JUDGMENT
Jasraj Chopra, J.
1. By this writ petition filed under Article 226 of the Constitution of India, the petitioner has challenged the validity of the Notification No. F.4(2)FD/GRIV/77-14, dated 30.3.1977 issued by the Govt. of Rajasthan in exercise of the powers conferred upon it under Section 28 of the Rajasthan Excise Act, 1950 (for short ‘the Act’ herein.)
2. The facts necessary to be noticed for the disposal of this writ petition briefly stated are : that M/s Mawar Oil and General Mills Ltd. Udaipur is a public limited Company registered under the Companies Ac and its Head Office is situated at Udaipur and it carried on the business of manufacturing Pesticides and other medical and toilet preparations under the name and style of M/s Pesticides India. The petitioner Company is having licence under the Rajasthan Excise Act for dealing in excise Articles including absolute alcohol, which is required in some of the products and preparations which are manufactured by it. It is alleged that on the recommendation of the Excise Commissioner, Rajasthan, 10,000 litres alcohol was allotted to the petitioner Company by the Excise Commissioner, Uttar Pradesh. On receipt of the said allocation of 10000 litres of absolute alcohol, the petitioner Company approached the District Excise Officer, Udaipur on 25.7.1980 for the issue of permit under the provisions of the Excise Act for import of 10000 litres of absolute alcohol from the State of Uttar Pradesh. A reminder was issued on 9.8.1980. The District Excise Officer vide his letter Ex. 3 dated 18.8.1980 informed the petitioner Company that permission can only be issued if Rs. 25/- per L.P. litre Excise duty is deposited.
3. According to the petitioner-company, Sub-section (4) of Section 3 of the Rajasthan Excise Act, 1950 defines excisable articles as under:
(i) Spirit fermented liquor or any alcoholic liquor for human consumption or danatured spirit or denatured spiritous preparation; or
(ii) any intoxicating drug; or
(iii) stills or other applicances for distillation; or
(iv) fermented wash or other material for distillation; or
(v) any other article which the State Govt. may, from time to time, declare to be an excisable article for the purpose of this Act.
and Section 28 of the Act empowers the State Govt. to levy excise duty on excisable articles. Accordingly, the State Govt. in exercise of the powers conferred on it under Section 28 of the Act issued Notification No. F. 4(2)FD/GR IV/77-14 dated 30.3.1977 imposing excise duty on various excisable articles at different rates and in the garb of this notification, the District Excise Officer, Udaipur has demanded excise duty @ Rs. 25/- per L.P. litre from the petitioner Company.
4. It was submitted that Entry 84, of List I of Schedule VII of the Constitution as also Entry 51 of the State List authorised the State Govt. to levy excise duty on alcoholic liquors for human consumption. It was further submitted that according to the Indian standard specifications for rectified spirit revised IV reprint, January 1975 ‘Absolute Alcohol’ is technically called an ethyal alcohol and it is not a beverage containing alcohol. It is not fit for human consumption as such, because absolute alcohol is not intended to be used as intoxicated beverage and, therefore, it is not an alcoholic liquor. Thus, the levy of excise duty on absolute liquor is not within the competence of the State Govt. The petitioner-Company has therefore, prayed that the respondents be directed not to demand excise duty at the rate of Rs. 25/- per L.P. litre on absolute alcohol and further, a writ in the nature of mandamus or any other appropriate writ, order or direction, be issued quashing the Notification dated 30.3.1977 and the respondents be directed to issue permit to the petitioner Company for import of absolute alcohol immediately for their own use for the manufacture of technical grade pesticides.
5. A reply to the writ petition was filed on behalf of the State of Rajasthan in which it has been claimed that absolute alcohol is an exciseable article and as such, it is subject to excise duty. Absolute alcohol becomes fit for human consumption no sooner a small quantity of water is mixed with it and, therefore, the contention of the petitioner-company that absolute alcohol cannot be used for human consumption is wrong. It was also claimed that imposition of excise duty on absolute alcohol is within the competence of the State Govt. According to the respondents, entry 8 of List II of Schedule VII of the Constitution of India is applicable in this case. It was, therefore, prayed that this writ petition may be dismissed.
6. I have heard Mr. K.N. Joshi, the learned Counsel appearing for the petitioner and Mr. R.C. Maheshwari, the learned Counsel for the respondents and have carefully gone through the record of the case.
