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ASSIGNMENT

CASE STUDY FOR SYNTHETICS AND CHEMICALS LIMITED Versus STATE OF UTTAR PRADESH

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NAME			:  ARULPRAKASH.E DEPARTMENT		:  CONSTITUTIONAL LAW & 1st year OPTIONAL PAPER	:  CONSTITUTIONAN NEW CHALLENGES FACULTY			:   Dr.P.VANANGAMUDI DATE			:                2012

SYNTHETICS AND CHEMICALS LIMITED V. STATE OF UTTAR PRADESH PETITIONER: SYNTHETICS & CHEMICALS LTD. ETC. Vs. RESPONDENT: STATE OF U.P. AND ORS. DATE OF JUDGMENT25/10/1989 BENCH: MUKHARJI, SABYASACHI (J) SEVEN JUDGE BENCH: 1)	VENKATARAMIAH, E.S. (CJ)       3)  MISRA RANGNATH 4) OZA, G.L. (J)        5) RAY, B.C. (J) 6) SINGH, K.N. (J)     7)   NATRAJAN, S. (J) 8) MUKHARJI, SABYASACHI (J)

BACKGROUND OF THE CASE : POLITICAL PARTIES: In 1989 while case proceedings President of india –R.venkataraman, Prime minister of india-Rajiv Gandhi     ( INDIAN NATIONAL CONGRESS) till December 2 1989. And Governor of U.P – Shri mohammad usman arif ,Chief minister of U.P- Mulyam sing yadav (samajwadi). BACKGROUND OF JUDICATURE: Judge(s):

CHIEF JUSTICE E.S. VENKATARAMIAH, JUSTICE SABYASACHI MUKHARJI, JUSTICE RANGANATH MISRA, JUSTICE G. L. OZA, JUSTICE B.C. RAY, JUSTICE K.N. SINGH & JUSTICE S. NATARAJAN. Engalaguppe Seetharamiah Venkataramiah (E. S. Venkataramiah) (born December 18, 1924) was the 19th Chief Justice of India, serving from June 19, 1989 until his retirement on December 17, 1989. He began his legal career in 1946, and was appointed as a Judge of Karnataka High Court in November 1970. In March 1979, he was appointed as Judge of the Supreme Court of India, and he became Former Chief Justice of India of India in June 1989. Chief Justice Hon'ble Mr. Justice S. Mukharji

