M.B.SHAH, J. - (1.) IN these petitions, the petitioners have prayed that levy and collection of sales tax and additional sales tax on industrial alcohol be declared as illegal, unconstitutional and without jurisdiction and entry 94 of Schedule II, Part A, to the Gujarat Sales Tax Act, 1969, as amended by notifications at annexures "a", "b" and "c" be quashed and set aside. Special Civil Application No. 1655 of 1990 is filed by Gujarat Alcohol Based Industries Development Association which is an association registered under the Bombay Public Trusts Act, having its office at Ahmedabad, and its president. It is the say of the petitioners that petitioner No. 1 is an association of various industries consuming industrial alcohol as a raw material for their production activities. In paragraph 1, it is stated that this petition was filed by the petitioners on behalf of themselves and the members of the association and other similarly situated consumers of industrial alcohol who are being subjected to the illegal levy of sales tax and additional sales tax. It is contended that industrial alcohol which is used by the members of the petitioner-association as a raw material for manufacturing various chemical products is unfit for human consumption. It is also pointed out that, because of the Bombay Prohibition Act, 1949, there is no unit in the State of Gujarat which manufactures and sells potable alcohol fit for human consumption. The petitioners have further stated that, with regard to levy of sales tax on industrial alcohol, the Supreme Court in the case of Synthetics and Chemicals Ltd. v. State of U. P. [1991] 80 STC 270; AIR 1990 SC 1927, has held that the States have power to levy excise duty on potable alcohol for human consumption and as regards sales tax under entry 54 of List II, the State have no power to levy sales tax on industrial alcohol which is not for human consumption as it is within the exclusive legislative competence of the Central Government in the light of the relevant constitutional provisions read with provisions of the Industries (Development and Regulation) Act and the statutory orders issued thereunder. It is further pointed out that in the aforesaid matter before the Supreme Court, the State of Gujarat was a party to the said proceedings and was represented by the learned Advocate-General. The petitioners, therefore, contended that the respondents are bound to abide by the law laid down by the Supreme Court in the aforesaid matter and the State has no power to levy sales tax on industrial alcohol, as it is within the exclusive legislative competence of the Central Government.
(2.) SPECIAL Civil Application No. 951 of 1990 is filed by the Guj-Chem Distilleries India Limited, a public limited company, having its registered office at Ahmedabad. In that petition, it is contended that levy and collection of sales tax and additional sales tax on industrial alcohol by the State Government is in utter violation of the directions given by the Supreme Court in the case of Synthetics and Chemicals Ltd. [1991] 80 STC 270; AIR 1990 SC 1927 as the Supreme Court has held that the States have no authority to levy any tax on industrial alcohol (special denatured spirit - SDS ). It is also stated that the petitioner-company is engaged in the business of manufacturing various chemicals and other products and the distillery of petitioner No. 1-company is in operation since May, 1970. The company is manufacturing rectified spirit and the same is covered into specially denatured spirit by addition of approval denaturants. In the petition, various other contentions are raised to point our that levy and collection of sales tax and additional sales tax is illegal. Special Civil Application No. 951 of 1990 came up for admission hearing on March 5, 1990. After hearing the parties, this Court (Coram : S. B. Majmudar and B. S. Kapadia, JJ.) passed an interim order, which reads as under : " We have heard the learned Advocates of parties on interim relief. Interim relief prayed for in para 21 reads as under : 'pending admission and final hearing and disposal of this petition, Your Lordships may be pleased to grant interim relief by way of injunction order restraining the respondent-authorities from collecting any sales tax or additional tax pursuant to entry 94 of Schedule II, Part A of Sales Tax Act as amended by notifications at annexures B, C and E. " This interim relief is based on the Constitution Bench decision of the Supreme Court in Writ Petition No. 182 of 1980 decided on October 25, 1989. [reported as Synthetics and Chemicals Ltd. v. State of U. P. [1991] 80 STC 270 (SC)] The Constitution Bench has taken the view that sales tax cannot be charged on industrial alcohol because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the State on industrial alcohol, and that State may charge excise duty on potable alcohol and sales tax under entry 54 of List II. Therefore, as the Constitution Bench decision of the Supreme Court stands today, no defence is available to the respondents in connection with collection of sales tax on industrial alcohol manufactured by the petitioners. It has to be kept in view that before the Constitution Bench, the State of Gujarat was represented through the learned Advocate-General and he had argued the matter amongst others. However, a review petition is already moved before the Constitution Bench of reconsidering the said decision and though the review petition is moved by the State of Uttar Pradesh, if the Constitution Bench decision is reviewed, then the basis of the present claim of the petitioners would disappear. It was further stated that even the State of Gujarat is desirous of moving a separate review petition before the Supreme Court. It is, therefore, submitted that if review petition is entertained and allowed, then there would be no occasion to restrain the respondents from collecting the sales tax. This is neither here not there. At present, the Constitution Bench decision operates and it is binding on this Court under article 141 of the Constitution. We have, therefore, to follow the said decision of the Supreme Court and give relief in terms of para 21 to the petition limited to recovery of sales tax on industrial alcohol manufactured by the petitioners. This interim relief will operate from March 6, 1990. However, at the request of the learned Advocate for the respondents, operation of this order is stayed for four weeks from today to enable him to file special leave petition against the present order before the Supreme Court and to obtain appropriate orders, if any. This order will operate from March 6, 1990 onwards, after four weeks' period is over if within that time, any other order of the Supreme Court is not obtained by the respondents. It is clarified that in case no other order is obtained from the Supreme Court and our present order operates from March 6, 1990, whatever amount is collected by the respondents from March 6, 1990, onwards till recovery is actually stopped, pursuant to the present order will have to be refunded to the petitioners by the respondents without putting forward the contention of unjust enrichment as it is because of stay of our interim order that they will be permitted to collect the amount awaiting further orders from the Supreme Court. Orders accordingly. " 3 Similar order was passed on March 23, 1990, by this Court in Special Civil Application No. 1655 of 1990. In view of the judgment rendered by the Supreme Court in the case of State of U. P. v. Synthetics and Chemicals Ltd. [1992] 87 STC 289 (SC); (1991) 4 SCC 139, the aforesaid interim order was vacated by this Court on October 22, 1991. Further, it is an admitted fact that the dealers had not collected sales tax from March 6, 1990 till October 21, 1991. Re : Constitutional validity of the Act :
(3.) WITH regard to constitutional validity of the Act, the learned Advocates for the petitioners are not in a position to substantiate their contentions in view of the judgment and order passed by the Supreme Court in the case of State of U. P. v. Synthetics and Chemicals Ltd. [1992] 87 STC 289; (1991) 4 SCC 139. In that case, the court has held that the State Governments have power to levy and collect sales tax on the industrial alcohol. The court has specifically held as under : " The power of regulation and control is separate and distinct from the power of taxation. Legislative exercise of regulation or control referable to entry 52 of List I or entry 8 of List II is distinct and different from a taxing power attributable to entry 54 of List II or entry 92-A or 92-B of List I. The power to levy taxes on sale or purchase or consignment is referable to these entries, and subject to the other provisions of the Constitution, the taxing power of the State is not cut down by the general legislative control vested in Parliament and referable to the general topics of legislation. " ;