Shyam Kishore Chhote Lal v. State of U. P. — 1971 DIGILAW 421 (ALL)

JUDGMENT H.N. Seth, J. - This is a petition under Art. 226 of the Constitution of India, filed on behalf of Messrs. Shyam Kishore Chhotey Lal, a licensee of a country liquor shop situated in the city of Allahabad, for the year 1967-68 The petitioner obtained a licence for retail vend of country liquor on auction system. Immediately after conclusion of the auction sale, he deposited one sixth of the annual fee payable as also an amount of Rs. 18,004/- being 1/24th amount of duty realisable on the minimum annual quota of liquor to be lifted by it, as security. This amount was deposited vide Treasury challans dated 17-4-1967 and 22-4-1967, as required by rule 373 (6) of the U.P. Excise Manual Vol. 1 as amended by notification dated January 30, 1966 published in the U.P. Gazette Part 1-A dated February 5, 1956. The petitioner claims that from out of the security money of Rs. 18,004.17, the Excise Authorities, on 29th March, 1968 adjusted a sum of Rs. 6,300/- in lieu of the price of country liquor lifted by it. There were no other dues of any kind which the petitioner was liable to pay. Thus, there remained a balance of Rs. 11,714.17 with the Excise Authorities which they were under a legal obligation to refund. The petitioner addressed letters dated June 22, 1968, 26th May, 1970 and 10th September 1970 to the Excise Commissioner, Excise Officer and the Collector Excise Department, claiming refund of Rs. 11,704.17, the balance of security deposit, but the authorities concerned did not care to reply to his letters. They kept the matter pending on the ground that the letters were receiving consideration and that suitable orders would be passed in due course. 2. In order to obtain the licence, the petitioner deposited a sum of Rs. 2.37,000/- in instalments towards payment of licence fee. It claims that the provisions in the Excise Manual relating to the levy of licence fee were invalid as they contravened the provisions of Art. 14 of the Constitution. The petitioner therefore claims that it is entitled to a refund of the entire licence fee amounting to Rs. 2,37,000/- deposited by it. 2.37,000/- in instalments towards payment of licence fee. It claims that the provisions in the Excise Manual relating to the levy of licence fee were invalid as they contravened the provisions of Art. 14 of the Constitution. The petitioner therefore claims that it is entitled to a refund of the entire licence fee amounting to Rs. 2,37,000/- deposited by it. During the year, the Excise Authorities and the District Magistrate, Allahabad, compelled the petitioner to close its shop on 18th to 21st, 23rd to 25th, 28th and 31st of March, 1968, five gazetted holidays and 52 Tuesdays (total 63 days). In any case it was entitled to recover compensation from Excise Department for the loss caused to it, at the rate of Rs. 770/- per day. The sum of Rs. 770/- represented proportionate licence fee which the petitioner was liable to pay for one day. 3. After expiry of petitioner's licence, balance of country liquor stock with him, on which duty amounting to Rs. 472.50 had already been paid, was made over to its successor. The Excise Authorities however, realised this amount of Rs. 472.50 over again from petitioner's successor and were therefore liable to refund it. 4. The petitioner, therefore prays that this Court should issue a writ in the nature of Mandamus directing the respondents to refund to the petitioner the amount of security money deposited for payment of Still Head duty or to dispose of its application dated June 27, 1968. It also claims relief for the refund of licence fee and compensation for loss suffered by it on account of closure of its shop on 63 days, and for the return of a sum of Rs. 472.50, the duty charged over again from its successor. 5. The respondents have contested the prayers made in this petition. According to them the petitioner was liable to pay Excise Duty in respect of the entire minimum quota of liquor that it was required to lift whether he actually lifted it or not. In this way a sum of Rs. 2,701/- was due from the petitioner which was recoverable from out of the Security amount. Further, Sri Shyam Kishore Kapoor, through whom this petition has been filed, had to pay a very heavy sum which was due from another licensee for whom he had stood surety. In this way a sum of Rs. 2,701/- was due from the petitioner which was recoverable from out of the Security amount. Further, Sri Shyam Kishore Kapoor, through whom this petition has been filed, had to pay a very heavy sum which was due from another licensee for whom he had stood surety. According to the respondents, these two amounts covered the entire balance of security amount and nothing was payable by them to the petitioner. They further claimed that the provisions relating to licence fee, according to which the petitioner paid a sum of Rs. 2,37,000- were valid and did not contravene the provisions of Art. 114 of the Constitution. Accordingly, the petitioner was not entitled to a refund of the licence fee paid by it. During March 1968, petitioner was required to close its shop only on four clays i.e. 23rd, 24th, 25th and 31st March. This was done as a result of disturbed condition in the city on account of communal riots. Further, according to condition No. 22 (4) of the Sales Chart, announced at the time of the auction, the petitioner was required to close its shop on five gazetted holidays, namely, Holi, Diwali, 15th August, 2nd October and 30th January, besides all Tuesdays. In the circumstances, the petitioner was not entitled to recover any compensation for the days on which its shop could not function. Petitioner's claim, for refund of Rs. 472.50, the duty paid by it in respect of the stock made over to his successor was also not admitted. 