STATE OF U.P. AND ANR. versus M/S. SYNTHETICS AND CHEMICALS LTD. AND ANR.

Citation: [1991] 3 S.C.R. 64 · Decided: 18-07-1991 · Supreme Court of India · Bench: T.K. THOMMEN · Disposal: Appeal(s) allowed

Cited by 10 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
STATE OF U.P. AND ANR. 
v. 
M/S. SYNTHETICS AND CHEMICALS LTD. AND ANR. 
JULY 18, 1991 
[T. KOCHU THOMMEN AND R.M. SAHA!, JJ.] 
Constitution of India, 1950-Article 141-Declaration of Law-
Binding effect of-Precedent-Principle and purpose of-Supreme 
Court decision in ( 1990) 1 SCC 109-Effect and consequences of. 
Constitution of India, 1950-Vl/th Schedule, List 11, Entry 54-
lndustrial alcohol-Whether State can levy tax on sale or purchase 
thereof-Ceritral Government controlling price under Ethyl Alcohol 
(Price Control) Orders-Effect and consequences of. 
Industries (Development and Regulation) Act, 1951-Section 
!BG-Ethyl Alcohol (Price Control) Orders-Enactment of by Central 
Government-Whether restricts the powers of the State to levy tax on 
industrial alcohol-United Provinces Sales of Motor Spirit, Diesel Oil and 
Alcohol Taxation Act, 1939-Section 3( 1) as amended by the Uttar 
Pradesh Sales of Motor Spirit, Diesel and Alcohol Taxation (Amend-
ment) Act, 1976---Validity of. 
The Uttar Pradesh Sales of Motor Spirit, Diesel Oil and Alcohol 
Taxation (Amendment) Act, 1976 amended sub-section (I) of section 3 
of the United Provinces Sales of Motor Spirit, Diesel Oil and Alcohol 
Taxation Act, 1939 purporting to levy purchase tax on industrial 
alcohol, which was challenged in a writ application before the High 
F 
Court by the respondents. 
The respondents contended before the High Court that the State 
Legislature was incompetent to levy tax with reference to Entry 54 of List 
II in respect of industrial alcohol in so far as that article was the subject of 
regulation by the Central Government in exercise of its power under 
G 
section ISG of the Industries (Development and Regulation) Act, 1951; 
that the price of that article was regulated by the relevant Price Control 
Orders made by the Central Government under the IDR Act and any 
levy of sales tax or purchase tax by the State by recourse to Entry 54 of 
List II would come into direct conflict with the law made by Parliament 
and the control exercised by the Central Government under that law in 
H 
regard to an industry falling under Entry 52 of List I read with Entry 33 
of List III. 
64 
_J 
-4- . 
,. 
' l,.· 
STATE OF U.P. v. SYNTHETICS AND CHEMICALS 
65 
Relying upon the decision of a Constitution Bench of this Court in 
Synthetics and Chemicals Ltd. & Others v. State of U.P. & Others, 
[1990] 1 sec 109 the respondents further contended that, in so far as 
industrial alcohol was concerned, the State was incompetent to levy 
sales tax, by reason of the operation of the Ethyl Alcohol (Price Control) 
Orders made by the Central Government under section lSG of the !DR 
Act. 
The appellants-Opposite parties contended that the decisiod of 
this Court in (1990) l SCC 109 did not deal with the question of levy of 
tax falling under Entry 54 of List II and that the power of the State to 
levy taxes on, the sale or purchase of goods was not the subject of 
consideration in that decision. 
The High Court allowing the writ petition and declaring the U .P. 
Act 8 of 1976 to be null and void held that the levy of purchase tax on 
industrial alcohol was, during the operation of the Price Control Orders 
of the Central Government beyond the legislative competence of the 
A 
B 
c 
State, against which the State filed the present Appeal. 
D 
The appellant submitted that the reference to sales t~x in the 
judgment of this Court in (1990) l SCC 109, which the High Court in 
the present case thought was binding upon it, was accidental and per 
incurium and did not arise from the judgment; that the levy of sales tax 
was not in question at any stage of the arguments, nor was the question 
E 
considered as it was not in issue; that the Court gave no reason what-
ever for abruptly stating that sales tax was not leviahle by the State by 
reason of the Ethyl Alcohol (Price Control) Orders. 
The respondents contended that the prices strictly controlled by 
the Central Government in exercise of its power under the IDR Act; F 
that the State Law cannot be allowed to disturb such prices; that any 
attempt to raise the prices, despite the strict contml exercised by the 
Central Government by means of statutory orders, was an invalid exer-
cise of power. 
On the question, whether or notthe power of the State to levy tax G 
on the sale or purchase of goods falling under Entry 54 of List II will 
comprehend industrial alcohol, allowing the appeal of the State, this 
Cour

Excerpt shown. Read the full judgment & AI analysis in Lexace.