SAMRAT LABORATORIES INDUSTRIAL Vs. STATE

JUDGEMENT

(1.) THE petitioner, registered as Small Scale Industrial Unit by the Darbhanga Industrial Area Development Authority for manufacturing of Ethyl Acetate and organic solvents from special denatured Alcohol as raw material, has filed the present writ application for declaring the Rule 111. of the Rules framed under Section 90 of the Bihar Excise Act (hereinafter referred to as the Rules) as ultra vires and invalid as well as the order dated 12.1.2004 passed by the respondent No. 3, the Member, Board of Revenue, whereby the literage fee at the rate of Rs. 1.50 per bulk litre has been charged from the petitioner for supply of industrial alcohol (special denatured alcohol which is not fit for human consumption).

(2.) THE case of the petitioner is that it being registered as Small Scale Industrial Unit holds license in Form 24 for use and storage of industrial special denatured alcohol issued by the Commissioner of Excise, Bihar, Patna on 21.12.2001. The petitioner manufactures Ethyl Acetate for which raw material is denatured alcohol. The Excise Department issued allotment orders or permits for procuring denatured spirit from different manufacturers. The unit had been given 36000 bulk litre per month quota of special denatured spirit after depositing Rs. 5/ - per bulk litre of licence fee in advance.

(3.) THE petitioner has challenged the vires of Rule 111 of the Rules on the ground that the State or its authorities are not competent to levy taxes on industrial alcohol (denatured spirit). The demand of licence fee also cannot be termed as compensatory fee as no service is rendered and as such there is no question of corelationship between the services rendered and the fee demanded. Once the spirit is converted into denatured spirit, the State has no power to levy fee either as compensatory fee or by way of regulatory measures.