6. Learned counsel for the petitioner urges that the Department was not entitled to charge a sum of Rs. 472.50 twice, once from the petitioner and again from its successor. It should therefore be required to refund the amount to the petitioner. This contention can be accepted only if the petitioner is able to show that under the law the duty in respect of the stock of liquor obtained by it and which after expiry of its licence was transferred to its successor, was in fact not payable by it. Merely because the same amount of duty has been realised from his successor, it will not entitle the petitioner to claim it back from the Department. Merely because the same amount of duty has been realised from his successor, it will not entitle the petitioner to claim it back from the Department. Paragraph 153 of the U.P. Excise Manual provides that Still Head duty imposed on country spirit is payable before issue of such liquor from the distillary, brewery or bonded ware-house. Responsibility for payment of duty, therefore, is of the person who takes steps for getting the spirit issued from the distillery, brewery or bonded ware-house, which in this case happens to be the petitioner. Learned counsel was unable to point to any provision in the Excise Act or the rules framed thereunder, or in the Excise Manual, which may show that the petitioner was not liable to pay duty in respect of the stock of liquor produced by it and which stock was subsequently made over to its successor, we are accordingly not satisfied that the petitioner has made out any case for claiming refund of Rs. 472.50. 7. In view of Full Bench decision of this Court, in the case of Gappu Lal Munnilal v. State of Uttar Pradesh, 1971 A.L.J. 796 learned counsel for the petitioner did not urge that the provisions in the Excise Manual, for payment of duty as per auction system were invalid as they were in violation of Art. 14 of the Constitution. He, however, argued that petitioner was granted licence on the understanding that it would be able to keep its shop open on all the 365 days of the year. As petitioner's shop was required to be closed for nine days in the month of March 1968, 5 public holidays and 52 Tuesdays it was entitled to recover compensation for the loss occasioned to it, which should be calculated on the basis of the proportionate amount of licence fee payable for each day. So far as closure of the shop on various dates in the month of March is concerned, respondents admit that the petitioner was directed to close its shop only on four days, under instructions from the District Magistrate of Allahabad on account of communal riots in the city. According to them such a direction could be issued under Section 59 of the Excise Act. According to them such a direction could be issued under Section 59 of the Excise Act. As the auction in respect of the licence was held on condition that the petitioner would not be able to open its shop on five public holidays and Tuesdays, and the licence having been granted on this condition, it was not open to it to claim any refund of licence fee on the ground that the Excise shop could not be run on those days. Learned counsel for the petitioner has not been able to substantiate its case that licence fee was charged on the basis that petitioner would be able to keep its shop open on all the 365 days of the year. We see no reason for not accepting respondent's case that petitioner obtained licence on clear understanding that it will not be able to run its shop on all Tuesdays and five gazetted holidays. In the circumstances, no question of the petitioner being entitled to compensation for closure of its shop on these dates arises. So far as closure of the shop on four days in the month of March, 1965 is concerned, reliance is placed on paragraph 190 of the Excise Manual which runs as follows :- "The following misc. direction regarding the classification and payment of charge are noted for observance :- (1) Payment on account of compensation for closing shops under Section 59 of the Act or for closing country spirit shop settled under the auction system during the passage of troops includes (a) the refund of an amount originally credited to excise and (b) 10% calculated on the amount of licence fee for the period during which the shop was closed, on account of such profits. The latter charge only should be debited to Contract Contigencies. The former will be treated as refund and adjusted against the separate grant for refund and draw-backs. (2) Compensation may be paid by the Collector on his own authority." 