The Court declares the 2022 Molasses Control Rules beyond the legislative competence of the state, emphasizing the non-intoxicant nature of raw molasses.
In a landmark decision, the Chhattisgarh High Court has declared the Chhattisgarh Molasses Control and Regulation Rules, 2022, unconstitutional, marking a significant win for traders dealing in non-intoxicant molasses. The division bench, comprising Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal, ruled that the rules exceeded the legislative competence of the state, as molasses in its raw form cannot be classified as an intoxicant.
The ruling came in response to a series of petitions, led by M/s Kedia Trading, challenging the constitutionality of the rules which mandated licensing and excise duties on molasses even when used for non-intoxicant purposes. The Court observed that such regulation was an overreach of the state's power under the Excise Act, which primarily governs intoxicating substances.
The Court noted that molasses, a by-product of the sugar industry, does not contain alcohol unless fermented, and thus, cannot be equated with intoxicants or excisable articles. The judgment emphasized that the state cannot regulate substances merely because they have the potential to be used in alcohol production. The Court criticized the rules for imposing undue restrictions on the trade of non-intoxicant molasses, violating the fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution.
The decision underscores the importance of legislative competence and the limits of state power in regulating trade activities. The Court's ruling highlights that while states have the authority to regulate intoxicating liquors, this power does not extend to non-intoxicating by-products like molasses unless they are used in the production of alcohol.
The verdict is expected to have significant implications for the molasses trade in Chhattisgarh, providing relief to traders who argued that the rules imposed an unfair burden on their operations. The state government's attempt to extend its regulatory framework to non-intoxicant uses of molasses was deemed unconstitutional, with the Court affirming that such matters fall under the purview of the central government, particularly in light of the Goods and Services Tax Act, 2017, which includes molasses under its ambit.
The ruling is a reminder of the judiciary's role in upholding the constitutional balance of powers and protecting the rights of businesses against unwarranted state interference. The state government has yet to respond to the Court's decision, but the judgment sets a precedent for similar cases across the country.
Bottom Line:
Chhattisgarh Molasses Control and Regulation Rules, 2022 declared ultra vires to the Constitution as Molasses in its raw, non-intoxicant form cannot be equated with intoxicants, excisable articles, or intoxicating liquor under the Excise Act.
Statutory provision(s): Articles 14, 19(1)(g), 246, 246A of the Constitution of India, Entry 8 and 51 of List II (State List), Chhattisgarh Excise Act, 1915, Chhattisgarh Molasses Control and Regulation Rules, 2022.
M/s Kedia Trading v. State Of Chhattisgarh, (Chhattisgarh)(DB) : Law Finder Doc id # 2873415
