M/S. SOMAIYA ORGANICS (INDIA) LTD. versus STATE OF UTT AR PRADESH AND ANR.

Citation: [2001] 3 S.C.R. 33 · Decided: 17-04-2001 · Supreme Court of India · Bench: B.N. KIRPAL, S.S.M. QUADRI, M.B. SHAH, RUMA PAL, K.G. BALAKRISHNAN · Disposal: Case Partly allowed

Cited by 12 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

MIS. SOMAIYA ORGANICS (INDIA) LTD. 
v. 
STATE OF UTT AR PRADESH AND ANR. 
APRIL 17, 2001 
[B.N. KIRPAL, SYED SHAH MOHAMMED QUADRI, M.B. SHAH, 
RUMA PAL AND K.G. BALAKRISHNAN, JJ.] 
Excise Law: 
U.P Excise Act, 1910: Section 39. 
Excise Revenue-Vend fee-Industrial alcohol-Levy on-Supreme 
Court declared levy of vend fee on industrial alcohol as illegal, prospectively 
w.e.f 25.10.1989-However, State sought to recover vend fee prior to 
A 
B 
c 
25. l 0.1989-Validity of-Held: Vend fee already realised not to be refunded-
However, State cannot collect any vend fee notwithstanding issue of notice D 
of demand. 
1"-
Excise Revenue-Vend fee-Industrial alcohol-Levy on-Vend fee 
deposited during pendency of writ petitions-Such deposits were to be kept 
in a separate account-Subsequently, levy of vend fee declared illegal 
prospective~y w. e.f 25. l 0.1989-Refimd of deposit Entitlement--Held: E 
Deposits are realisations for the purposes of U.P Excise Act-Hence, such 
deposits are not to be refunded although they were kept in a separate 
account. 
Excise Revenue-Vend fee-Industrial alcohol-Levy on-Bank F 
guarantee furnished during pendency of writ petitions-Subsequently, levy of 
vend fee declared illegal prospectively w.e.f 25. l 0.1989-Invoking of bank 
guarantee-Held: Furnishing of bank guarantee does not amount to payment 
of vend fee-Hence, State not entitled to en cash bank guarantee and realise 
vend fee in respect of the period prior to 25. l 0.1989. 
G 
Constitution of India, 1950: Article 265. 
"Levy" and "collect"-Meaning of-Held: 'Levy' means assessment or 
charging or imposing tax-While 'collect' means physical realisation of tax 
which is levied or imposed-Collection of tax is normally subsequent to levy H 
33 
34 
SUPREME COURT REPORTS 
[2001) 3 S.C.R. 
A of the same-Words and Phrases. 
Doctrines: 
Doctrine of Prospective Overruling-Applicability of 
B 
The applicant manufactured industiial alcohol on which vend fee payable 
under the U.P. Excise Act, 1910 was exempted. Subsequently, the respondent-
State withdrelv the exemption from payment of vend fee on indu!l1rial alcohol. 
This was challenged by the appellant and the High Court, by an interim 
order, required the a1lpellant to give a bank guarantee and/or to pay the 
amount due; it directed the res1londent-State to keep the amount in a separate 
C account 
Subsequently, in Synthetics and Chemicals case, [1990] 1 SCC 109 
(second Synthetics case) this Court struck down the llrovision imposing vend 
fee on industrial alcohol proSJlectively i.e. from 25.10.1989. However, the 
High Court held that the res1londent-State was entitled to realise the vend fee 
D for the period prior to 25.10.1989. Hence these appeals. 
On behalf of the a1lpellant it was contended that under Article 265 of 
the Constitution no tax could be levied or collected without the authority of 
law; that in respect of the pel"iod 1irior to 25.10.1989 even if tax had been 
¥ 
levied and/or demand raised the same could not be collected; that in those 
E cases where money was deposited with the State on the condition that the 
same would be kept in a separate account and would be subject to the outcome 
of the writ petition, the allllellant would be entitled to refund thereof; and that 
furnishing of a bank b'llarantee did not tantamount to the payment of tax and, 
therefore, the respondent was not entitled to encash it. 
F 
G 
On behalf of the respondent it was contended that the appellant had 
realised the amount of vend fee payable by taking that figure into account 
while determining the sale llrice of industrial alcohol and, therefore, the 
respondent was entitled to recover the same as it othenvise would result in 
.indue enrichment 
Allowing the appeal, the Court 
HEID: 
(Per Kirpal, J, for himself, Quadri, J, Shah, J and Balakrishnan, J) 
H 
1. Prospective overruling, des11ite the terminology, is only a recognition 
-
.... 
SOMAIYA ORGANICS (INDIA) LTD. v. STATE 
35 
of the principle that the court moulds the relief claimed to meet the justice of A 
the case - justice not in its logical but in its equitable sense. As far as this 
country is concerned, the power has been expressly conferred by Article 142 
of the Constitution, which allows th~s Court "to pass such decree or make 
such order as is necessary for doing complete justice in any cause or matter 
1>ending before it". In exercise of this power, this Court has often denied the 
relief claimed despite holding in the claimants' fa

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