In Brief
The State of Orissa issued excise duty demand notices to Utkal Distilleries Ltd. for weak spirit generated as wastage during the rectification process of manufacturing IMFL. The company contended the wastage was unfit for human consumption and thus outside the State's taxing authority. A chemical examination confirmed the weak spirit was unsafe for potable purposes. The Supreme Court held that the State can levy excise duty only on alcoholic liquor for human consumption (Entry 51 List II), not on alcohol unfit for human consumption, which falls under central authority (Entry 84 List I). The appeals were dismissed, upholding the High Court's decision in favour of the company.
The lawyer headnote and full judgment text are available to registered users.