Hon'ble Mr. Justice Ranganath Misra : Appointed Permanent Judge of the Orissa High Court on 4.7.1969. Appointed acting Chief Justice, Orissa High Court on 6.11.1980 and permanent Chief Justice from 16.1.1981. Appointed Judge, Supreme Court of India on 15.3.1983. Appointed as Chief Justice of India on 25.9.1990. Retired on 24.11.1991. Appearing Parties: Advocate(s) For the Appearing Parties: A.K.Sangal, A.K.Srivastava, A.K.Verma, A.M.Khanwilkar, A.P.Hathi, A.S.Bhasme, A.S.Bobde, A.Subba Rao, A.Subhashini, A.T.M.Sampath, Amrita Sanghi, Anil B.Divan, Anil Kumar, Anuradha Mahajan, Ashok Singh, C.Shivappa, D.Goverdhan Chary, D.Gupta, D.N.Mishra, D.R.K.Reddy, Dinesh Chandra, F.S.Nariman, G.B.Sanghi, G.Rathi, H.K.Puri, Harish N.Slave, Himanshu Shekhar, Inder Singh, Indra Makwana, J.B.Dadachan And Co., J.M.Rao, K.C.Dua, K.D.Prasad, K.J.John, K.K.Mohan, L.K.Pandey, L.M.Singhvi, M.H.Baig, M.L.Lahoty, M.N.Shroff, M.S.Gupta, N.K.Sharma, N.N.Gupta, Naresh Bakshi, O.P.Sharma, P.H.Parikh, P.R.Ramaseshesh.S.Pariharhar, P.S.Poti, P.Shroff, P.Venugopal Rao, Porus A.Mehta, Prabir Chaudhary, R.B.Datar, R.F.Nariman, R.K.Mehta, R.N.Banerji, R.N.Trivedi, R.S.Rana, Rajinder Sachar, S.C.Sharma, S.Ganesh Rao, S.K.Bhattacharjee, S.K.Dholakia, S.S.Shroff, S.Sukumaran, Sandip I.Thakore, Satish K.Agnihotri, Shalini Soni, Shishir Sharma, Shiv Prasad Sharma, Sunita Sharma, Svaran Mahajan, T.T.Kunhikannan, T.V.S.N.Chari, V.M.Tamaskar, V.Venkata Ramaiah, Yogeshvar Prasad, Advocates. Issue which are in challenges: The main question that falls for consideration in these matters is whether the vend fee in respect of the industrial alcohol under different legislations and rules in different States is valid. The question is the vend fee and impost leviable or extractable by the States under different Acts. The question mainly involved in all these matters is a common question of law but we will have to deal with diverse factual situations as well as the particular provisions of the various Acts. The questions with which we are mainly concerned are the following : (i) whether the power to levy excise duty in case of industrial alcohol was with the State legislature or the central legislature ? (ii) what is the scope and ambit of Entry 8 of List II of the Seventh Schedule of the Constitution ? (iii) whether, the State government has exclusive right or privilege of manufacturing, selling, distributing, etc. of alcohols including industrial alcohol. In this connection, the extent, scope and ambit of such right or privilege has also to be examined. Statute provisions of constitution Articles 19(1)(g): All citizens shall have the right,- to practice any profession, or to carry on any occupation, trade or business.

Article 21: No person shall be deprived of his life or personal liberty except according to the procedure established by law. Article 47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health.— The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health.

Article 245: Extent of laws made by Parliament and by the Legislatures of States (1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. (2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation.

Article 246:

Subject matter of laws made by Parliament and by the Legislatures of States

(1) Notwithstanding anything in clauses ( 2 ) and ( 3 ), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the Union List)

(2) Notwithstanding anything in clause ( 3 ), Parliament, and, subject to clause ( 1 ), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the Concurrent List)

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List

Article 277: Savings Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.

CasesReferred: Hindustan Polymers Ltd. v. State of A.P. State of Assam v. A.M. Kidwai, Commissioner of Hills Division and Appeals, Shillong, Amar Chandra Chakraborty v. Collector of Excise, Government of Tripura, State of Bombay v. R.M.D. Chamarbaugwala, All India Alcohol Based Industries Development Association v. State of Maharashtra; Crowley v. Christensen, (1890) 34 L ed 620, 137 US 86; Southern Pharmaceuticals & State of West Bengal v. Subodh Gopal Bose M.P.V. Sundararamier & Co. v. State of A.P.,; State of Mysore v. D. Cawasji & Co., R.C. Jall v. Union of India,; Commonwealth of Massachusetts et al v. USA, 92 L ed 968; Nebbia v. People of the State of New York, 78 L ed 940, 291 US 502; Nashville, Chattangooga & St. Louis Railway v. Herbert S. Walters, 79 L ed 949, 294 US 405 (1935); Motor General Traders v. State of Andhra Pradesh,; Kameshwar Prasad v. State of Bihar; India Cement Ltd. v. State of Tamil Nadu Adhyaksha Mathur Babu's Sakti Oushadhalaya Dacca (P) Ltd. v. Union of India, Om Prakash Agarwal v. Giriraj Kishore, Delhi Cloth and General Mills Co. Ltd. v. The Excise Cammissiner, U.P. Allahabad and Anr. Special Appeal No. 177 of 1970; Nusserwanji Balsara v. State of Bombay, K.K. Narula v. State of J&K, Ostime (Inspector of Taxes) v. Australian Mutual Provident Society, (1959) 3 All ER 245, 1960 AC 459; Town Municipal Committee, Amraoti v. Ramachandra Vasudeo Chimote, P.N. Kaushal v. Union of India, Guruswamy & Co. v. State of Mysore, Chemicals, Trichur v. State of Kerala, Cooverjee B. Bharucha v. Excise Commissioner and the Chief Commissioner, Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, State of Orissa v. Harinarayan Jaiswal, Indian Mica and Micanite Industries v. State of Bihar, Har Shankar and Ors. etc. v. The Dy. Excise & Taxation Commissioner and Ors. Chemicals & Plastics India Ltd. v. State of Tamil Nadu; Calcutta Gas Co. v. State of West Bengal, Nashirwar v. State of M.P., Sheopat Rai v. State of U.P., 1972 All LJ 1000 ; State of Bombay v. F.N. Balsara, Synthetics & Chemicals Ltd. v. State of U.P. and Ors. ; Kesar Sugar Works Ltd. v. State of U.P. Review Petition No. 17 of 1980.

