Ramesh Kumar Jaiswal v. State of M. P. — 1998 DIGILAW 774 (MP)

ORDER Dipak Misra, J. 1. The factual matrix and the questions of law involved being similar in these two writ petitions they were heard analogously and are disposed of by this common order. For the sake of clarity and convenience the factual aspects in W.P. No. 765/98 are adumbrated herein. 2. The Petitioner is an excise contractor and carries on the business of sate of liquor under the licence issued by the State Authorities. For the year 1997-98; i.e. 1.4.1997 to 31,3.1998 the Respondents held public auction for grant of licence for retail sale of sealed bottles under the auction amount adjustment system in February/March 1997 at Sidhi district for waidhan group of shops comprising of 22 country liquor shops and 4 foreign liquor shops. Before the auction the Respondents had published a sale-memorandum under the authority of Respondents No. 3 and 4, namely, the Collector, Excise, and the District Excise Officer, Sidhi which contained certain conditions subject to which the licence was proposed to be granted. In the sale memorandum the Respondents reiterated the conditions relating to auction amount adjustment system. Keeping in view the conditions of the sale-memorandum which was putforth to the general public the Petitioner participated in the public auction. The Petitioner was the highest bidder having offered Rs. 3,75,00,000/- which was accepted and eventually the said group of shops was knocked down in his favour. After completing necessary formalities, a licence in form CS-2A under Rule 9 of the Country Spirit Rules, 1995 was issued in favour of the Petitioner. It is stated that according to the condition of the licence and the provisions of the prevalent Rules the petitoner was receiving supply of both country and foreign liquor from the warehouse on deposit of the excise duty. Before obtaining supply the Petitioner was required to deposit the duty for the whole amount. The Petitioner deposited the amount in question for the months of April, May, June and August, 1997 and the supply was made available to him. According to the Petitioner the said supply might have exceeded the requisite quantity, i.e. last year's quota plus 15% for the concerned shop, but no objection was raised by the departmental authorities. However the Petitioner received a notice dated 16.1.1998, Annexure-P.4, deposit a sum of Rs. According to the Petitioner the said supply might have exceeded the requisite quantity, i.e. last year's quota plus 15% for the concerned shop, but no objection was raised by the departmental authorities. However the Petitioner received a notice dated 16.1.1998, Annexure-P.4, deposit a sum of Rs. 2,23,986/- within 15 days from the date of receipt of the notice in the Treasury towards the duty payable by the Petitioner on the excess quantity of liquor lifted during the months of April, May, June and August, 1997. In the said notice it was stated that the Petitioner during the aforesaid months had availed supply of liquor in excess of the requisite quota. The said demand is the cause of grievance of the Petitioner. 3. It is averred in the writ petition that before the demand was made no opportunity of hearing was given to the Petitioner. It is also stated that the Petitioner had lifted liquor as per the sale-memorandum. There is reference to Rule-A of the General Licence Conditions inserted by way of notification amending the Rule published in the Official Gazette dated 1.4.1997. The said amendment has been brought on record as Annexure-P.5. It has been averred that the Petitioner was quided by the sale memorandum as the same was the initial document, and hence the demand is unjustified. It has been also averred that the condition as to the maximum limit upto which adjustment could be granted and the determination thereof was inserted in the statutory Rule II-A of General Licence Conditions by means of a notification amending and inserting a provision to the Rule II-A published in the gazette dated 14.8.1997, but the said amendment is clarificatory in nature and has to be so understood to confer the benefit on the licence holder to avoid anomaly. 