8. Learned counsel for the petitioner argues that the provision in paragraph 190 of the Excise Manual postulates in case if licensee is directed to close its shop under Section 59 of the Act it will be entitled to receive compensation and the amount of compensation will consist of the amount originally credited to Excise and 10% of the amount of licence fee for the period during which the shop was closed. We are unable to accept this contention. Sec. XVI of Excise Manual, which is headed as "Expenditure" is divided into three parts. Part II, which deals with District Contingent charge, consists of paragraphs Nos. 186 to 190. Paragraph 186 provides that contingent charges payable by the Collector from allotment made by the Excise Commissioner are to be divided into two classes, namely contract contingencies and non-contract contingencies. Paragraph 187 further classifies the charges, to be recovered by the grant for contract contingencies, in 13 classes. Paragraph 188 prescribes the method for drawing money to meet contingent charges. Paragraph 189 provides that non-Contract contingencies include freight on excise opium only. Paragraph 190 (1) then provides that in a case where compensation is payable for closing shops under Section 59 of the Act or for closing country spirit shops settled under the auction system during the passage of troops, it will include (a) the refund of an amount originally credited to excise and (b) 10 per cent calculated on the amount of licence fee for the period during which the shop was closed on account of loss of profits. This provision was made with a view to state as to how in case compensation becomes payable because of closure of shops under Section 59 of the Act, the amount of compensation would be accounted for by the Excise Authorities. According to this provision in a case where compensation is payable that part of compensation which represents the refund of amount originally credited to excise, is to be treated as a refund and adjusted against the separate grant for refund and draw backs, whereas the amount equivalent to 10 % of the amount of licence fee for the period during which the shop was closed is to be debited to contract contingencies. It is obvious that paragraph 190 (1) was not intended to confer upon a licensee a right to claim compensation when it is directed to close its shop under Section 59 of the Act. It was merely intended to provide as to how the amount of compensation is it became payable is to be adjusted in the books of the Excise Department. Right to claim compensation in such circumstances has, therefore, to be discovered also where. Paragraph 190 (2) states that compensation may be paid by the Collector on his own authority. It was merely intended to provide as to how the amount of compensation is it became payable is to be adjusted in the books of the Excise Department. Right to claim compensation in such circumstances has, therefore, to be discovered also where. Paragraph 190 (2) states that compensation may be paid by the Collector on his own authority. In our opinion this provision merely provides the authority which can make the payment in a case where compensation becomes payable. Even if this provision is construed as implying that compensation is payable when a shop is directed to be closed under Section 59 of the Act, it does not confer an absolute right upon the licensee to claim such compensation, as of right. This provision at best can be construed as meaning that in a case where a licensee has been directed to close its shop under Section 59 of the Act, the Collector may authorise payment of compensation. Even on this construction, it will be in the discretion of the Collector to authorise payment of compensation. He is not bound to authorise payment of compensation for such closure in each and every case. The petitioner has not been able to point out any other provision in the Excise Act or the Excise manual which may confer a right upon it to claim compensation for such closure of shop. 9. It is significant to note that Section 34 of the Act makes a provision for cancellation or suspension of licence in certain circumstances. Sec. 34 (2) provides that if a licence is cancelled or suspended under the provisions of that section no compensation for the same would be payable. Sec. 35 of the Act further authorises the licensing authority to cancel a licence for causes other than those specified in Section 34 either by giving 15 days notice in writing of its intention to do so or forthwith without notice. In a case where a licence is cancelled under Section 35, provision has been made that the authorities shall refund a sum equal to the amount of fee payable in respect thereof for 15 days. According to Section 35 (2) if a licence is cancelled under that section forthwith, without notice, the authorities are required to pay in addition to the sum remitted a further sum by way of compensation as the Excise Commissioner may direct. According to Section 35 (2) if a licence is cancelled under that section forthwith, without notice, the authorities are required to pay in addition to the sum remitted a further sum by way of compensation as the Excise Commissioner may direct. No such provision has been made in the Act for payment of compensation in a case where a shop is required to be closed under Section 59 of the Act. We are, accordingly, not satisfied that the petitioner is entitled to any compensation in respect of the closure of its shop on account of communal disturbances in the month of March, 1968. 