What are the concepts that are deal with role of law:

21. Protection of life and personal liberty-No person shall be deprived of his life or personal liberty except according to procedure established by law. This Article casts a duty on the State to protect the life of every citizen except as is provided under Article 21. If we compare this duty of the State with the scheme of privilege which means that the State has a privilege to endanger human life (the life of a citizen) such a privilege runs contrary to Article 21. Another significant article of our Constitution is Article 47. It reads as under : 47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health-The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. This Article appears in the Chapter of Directive Principles of State Policy. Inclusion of this Article in this Chapter clearly goes to show that it is the duty of the State to do what has been enacted in Article 47 and in fact this Article starts with the phrase "Duty of the State" and the duty is to improve public health and it is further provided that this duty to improve public health will be discharged by the State by endeavouring to bring about prohibition. It sounds contradictory for a State which is duty bound to protect human life, which is duty bound to improve public health and for that purpose is expected to move towards prohibition claims that it has the privilege of manufacture and sale of alcoholic beverages which are expected to be dangerous to human life and injurious to human health, transferring this privilege of selling this privilege on consideration to earn huge revenue without thinking that this trade in liquor ultimately results in degradation of human life even endangering human life and is nothing out moving contrary to the duty cast under Articles 21 and 47 and ideal of prohibition enshrined in Article 47. In view of Articles 21 and 47 with all respects to the learned Judges who so far accepted the privilege doctrine it is not possible to accept any privilege of the State having the right to trade in goods obnoxious and injurious to health. The other stand of States to justify these levies is based on the doctrine of police powers. The doctrine of police powers enunciated in number of decisions of the American Courts and which has been the subject matter of discussion by various authors in texts on jurisprudence is referred to in Indian context under owr Constitution does not appear to be applicable. In the Constitution of U.S.A. basic factor which must be kept in mind is : that various States after getting independence from their European Masters came together to form a Federal State and therefore what was not conceded to the Federal State i.e. the residuary powers vested in the State and as it was not conceded to the Federal Government that this residuary power of maintenance of law and order peace so essential for the development in a civilised society was evolved as a doctrine of police powers vested in the State. In India as the Constitution was enacted or was framed after having the experience of various countries in the World, the concept of fundamental rights and rights like life, liberty, procedure established by law and various 'legislative functions which were divided between the States and the Union left no scope for any power except which could be derived from any provision in the Constitution coupled with an Entry in one of the three Lists which would indicate the power vested in either the State or the center, Apart from it the scheme of our Constitution is that there are no residuary powers which vest in the State and the scheme of our Constitution also reveals that in case of any conflicts it is the center which prevails and not the State and therefore trying to apply the doctrine of police powers which has been conceived of in the American decisions with the Government of a State in the United States and to apply it to a State under Indian Constitution, will only mean to do violence to the scheme of our Constitution. What police powers have been enunciated under the American Constitution clearly will fall within the ambit of Articles 19, 21, 22 and respective entries in the Schedule of the Constitution. In fact, under our Constitution no powers could be conceived for which there is no provision in any one of the entries in the three Lists or which could not be justified under any specific Article of the Constitution. Thus even this concept of the doctrine of police powers could not be of any help to justify the levies imposed by the State on alcohol or alcoholic liquOrs. These question about the privilege and doctrine of police powers in fact would be material to be considered when the question about the various levies imposed by the State in respect of alcoholic