States empowered to impose import duty on IMFL: SC

In a major order affecting the liquor traders, the Supreme Court has ruled that the state governments had the power to impose import levy on Indian made foreign liquor (IMFL) imported into the state by licensee over and above the excise and countervailing duty.

Holding that trade in liquor was not a right at all, a five-judge constitution bench headed by Chief Justice V N Khare in a 3:2 majority held that "there is no bar on the state to charge any other fees on account of consideration for the privilege provided to the licensee to trade in liquor which privilege otherwise he did not have."

The majority judgement was written by Justice A R Lakshmanan on behalf of the Chief Justice and Justice R C Lahoti. The dissenting judgements were written by Justice B N Agrawal and Justice S B Sinha.

Allowing an appeal filed by Punjab government, Justice Lakshmanan said the state has unfettered powers to regulate the export/import and sale of intoxicants and in exercise of its regulatory powers, the import fee had been incoporated as one of the terms of the excise policy on yearly basis.

The bench also rejected a petition filed by a liquor licensee challenging the decision of the Kerala government to increase the import fee levied on IMFL.

"The amount charged is not a fee nor a tax but is in the nature of price of a privilege which the purchaser has to pay in any trading and business in noxious article/goods," it said.