4. A counter affidavit was filed in W.P. No. 4322/97 which has been adopted in this case. 4. A counter affidavit was filed in W.P. No. 4322/97 which has been adopted in this case. The stand of the State and the functionaries is that in accordance with the provision of condition II-A of the General Licence Conditions the Petitioner was given benefit of adjustment of excise duty to the extent of 15% over and above the quantity of liquor lifted by the Petitioner in the corresponding month of the previous year for that particular shop which has been leased out to him and this condition was duly accepted an implemented against all persons from 1.4.97 onwards and accordingly recoveries as and when required to be made were made from the concerned licensee in case he had lifted more than 15% over and above quota fixed in the previous year in respect of the particular shop concerned. As there was complaint in respect to the prevalent situation the government after duly considering the grievance of various licensees brought a notification dated 14.8.97 published in the gazette amending the proviso to Clause 2-A of the General Condition Rules and gave the benefit keeping the group of shops as one unit and accordingly from 14.8.97 onwards the benefit of this adjustment of 15% was given in relation to the entire group of shops leased out to a licensee. Apart from this, various other provisions of the Act and Rules have been referred to in support of their stand. 5. To understand the factual scenario in its proper perspective it is essential to state that before the rules came into force on 1.4.97 the exclusive privileges were sold in auction on shopwise basis. There was no auction as per lot or group. The privilege holder or a licensee was required to lift minimum guaranteed quota during a month. This system was given a go by the year 1997. A system was introduced that the shops would be sold by way of public auction in a group lot. In the case at hand 22 shops of country liquor and 4 shops of foreign liquor were put in auction in a group/lot. The auction amount which was fixed was based on earlier data. Payment was to be made by 12 monthly equal installments. In the case at hand 22 shops of country liquor and 4 shops of foreign liquor were put in auction in a group/lot. The auction amount which was fixed was based on earlier data. Payment was to be made by 12 monthly equal installments. A privilege holder was required to lift the liquor from the warehouse every month and the quantity was required to be in excess of 15% of the previous year quota and the lifting was determined shopwise. If the privilege holder lifted liquor in excess he was required to pay duty. It is worthwhile to mention here that every privilege holder was required to pay the duty amount which was adjusted from the auction amount. The fixation of quota for each shop was not followed as a practice and the officers collected duty on the basis of 15% rise of excess of taking into consideration the entire shops in a lot and not shopwise corresponding to the previous years's quota. However, there was a communication by the competent authority concerned vide Annexure-P.9 indicating that the method adopted by the collecting official was erroneous, it was reiterated that if the quantity of liquor was fixed on the basis of group of shops and not on the basis of quota fixed for each shop, the same was not adjustable in respect of the total quota allotted to the group. At that juncture the licensees agitated their grievance as a result of which the State Government by notification dated 21.8.97 brought in an amendment permitting them to adjust the excess lifting against the total number of shops in the group. The corresponding quota for the shopwise adjustment was done away with. Because of this development, the controversy only remains in respect of the period when the Petitioner had lifted more and not paid the duty on the ground the same was adjustable towards the quota fixed for the entire group of shops. 6. This being the factual scenario the question arises whether the Petitioner is entitled to relief of adjustment on the basis of each shop or on the basis of the group of shops. Mr. 6. This being the factual scenario the question arises whether the Petitioner is entitled to relief of adjustment on the basis of each shop or on the basis of the group of shops. Mr. Ravindra Shrivastava, learned Counsel in support of the stand of the writ Petitioners has raised the following contentions: (a) the sale memorandum AnnexureP.5 is the initial document wherein under Clause 29 it was stipulated that there would be shopwise adjustment and that being the first document it has the binding effect; (b) the amendment which has been brought on 31st March, 1997, vide Annexure-P6 amending the General Licence Condition Rule-II-A making it shopwise was not reflected in the sale memorandum which had been published earlier, and, therefore, this could not be given effect to as a licensee is given as per sale memorandum and even assuming the rules had come into force, the sale memorandum must be given priority and due weightage; (c) the rules which amended the earlier rules have to be regarded as retrospective as the same has been brought into existence to cure the discrepancy that had existed between the sale memorandum and the rules prevalent as on 1.4.97; (d) the State Government's intention has also to be kept in view while interpreting the Rule in question and objective assessment of facts clearly would indicate that the amending rule dated 22.8.97 is retrospective; (e) if the rule is not made retrospective a peculiar situation would arise by which the auction amount would reach the value beyond the bid amount which is not permissible and the State Government cannot unjustly enrich itself; (f) if the amended rules are not given retrospective effect two sets of rules would govern one financial year which is not a healthy situation; and (g) the amending rules are to be treated as retrospective in view of the postulation in Clause 33 of the General Conditions of Licence. 