GOVERNMENT OF HARYANA Vs. HARYANA BREWERY LIMITED

JUDGEMENT

(1.) Leave granted in both these matters.

(2.) Certain important questions arise in these matters which, in our opinion, require to be decided authoritatively by a Constitution bench. Much water has flowed since the decision of the seven-Judge Constitution bench of this court in Synthetics and Chemicals Ltd. v. State of U. P In State of A. P. v. Mcdowell and Co. it has been held by a three-Judge bench of this court that so far as intoxicating liquors are concerned, their production, manufacture, possession, transport, purchase and sale is the exclusive province of the States by virtue of Entry 8 of List II. It has also been held that the imposition of prohibition and levy of duties thereon is also the prerogative of the States alone. In Vam Organic Chemicals Ltd. v. State of U. P. it has been held by a two-Judge bench of this court that the decision in synthetics and Chemicals' was concerned only with industrial alcohol and that so long as any alcoholic preparation can be diverted to human consumption, the States have the power to legislate in that behalf and also to impose taxes. It has been held that rectified spirit can be converted into country liquor by mere addition of water and, therefore, the States are not to tally excluded from control over the rectified spirit. In Bihar Distillery v. Union of India it has been held by another bench of two Judges that having regard to the fact that by merely adding water, rectified spirit can be converted into country liquor and also because rectified spirit can also be used for manufacturing IMFLs, the States are entitled to joint control overproduction, storage and distribution of rectified spirit. It has been held that so far as levy of duties are concerned, the point of departure is the stage ofremoval. The rectified spirit which is removed for industrial purposes (purposes other than manufacture of IMFLs or country liquor) can be taxed by the Union while the rectified spirit which is removed for the purpose of manufacture of IMFL or country liquor or other intoxicating liquors can be taxed by the States

(3.) In State of U. P. v. Modi Distillery a three-Judge bench of this court held that any wastage occurring in the course of manufacture of alcoholic liquors occurring before it reaches the stage of alcoholic liquor for human consumption is outside the State's jurisdiction but any wastage occurring after they reach the alcoholic liquor for human consumption is the province of the State. This was held in the context of power to levy duty upon liquors. To the same effect is the decision of a two-Judge bench in Mohan Meakin Ltd. v. Excise and Taxation Commr.