LexSRI MALAPRABHA CO-OP SUGAR FACTORY LTD. versus STATE OF KARNATAKA & ORS.
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[2015] 12 S.C.R. 837 SRI MALAPRABHACO-OP SUGAR FACTORY LTD. A v. STATE OF KARNATAKA & ORS. (Civil Appeal No. 860 of 2006) AUGUST 21, 2015 [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] B Karnataka Excise (Manufacture and Bottling of Arrack) Rules, 1987- r 17- Fixation of price of rectified spirit- By c Government Order, State fixed the price of rectified spirit uniformly at Rs. 61- per litre wherein captive distilleries entitled to receive only Rs. 5/- per litre, and the balance Rs. 11- per litre receivable by the State -Appellant supplied rectified spirit to various parties and received the entire sum at the D rate of Rs. 61- per litre - Demand raised by the Excise Department, being accorded at Rs.11- per litre sold by the appellant, - Challenge to, by the appellant- Held: The State had clarified that it would permit the appellant to sell rectified spirit at the common fixed rate of Rs. 61- provided it transferred E Rs.11- per litre to the State- If the appellant was serious in questioning the legal capacity of the State to recover the said Rs.11- per litre, it perforce had to challenge the Government Order- Having failed to do so it cannot, thereafter, challenge the Demand which is predicted on the Government Order F itself- More so, the appellant had full knowledge of the fact that it had been permitted to supply rectified spirit to third parties on the condition that of the general fixed price of Rs. 61- per litre, Rs. 11- per litre would have to be made over to the ~~ G Bihar Distillery vs. Union of India AIR (1997) SC 1208: 1997 (1) SCR 680; Synthetics & Chemicals Ltd. v. state of U.P. (1990) 1 sec 109: ~ 989 (1) 837 H 838 SUPREME COURT REPORTS [2015] 12 S.C.R. A Suppl. SCR 623 ; Vam Organics Chemicals Ltd. v. State of UP (1997) 2 sec 715: 1997 (1) SCR 403; Prat1ma Chowdhury v. Kafpana Mukhef}ee (2014) 4 sec 196- referred to. B c D Case Law Reference 1997 (1) SCR 680 referred to Para4 1989 (1) Suppl. SCR 623 referred to Para 4 1997 (1) SCR 403 referred to Para4 (2014) 4 sec 196 referred to Para4 CIVILAPPELLATE JURISDICTION : Civil Appeal No. 860 of 2006 From the Judgment and Order dated 16.04.2004 of the High Court of Karnataka at Bangalore in W.A. No. 7352 of 1999 E Rajesh Mahale, Adv., for the Appellant. V. N. Raghupathy,Adv., for the Respondents. The judgment of the Court was delivered by F VIKRAMAJIT SEN, J. 1. This Appeal brings into challenge the Judgment of the Division Bench of the High Court of Karnataka in terms of which the Judgment of the learned Single Judge had been upheld; however, with the direction that the competent authority shall examine the claim made by the G Appellant for being classified as a non-captive unit. On 2.9.7.2004, while issuing notice it had been clarified that the impugned Judgment had not been stayed. 2. The facts that are relevant for deciding the present H Appeal, succinctly, are that the Respondent State had fixed SRI MALAPRABHACO-OP SUGAR FACTORY LTD. u 839 STATE OF KARNATAKA[VIKRAMAJIT SEN, J.] the price of rectified spirit uniformly at ' 6/- per litre by A Government Order dated 12.5.1992. While doing so, it had been indicated that the captive distilleries would be entitled to receive only ' 51- per litre, and the balance ' 1/- per litre would be receivable by the Respondent State. For the period of 1. 7.1992 to 30.6.1 993, supplies of rectified spirit were made B by the Appellant to various parties and the entire sum at the rate of ' 6/- per litre was recovered/received by the Appellant. It will be relevant to underscore that the supply of rectified spirit (ethyl a !coho\) was made by the Appellant with full knowledge of the Government Order to which challenge has been made, C namely, the payment of ' 1/- per litre to the State Government. The Appellant does not dispute that it is a captive distillery, since it produces molasses which is then distilled and converted into ethyl alcohol/rectified spirit/industrial alcohol. 0 The Government Order dated 12.5.1992 has not been assailed by the Appellant at any point of time. When a demand for a sum of ' 13,32,000/- was raised by the Superintendent of Excise, Huballi, by letter dated 15.12.93, a challenge by way of the filing of a writ petition was initiated. E 3. The Respondent State is empowered to fix the price of rectified spirit by virtue of Rule 17 of the Karnataka Excise (Manufacture and Bottling of Arrack) Rules, 1
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