7. Mr. K.N. Joshi, the learned Counsel appearing for the petitioner while relying on J.K. Synthetics Ltd. Kota v. State of Rajasthan 1976 R.L.W. 338 has argued that methyl alcohol or methanol is a poison and in no case it can be considered a beverage meant for human consumption. It was submitted by Mr. Joshi that on the basis of the aforesaid observations, in J.K. Synthetics Ltd. Kota’s case (supra), a learned single Judge of this Court has held that no excise duty was leviable and consequently, the notification dated 26.4.1972 imposing levy of excise duty on methyl alcohol, was declared to be illegal. In this case, the notification dated 26.4.1972 is not under consideration and challenge and hence, J.K. Synthetics Ltd. Kota’s case (supra) has no application to the facts of the present case.
8. It was further argued by Mr. K.N. Joshi, the learned Counsel for the petitioner that a similar view has been expressed by a learned single Judge of this Court in Shri Mahalaxmi Paints Industries v. State of Raj. and Ors. S.B. Civil Writ Petition No. 1688 of 1976, decided on 17.3.1979. In that case, the learned single Judge has held that the notification dated 9.3.1970 whereby the levy of excise duty on denatured spirit and denatured spiritous was imposed, is unconstitutional and void being violative of entry No. 51 of List II of Schedule VII of the Constitution. Against that Judgment, an appeal was filed and that came to be dismissed by a Division Bench of this Court. The State of Rajasthan preferred special leave petition before their lordships of the Supreme Court and that petition came to be decided by their lordships of the Supreme Court vide Judgment dated 25.10.1990. The State of Rajasthan and Ors. v. Shri Mahalaxmi Paints Industry, Ajmer and Ors. Civil Appeal Nos. 1744-48 of 1987. It was submitted by Mr. Joshi that on the basis of the decision rendered in Shri Mahalaxmi Paints Industries’s case (supra), a bunch of four other writ petitions viz., Balkishanlal v. State S.B. Civil Writ Petition No. 1262 of 1979, Pesticides India v. State S.B. Civil Writ Petition No. 925 of 1979, Rughnath Das Mathuradas State S.B. Civil Writ Petition No. 955 of 1979 and Ramchandra v. State S.B. Civil Writ Petition No. 1156 of 1979 also came to be decided by a learned single Judge of this Court on February 6, 1981 and it was held that the notifications dated 9.3.1970 and 30.3.1977 which impose levy of excise duty and countervailing duty on danatured spirit and denetured spiritous preparations is unconstitutional and void. As stated above, the basis of this decision was the decision rendered by a learned single Judge of this Court in Mahalaxmi Paints Industries’s case S.B. Civil Writ Petition No. 1688 of 1976, decided on 17.3.1979 against which a special leave petition was filed before their lordships of he supreme Court, which came to be decided on 25.10.1990. In State of Rajasthan and Ors. v. Shri Mahalaxmi Paints Industry, Ajmer and Ors. Civil Appeal Nos. 1744-48 of 1987 decided on 25.10.1990, their lordships of the Supreme Court have held that the issue in these appeals is now concluded by the decision of this Court in Synthetics & Chemicals Ltd. and Ors. v. State of U.P. and Ors. , where this Court has taken the same view that the State legislature has no authority to impose levy of excise duty on denatured spirit and denatured spiritous preparations, which are not used for human consumption as that could only be levided by the Central Govt. It was, therfore, contended by Mr. K.N. Joshi, the learned Counsel appearing for the petitioner that when levy of excise duty on denatured spirit and denatured spiritous preparation has been held to be unconstitutional and void then the notification dated 30.3.1977 issued by the State Govt. has to be struck down and no excise duty can be levided against the petitioner company as regard import of 10000 litres of absolute alcohol.
9. It may be mentioned here that in this case, in the stay petition that was filed on behalf of the petitioner company, initially an adinterim stay order was passed on 6.9.1980 that the District Excise Officer, Udaipur is restrained from collecting excise duty on the absolute alcohol. However, after hearing both the parties, by an order dated 15.10.1981, this stay order was modified and it was ordered that the petitioner shall be able to import absolute alcohol subject to the condition that the petitioner furnishes adequate security in respect of ‘Abhkari Shulka’ or the excise duty, as the case may be to the satisfaction of the District Excise Officer, Udaipur. Thus, the petitioner company was permitted to import excise duty on furnishing adequate security of the excise duty to the satisfaction of the District Excise Officer, Udaipur.
