- (1.) This Appeal brings into challenge the Judgment of the Division Bench of the High Court of Karnataka in terms of which the Judgment of the learned Single Judge had been upheld; however, with the direction that the competent authority shall examine the claim made by the Appellant for being classified as a non-captive unit. On 29.7.2004, while issuing notice it had been clarified that the impugned Judgment had not been stayed.
(2.) The facts that are relevant for deciding the present Appeal, succinctly, are that the Respondent State had fixed the price of rectified spirit uniformly at Rs. 6/- per litre by Government Order dated 12.5.1992. While doing so, it had been indicated that the captive distilleries would be entitled to receive only Rs. 5/- per litre, and the balance Rs. 1/- per litre would be receivable by the Respondent State. For the period of 1.7.1992 to 30.6.1993, supplies of rectified spirit were made by the Appellant to various parties and the entire sum at the rate of Rs. 6/- per litre was recovered/received by the Appellant. It will be relevant to underscore that the supply of rectified spirit (ethyl alcohol) was made by the Appellant with full knowledge of the Government Order to which challenge has been made, namely, the payment of Rs. 1/- per litre to the State Government. The Appellant does not dispute that it is a captive distillery, since it produces molasses which is then distilled and converted into ethyl alcohol/rectified spirit/industrial alcohol. The Government Order dated 12.5.1992 has not been assailed by the Appellant at any point of time. When a demand for a sum of Rs. 13,32,000/- was raised by the Superintendent of Excise, Huballi, by letter dated 15.12.93, a challenge by way of the filing of a writ petition was initiated.
(3.) The Respondent State is empowered to fix the price of rectified spirit by virtue of Rule 17 of the Karnataka Excise (Manufacture and Bottling of Arrack) Rules, 1987, the vires of which have not been questioned. The Rule is reproduced for facility of reference: Rule 17 - Rectified spirit Whether Rule 17 which empowers the Government to fix the price of rectified spirit, valid K.Shivashankar Bhat, J., Held. - Rule 17 of the State rules, invoked in the present case, nowhere lays down nor indicate the principles or factors to be considered while the Excise Commissioner fixes the price with the prior approval of the State Government. The case of other liquors may be different, because, in those cases, the State has exclusive privilege to deal with those liquors/intoxicants, unlike the case of rectified spirit. The permissible limits of delegation of legislative function cannot be stretched so as to make it notional. It cannot be said that the limitation on the delegation of legislative function has reached a vanishing point. Limitation is needed to prevent any possible dictatorial power being vested in the executive by the legislature. Rule 17 insofar as it empowers of the fixation of price of rectified spirit, is therefore, declared as unconstitutional and ultra vires the provisions of the State Act.;