7. Mr. R.S. Jha, learned Dy. Advocate General combating the submissions of Mr. Shrivastava has contended that the sale memorandum clearly stipulated that the quota and adjustment had to be shopwise. With regard to the existence of anomaly between the earlier rules and the sale memorandum it is seriously controverted by the learned Dy. A.G. by contending that there was no inconsistency between the two. In regard to the unworkability of the Rules is concerned, it is submitted by Mr. With regard to the existence of anomaly between the earlier rules and the sale memorandum it is seriously controverted by the learned Dy. A.G. by contending that there was no inconsistency between the two. In regard to the unworkability of the Rules is concerned, it is submitted by Mr. Jha that the State Government in order to give the benefit to the privilege holders amended the rule, but it has to be given effect from the date of publication in the Gazette and not prior to that date. In support of this he has referred to Section 62 and 63 of the M.P. Excise Act. Mr. Jha has also seriously resisted the submission of Mr. Shrivastava as far as interpretation of Clause 33 of the General Licence Conditions is concerned. 8. To appreciate the rival submissions raised at the Bar it becomes essential to refer to Clause 29 (6) of the sale-memorandum which reads as under - On a bare reading of the aforesaid clause I find that there is a stipulation which clearly lays down that for the year 1997-98 there shall be shopwise adjustment and not groupwise adjustment. The words used in this clause make it graphically clear that lifting of the liquor has to be based on the shopwise and if excess is lifted duty is to be paid. The Rule which was amended with effect from 31st March, 1997 is as follows: Rule II-A - Adjustment of Excise Duty against Annual Auction Amount -(1) The annual auction amount shall be payable in twelve equal monthly instalments. If the annual auction amount is not exactly divisible in equal monthly instalments the remainder shall be adjusted in the first instalment. The Rule which was amended with effect from 31st March, 1997 is as follows: Rule II-A - Adjustment of Excise Duty against Annual Auction Amount -(1) The annual auction amount shall be payable in twelve equal monthly instalments. If the annual auction amount is not exactly divisible in equal monthly instalments the remainder shall be adjusted in the first instalment. (2) The monthly instalment of the annual auction amount calculated in the manner prescribed in Sub-rule (1) for country spirit and foreign liquor shops or the balance of such monthly instalment after adjusting the amount of duty of country spirit and or foreign liquor paid at the prevailing rates against the quantity of country spirit/foreign liquor drawn by the licensee from the respective country spirit warehouse and the bonded foreign liquor F.L. 10 licensee (s) as the case may be shall be deposited in full by challan in the Treasury or in the Sub-Treasury of the District/Tehsil by the end of each month in the prescribed budgetary head; Provided that no adjustment of the amount of duty paid for the quantity of country spirit in excess of the quantity of country spirit issued for a shop in the corresponding month of the previous year plus fifteen percent of such quantity, will be allowed. (3) In case the duty paid as aforesaid, by the licensee in a month falls short of the monthly instalment of that month he shall be bound to deposit the balance amount in cash by the end of the month. The assessment of the payment of monthly instalment of auction amount will be done by the 10th of the succeeding month. If the balance is not so paid, issues of the country spirit arid foreign liquor shall be given to the licensee on payment of such market price for it as may be determined by the Collector and not on payment of prevailing rate (s) of duty. If the balance is not so paid, issues of the country spirit arid foreign liquor shall be given to the licensee on payment of such market price for it as may be determined by the Collector and not on payment of prevailing rate (s) of duty. The total amount, thus recovered by way of payment of market price from the licensee for issue of country