The main legal point established in the judgment is the lack of legislative competence of the State to levy license fee on rectified and denatured spirit under the Bihar Excise Act.

Navin Sinha, J.

1. The common challenge in this batch of writ applications is to the notification issued by the respondent State, dated 24.3.1992 amending Rule 3 of the notification dated 20.4.1919 in exercise of powers under Section 19 of the Bihar Excise Act, 1915 (hereinafter called the Bihar Excise Act) levying license fee for establishment of Distillery based on installed production capacity and annual renewal thereof on payment of fresh license fee at the same rate on each renewal, in so far as rectified spirit and denatured spirit unfit for human consumption are concerned.

2. During the pendency of the writ application by fresh notification dated 17.10.2005 the license fee was enhanced to Rs. 7,50,000/- annually from Rs. 3,25,000/-. This has been challenged by amendment in I.A. No. 4462 of 2010. Upon hearing counsel for the parties this Court considers it proper to allow the amendment satisfied that it is based on a continuity of challenge to the levy of license fee not raising any fresh issues.

3. Learned Senior Counsel Shri Y.V. Giri appearing for the petitioner in CWJC 2868/92 made the lead submissions. The facts shall therefore be primarily noticed from the same except to the extent necessary. It was submitted that the petitioners Distillery (hereinafter called "the Distillery") held license under the Industries (Regulation & Development) Act, 1951 ("hereinafter called the I.D.R. Act"), for manufacture of rectified and denatured spirit only. These were unfit for human consumption. They were ingredients as raw material for varied uses such as industrial or for manufacture of country liquor and Indian made foreign liquor by a process of dilution for the latter two purposes. Being unfit for human consumption in their original form, they did not constitute excisable articles under the Bihar Excise Act and were not within the legislative competence of the State under the Constitution of India. Under Entry 7, 52 and 84 of List-1, Schedule-7 to the Constitution of India, the Industry was amenable to legislative control by the Union of India alone under the I.D.R. Act and the Licensing of Industrial Undertaking Rules, 1952 framed thereunder. The State Legislature was competent to legislate only in respect of matters under Entry 8 and 51 of List-2 in the 7th Schedule to the Constitution of India which related to intoxicating liquor fit for human consumption. The Distillery under Section 13 of the Bihar Excise Act held a license under Form 28A for manufacture of such spirit only, issued in 1955 renewed annually since then without levy of fee, until the issuance of the present notifications. The product manufactured under the license, being unfit for human consumption, what may be the possible user by a process of conversion to potable liquor or that the State required the petitioner to supply a portion of the spirit to warehouses, who in turn, supplied it to manufacturers of country liquor shall not render the petitioner liable to legislative control and competence of the State Government, Relying upon a notification dated 5.3.1990 of the Union of India issued in pursuance of the judgment of the Supreme Court in (1990)1 S.C.C. 109, Synthetics and Chemicals Ltd. V/s. State of U.P. & Ors., it was submitted that a clear distinction had been made between a Distillery manufacturing spirit unfit for human consumption and that manufacturing potable liquor.

4. Reliance was placed on the judgment of this Court in 1983 P.L.J.R. 105 (D.B.), (The New Swadeshi Sugar Mills Ltd. & Anr. V/s. State of Bihar & Ors.) stated to have been affirmed in (2003) 11 S.C.C. 478 (State of Bihar & Ors. V/s. New Swadeshi Sugar Mills Ltd.), 1997(1) P.LJ.R. 77 (M/s. Industrial Corporation Pvt. Ltd. V/s. State of Bihar & Ors.) affirmed in (2003)11 S.C.C. 465 (State of Bihar & Ors. V/s. Industrial Corporation Pvt. Ltd.). Reliance was further placed on (2004)1 S.C.C. 225 (State of U.P. & Ors. V/s. Vam Organic Chemicals Ltd.). The judgment of the Suprem