10. On the other hand, it was contended by Mr. R.C. Maheshwari, the learned Counsel appearing for the respondents that after the decisions in J.K. Synthetics Ltd. Kota’s case 1976 R.L.W. 338 and Shri Mahalaxmi Paints Industires’ case S.B. Civil Writ Petition No. 1688 of 1976, decided on 17.3.1979, it was held by their lordships of the Supreme court in State of U.P. v. Synthetics & Chemical Ltd. that the definition of alcohol under Rule 12 of the U.P. Licences for the possession of Denatured Spirit and Special Denatured spirit Rules, 1976 includes both ordinary as well as denatured spirit. It is not different from ordinary denatured spirit and thus, it was treated as an alcohol and, therefore, their lordships of the Supreme Court have observed that the Ethyl Alcohol (Price Control) Orders do not explicitly or impliedly take away the power of the State to regulate the distribution of intoxicating liquor by collecting a levy for parting away with its exclusive rights. Thus, their lordships of the Supreme Court have held that the levy of excise duty on denatured spirit or denatured spirituous preparation, which is part of alcohol is not prohibited and consequently, the decision in State U.P.’s case has overruled all other decisions which have been rendered by different High Courts. It appears that while deciding a bunch of four writ petitions in Balkishanlal v. State S.B. Civil Writ Petition No. 1262 of 1979, Pesticides India v. State S.B. Civil Writ Petition No. 925/79, Rughnath das Mathuradas v. State S.B. Civil Writ Petition No. 955/79 and Ramchandra v. State S.B. Civil Writ Petition No. 1156/79, vide Judgment dated 6.2.1981 by a learned single Judge of this Court the decision in State of U.P.’s case was not brought to the notice of the Court, otherwise it could not have rendered this decision on 6.2.1981. Be that as it may, the basis of the decision in a bunch of four writ petitions by a learned single Judge of this Court was the decision of this Court in Shri Mahalaxmi Paints Industries’s case S.B. Civil Writ Petition No. 1688 of 1976, decided on 17.3.1979, against which a special appeal was filed and that came to be dismissed. A Special leave Petition was also filed before their lordships of the Supreme Court and that came to be decided in terms of the judgment rendered by their lordships of the Supreme Court in Synthetics & Chemicals Ltd. v. State of U.P. , by which the earlier decision rendered by their lordships of the Supreme Court in State of U.P.’s case was overruled.
11. Mr. K.N. Joshi, the learned Counsel appearing for the petitioner drew my attention to a Division Bench decision of the Madhya Pradesh High Court in Suneeta Laboratories v. State of M.P. 1972 Tax. L.R. 2058, wherein also it was held that the alcoholic liquor is something different from alcohol or rectified spirit and does not include pure alcohol as well. Thus, if the product at the stage of manufacture is alcohol which could not be directly used by human beings as a beverage then the State Legislature would have no right to impose any excise duty notwithstanding the fact that by some process, alcohol can be turned into an alcoholic liquor. It was further observed that it may be that at the stage it is turned into alcoholic liquor, the State Legislature may get an authority to impose excise duty but till that stage is reached, it is only the parliament that can impose the excise duty. Suneeta Laboratories’s case (supra) is not an authoritative pronouncement in the light of the aforesaid decision of their lordships of the Supreme Court in State of U.P.’s case . The State of Rajasthan and Ors. v. Shri Mahalaxmi Paints Industry, Ajmer and Ors. Civil Appeal Nos. 1744-48 of 1987 decided on 25.10.1990 was decided by their lordships of the Supreme Court in terms of the judgment rendered in Synthetics & Chemicals Ltd. ‘s case , wherein it was observed:
We must, however, observe that these imposts and levies have been imposed by virtue of the decision of this Court in Synthetics & Chemicals Ltd.’s case supra. The states as well as the petitioners and manufactures have adjusted their rights and their position on that basis except in the case of State of Tamil Nadu. In that view of the matter, it would be necessary to state that these provisions are declared to be illegal prospectively. In other words, the respondents States are restrained from enforcing the said levy any further but the respondents will not be liable for any refund and the tax already collected and paid will not be refunded. We prospectively declare these imposts to be illegal and invalid, but do not affect any realisations already made. The writ petitions and the appeals are disposed of accordingly. The review petitions, accordingly, succeed though strictly no grounds as such have been made out but in the view we have taken, the decision in the Synthetics & Chemicals Ltd.’s case (supra) cannot be upheld. In the view, we have taken also, It is not necessary to decide or to adjudicate if the levy is valid as to who would be liable, that is to say, the manufacturer or the producteror or the dealer.