spirit and permit for foreign liquor, shall be adjusted towards the balance of the monthly instalment for the preceding month payable by the licensee towards the duty between the period starting from 1st day of succeeding month and the date of such assessment shall also be adjusted against the arrears of the instalment of auction amount of the succeeding month (s) if any. The issue of Country Spirit and permits for foreign liquor at the market price the aforesaid shall continue as long as it is necessary to recover the balance of monthly instalment (s) of the auction amount in the above manner. Any challan relating to payment of duty against which country spirit and foreign liquor has not been drawn by the end of the month shall be treated to be deposited against the instalment of auction amount for that particular month. (4) The amount of duty paid in excess of monthly instalment of auction amount in a month shall not be adjusted against the instalment of next month (s). But subject to the proviso to Sub-rule (2) this excess amount shall be adjustable against the total auction amount of that particular financial year. (5) When the cumulative total of the amount of duty paid/deposited and difference of excise duty and monthly instalment of annual auction amount, if any, paid in cash by the licensee together with the advance amount deposited by him at the time of auction/tender becomes equal to the yearly auction amount. (5) When the cumulative total of the amount of duty paid/deposited and difference of excise duty and monthly instalment of annual auction amount, if any, paid in cash by the licensee together with the advance amount deposited by him at the time of auction/tender becomes equal to the yearly auction amount. The licensee's liability to pay monthly instalment (s) of auction amount shall cease and the licensee shall be permitted to take issues of country spirit and obtain permits for lifting foreign liquor without payment of duty against the advance amount deposited by him at the time of auction/tender which shall be adjustable against the balance of the auction amount but issues of country spirit in excess of the limit laid down in the proviso to Sub-rule (2) and issue of permits for foreign liquor in excess or double the monthly average quantity drawn by him during previous months shall not be permissible. After adjustment of the total advance deposit towards the annual auction amount the licensee will be allowed rebate on excise duty of the quantity of country spirit and foreign liquor drawn by him at the following rates - (a) When total duty deposited 25% of the prevailing rate does not exceed 25% of duty the annual auction amount (b) When total duty deposited 50% of the prevailing rate exceed 25% of the annual of duty auction amount Provided that the licensee will be elegible to avail of the above rebate in the months of February and March only on such quantity of country spirit and foreign liquor drawn by him which does not exceed the quantity of country spirit mentioned in the proviso to Sub-rule (2) and double the average monthly drawal of foreign liquor in the previous months. Explanation I -"Annual Auction Amount" for the purpose of this rule shall mean the bid received for a group of shops put to auction whether by open auction or tender system for any period and accepted and confirmed by the Collector or the Excise Commissioner, as the case may be. The proviso to Rule II-A makes it plain as noon day that no adjustment in excess of the quota/quantity issued for a shop in the corresponding month of the previous year by more than 15% is allowable. The proviso to Rule II-A makes it plain as noon day that no adjustment in excess of the quota/quantity issued for a shop in the corresponding month of the previous year by more than 15% is allowable. Vide Annexure-P.8 dated 22.8.97 the said proviso has been amended which reads as under: Amendment - In the said Rules under the heading "(C) General Licence Conditions", for the proviso Sub-rule (2) of rule II-A, the following proviso shall be substituted, namely - "Provided that no adjustment of the amount of duty paid for the quantity of Country Spirit issued to shops auctioned in a group in excess of the total of Country Spirit issued for such shops in the corresponding month of the previous year plus fifteen percent of such total quantity, shall be allowed. Admittedly the said amendment came into force with effect from 14th August, 1997. The core question arises whether the amended provision could be regarded as retrospective. Mr. Shrivastava has strongly contended that the intention of the State Government is to be taken into consideration as well as Clause 33 of the General Licence Conditions. To substantiate his contention whether it is retrospective in nature, it is necessary to refer to Section 