there is a specific provision for it in R. 10 (ix) and such a levy has been in vogue for a considerably long time. List II of the Seventh Schedule to the Constitution provides for the levy of fees in respect of any of the matters in the List and a similar provision is also made under Entry 96 of List I and Entry 47 of List III. Fees are thus leviable in the course of levy or collection of taxes apart from fees for licences. Fees, it has now become settled, is not a voluntary payment and hence there can be an element of compulsion in all cases while conferring a special benefit on an individual. Gallonage fee is a regulatory levy and has to be made in the interests of the administration and enforcement of the Prohibition Act. On the foot of such contentions, the first respondent would say that the petitioner is not entitled to the issue of any writ or order.
6. In addition to the counter-affidavit, the first respondent has also furnished answers to the specific questions raised by the petitioner by means of an interrogatory. In the answers to the interrogatories, it is stated as follows-
1. D. L. 2 licence for “session of methyl alcohol under the Madras Spirits Rules, 1959, as originally enacted, could be obtained free of licence fee.
2. Rule 8 was subsequently amended on 23-1-1964 and a licence fee of Rs. 15 was fixed for D. L. 2 licence.
3. The licence fee was subsequently raised to Rs. 20 and then to Rs. 1:00.
4. Under a later G. O dated 29-111973, the Government has fixed the licence fee for D. L. series licencees having annual quota of .1,00.000 litres and above at Rs. 5000.
5. The licence fee Payable by the Petitioner on the annual quota of 40,00,OW litres will not amount to Rs. 2 lakhs, but only Rs. 5000.
6. On the annual quota of 40,00,000 litres for the petitioner, the security deposit will amount to Rs. 10 lakhs. However, instead of depositing cash, Bank guarantee would be accepted by Government.
7. The petitioner need not execute an agreement agreeing there under to the Government being entitled to forfeit the security deposit in case of non-observance by the petitioner of the terms and conditions of the licence.
8. However, the security deposit is liable to forfeiture by Government for non-observance of the terms and conditions of the licence issued under Rule 9 (vii) (a) of the Madras Spirit Ru es, 5 .
9. Gallonage fee in respect of methanol will be 50 paise per bulk litre if imported and 25 paise if purchased within the State.
7. Mr. V. K. Thiruvenkatachari learned counsel for the petitioner, contended that methyl alcohol or methanol is not an intoxicating liquor or liquor fit for human consumption and hence the State Legislature has no power to enact laws for regulating the manufacture, possession, transport, purchase and sale of methyl alcohol or impose excise duty or countervailing duty upon the commodity. The learned counsel stated that in the Government of India Act, 1935, all aspects of intoxicating liquors, viz., industry, trade, production and distribution were taken out of Entries 24, 26 and 27 of List II and concentrated in one Entry viz., Entry 8. The term ‘alcohol’ comprehends many items such as industrial alcohol, like denatured spirit organic chemicals like methyl alcohol formaldehyde, acetic acid etc. besides potable liquor. However, only other varieties of alcohol fall under Entries 24, 26 and 27. Consequently, there is a difference in the ambit and scope of leaislation as regards potable liquor on the one hand and the other varieties of liquor on the other. The absolute right of the State legislature in matters relating to potable liquor, extending even to imposing total prohibition upon the trade, production and distribution of potable liquor, was recognised, in Bolo Prasad’s case (sic). After the Constitution the powers of the State Legislature to enact laws in respect of alcohol other than intoxicating liquor fall under Entries 24, 26 and 27 of List II of the 7th Schedule and since the freedom of trade guaranteed under Art. 19(1)(g) of the Constitution will cover these Entries also, the State Legislature has to make laws in such a manner that they will not conflict with Art. 19(1)(9). However, in respect of intoxicating liquor or potable liquor, Art. 19 has no application and hence the State can claim monopoly rights by legislation, as has been done in the Tamil Nadu Excise Act. On account of these features, the categorisation of various kinds of alcohol in the appropriate Entries is an inevitable concomitant. In the same manner, in the matter of levy of excise also, a difference has to be maintained in the powers of the State between potable liquor falling under Entries 8 and 51 and other kinds of alcohol falling under Entries 24, 26 and 27. Since methyl alcohol is totally unfit for human consumption and is in fact a highly poisonous and inflammable commodity it cannot by any stretch of imagination be considered as potable liquor and subjected to licence fee and excise by the State Government. It was further urged that while S. 3 (9) of the Prohibition Act referred only to denatured spirit and not methyl alcohol or methylated spirit, the Madras Spirit Rules, 1959 purported to deal with methyl alcohol, methylated spirit and varnish also and the inclusion of those products was beyond the competence of the State.
8. It was then urged that the matter could be viewed from another angle also. Methyl alcohol on account of its being a highly inflammable material is governed by the provisions of the Inflammable Substances Act (Central Act XX of 1952) and the Petroleum Act (Central Act XXX of 1934) and the Rules and Notifications issued thereunder. The petitioner has obtained licences under the above said Acts and is therefore entitled to purchase, transport and utilise methyl alcohol for manufacturing formaldehyde in accordance with the terms and conditions of these licences. Hence the petitioner cannot be compelled by the State Government to obtain further licences under the impugned Rules.