Their lordships further observed in para 89 as under:
…It is, therefore, necessary to declare that in further, no further realisation will be made in respect of this by the State Govt. from the petitioners. So far as the past realisations made are concerned we direct that this application for that part of the direction should be in accordance with our decision herein be placed before a Division Bench for disposal upon notice both to the State Govt. and the Central Govt.
In State of Rajasthan’s case Civil Appeal Nos. 1744-48 of 1987, decided on 25.10.1990 by their lordships of the Supreme Court, it was observed:
However, learned Counsel for the appellants brings to our notice paragraph 89 of the judgment of this Court. In this paragraph, it has been stated that the said levy has been declared to be illegal only prospectively. In other words, the respondents-states therein were restrained from imposing the said levy any further but they were not liable to refund any duty already paid or collected. We direct the appellants here to keep this in mind and abide by the terms of the declaration of this Court that the levy is declared illegal prospectively but the duties collected already will not be refunded to the parties concerned. With these observations, the appeals are disposed of with no order as to costs.
It was, therefore, contended by Mr. R.C. Maheshwari, the learned Counsel appearing for the respondents that the impost of excise duty on denatured spirit or denatured spirituous preparation has been held to be illegal prospectively i.e. with effect from 25.10.1989, when the judgment was rendered by their lordships of the Supreme Court in Synthetics & Chemical Ltd.’s case and before that, such levy of excise duty or counter vailing duty has not been held to be void and can be realised and the State Govt. is not liable to refund any duty already paid or collected. According to Mr. Maheshwari, in this case, realisation of excise duty on absolute alcohol was ordered to be stayed only on furnishing adequate security to the satisfaction of the District Excise Officer and when excise duty on absolute alcohol has been held to be illegal only prospectively and prior to that such a duty was held to be legal as per the aforesaid decision of State of U.P.’s case then the petitioner company is obliged to pay excise duty on the import of 10000 litres of absolute alcohol.
12. Such a matter came up for consideration before this Court in Jaipur Minerals and Chemicals v. State of Raj. S.B. Civil Writ Petition No. 2092 of 19, decided on 25.3.1991, wherein after considering all these authorities, it was held that to direct the refund of the excise duty to the petitioner would result in returing the excise amount, to which he was not entitled. That would mean unjust enrichment of the petitioner. This Court cannot direct the State Govt. to refund the excise duty to the petitioner as that amount had been realised by him from his customers. It was further observed that as the burden of excise duty had been shifted to the consumer an order of refund in favour of the petitioner would result in unjust enrichment, as already observed above. In this case, it is not the case of the petitioner-company that the incidence of excise duty on absolute alcohol has not been passed on the customers as a component of the price, which has been charged from them. Thus, it has to be held that excise duty has been charged from the customers by the petitioner-company keeping in view the adequate security furnished by petitioner company to the satisfaction of the District Excise Officer, Udaipur. Therefore, as the burden of excise duty has been shifted an order or not realising excise duty from the petitioner company would result in unjust enrichment of the petitioner company. Moreover, the excise duty or the countervailing duty on absolute alcohol has been held to be void and unconstitutional only prospectively i.e. with effect from 25.10.1989 and prior to that it could have been levied in terms of the judgment rendered in State of U.P.’s case and, therefore, to this extent, the contention of Mr. Joshi cannot be sustained.
13. In view of the aforesaid discussion, writ petition partially succeeds and the notification dated 30.3.1977 issued by the State Govt. imposing excise duty or the countervailing duty on absolute alcohol is held to be unconstitutional and void in terms of the judgment in Synthetics & Chemical Ltd.’s case with effect from 25.10.1989. However, if any absolute liquor has been imported by the petitioner company prior to 25.10.1989 and it has passed on the incidence of the excise duty on the customers as a part of price component of the finished goods in which absolute alcohol has been used, then the State Govt. is entitled to recover excise duty or countervailing duty from the petitioner company. No such levy under the aforesaid notification dated 30.3.1977 can be made on the absolute alcohol after 25.10.1989.
14. In the facts and circumstances of this case, the parties are left to bear their own costs.