While quashing the levy of import fee levied on distilleries, a division bench of the Himachal Pradhesh High Court held that the levy is ultra vires to the Constitution.
A bench of Justices Tarlok Singh Chauhan and Chander Bhusan Barowalia was hearing two writ petitions wherein the petitioners challenged the levy of license fee on distilleries.
While the State failed in the “quid pro quo”, the High Court quashed the relevant Notification issued by the State Government for the purpose of levying permit fee on distilleries & breweries on import / transport of ‘malt spirit of over proof strength’ into the State, as same does not constitute “alcoholic liquor for human consumption” within ambit of any regulation or control of State Govt. under List II of Seventh Schedule.
Before the Court, the Revenue contented that fee was payable since said spirit became portable and fit for human consumption by subsequent dilution.
The bench noticed the Apex Court decision in Vam Organic Chemicals Ltd & Ors. wherein it was held that State cannot legislate in respect of industrial alcohol despite the fact that same has potential to be used to manufacture alcoholic liquor.
Explaining the concept of ‘quid pro quo’, the bench noticed that in instant case, State Govt. had not undertaken any supervisory activity which constituted “quid pro quo” for imposition of import fee, and Revenue had failed to co-relate the amount of fee levied with expenses incurred for rendering the services.
Following a catena of decisions, the bench ruled that “the State Government cannot claim to have power to legislate on alcohol of “malt spirit of overproof strength” merely on the ground that the same can be made potable after dilution. The State at best can only lay down regulations to ensure that non-potable alcohol is not diverted and misused as a substitute for potable liquor.”
Read the full text of the Judgment below.
