Levy of licence fee by State Government held justified.

JUDGEMENT :- The writ petition and the writ appeal arising from an order passed in an interlocutory petition (W.M.P. 5832 of 1979) in the writ petition before us, have been posted before a Full Bench on account of certain conflicting decisions on the question whether methyl alcohol is an intoxicating liquor coming within the scope of Entry 8 of List II of the Seventh Schedule to the Constitution of India, and whether a State Legislature has competence to legislate with reference to the possession, transport and storage of methyl alcohol and the issue of licences and imposition of licence fees. In the writ petition the Constitutional validity of the Madras Denatured Spirit, Methyl Alcohol and Varnish (French Polish) Rules, 1959 (hereinafter referred to as the Madras Spirit Rules) is questioned in so far as the Rules provide for the levy and collection of licence fee and/or gallonage fee. The writ appeal is directed against the order of V. Ramaswami J. dismissing the petition, W.M.P. 5832 of 1979 for impleading respondents 2 to 4 as parties to the petition on the ground of judicial expediency.

2. In the writ petition, the Union of India has been impleaded as the second respondent pursuant to an application filed by the petitioner.

3. The petitioner company has been granted an industrial licence for establishing an industrial undertaking at Ranipet for manufacture of 6000 tonnes of formaldehyde and other organic chemicals. Methyl alcohol or methanol is the main raw material required for the manufacture of formaldehyde. The petitioner's factory would require annually 3000 metric tons equivalent to 37.50 lakhs litres by volume of methyl alcohol for the production of 6000 tonnes of formaldehyde. The Government of Tamil Nadu, in exercise of the powers conferred on it by the provisions of the Madras Prohibition Act (Madras Act X of 1937), have framed the Madras Spirit Rules, 1959 and the Rules have been brought into force from 1-4-1959 in the said Rules methyl alcohol is defined in Rule 2(e) as under:

" 'Methyl alcohol' means the liquid having the chemical formula CH3OH Its other chemical names are methanol, carbonal and methyl hydrate and includes wood naphtha, wood spirit, wood alcohol, pyrogallic spirits. And pyroligneous spirits."

Rule 6 of the said Rules prohibits the possession, transport or storage of methyl alcohol except in accordance with the terms and conditions of a licence issued by the Government for such possession or permit for transport, as the case may be, Rule 8 of the said Rules prescribes that if methyl alcohol is to be possessed and stored for purposes of use in the manufacture of specified commodities, a licence in the form known as D.L. 2, should be obtained by the person possessing or storing such methyl alcohol on payment of the prescribed licence fee based on the quantity of methyl alcohol to be stored. The Rules also provide for the licencee being called upon to furnish security by way of cash deposit of such sum as may be prescribed by the Licensing Authority. Rule 10(ix) provides for the levy of gallonage fee at the rate of 25 paise per litre on methyl alcohol obtained by a licencee from a distillery in the State or from sources outside the State. The present scale of licence fee prescribed under Rule 8(a) is set out hereunder:-

(see table below)

(The rate of licence fee for quantities in excess of one lakh litres has been wrongly given in the petitioner's affidavit as Rs. 5000 for each slab of 1 lakh litres in excess of the first one lakh litres). Besides the licence fee, there is an obligation to pay gallonage fee at 25 paise

Quota of spirit per annum Rate of licence fee from 1-4-1973

Rs.

25

Not exceeding 500 litres in cases other than educational institutions. 50

Above 500, but not exceeding 1000 litres.

Not exceeding 500 litres in case of educational institutions (schools, colleges, polytechnics, etc.)

100

Above 1000, but not exceeding 5000 litres.

200

Above 5000 but not exceeding 7500 litres.

300

Above 750