SH. BILESHWAR KHAND UDYOG KHEDUT SAHAKARI MANDALI LTD. versus STATE OF GUJARAT AND ANR.

Citation: [1992] 1 S.C.R. 391 · Decided: 28-01-1992 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Dismissed
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Judgment (excerpt)

SH.BILESHW AR KHANO UDYOG KHEDUT 
SAHAKARI MANDALI LTD. 
v. 
STATE OF GUJARAT AND ANR. 
JANUARY 28,1992 
[R.M. SAHAI ANDS. MOHAN, JJ.] 
Constitution of India, I 950: 
Article 245 and 246/VII Schedule-List II Entries 26 and 27/List Ill 
A 
B 
&~n: 
c 
Legislative competence qf State~5ection 58A of Bombay prohibi-
.tion Act-Enactment of-Whether within the legislative competence. 
Bombay Prohibition Act: 
Section 58A-Whether within the legislative competenco qf State-
Constitutional validity of 
Rule 2 of the Bombay Prohibiiion (Manufacture of Spirit) (Gujarat) 
D 
-'1-
Rules, 1963, framed by the State Government in exercise of powers 
conferred under Section SSA of the Bombay Prohibition Act, dealt 
E 
with grant of licence for working of distillery for the manufacture of 
spirit. One of the conditions for grant of licence was that the cost of 
maintenance of staff, viz. payment of salary and allowances, was to be 
paid to the Government by the licensees. This was challenged by the 
appellant and the High Court upheld the levy as being within the 
legislative competence of the State. 
F 
Aggrieved against the High Court's order, the appellant has pre~ 
'-- • 
ferred the present appeal. 
The appellant contended that since the judgement appealed against 
proceeded on privilege theory, it cannot withstand the principle laid 
G 
down in Synthetic & Chemicals, case; and that levy as a fee under 
Entry 8 of list II of Seventh Schedule or excise duty under Entry 51 is 
different than the cost of supervision charged under Section SSA of 
the Bombay Prohibition Act. 
Dismissing the appeal, this Court, 
H 
391 
392 
SUPREME COURT REPORTS 
(1992] 1 S.C.R. 
A 
HELD: 1.1 Even though the power to levy tax or duty on indus-
B 
c 
D 
E 
trial alcohol is vested in the Central Government, the State was till 
left with power to lay down regulations to ensure that non-potable 
alcohol, that is, ·industrial alcohol, was not diverted and misused as 
substitute for potable alcohol. This is enough to justify a provision like 
SSA of the Bombay Prohibition Act. (394 D] 
1.2 Principle of occupied field precluded State from trenching 
on any power which was already convered by Central legislation. But 
in absence of any provision in Industries (Development & Regulation) 
Act touching upon regulation or ensuring that industrial alcohol was 
not diverted, the State was competent to legislate on it under Entry 33 
list III of VII Schedule. (394 F-G] 
1.3 Trade and commerce and supply and distribution of goods 
are exclusive state subject under entries 26 and 27 of List II of VII 
Schedule. But both are subject to entry 33 of List III. What is covered 
in entry 33 is excluded from List II. And the power to legislate in 
respect of what is covered by List III is enjoyed both by Central and 
State legislatures subject to Article 246 of the Constitution. Since sec-
·' 
tion SSA can be traced to regulatory power of the State exercisable 
under entry 33 of List III the challenge to its validity is liable to fail. 
Thus, Section SSA of the Bombay Prohibition Act is valid and is not 
violative of any constitutional provision. [39S B-C(. 
l.4 It cannot he said that no cost for supervision could be de-
manded unless the power to issue licence for production was found to · 
exist in State. [ 39S DJ 
F 
Synthetics & Chemicals Ltd. & Ors. v. State of UP. & Ors., [1990] 
G 
1 SCC.109, followed. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 503 of 1974. 
From the Judgment and order dated 29/30.8.1973 of the Gujarat 
High Court in Special Civil Application No. 129 of 1973. 
Joseph Vellapally and D.N. Mishra for the Appellants. 
R.N.Sachthey, Anip Sachthey and Ms. Rashmi Dhariwal for the 
H 
Respondents. 
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KHAND UDYOG v. STATE !SAHA!, J.j 
393 
The Judgment of the Court was delivered by 
R.M. SAHA!, J. Validity of demand, under Section 58A of the 
Bombay Prohibition Act, for maintenance of the excise staff for supervi-
sion of the manufacture of industrial alcohol was assailed on lack of 
legislative·competence of the State. 
Section 58A is extracted below: 
"58A: The State Government may be general or special order 
direct that the manufacture, import, export, transport, storage, 
sale, purchase, use, collection or cultivation of any intoxitant, 
denatured spirit~ous preparations, hemp, Mowra flowers, or 
molasses shall be under the supervision of such Prohibiti.on 
and Excise or Police Staff as it may deem proper to appoint, 
and that the cost of such sta
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