Satish Chandra, C.J.: - (1.) THIS group of special appeals is directed against the judgment of a learned single Judge quashing the Excise Commissioner' s order dated 18th September, 1974, whereunder he had indicated that vend fee will continue to be charged from wholesale licence-holders of denatured spirit, and farther directing the Excise Commissioner to refund the vend fee actually paid by the petitioner-respondents for a period of three years prior to the institution of the writ petition.
(2.) THE petitioner-respondent holds a licence in Form FL-16 for the wholesale vend of denatured spirit. It questioned the validity of the levy of vend fee on denatured spirit. According to the petitioner- respondent, the State was rendering no service to the trade of denatured spirit. THE vend fee hence could not be levied as a fee. In its true nature and character it was an excise duty or tax. THE State Legislature had no competence to authorise the levy of excise duty or tax on denatured spirit, because levy of such duty or tax on denatured spirit was exclusively in the domain of Parliament The appellate State has pleaded that the levy of vend was not a tax or a duty. It was consideration for parting with the exclusive privilege of the State to trade in intoxicating liquors, including denatured spirit. In law the State had exclusive privilege to deal in such articles, and it could validly part with the privilege for consideration. The levy of licence fee and the vend fee constituted consideration for permitting the petitioner-respondent to carry on trade in the wholesale vend of denatured spirit. It was also suggested that the vend fee was a fee properly so-called. In 1972 the State Legislature enacted the U. P. Excise (Amendment) Act, 30 of 1972. By this Act the State Legislature authorised the Government to sell by auction the right of retail and wholesale vend of foreign liquor (which includes Denatured Spirit).
(3.) THE validity of the 1972 Act was challenged in Sheo Pat Rai v. State of U. P., 1972 All LJ 1000. In that case this Court held that the levy of fee on retail vend of foreign liquor by auction was a levy in the nature of tax. It was not a fee. THE State Legislature had no competence to impose tax on foreign liquor. It was also held that the State did not have the exclusive privilege or monopoly to trade in intoxicants. THE State could only place reasonable restrictions on the inherent right of every citizen to carry on trade in intoxicants. Subsequently in Nashirwar v. State of Madhya Pradesh, AIR 1975 SC 360 the Supreme Court considered this aspect. It had occasion to consider the same matter again in Har Shankar v. The Deputy Excise and Taxation Commissioner, AIR 1975 SC 1121. In these cases the Supreme Court repelled the submission that a citizen had a fundamental right to trade in intoxicating liquors. After considering and interpreting its own earlier decisions, it ruled that the State under its regulatory powers has power to prohibit every form of activity in relation to intoxicants - its manufacture, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the State. The State could auction the right to vend by retail or wholesale foreign liquor by appropriate legislation under Entry No. 8 of List II of the Seventh Schedule of the Constitution.;