9. Another contention Put forward was that with effect from 8-5-1952 organic heavy chemicals and industrial alcohol were included in the schedule to the Industries (Development & Regulation) Act, 1951 (Act LXV of 1951). The effect of this will be that these items also will stand inserted in List I, under Entry 52. As a result thereof, methyl alcohol industry, formaldehyde industry, alcohol industry etc, would be covered by the declaration made by the Government with effect from lst March 1957. The resultant position would be that whatever articles are included by the Government of India under the Industries (Development and Regulation) Act 1951′, have to be taken as falling under Entry 52 of List 1 and not comprised in Entry 8 of List II. The learned counsel urged that once a notification was made under the Industries (Development and Regulation) Act, so as to include methyl alcohol industry also as one of the controlled industries, then Arts. 73 and 162 would be attracted and the executive power of the State will be subject to and limited by the executive power of the Central Government and, in addition, the State Executive will have no power under Art. 298(b) of the Constitution to exercise control over methyl alcohol industry.
10. Lastly, Mr. Thiruvenkatachari advanced arguments regarding the excessive and unrealistic nature of the licence fee and gallonage fee. It was urged that the slab system of levy, if at all it can be justified, can be done only in the matter of taxation and not in the imposition of a licence fee which should always have a proper correlation to the services rendered. It was further stated that even if the slab system is held applicable to the imposition of licence fee, the fee imposed should have nexus to the services rendered.
11. On the contentions put forth by Mr. Thiruvenkatachari three questions fall for our consideration viz-
1. Whether the State Legislature, acting under Entry 8 of List II of the Seventh Schedule to the Constitution, has no legislative competence to demand a licence fee and levy gallonage fee in respect of methyl alcohol as it is not fit for human consumption?
2. Whether, by reason of the Notification issued under the Industries (Development and Regulation) Act, 1951, methyl alcohol will stand taken out of Entry 8 of List II? and
3. Whether the levy of licence fee at slab rates is wholly unrelated to the services rendered by Government and is harsh and oppressive?
12. The questions posed for consideration are not strictly res integra because they have already been considered by three High Courts and also by the Supreme Court, though all those cases but two did not relate to methyl alcohol. Even so, we will examine the contentions of the petitioners counsel in some detail. The Tamil Nadu Prohibition Act was introduced in 1937 for the purpose of bringing about prohibition, except for medicinal, scientific, industrial or such like purposes, of the production, manufacture, possession, export, import, transport, purchase, sale and consumption of intoxicating liquors and drugs in the province of Madras. The word ‘liquor’ has been defined in S. 3 (9) of the Prohibition Act as follows-
“Liquor’ includes toddy, arrack, spirits of wine, denatured spirits, wines beer and all liquid consisting of or containing alcohol.”
Under S. 4 of the Act, it is laid down that the import, export, transport or possession of liquor or any intoxicating drug or the manufacture of liquor or any intoxicating drug should be done only in accordance with the Rules made by the State Government in that behalf. S. 5 provides –
I “Whoever rendered or attempted to render fit for human consumption any spirit which has been denatured or any preparation containing such spirit shall be punished in the manner provided in the Act. ”
Under S. 54, the State Government is empowered to make rules for the purpose of carrying into effect the provisions of the Act. In particular the power to make rules is conferred in respect of matters relating to W issue of licences and permits and the enforcement of the conditions thereof and (ii) prescribing the ways in which the duty under Section 18-A may be levied and collected on all kinds of liquors and drugs. In the year 1971, the Prohibition Act of 1937 was suspended by the State Legislature, but on the same date, the Tamil Nadu Excise Act 1971 was enacted. Section 83 of the said Act introduced a fiction and declared that all rules and notifications issued under the Prohibition Act of f937 should be deemed to have been issued under the corresponding provisions of the Excise Act of 1971 and continue to have force. In the Excise Act of 1971, the word ‘liquor’ has been defined’ as follows –
“S. 2 (16): ‘Liquor’ includes arrack, spirits of wine, methylated spirits, spirits, wine, toddy, beer and all liquid consisting of or containing alcohol.”
Subsequently, the suspension of the Prohibition Act was revoked in 1974, and the Act has come to be in force as before. It is in exercise of the powers under the Prohibition Act, 1937, and the rules framed thereunder, methvl alcohol Is also subjected to control by means of appropriate licences issued by the Government on payment of licence fee.
13. Turning now, to the literature of methyl alcohol, we find that its chemical composition is CH3OH and it is a highly poisonous liquid. It was originally obtained by destructive distillation of wood, but on account of scientific advancement it is now produced by synthetic process. Methyl alcohol is now increasingly required for industrial use in chemical industries. It has a high rate of toxicity and it is said that a dose of 250 ml. can cause death while intake of lesser quantities can lead to total blindness, convulsion, perspiratory collapse, respiratory failure etc. It may have an alcoholic smell, but it is different from alcohol and is an organic liquid, On account of its highly inflammable nature, the storage, transport and use of methyl alcohol is governed by the Provisions of the Inflammable Substances Act and the Petroleum Act and the Rules and Notifications issued there under. On the other hand, ethyl alcohol or ethanol, which is commonly referred to as alcohol, is an intoxicant and its chemical formula is C2H2OH, (C2H5OH – Ed.). Ethyl alcohol is used as an alcoholic beverage in suitable solutions. It is also used as a solvent in laboratory and industrial manufacture of denatured alcohol, pharmaceuticals and perfumeries. If ethyl alcohol is to be rendered unfit for human consumption or, in other words, if it is to be denatured, methanol is often used. Methanol is therefore a denaturant and not denatured spirit.
