Judgment

MOHAN, J.:- This is an appeal by certificate granted by the High Court of Gujarat at Ahmedabad under Articles 132(1) and 133(1)(a) of the Constitution of India. It is directed against the judgment dated 29/30th August, 1973 in Special Civil Application No. 163 of 1973.

2. The facts leading to this appeal are briefly as under :-

The appellant is a company registered under the Indian Companies Act. It is engaged in the business of manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals. Industrial alcohol is one of the raw materials used by the appellant company.

3. Though, till the year 1969, the appellant was purchasing industrial alcohol from the market. It installed its own distillery from May 1970 at Bilimora, within the State of Gujarat. This was for the purpose of manufacturing industrial alcohol from molasses.

4. On July 3rd, 1969 the second respondent, the Director of Prohibition and Excise, Gujarat State, Ahmedabad issued a licence to the appellant for manufacturing spirit. In accordance with the conditions Nos. 2 and 3 of the licence, the 2nd respondent appointed a staff of 9 persons. The said staff consisted of one Inspector, one Sub-Inspector, one Nayak, one Jamadar and five constables to supervise the manufacture of spirit in the appellants distillery plant. The appellant was also required to provide residential accommodation to the supervisory staff within the factory premises. On July 3rd, 1969 the 2nd respondent asked the appellant to deposit the supervisory charges. From time to time, these supervisory charges were also deposited in accordance with the directions of 2nd respondent.

5. it requires to be stated at this stage that the levy of supervisory charges, is traceable to Section 58(A) of the Bombay Prohibition Act of 1949. The Section says :

"Section 58(A) : The State Government may by general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use, collection or cultivation of any intoxicant, denatured spirituous preparation, hemp, mhowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Government by person manufacturing, importing, exporting, transporting, storing, selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation, hemp, mhowra flowers or mollases :

Provided that the State Government may exempt any class of persons or institutions from paying the whole or any part of the cost of such staff."

Section 143 of the said Act confers power for making rules. Rules have been framed called Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules, 1963. These rules inter alia regulate the working of distilleries, manufacturing spirit. Rule 2 provides for the licence. Conditions Nos. 2 and 3 of the licence require payment of the supervisory staff and for provision of quarters for the residential accommodation of the staff respectively.

6. The appellant filed Civil Application No. 163 of 1973 in the High Court of Gujarat challenging the constitutional validity of Section 58(A) of the Act. By the impugned judgment, the said petition was dismissed. Hence, the present civil appeal.

7. The arguments of the appellant briefly stated will boil down to this. It has been categorically laid down in Synthetics & Chemicals Ltd. v. State of U.P., 1989 Supp (1) SCR 623 that in respect of industrial alcohol, the States have no power to impose the impost as is sought to be done in the instant case. The theory of privilege as adumbrated by the High Court can no longer be sustained in view of the judgment.

8. Even otherwise, there is no quid pro quo.

9. In countering the submissions, it is argued on behalf of the State that Synthetics and Chemicals Ltd. (supra) dealt merely with the vend fees. That is not the case here. The maintenance of the staff contemplated