10. We now proceed to consider petitioner's case for refund of Rs. 11,704.17 from out of the security money amounting to Rs. 18,004.17, deposited by it. This deposit was made in accordance with the provision of paragraph 373 (6) of the Excise Manual as inserted in the Excise Manual by the U.P. Excise (Amendment) Rule, 1966. This rule reads as follows : A sum equal to ?th of the annual fees shall be payable immediately on the conclusion of the sales of the day and the balance by such instalments as are specified in the licence to be granted. In the case of country spirit licences in addition to the security deposit mentioned above an amount equal to 1/24th of the amount of duty realisable on the minimum annual quota, if any fixed for the vend shop payable within a week of the auction, above security, unless it is forfeited or adjusted against any regular dues deposited by the person whose bid has been provisionally accepted shall either be refunded at the end of the year or adjusted against the still head duty realisable on proportionate monthly quota to be levied by him during the last month of the year provided he has lifted the proportionate quota due upto the month of February ........" According to this rule, the respondents are obliged to return the security amount deposited by a licensee at the end of the year or to adjust the same against the still head duty realisable on proportionate monthly quota to be lifted by the licensee during the last month of the year, unless the same is forfeited or adjusted against any earlier dues. According to the petitioner, out of the security amount deposited by it, only a sum of Rs. According to the petitioner, out of the security amount deposited by it, only a sum of Rs. 6,300/- had been adjusted towards earlier dues and the respondents were liable to refund the balance. The respondents were liable to refund the balance. The respondents, however claim that apart from the adjustment of Rs. 6,300/- already made, they were entitled to appropriate a sum of Rs. 2,701/- which was due from the petitioner on account of the duty payable in respect of the quota of country liquor which the petitioner failed to lift. Besides this Sri Shyam Kishore Kapoor, through whom the present petition has been filed, stood surety for another licencee who was liable to pay a large amount to the Excise Department. Since the person for whom Sri Shyam Kishore stood surety, did not discharge his liability, the authorities are entitled to adjust the balance of security deposit towards the satisfaction of that liability. If these two amounts are taken into consideration, is will be found that the entire security deposited by the petitioner Stands adjusted and nothing is payable to it. 11. So far as the respondent's claim for adjustment of Rs. 2,701/- is concerned, it is based on the fact that according to the licence a minimum annual quota of liquor had been fixed which the petitioner, as a licensee, had to lift during the year and was to pay excise duty thereon irrespective of the fact whether it lifted that quantity of liquor or not. Petitioner's case on the other hand is that it has already paid the duty in respect of the entire quantity of liquor lifted by it during the year, but due to certain reasons, in spite of the best efforts it could not lift liquor to the extent of minimum quota fixed, with the result that total duty paid by it fell short of the duty which would have been payable had the minimum quota of liquor fixed for the purpose been lifted. The question, therefore, that arises for consideration is whether the petitioner is liable to pay excise duty in respect of the quantity of liquor by which the quantity of liquor lifted by the petitioner fell short of the minimum quota fixed by the authorities. The question, therefore, that arises for consideration is whether the petitioner is liable to pay excise duty in respect of the quantity of liquor by which the quantity of liquor lifted by the petitioner fell short of the minimum quota fixed by the authorities. In the case Murli Prasad v. The Excise Commissioner, Special Appeal No. 62 of 1957 decided on 29-3-1968, a Division Bench of this Court has held that under the provisions of the Excise Act, a licensee cannot be obliged to pay excise duty in respect of the quantity of liquor by which the quantity of liquor lifted by it falls short of the minimum quota fixed by the authorities, even though there may have been so stipulated at the time of auction sale. In view of this decision it is clear that there is no obligation on the part of the petitioner to pay Rs. 2,701/- on account of excise duty in respect of unlifted quota of liquor and the same cannot be adjusted against the security deposit. 12. We also find that there is no substance in respondent's claim for adjusting the balance of security deposit as against the alleged dues of another licensee, for whom Sri Shyam Kishore, the person through whom the present writ petition has been filed, stood surety. According to Rule 373 (6) the security amount has to be refunded at the end of the year, or adjusted against the still head duty realisable from the licensee unless the same has been forfeited or adjusted against any earlier dues. This rule, therefore, enables the authorities to adjust the security amount either against earlier dues of the licensee or against the still head duty realisable from it to a certain extent. The security cannot be adjusted against the dues of any other person. It is nobody's case that the security has been forfeited. There are no dues, on account of still head duty to be paid by the petitioner. An adjustment towards earlier clues of the petitioner to the extent of Rs. 6,300/- has already been made and is not in dispute. In the circumstances, the petitioner is entitled to and the respondents are under an obligation to refund the balance of Rs. 11,704.17 to the petitioner under Rule 373 (6) of the Excise Manual. 