14. Having noticed the differences between methyl alcohol on the one hand and ethyl alcohol on the other, we will now consider whether the State Government is entitled to treat methyl alcohol also as potable liquor or intoxicating liquor. There is no denying the fact that in spite of methyl alcohol being dangerous and highly poisonous, it is not infrequently used as an intoxicant by ignorant or misinformed persons and, sometimes, knowingly too, by degenerate alcoholics. It is also common knowledge that unscrupulous adulterators mix methyl alcohol with potable liquor and pass on the preparations as a highly potent intoxicant to satisfy avid hard-core drinkers and the consumption of such liquor often leads to tragic, consequences. It cannot, therefore, be said that methyl alcohol is either incapable of or is not being used as an intoxicant. May be, the use of methyl alcohol as an intoxicant would amount to an abuse of the product; but that will not detract from the position of its being used as an intoxicant. Since the policy of the Government under the Prohibition Act is to regulate the consumption of liquor in such a manner as will eventually fulfill the objective of Art. 47 of the Constitu-1 tion of India, it must be held that the State is entitled to exercise its powers under Entry 8 of List II, not only in respect of ethyl alcohol and preparations made there from, but also methvl alcohol, as the latter also is sought after and consumed, though mistakenly, as an intoxicant. We may appositely extract the view expressed by the Division Bench of the Andhra Pradesh High Court in State of Andhra Pradesh v. Formalin and Fine Chemicals Ltd., (W, A, 868/75 and 256/76 of Andhra Pradesh High Court, judgment dated Nov. 13, 1976), (Reported in 1978 Tax LR 1603) on this aspect of the matter (para 11): –
“Sri Ramachandra Rao for the petitioner went to the extent of arguing that methyl alcohol does not come under clause (b) of S. 2 (21) of the Andhra Pradesh Excise Act, 1968, either. The basis of this contention is that methyl alcohol is not an intoxicating substance and unless it is an intoxicating substance, it cannot be declared to be liquor for the purpose of the Act under clause (b). Learned counsel’s contention is that methyl alcohol is a highly dangerous substance and it is undrinkable, since it kills persons when it is drunk, we are not persuaded to accede to this submission. May be, it is ethyl alcohol that goes into the composition of ordinary alcoholic drinks. At the same time, it shall not be overlooked that dangerous and deadly substances also are used in some unauthorised and adulterated drinks. Taylor in the 12th edition of his book Principles and Practice of Medical-jurisprudence, says at page 381 of the Volume
Of the various alcohol. in common use in every day life, only ethyl and methyl alcohols are found in drinks, the latter only in cheap adulterated spirits. About methyl alcohol the same learned author says –
In many parts of the country methylated spirit is used for drinking purposes in spite of addition of the dye and poisonous substances prescribed by the regulations. Glaster expressed similar opinion in his Medical Jurisprudence. Weiston and Gisvold in their Text Book of Organic Medical Pharmaceutical Chemistry, state –
‘Ingestion of even small quantities of methanol produces a drunkenness similar to that of ethanol ……….
Keith Simpson in his ‘Forensic Medicine’ stated about methyl alcohol that it is an intoxicating spirit. Coming to Indian authors, Modi in his Medical Jurisprudence and Toxicology, expresses the following view at page 658 of the 19th edition –
‘Methyl alcohol produces drunkenness less readily than ethyl alcohol, but its poisonous effect lasts longer as it is metabolized much more slowly and re mains in the body for several days.”
……… From the above opinion, it be-comes clear that methyl alcohol, while being dangerous and often deadly in its effects causing blindness and death * is certainly capable of being used as an in toxicant and is, therefore, an intoxicating substance ………..
It may thus be seen that the Division Bench of the Andhra Pradesh High Court has also taken the same view, as we have taken, viz., that Methyl alcohol, despite its toxic effects, is capable of being used as an intoxicant and can therefore be subjected to control by the State Government.
15. The subsidiary contention on the basis of the licences obtained under the Inflammable Substances Act, (Central Act XX of 1952) and the Petroleum Act (Central Act XXX of 1934) and the Rules and Notifications issued there under is also, in our opinion, without any force. Merely because methyl alcohol, on account of its high inflammability also calls for regulation under the Inflammable Substances Act and the Petroleum Act, the petitioner cannot contend that the power of the State Government under the Prohibition Act tol exercise control over methyl alcohol as, an intoxicant will stand obliterated in full manner. Having reached such a conclusion, we will now examine the easel law on the subject.
