ENOCH PHARMA Vs. STATE OF KERALA

JUDGEMENT

(1.) The five writ petitioners are engaged in the manufacture and sale of medicinal and toilet preparations. The preparations manufactured by them are stated to be drugs and medicines covered by the British Pharmacopoeia, Indian Pharmacopoeia, etc., and used mainly for external use or internal consumption as medicine. The petitioners have licences under the Medicinal and Toilet Preparations Act, 1955 and also under the Drugs Act, 1940. The licences of the two of the petitioners are produced, by way of sample, as Exts. P1 and P2. A large number of medicinal preparations manufactured by the petitioners contain alcohol. The manufacture of medicinal and toilet preparations is now controlled by the Medicinal and Toilet Preparations Act, 1955, and the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956. Before the coming into force of the said Act and the Rules the medicinal and toilet preparations were controlled by the provisions of the Abkari Acts of Travancore and Cochin States and the Rules framed thereunder. S.21 of the Medicinal and Toilet Preparations Act repealed the Abkari Act, but served the Rules made, ratifications issued, licences granted etc., in so far as they are not inconsistent with the Act, and deemed them as having been made, conferred or granted under the provisions of the 1955 Act. R.143 of the 1956 Rules repealed all Rules under any law corresponding to the 1955 Act in force in any State. Thus, the Rules under the Abkari Rules were also repealed. In 1967, the State of Kerala consolidated and amended the law relating to import, export, manufacture, possession, etc., of intoxicating liquor and drugs by extending the Cochin Abkari Act 1 of 1077 to the whole of Kerala. Under S.29 of the Abkari Act 1 of 1077, two sets of Rules were framed, namely, (1) the Kerala Spirituous Preparations Control Rules, 1969 and (2) the Kerala Rectified Spirit Rules, 1972. The petitioners attack S.12, 12A, 12B, 13, 13A, 14 and 68A of the Act and R.4, 5 and 6 (3) and 11(a) of the Rules. They have accordingly prayed to declare these sections and Rules as unconstitutional. This is the main relief prayed for in the writ petition. The incidental reliefs prayed for include the quashing of a Circular (Ext. P3) issued by the Board of Revenue to implement the Act and the Rules.

(2.) The legislative competence to pass the Act is attacked on the ground that the subject matter of the Act belongs to entry 84 of List 1 and also to entries 51 and 52 of List I. These entries read as follows:

(3.) To furnish the background of the legislation, it may be stated that prior to the Constitution, medicinal and toilet preparations were dealt with by the Abkari Acts in the various States. Despite the transfer of legislative power to deal with these preparations to Parliament by entry 84 of list I, a limited power of continuance of the levies under the Abkari Act was available under Art.277 of the Constitution till provision to the contrary was made by parliament by law. With the enactment by Parliament, of the Medicinal and. Toilet Preparations Act, 1955, this power ceased, and the Abkari Act stood repealed in so far as the same related to duties of excise on medicinal and toilet preparations. S.12, 12A, 12B, 14 and 68A -- the sections objected -- were introduced by the amending Act. 1967, which has received the assent of the president. The immediate reason for the amendment seems to have been furnished by the decision in Enoch Pharma v. State of Kerala (1965 KLT 415) which held that the Medicinal and Toilet Preparations Act and the Rules do not permit control under the said Act regarding the manufacture of medicinal and toilet preparations; so that the quantity of medicinal and toilet preparations to be manufactured was not liable to be controlled by the Rules. It was pointed out that under S.19(2) of the Act, the restrictions to be imposed can relate only to (a) the place of manufacture and (b) the proper levy and collection of duty imposed by the Act. Beyond this, it was ruled, the control cannot extend. The decision in Enoch Pharma v. State of Kerala (1965 KLT 415) had also struck down R.38(1) of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956. It was pointed out that under S.2 and 3 of the Act, the duty could be levied only on "dutiable goods" as defined in the Act and specified in the schedule to the Act. Spirit was not among the dutiable goods. It was therefore held that R.38 was in excess of the powers conferred by the statute. These decisions offered the immediate provocation for the 1967 amendment.