The main legal point established in the judgment is the interpretation of the relevant legal provisions, including the Uttar Pradesh Excise Act, 1910, the Industries (Development and Regulation) Act, 1961, List I of the Seventh Schedule, and List III of the Seventh Schedule, to determine the legality of the licence fee imposed on the sale of specially denatured spirit.

ALTAMAS KABIR, J.

( 1 ) SPECIAL Leave Petition No. 16505 of 2004 was filed by the State of Uttar Pradesh and its officers in the Excise department on 23rd June, 2004 against the Judgment and Order passed by the Division Bench of the Allahabad High Court on 12th February 2004 in Civil Misc. Writ Petition No. 1027 of 1999, which had been filed by Shri R. P. Sharma in his capacity as the sole proprietor of M/s Bimal Paints and chemical Industries situated at Aligarh in Uttar Pradesh.

( 2 ) THE writ petitioner in the said writ petition is the holder of a licence in Form FL No. 41 granted under the provisions of the Uttar Pradesh Excise Act, 1910 and the rules framed thereunder. The petitioner was aggrieved by the levy of licence fee on the sale of specially denatured spirit to licencees holding licence in Form FL 41 @ 15% ad valorem on the sale made by a distillery/wholesale vendor to FL 41 licencees purportedly under the provisions of the u. P. Licences for the Possession of Denatured Spirit and specially Denatured Sprit Rules, 1976 as amended from time to time. On behalf of the writ petitioners it was contended that the licence fee levied on a FL 41 licence is neither regulatory nor a compensatory fee because no services are rendered to the licensee which could justify it as a regulatory fee.

( 3 ) ALTHOUGH, on behalf of the petitioner reliance was placed on the decision of this Court in State of U. P. Vs. Vam Organic Chemicals Ltd and Anr. (2004 (1) SCC 225), such stand was held to be untenable by the High Court inasmuch as, in the said case it was held that denatured spirit is outside the seisin of the State Legislature which has jurisdiction over only potable alcohol.

( 4 ) HOWEVER, the High Court held the impugned licence fee to be wholly illegal upon observing that in the case before it, the respondents had not claimed that the fee in question was being charged for ensuring that the rectified sprit is not diverted and used for human consumption, but that the fee was being charged for sale/purchase of denatured spirit. The High Court was of the view that having regard to the findings of this Court in Vam organic's case (supra) imposition of fee on such ground was not acceptable since legislation with regard to denatured spirit was outside the perview of the State Legislative powers. Paragraph 42 of the judgment in Vam Organic's case (supra) has been quoted in its judgment by the High Court and reads as follows:-

"assuming that de-natured sprit may by whatever process be renatured, (a proposition which is seriously disputed by the respondents)and then converted into potable liquor this would not give the State the power to regulate it. "

( 5 ) ON the basis of the aforesaid reasoning the impugned licence fee was declared to be illegal by the High Court. The High Court also directed the respondents to refund the fee collected from the writ petitioners along with interest at the rate of 10% per annum from the date of realization/deposit till the date of refund within two months of production of the certified copy of the judgment before the respondent No. 2. There is further discussion with regard to the direction given regarding interest with which we are not concerned.

( 6 ) AS mentioned hereinbefore, Special Leave Petition (C)No. 16505 of 2004 was filed against the said judgment and order of the Allahabad High Court and the same was taken up for admission on 22nd August, 2004, when this Court directed notice to issue and also granted interim stay in the meantime. The interim relief as prayed for as indicated in prayer (a) of the Special Leave Petition reads as follows:-

"ad-interim ex-parte stay of the impugned final judgment and order dated 12. 02. 2004 passed by the Hon'ble High Court of judicature at Allahabad in Civil Misc. Writ petition No. 1027 of 1999. "

( 7 ) SUBSEQUENTLY, several other similar writ petitions were filed by several licence holders holding licences in form FL Nos. 16, 17, 39 and 41 which were all disp