16.In Messrs Formalin and Fine Chemicals Ltd. v. State of Andhra Pradesh, W. P. 3159 of 1973 of the Andhra Pradesh High Court order dated. July 11. 1975, Chinnappa Reddy, J. (as he then was) had to consider whether methyl alcohol can be termed as liquor and whether the Andhra Pradesh Government could levy licence fee called ‘import pass fee’ on methyl alcohol in exercise of its powers Linder the Andhra Pradesh Excise Act 1968, and the Andhra Pradesh Denatured Spirits and Denatured Spirituous Preparations Rules, 1971 The learned Judge held that though methyl alcohol is dangerous and often highly poisonous, causing blindness and death, it is occasionally used as an in-toxicant by the ignorant and uninformed and perhaps by the degenerate an adulterator and the fact that it is capable of being used as an intoxicant is quite sufficient to make it an intoxicating substance which could be declared to be a liquor under S. 2 (21) (b) of the Andhra Pradesh Excise Act and there fore, the relevant notification declarine methyl alcohol to be a liquor for the purpose of the said Act would be valid. On the further question as to whether the State Legislature had competence to legislate in regard to methyl alcohol the learned Judge held that while Parlia- ment is competent to legislate in regard to methyl alcohol as an inflammable substance, the State Legislature is equally competent to legislate in regard to methyl alcohol as an intoxicating liquor and as a poison. The order of Chinnappa Reddy. J was affirmed by a Division Bench of the Andhra Pradesh High Court in State of Andhra Pradesh v.Formalin and Fine Chemicals Ltd. (197?, Tax LR 1603): W. A. 868/75 and 256/76 of Andhra Pradesh High Court.
17. A Division Bench of this court consisting of Ramaprasada Rao, C. J. and Ramanujam, J. had to consider in Mascherneijer Aromatics (India) P. Ltd. v. State of Tamil Nadu, W. P. 2871 and 2879/73 of this court, order dated April 16, 1979 whether the State Legislature, acting either under Entry 8 or under Entry 51 of List II of the Seventh Schedule to the Constitution, had power to control industrial alcohol and whether it had competence to demand licence fee in respect of industrial alcohol. The Bench held as follows –
“We are of the view that even if industrial alcohol is not fit for human consumption and as such, is not an excisable article under S. 2 (6) of the Act (Tamil Nadu Excise Act), it can be brought under control or regulation under the provisions of the Act in view of the wide definition of liquor even in S. 2 (16) as including arrack spirits of wine, methylated spirits, spirits, wine beer and all liquor consisting of or containing alcohol. We have therefore to reject the petitioner’s contention that industrial alcohol, being unfit for human consumption, cannot be dealt with under the Tamil Nadu Excise Act.”
18. As against the view taken in the abovesaid two cases, a Division Bench of the Kerala High Court has taken a different view in Bombay Oil Industries P. Ltd. Angamally v. Excise Inspector, Excise Range, Angamally. O. P. 141 and 208/75 of Kerala High Court order dated April 5, 1979: (1980 Tax LR 2258) It was held by the Division Bench that the mere fact that methanol is sometimes recklessly used by illiterate or uneducated persons could not afford sufficient reason for holding that methyl alcohol is a beverage or an intoxicatina liquor. On such a finding, it was held that the definition of liquor in the Kerala Akbari Act would not take in methyl alcohol or methanol.
19. After these judgments were rendered, the Supreme Court has also rendered judgment in one case which will have very great relevance to the debate before us. In State of U. P. v. Synthetics and Chemical Ltd., , the imposition of vend fee under the U.P.Excise (Amendment) Act13/1972 on denatured spirit for grant of licence for wholesale vend of denatured spirit was challenged as being beyond the competence of the State Government. Therein also, the argument (sic) and hence the imposition of vend fee was beyond the competence of the State Legislature under Entries 8 and 51 of List 11 of the 7th Schedule to the Constitution. The Supreme Court’s decision on the matter is in the following terms (Para 12)
“We are unable to accept this contention, for in Balsari’s case, after explicitly approving of the definition of the word ‘liquor’ in various Abkari Acts 41 the provinces of India, the court held that liquor would not only cover alcoholic liquor which is generally used for beverage purposes and produced intoxication, but would also include liquids containing alcohol.’
20. In another portion of the judgment, after referring to the earlier decisions of the Supreme Court, on the same subject, their Lordships have held as follows, at page 620-
“The decisions referred to above make it clear that the power to legislate under List II, Entry 8, relating to intoxicating liquor comprises of liquor which contains alcohol, whether it is potable or not”.
From the decisions referred to above, it may be seen that the more acceptable view to courts including the Supreme Court is that whatever be the nature of the liquor, i.e., whether it is potable or not, the State Government will be well within its power to legislate under List II, Entry 8, relating to intoxicating liquor. The decision in MascherneiJer Aromatics (India) Pvt. Ltd. v. State of Tamil Nadu , W. P. 2871 and 2872/73 of this court, orders dt. April 16, 1973 was criticised on the ground that the Bench had failed to notice that with effect from 28-8-1974 the Prohibion Act had been revived and hence the power of the State Government to issue licence for purchase and use of industrial alcohol ought to have been considered with reference to the terms of the Prohibition Act and not the Tamil Nadu Excise Act. We are not persuaded by this contention, because the writ petitions were of the year 1973 and consequently, the Division Bench was called upon to decide the validity of the impugned Act as on the date of its issue i.e. when the Prohibition Act was suspended and the Tamil Nadu Excise Act was in force. Moreover, the finding of the Bench which is relevant for consideration in this case, is on the question whether industrial alcohol is intoxicating or potable liquor or not, The relevant portion in the order is in the following terms –
Emphasis not given in copy-Ed.