beverages is considered and so far as the present cases are concerned which pertain to only alcoholic liquors which are not for human consumption i.e. which meant for industrial use. The only question will be as to whether the state could justify the respective levies under any of the entries in List II. The main theme of the argument on behalf of the State has been that they have imposed levies because the alcohol which is not for human consumption is a commodity which could be easily converted into alcoholic liquors for human consumption and therefore the levies have been imposed assuming that it is for human consumption or in other words the contention has been that these levies have been imposed in order to prevent the conversion of alcoholic liquors which are not for human consumption to those which are for human consumption. A contention therefore suggested that these levies could be justified as regulatory fees although it was frankly conceded that although the revenue earned put of it is substantial and may not be justifiable as fees out have been imposed and it was therefore the main theme on behalf of the respondents has been based on the doctrine of the privilege of the State to trade in these commodities as that trade is considered to be obnoxious and injurious to public health. In our opinion, therefore so far as the present case is concerned the State in exercise of powers under Entry 8 of List II and by appropriate law regulate and that regulation could be to prevent the conversion of alcoholic liquors for industrial use to one for human consumption and for purpose of regulation, the regulatory fees only could be justified. In fact, the regulation should be the main purpose, the fee or earning out of it has to be incidental and that is why the learned Counsel appearing for the State attempted to use this terminology by saying that the purpose is regulation, the earnings are incidental but frankly conceded that in fact the earnings are substantial. In fact in some of the excise laws in the States they have even used terminiology relying on the doctrine of privilege and parting with privilege but in our opinion it is not necessary for us to go into those questions in greater detail as we are not here concerned with the trade in alcoholic liquors meant for human consumption and therefore in view of clear demarcation of authority under various items in the three Lists Entry 8 List II could not be invoked to justify the levies which have been imposed by the State in respect of alcoholic liquors which are not meant for human consumption. What are the ratio of the case; Ratio Decidendi: Court shall restrain authority to enforce levy of duty if is not within its power. What is the poloce power under the U.S.A Constitution Crowley v. Christensen 1890 34 L E 620 Nebbia v. People of the State of New York Railway v. Herbert S. Walters Ostime (Inspector of Taxes) v. Australian Mutual Provident Society Commonwealth of Massachusetts Et Al v. USA 92 L E 9681 The American doctrine of police power is not perhaps applicable as such in India, but powers of the sovereignty to regulate as part of the power of the competent legislature to effectuate its aim are there. It was stated that the American jurisprudence of police power as distinguished specific legislative power is not recognised in our Constitution and is, therefore, contrary to the scheme of the Constitution In interpreting the provisions of our Constitution, we should go by the plain words used by the Constitution makers and the importing of expression like 'police power', which is a term of variable and indefinite connotation, can only make the task of interpretation more difficult. It was contended that in enacting a law with respect to intoxicating liquor as part of the legislative power measures of social control and regulation of private rights are permissible and as such may even amount to prohibition. The other stand of States to justify these levies is based on the doctrine of police powers. The doctrine of police powers enunciated in number of decisions of the American Courts and which has been the subject matter of discussion by various authors in texts on jurisprudence is referred to in Indian context under owr Constitution does not appear to be applicable. In the Constitution of U.S.A.

Conclusion : My opinion, right of the States to levy vend fee or duties in respect of industrial alcohol under different legislation in states therefore so far as the present case is concerned the State in exercise of powers under Entry 8 of List II and by appropriate law regulate and that regulation could be to prevent the conversion of alcoholic liquors for industrial use to one for human consumption and for purpose of regulation, the regulatory fees only could be justified.