In Brief
The State of Jharkhand issued a notification levying import fees on rectified spirit used to manufacture Indian Made Foreign Liquor (IMFL). The High Court quashed the notification, holding that rectified spirit is non-potable industrial alcohol outside the State's legislative competence under Entry 8 of List II, and that the State failed to justify the levy based on quid pro quo. The Supreme Court reversed the High Court's judgment, holding that upon proper interpretation, the levy applies not to rectified spirit as such, but to the final processed potable product (IMFL). Since it concerns potable liquor, the State has competence to regulate and charge for parting with its exclusive rights regarding manufacture and sale of intoxicants. The impost need not satisfy the quid pro quo doctrine as it represents payment for State privileges.
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