“In this view, the petitioner’s contention that industrial alcohol, which is not fit for human consumption and therefore not excisable, cannot be the subject matter of control or regulation under the provisions of the Act loses all significance. We are of the view that even if industrial alcohol is not fit for human consumption and as such, is not an excisable article under S. 2 (6) of the Act (Tamil Nadu Excise Act), it can be brought under control or regulation under the provisions of the Act in view of the wide definition of ‘liquor’ given in S. 2 (16) as including arrack, spirits of wine, methylated spirits, spirits, wine, beer, and all liquor consisting of or containing alcohol. As per the scheme of the Act, ‘liquor’ as defined in S. 2 (16) which includes within it alcohol which is fit for human consumption can be controlled and regulated under the Act though for the purpose of levy of excise and countervailing duty, it is only alcoholic liquid fit for human consumption which is brought under the definition of ‘excisable article’ under S. 2 (6). We have, therefore, to reject the petitioner’s contention that the industrial alcohol, being unfit for human consumption, cannot be dealt with under the Tamil Nadu Excise Act.”
We are in differential agreement with the ratio contained in State of Andhra Pradesh v. Formalin and Fine Chemicals Ltd., W. A. 868/75 and 256/76, of Andhra Pradesh High Court judgment dated Nov. 13, 1976 : (1978 Tax LR 1603), and Maschemeiier Aromatics (India) Pvt. Ltd. v. State of Tamil Nadu, W. P. 2871 and 2872/73 of this court order dt. April 16, 1973 and, of course, we are bound by the ratio in State of U. P. v. Synthetics and Chemicals Ltd., . It is needless to say that we do not agree with the view taken by the Kerala High Court in Bombay Oil Industries Pte. Ltd. Angamally v. Excise Inspector, Excise Range, Angamally, 0. P. 141 and 208/75 of Kerala High Court order dt. April 5, 1979 : (1980 Tax LR 2258). Mr. Thiruvenkatachari argued that State of U. P. v. Synthetics and Chemicals Ltd., , was concerned with denatured spirit which will fall within the category of alcohol and hence the decision can be distinguished. He further contended that in the Supreme Court case, it had not been contended that the State did not have competence to pass a law to monopolise for itself the trade and industry of denatured spirit and in such a situation, it was not open to the State to levy licence fee. We are not persuaded by this argument because the debate is not whether methyl alcohol will amount to alcohol or not or whether the State must necessarily have monopolistic rights before levying licence fee, but it is whether methyl alcohol i3 consumed as an intoxicant or not, and if it is so consumed, whether, for the purposes of the Prohibition Act, the State can issue licence and levy a fee therefore. In that view of the matter, we think that the decision of the Supreme Court, though it related to denatured spirit, will be fully applicable to the facts of this case also. Mr. Thiruvenkatachari stated that a review petition has been filed against the decision of the Supreme Court in State of U. P. v. Synthetics and Chemicals Ltd., and the matter is pending consideration by the Supreme Court. Till now it has not been brought to our notice that the judgment has been reviewed by the Supreme Court and a different view has been taken in the matter. Hence we are bound by the ratio contained in the above said decision. We have already considered the further contention that because of the petitioner having taken licences under the Inflammable Substances Act, and the Petroleum Act, the State Government has no power to regulate the petitioner’s use of methyl alcohol, by means of licence. We may only point out that in St ate of Andhra Pradesh v. Formalin and Fine Chemicali Ltd., W. A. 868/75 and 256/76 of Andhra Pradesh High Court judgment dt. Nov. 13, 1976: (1978 Tax LR 1603), the same view was taken and it was held that the, regulation of methyl alcohol as an inflammable substance will not take within it the regulation of methyl alcohol either as an intoxicating liquor or as a poison, and hence there is no hypothesis for the contention that the legislations by the Parliament and the State Legislature are in respect of the same matter. Hence the petitioner has to fail on the first question enunciated (supra).
21. As regards the second poser, based on the notification of methyl alcohol industry, under the Industries (Development and Regulation) Act 1951, the argument was that, by reason of the notification, methyl alcohol industry stood included under Entry 52 of List I and consequently the State’s power to legislate on methyl alcohol was taken and only the Centre had power to govern, the purchase~ storage transport etc. of methyl, alcohol . Reliance was placed in this behalf on Arts. 73 and 162 as well as Art. 298(b); of the Constitution. The argument M Mr. Thiruvenkatrchari was that the notification made by the Central Government excludes the power of the State Government, to levy licence fee, gallonage fee etc- from methyl alcohol as it has been placed beyond the powers of the State to regulate the distribution of licences, permits etc., regarding methyl alcohok The counsel further submitted that even if it could be taken that the State had originally power under Entry 8~ List 11 to issue licences, etc. in respect of methyl alcohol and impose licence fee on the footing that it is an intoxicating liquor” the power stood taken away from the State as soon as the notification was made under the Industries (Development, and Regulation) Act 195L declaring methyl alcohol industry as one of the industries falling under Entry 52 of List I.
