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1999 DIGILAW 119 (KER)

Johny v. Excise Inspector

1999-03-01

K.S.RADHAKRISHNAN

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Judgment :- K.S. Radhakrishnan, J. The question that has come up for consideration in these cases is whether the department is justified in demanding additional rental of Rs. 25,000/- from the petitioners in accordance with the proviso to R.13(3) of the Foreign Liquor Rules. 2. Petitioners were having FL 3 licence and were conducting Bar Hotels. FL 3 licence in respect of petitioner in OP. 7082/94 expired on 31.3.94. Petitioner vide his letter dated 17.3.1994 requested the excise authority to issue countersigned challan to enable the petitioner to remit licence fee. The countersigned challan was not issued by the first respondent till 12.4.94. On receipt of the said challan petitioner remitted the requisite licence fee of Rs. 5 lakhs on 13.4.94. On 26.4.95 excise authority issued a notice to the petitioner demanding an amount of Rs. 25,000/- towards late fee. According to the petitioner, respondents have no legal right to demand Rs. 25,000/-towards late fee for the delay in remitting the amount. In any view of the matter counsel suhmitted that the delay is on the part of the department and not on the part of the petitioner in remitting the amount. 3. Petitioner in OP. 6809/94 is also running a Bar Hotel. Period of licence expired on 31.3.94. According to the petitioner, he submitted necessary challan before the authority on 29.3.94 for counter-signing. He received the same only in the afternoon of 31.3.94. Petitioner therefore could not remit the amount on 31.3.94. On 1.4.94 was a holiday. 2.4.94 was also a holiday for the bank. 3.4.94 was Sunday and therefore, petitioner could remit the amount only on 4.4.94. Petitioner remitted an amount of Rs. 5 lakhs on 4.4.94. Petitioner could not conduct the shop from 1.4.94 to 4.4.94. However, he remitted the entire amount of Rs. 5 lakhs. But he was served notice to pay Rs. 25,000/- as pre-condition for renewing the licence. Petitioner is aggrieved by the said demand and has approached this Court. 4. I heard counsel for the petitioners Sri. G. Srikumar and Sri. K. Divakaran Nair and also the learned Government Pleader N. Raghuraj. In both these cases, it is admitted that the period of licence expired on 31.3.94. Licence fee for the year 1994-95 was Rs. 5 lakhs. Bom the petitioners remitted the said amount. There was some delay in remitting the said amount. G. Srikumar and Sri. K. Divakaran Nair and also the learned Government Pleader N. Raghuraj. In both these cases, it is admitted that the period of licence expired on 31.3.94. Licence fee for the year 1994-95 was Rs. 5 lakhs. Bom the petitioners remitted the said amount. There was some delay in remitting the said amount. The question is whether for the few days delay in remitting the amount, assuming that it is fault of the petitioners, would enable the department to demand Rs. 25,000/- by way of penalty or by way of additional rental. According to the learned Government Pleader the proviso to R.13(3) as well as the proviso to R.14 authorise the Government to collect additional rental of Rs. 25,000/-for the delay in renewing the licence. It is profitable to refer to those provisions to appreciate the contentions of the learned Government Pleader. "13. Licences for possession, use or sale - Licences for the possession and sale of foreign liquor.... (3) Foreign Liquor 3 Hotel (Restaurant) Licences- Provided that renewal of the licences of Bar Hotels which did not/ do not function on the expiry of valid licence can be permitted on payment of an addition a1 rental of Rs. 25,000/- (Rupees Twenty five thousand only) for each year of defunction, over and above the annual rental for the year of renewal, subject to the observance of other rules in this regard. 14. If any of the licences referred to in R.13 is granted in the course of a financial year, the full annual fee shall be paid and the licence shall expire at the end of the financial year. Provided that renewal of the licences of Bar Hotels which did not/ do not function on the expiry of valid licence can be permitted on payment of an additional rental of Rs. 25,000/- (Rupees Twenty five thousand only) for each year of defunction, over and above the annual rental for the year of renewal, subject to the observance of other rules in this regard." 5. The question to be decided in this case is whether due to the delay in renewing the licence the department could demand Rs. 25,000/-. Both the provisos refer to the case of renewal of bar licence of hotels which did not/ do not function on the expiry of valid licence. Therefore, an additional fee of Rs. The question to be decided in this case is whether due to the delay in renewing the licence the department could demand Rs. 25,000/-. Both the provisos refer to the case of renewal of bar licence of hotels which did not/ do not function on the expiry of valid licence. Therefore, an additional fee of Rs. 25,000/- could be demanded in respect of only those Bar Hotels which did not/do not function on the expiry of valid licence, that is on 31.3.94 in the instant case. There are also cases where hotels which were having licence for previous year/ or years but could not function on the expiry of licence due to various reasons. The question to be decided is in what all circumstances the department could demand Rs. 25,000/- by way of additional rental. The proviso uses the expression 'additional rental of Rs. 25.000/-' can be demanded for each year of defunction. The department could demand Rs. 25,000/- as additional fee only for each year of defunction. Therefore, in order to attract the proviso to Rr.13 and 14, two conditions must be satisfied, that is, the licensee who apply renewal, did not/ do not function on the expiry of licence and also that it remained defunct for an year. Statute specifically says that only for each year of defunction Rs. 25,000/- as additional rental could be demanded. In other words, completion of an year of defunction is pre-requisite for the demand of Rs. 25,000/- as additional rental. 6. The substantive Rr.13 & 14 enable a licencee to apply for renewal, during the course of a financial year. But the licencee has to remit the full annual fee irrespective of the facts whether it would function or functioned for the full financial year. There is no question of remission of licence fee in any case. But the proviso added to Rr.13 and 14 only qualify or create an exception if the licence stood defunct for an year, by way of an additional rental of Rs. 25,000/- for each year of defunction. The Supreme Court dealing with the scope of a proviso held in C.I.T., Mysore v. Inch Mercantile AIR 1959 sc 713 that ordinarily it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. The Supreme Court dealing with the scope of a proviso held in C.I.T., Mysore v. Inch Mercantile AIR 1959 sc 713 that ordinarily it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. A proviso also cannot normally be constructed as nullifying the enactment or as taking a way completely a right conferred by the enactment. I am of the view, that proviso to Rr.13 and 14 do not authorise the department to demand Rs. 25,000/- if the licence is not defunct for an year. However, the licencee has to remit full annual fee for renewal. 7. In this case, both the petitioners paid Rs.5 lakhs for renewal of the licence eventhough the Bar Hotel did not function for few days and therefore, the demand of Rs. 25,000/- made by the department is illegal and unauthorised. It is so declared. O.Ps. are allowed as above.