13. An adjustment towards earlier clues of the petitioner to the extent of Rs. 6,300/- has already been made and is not in dispute. In the circumstances, the petitioner is entitled to and the respondents are under an obligation to refund the balance of Rs. 11,704.17 to the petitioner under Rule 373 (6) of the Excise Manual. 13. We may also point out that in the counter-affidavit filed on behalf of the respondents it was vaguely stated that Sri Shyam Kishore Kapoor had to pay a very heavy sum due from another licensee for whom Shyam Kishore Kapoor stood surety. The circumstances in which Shyam Kishore Kapoor stood surety and its extent have not been stated. There is a complete lack of particulars in this respect. In the rejoinder affidavit the petitioner has in no uncertain terms denied that the petitioner ever stood surety for any other licensee. In the circumstances, we are not satisfied that Shyam Kishore stood surety for any other licensee and that in such capacity he was liable to pay any amount to the excise department, much less, a heavy amount as claimed by the respondent. The respondents, therefore, cannot resist the claim for the refund of the security amount on this ground. Under Rule 373 (6) , they are under an obligation to refund the balance of security amount amounting to Rs. 11,704.17. 14. Learned counsel for the respondents contended that in this case the petitioners had an alternative remedy of a suit for claiming refund of the balance of security amount. In the circumstances, this is not a fit case in which this Court should entertain a petition under Article 226 of the Constitution. In this connection he relied upon the following observations made by the Supreme Court in the case of Sugan Mal v. State of Madhya Pradesh, A.I.R. 1965 S.C. 1940. In the circumstances, this is not a fit case in which this Court should entertain a petition under Article 226 of the Constitution. In this connection he relied upon the following observations made by the Supreme Court in the case of Sugan Mal v. State of Madhya Pradesh, A.I.R. 1965 S.C. 1940. "......Though the High Courts have power to pass any appropriate order in exercise of the powers conferred on them under Article 226 of the Constitution such a petition solely praying for the issue of a writ of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as tax." After making aforesaid observation, the Supreme Court went on to explain that in case where validity of an assessment is challenged and in consequence of it relief for return of tax is claimed, it stands on a different footing from a case where the party merely claims an order for refund of money as a substantive relief. The Court then observed :- "We do not find any good reason to extend this principle and therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims it right." As we read the judgment of the Supreme Court, it merely lays down that normally High Courts should not entertain a writ petition merely for granting a mandamus for refund of money claimed to be illegally exacted. The Supreme Court did not lay it down as an absolute rule that where there is a claim for refund of money, no writ can ever be issued by the High Court. In our opinion it will depend upon the facts and circumstances of each case whether a petition under Article 226 of the Constitution should be entertained or not. 15. In the instant case we find that Rule 373 (6) which obliges the respondents to refund the balance of security amount is a statutory rule framed by the Excise Commissioner in exercise of his powers under Section 41 of the U.P. Excise Act. Basic facts which oblige the respondents to refund the balance of security amount are not in dispute. In the instant case we find that Rule 373 (6) which obliges the respondents to refund the balance of security amount is a statutory rule framed by the Excise Commissioner in exercise of his powers under Section 41 of the U.P. Excise Act. Basic facts which oblige the respondents to refund the balance of security amount are not in dispute. The petitioner has been writing to and requesting various excise authorities for refund of the security, as is evident from the letters dated June 22, 1968, 26th May, 1970 and 10th September, 1970 addressed to Excise Commissioner, U.P. Excise Officer, Allahabad and the Collector Excise Department, Allahabad. These authorities kept silent and did not care to reply or communicate their decision to the petition. Further, non-exercise of jurisdiction under Article 226 may now result in the claim of the petitioner becoming barred by limitation. In the circumstances, we do not feel that this is a fit case in which we should refuse to exercise our jurisdiction under Article 226 of the Constitution on the ground that it was open to the petitioner to obtain relief by filing a civil suit. 16. In view of aforesaid discussion, the petition succeeds in part. 17. We direct the respondents to refund to the petitioner Rs. 11,704.17, the balance of security amount of Rs. 18,004.17 deposited by the petitioner after adjusting Rs. 6,300/-. The petitioner's prayer for other reliefs is rejected. Since the petition succeeds only in part, we direct the parties to bear their own costs.