22. We are not persuaded by, this argument and, in fact, we can make short shrift of it in vfevr of the pronouncement of the Supreme Court in several cases on the identical question. Even so, we would like to observe that once it is held, that methyl alcohol can be treated as an intoxicating liquor and that the State is fully entitled, in exercise of its powers under Entry 8, List M to regulate its possession, storage transport, etc., then merely by reason of methyl alcohol industry being notified under the Industries (Developmentand
Regulation) Act, as falling under Entry 52, of List 1, the State will not stand deprived of its powers under List 11.By exercise of its, powers under the Madras Spirit Rules, the right of anyone to manufacture metTivT alcohol or to make use of methyl alcohol for manufacturing formaldehyde is regulated by the State. Al that the State wants to achieve by means of the licensing system and payment of licence fees and security deposit is the prevention of the use of methyl alcohol as an intoxicant. The control envisaged is, therefore
clearly one of a marginal or peripheral nature, and does not go to the heart of the matter- We will now refer, to the decisions of the Supreme Court on, this aspect of the matter
23. In Tika Ramji v. State of U. P., , the U. P. Sugarcane (Regulation of Supply and Purchase) Act (24 of 1953) where under specified cane purchasing centres, were reserved or assigned to sugar factories, was assailed as unconstitutional on the ground that it trenched upon the exclusive powers of Parliament on a controlled industry falling under Entry 52, List I. The contention was not accepted and it was held as follows (at p, 697) –
“This comparison goes to show that the impugned Act merely confined itself to the regulation of the supply and purchase of sugarcane required for use in sugar factories and did not concern itself at all with the controlling of licensing of sugar factories, with the production or manufacture of sugar or with the trade and commerce in, and the production, supply and distribution of, sugar. If that was so, there was no question whatever of its trenching upon the jurisdiction of the Centre in regard to the sugar industry which was a controlled industry within Entry 52 of List 1, and the U. P. Legislature had jurisdiction to enact the law with regard to sugarcane and had legislative competence to enact the impugned Act.”
24. In K. D. H. P. Co. v State of Kerala, , the validity of the Kannan Devan Hills (Resumption of Land) Act 1971 was questioned on the ground that the legislation trenched upon a controlled industry falling under Entry 52, List 1. The con tention was repelled in the following manner (at page 2307) –
“It seems to us clear that the State has legislative competence to legislate on Entry 19, List 11, and Entry 42, List IIL This power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52, List Effect is not the same thing as subject matter. If a State Act, otherwise valid, has effect on a matter in List I, it does not cease to be a legislation with respect to an entry in List 11 or List III.”
25. In Ganga Sugar Corpn. v. State of U. P., , the validity of the U. P. Sugarcane (Purchase Tax) Act 1961, was inter alia challenged as unconstitutional on the ground that sugar industry was a controlled industry within the meaning of Entry 52, List I of the Seventh Schedule and hence Parliament alone was competent to make enactments under Art. 246(1) of the Constitution. After referring to Tika Ramji v. State of U. P., and K, D. H. P. Co. v. State of Kerala, , the court held as follows (at p. 295) –
“Industry’ as a legislative topic is of large and liberal import; true. But what peripherally affects cannot be confused with what goes to the heart. An acquisition of land for sugar mills or of sugar mills may affect the industry but is not an action in the legislative field forbidden for the States. (See K. D. H. P. Co. v. State of Kerala, supra), Sales tax on raw materials going to a factory may affect the costing process of the manufacture, but is not legislation on industrial process or allied matters. Indeed, if the State Legislature cannot go anywhere near measures which may affect topics reserved for Parliament, a situation of reductio ad absurdum may be reached.”
26. The last of the decisions is State of U. P. v. Synthetics and Chemicals Ltd. . In this case, the levy of vend fee under Rule 15 of Para WO of U, P. Excise Manual, was challenged on the ground of legislative competence. One of the contentions raised was that by reason of the Notification under the Industries (Development and Regulation) Act, 1951, the Union had taken under its control the fermentation industries including the manufacture of industrial alcohol and as such the levy of vend fee on denatured spirit by the State was beyond its competence. The Supreme Court rejected the contention in the following terms (at P. 622)-
“Under Entry 33 List III the Parliament and the State have concurrent powers to legislate regarding the production supply and distribution of the products of industries notified by the Parliament. Furthermore, it has to be noted that the exclusive power of the State to provide for manufacture distribution, sale and possession of intoxicating liquor is vested with the State. The power of the State Government to levy a fee for parting with its exclusive fight regarding intoxicating liquor has also been recognised as is seen from the various Acts regulating manufacture sale etc. of intoxicating liquor. A fair scrutiny of the relevant entries. makes it clear that the Power to regulate “lie notified industries is not exclusively within the Jurisdiction of Parliament as List III, Entry 33 in the concurrent list enables a law to be made regarding production, supply and distribution of products of a notified industry.”
27. Applying the ratio laid down by the Supreme Court in the above said cases, we hold that the second contention of the petitioner must also fail.