62 of the Act. It confers power on the State Government to make rules. The Sub-sections (g), (h), (i) and (j) are reproduced hereunder - Section 62 (2) (g) -Regulating the amount, time, place and manner of payment of any duty of fee of tax or penalty; (h) prescribing the authority by, the form in which, and terms and conditions on and subject to which any licence, permit or pass shall be granted, any by such rules, among other matters - (i) fix the period for which any licence, permit or pass shall continue in force, (ii) prescribe the scale of fees or the manner of fixing the fees payable in respect of any such licence, permit or pass, (iii) prescribe the amount of security to be deposited by holders of any licence, permit or pass for the performance of the conditions of the same. (iv) prescribe the accounts to be maintained and the returns to be submitted by licence-holders, and (v) prohibit or regulate the partnership in, or the transfer of, licences; (I) prescribing the measures for ascertaining local public opinion and providing for the appointment of advisory committees and specifying their powers and duties; (j) providing for the destruction or other disposal of any intoxicant deemed to be unfit for use. The General Licence Rules are under Rule 62 (2) (g), (h), (i) and (j) and therefore, they have statutory force. The Clause 33 of the General Licence Conditions reads as under: Clause XXXIII -Power to amend conditions of Licence -TheState Government are authorised to amend any condition of a licence during the currency of the licence and, unless otherwise directed, such amendment, shall be effective as from the commencement of the licence and the licensee shall be bound by the same and shall not be entitled to any damages on account of any such amendment. Heavy reliance has been placed on this clause to emphasise that Rule II-A has retrospective effect as there is no contrary intention by the Rule Making Authority. The aforesaid submission has no force. The General Licence Conditions is a set of conditions. Clause 33 is a part of the conditions. From a bare reading of the conditions it is perceptible that there is a gulf of distinction between General Licence Conditions and Conditions of Licence. I am of the humble view that Rule II-A has no retrospective effect. In this context I may state that a rule or notification unless stated to be retrospective, cannot have retrospective effect. I may refer the decision rendered by the Apex Court in the case of Shri Vijaylakshmi Rice Mills V. State of A.P., AIR 1976 SC 1471 wherein their Lordships held as under: There is no deeming clause or some such provision in the Rice (Andhra Pradesh) Price Control (Third Amendment) Order, 1964 to indicate that it was intended to have retrospective effect. It is a well recognised rule of interpretation that in the absence of express words of appropriate language from which retrospective may be inferred, a notification taxes effect from the date it is issued and not from any prior date. It is a well recognised rule of interpretation that in the absence of express words of appropriate language from which retrospective may be inferred, a notification taxes effect from the date it is issued and not from any prior date. The principle is also well settled that statutes should not be construed so as to create new disabilities or obligations or impose new duties in respect of transactions which were complete at the time the Amending Act came into force. From the aforesaid analysis, it is crystal clear that the amended rule cannot be given effect retrospectively, moreso, when nothing has been stated therein making it retrospective. The submission of Mr. Shrivastava that if the amendment of the rule is appreciated against the factual backdrop and on the anvil of Government's intention it has to be understood that it is retroactive, though attractive, is devoid of substance. 9. The contention of Mr. Shrivastava relating to enhancement of the auction price has no substance as the intending bidder was expected to be aware of the sale memorandum and the rules in vogue and when he participated keeping the eyes wide open, he cannot turn back and make a grievance in regard to the consequences. 10. In view of the aforesaid premises I find that there is no substance in any of the submissions of the learned Counsel for the Petitioners for which the petitions are liable to be dismissed. However, as submitted by the learned Counsel for the Petitioners they may be permitted to make representations to the Government to waive the duty or to make payment by easy instalments. Keeping the aforesaid submission in view it is directed that if the Petitioners make representations, the same may be considered by the State Government. 11. In the result, the writ petitions are dismissed without any order as to costs.