28. There only remains for consideration the third contention of the petitioner regarding the excessive nature of the licence fee, gallonage fee and security deposit. We have already extracted the Table of licence fee, as for the amended Rules, and referred therein itself to the mistake contained in the petitioner’s affidavit regarding the rate of licence fee for quantities of methyl alcohol exceeding one lakh litres. The amendment has not been noticed by the petitioner and hence the affidavit proceeds on the basis that the petitioner has to pay Rs. 4000 towards licence fee for the first one lakh litres and an additional fee of Rs. 5,000 for each one lakh litres, in excess thereof As a consequence of the amendment brought about in 1971 the petitioner has to pay only a sum, of Rs. 5,000 towards licencee fee for the entire quantity of 37.50 lakh litres of methyl alcohol, and not an amount running to some lakh of rupees as stated by the petitioner. This has also been conceded by the first respondent in its replies to the interrogatories of the petitioner. Even so, we will examine the petitioner’s contentim that the State has to right to fix licence fee on slab basis. The justification given by the State Aw levy of hence fees as ship rate is, that the greater Like quantity of spirit required, the greater is the need More scrutiny, inspection, consultation with other departments etc. The Constitution, has drawn a clear distinction between the imposition of tax by a money bill and the impost of fees by my other kind of UK -in the Seventh Schedule also, both m List 1 and in list H, a distinction has been maintained in relation to the Entries of tax and fees. In the Union List, Entries 82 to 92-A relate to taxes and duties and Entry 96 carves aid the legislative field for fees in respect of any of the matters in the said last except fees taken in any court. Similarly, in the State List, Entries relating to taxes are Entries relating to taxes are Entries 46 to 63 and Entry provides for fees in respect of any of the matters in List II, but not including fees taken in any court. The entry relating to fees in List III is Entry 47. The Constitution therefore recognises a different and distinct connotation between taxes and fees
29. In Indian Mica and Macanites Industries Ltd. v. State of Bihar, , His Lordship Hegde, J. speaking for the Bench enunciated the Position of law as regards fee in the following terms at P. 1186): –
“From the above discussion, it is clear that before any levy can be upheld as a fee, it must be shown that the levy has reasonable correlation ship with the services rendered by the Government. In other words, the levy must be proved to be a quid pro quo for the services rendered. But, in these matters, it will be impossible to have an exact correlation ship. The correlation ship expected is one of a general character and not as of arithmetical exactitude.”
30. The case law on the subject has been reviewed by the Supreme Court in a recent case, Kewal Krishnan v. State of Punjab, and the difference between tax and fee has been emphasised, besides pointing out how the levy of fee should have reasonable nexus to the services rendered by Government in return,
31. Examining the question whether the levy of licence fee at slab rates and the fixation of a fee of Rs. 5,000 for quantities of methyl alcohol in excess of one lakh of litres are, in any way, improper, we do not think the fee can be considered to be harsh and excessive. It cannot be denied that the State has to maintain separate machinery, irrespective of the number of applicants, for grant of DL 2 licences and for ensuring that the licence conditions are fully observed. It is equally axiomatic that the greater the quantity of spirit that is required by a licensee, the greater is the need for scrutiny and inspection of the licensed commodity. If this is borne in mind the attack on levy of licence fee on the basis of slab rates cannot be sustained. In this connection, we may appositely refer to the view taken in Maschemeller Aromatics (India) Pvt. Ltd. v. State of Tamil Nadu, W. P. 2871 and 2872/73of this court order dt. April 16, 1979 about the validity of the imposition of licence fee on slab basis. The Division Bench held as follows: –
“Therefore the principal basis on which the slab system has been introduced appears to be substantially to rationalise the services pro rata i.e., the smaller licensees to pay a smaller licence fee and bigger licensees to pay a higher licence fee. Such a basis or notion cannot be said to be foreign to the imposition of licence fee. We cannot, therefore, hold the levy of licence fee on the basis of slab system to be bad.”
32. We are entirely in agreement with the above said view. Hence, in our opinion, the levy of licence fee on the basis of slab rates is not open to attack by the petitioner. Similarly, the demand of a sum of Rs. 5,000 as licence fee for the large quantity of methyl alcohol the petitioner would be requiring for its industry, cannot be considered as harsh or excessive.
33. Before taking up the question of gallonage fee, we can conveniently dispose of the petitioner’s attack on the Government’s demand for security deposit at the rate of 25 Paise Per litre. In the petitioner’s affidavit the relevant rule has not been set out. The relevant rule is Rule 9 (vii) (a). It reads as follows-
“Rule 9 (vii)- (a) Security: – In the case of applications for a licence in forms D.L. 1, D.L. 2, D.L. 4, D. L. 5, D.L. 6 or D.L, 8, the licensing authority, before granting the licence shall require the applicant to deposit with the Collector in cash or in Government promissory note, National Savings Certificate, Post Office cash certificate duly endorsed in favour of the Collector of the District concerned, as security for the due observance of the conditions of the licence a sum calculated at the rate of twenty five paise per bulk litre of the annual quota proposed to be allowed under the licence for denatured spirit and/or methylated spirit and/or methvl alcohol, in respect of licence in form DL 1, DL 2, DL 4 and DL 5, and at the rate of fifty paise per litre of the annual quota of varnish proposed to be allowed under the licence in respect of licence in form DL 6, and DL 8. In the case of an application for a licence in form DL 1, from a distillery, however the security deposit to be required shall be calculated at the rate of five Paise per bulk litre of the annual quota of denatured spirit and methylated spirit and methyl alcohol. In case of non-observance of the terms of the licence the security so deposited may be forfeited to Government and the licence cancelled, provided that no forfeiture of deposit shall be made unless the licensee has had a reasonable opportunity of showing cause against such forfeiture:
Provided that the total amount of such security shall not, in each case, exceed one lakh of rupees ………..
(Second Proviso, introduced by G.O.Ms. No. 109, Home dated 14-1-1981, omitted as not relevant)
34. We have extracted the Rule in order to point out that the petitioner’s contention that it will have to pay, security deposit at the rate of 25 paise per litre for all the 37.50 lakhs of litres allotted to it, is not a correct contention The maximum amount that has to be offered as security deposit either in the form of cash or Government promissory notes National Savings Certificates etc., is only Rs. one lakh. Having regard to the large quantity of methyl alcohol which will be held by the petitioner, the deposit of Rs. one lakh by way of security, cannot be said to be excessive. Though the said amount is liable to forfeiture, the liability will occur only if the petitioner contravenes any of the terms and conditions of the licence and that too, only after issue of show cause notice to the petitioner. Hence we do not think there is any basis for the petitioner to feel aggrieved about the deposit of security
35. As far as the gallonage fee is concerned, the relevant rule is Rule lO Ox) and the rule reads as under –
“A gallonage fee at the rate of twenty five paise per litre (or at such other rate as may be fixed by the Government from time to time shall be levied on (a) denatured spirit/methylated spirit/methyl alcohol, exported by holders of licences referred to in Rule 4 of these rules to other States in the Indian Union, or obtained by holders of licences or others who are exempted from taking out licence under these rules from a distiny in the State and (b) denatured spirit/methylated spirit/methyl alcohol or varnish obtained from sources outside the State. In the former cases, the fee shall be paid to the distiller by the purchaser at the time of purchase of stock from the distillery. In the latter case of imports, the amount of gallonage fee at the above rate calculated for the quantity proposed to be imported shall be paid into the treasury in the district concerned and the treasury receipt/chalan shall be enclosed with the application for import permit ………..
36. This Rule has now been changed by G.O.Ms. No. 28 Prohibition and Excise, dated 12-5-1981, and it is now provided that vend fee shall be payable by the holder of the distillery licence under Rule 6 of the Tamil Nadu Distillery Rules, 1981,
37. If the matter is viewed in its proper perspective, the petitioner’s attack on the levy of gallonage fee cannot be sustained. Methyl alcohol, we have already held lends itself open to be treated as an intoxicant by the State and, once this position is reached, then the State, under its regulatory powers, has the right to effectively control all forms of activity in relation to methyl alcohol. In exercise of such powers, the State is empowered to levy gallonage fee at a rate prescribed by it. As pointed out in Har Shankar v. Dv E. and T. Comm. , the amount charged on the licensee by way of gallonage fee is not a fee properly so called, nor indeed a tax, but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transaction. We may usefully refer, once again, to State of U. P. v. Synthetics and Chemicals Ltd., , because in that case, a similar contention was raised regarding the vend fee levied by the State of U. P. The argument there was that the words ‘foreign liquor’ cannot be understood as including denatured spirit and hence vend fee cannot be levied on denatured spirit. The Supreme Court observed as follows (at P. 625): –
“We are unable to give the words ‘foreign liquor’ such a restricted meaning for the word ‘consumption’ cannot be confined to consumption of beverage alone. When liquor is put to any use such as manufacture of other articles the liquor is all the same consumed.”
In our opinion. what applies to denatured spirit must also hold good for methyl alcohol, The resultant position will be that the petitioner’s attack on the levy of gallonage fee cannot also be sustained. Hence the petition has to fail on this contention also.
38. For the aforesaid reasons, we hold that the Madras Denatured Spirit, Methyl Alcohol and Varnish (French Polish) Rules 1959, do not suffer from want of legislative competence either on the ground that methyl alcohol falls outside the purview of Entry 8 of List II of the Seventh Schedule to the Constitution or on the ground that methyl alcohol industry has been included in Entry 52 of List I of the Seventh Schedule and hence subjected to the exclusive control of the Union. We also find the attack on the levy of licence fee, gallonage fee and the provisions relating to security deposit, to be devoid of substance. Consequently, the writ petition has to fail and it will accordingly stand dismissed.
39., W.A. No. 8 of 1980 as already stated, is directed against the order of V. Ramaswami J. in W.M.P. 5832 of 1979 filed for the purpose of including respondents 2 to 4 as parties to the writ -petition. The only around urged is that for the purpose of dealing with the judgments in W.P. 2871 and 2972 of 1973, Tax Case No. 300 of f974 and W. P. 5465 of 1975, the appellant will have to refer to the Letter of Intent granted to E.I.D. Parry Ltd., for the manufacture of methanol and the application made there under under the Industries (Development and Regulation) Act, and hence it is absolutely necessary that respondents 2 to 4 should be added as parties to the present writ petition, Since we have considered the matter in all relevant aspects, we do not think it necessary that the proposed respondents are necessary parties to the writ petition. Hence the writ appeal also has to fail and it will stand dismissed. There will however, be no order as to costs in the writ petition or the writ appeal.
Natarajan, J.
40. Learned counsel for the petitioner seeks leave to appeal to the Supreme Court against our judgment under Art. 133(1)(a) read with Art. 134-A of the Constitution of India on the ground that substantial questions of law of general importance which need determination by the Supreme Court, arise in the case. According to the learned counsel, the questions of law which need determination by the Supreme Court are as follows. –
1. Whether the State Legislature is competent to legislate on methanol/ industrial alcohol licensed under the Industrial (Development and Regulation). Act and in respect of which declarations have been made under Entrv 52 of List I?
2. Whether the State Government has no power of levy gallonage fee on alcohol under Entry 8 and Entry 51 of List II? And
3. Whether the decision reported in State of U. P. v, Synthetics and Chemicals Ltd., would apply to the facts of this case?
We are not inclined to grant leave, because we have followed the decisions of the Supreme Court, though not with reference to methanol/methyl alcohol, regarding denatured spirit falling within Entries 8 and 51 of List II of the Seventh Schedule to the Constitution and the power of the State Government not being taken away in spite of the notification of the industry under the Industrial (Development and Regulation) Act. Hence we decline to grant leave and the oral application for leave will stand dismissed.
41. Petition dismissed.