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Madhya Pradesh High Court · body

2006 DIGILAW 100 (MP)

Lalit Jaggi v. State of M. P.

2006-01-17

A.K.PATNAIK, DIPAK MISRA

body2006
ORDER Patnaik, C. J.-- 1. By a notification dated 21.2.2005, the State Government of Madhya Pradesh framed a liquor policy for the year 20052006. Clause 13 of the said Liquor Policy laid down the procedure for depositing the licence fee by a retailer of liquor. Sub-clause (1) of clause 13 of the Liquor Policy stipulated that the annual licence fee would be divided into 24 equal fortnightly instalments and liquor would be released in lieu of the instalments deposited. Sub-clause (2) of Clause 13 of the Liquor Policy provided for issue of a No Objection Certificate to the licensee after deposit of instalment of licence fee. Sub-clause (3) of Clause 13 stipulated that in case the licensee failed to deposit the licence fee before the expiry of next instalment due then the licence was liable to be cancelled and an alternative arrangement would be made to operate the concerned liquor shop. Sub-clause (4) of Clause 13 further stipulated that in case the licensee deposited the amount of instalment before the expiry of the next instalment due and for some reason it was not possible to supply the liquor then the same would be supplied after the expiry of the said period. 2. After the aforesaid liquor policy for the year 2005-2006 was notified the petitioner was allotted liquor shop M.P. Nagar, Bhopal pursuant to an auction in which the petitioner was the highest bidder. The petitioner deposited the basic licence fee of Rs. 18.40,000/- and was required to deposit the annual licence fee of Rs. 2. I 1,60.000/- in 24 equal instalments starting from 1.4.2005 to 31.3.2006. Each of these instalments worked out to Rs. 8,81.666/- and such instalment was to be deposited once every fortnight. Between April and July 2005, the petitioner defaulted in depositing the full amount of the instalments in time and against the amounts deposited, lifted liquor and started selling the same in the shop in question. A show cause notice dated 12.7.2005 was issued to the petitioner by the Collector, Bhopal requiring him to show cause as to why action should not be taken against him inasmuch as he had not deposited a deficit of Rs. 10.01,758/- towards the said instalments due up to 30.6.2005. The petitioner submitted his reply on 18.7.2005 to the Collector. Thereafter the petitioner cleared the entire deficit. 10.01,758/- towards the said instalments due up to 30.6.2005. The petitioner submitted his reply on 18.7.2005 to the Collector. Thereafter the petitioner cleared the entire deficit. The Excise Department issued a No Objection Certificate dated 30.7.2005 in favour of the petitioner but the same was cancelled by the Assistant Commissioner of Excise by letter dated 11.8.2005 and a direction was given to the Warehouse In-charge not to release supplies to the petitioner. The petitioner again paid the instalment of Rs. 8.81.666/- which was to be paid on 15.8.2005 but No Objection Certificate was not issued to the petitioner on account of which the petitioner was unable to lift the supply of liquor against the payment made. The Petitioner was informed that unless he paid an additional amount of Rs. 5.00,000/-, he would not be allowed to lift the liquor and the petitioner paid Rs. 5,00,000/- under protest on 26.8.2005. Thereafter, the petitioner was asked to pay further amount of Rs. 77,000/- which the petitioner paid on 26.8.2005. Since the petitioner was not issued with No Objection Certificate and he could not lift the liquor against the deposits already made by him, he filed the present writ petition for appropriate reliefs. 3. Mr. Y.K. Tankha, learned Senior Counsel for the petitioner submitted that the petitioner was prevented from lifting the stocks of liquor presumably due to the circular dated 9.8.2005 issued by the Excise Commissioner wherein the Excise Commissioner, construing the provisions of clause 13 of the Liquor Policy of 2005-2006 of the State Government, has directed the district authorities not to allow the licensees to lift stocks of liquor against the instalments deposited after the stipulated time. He submitted that a reading of clause 13 of the Liquor Policy and in particular sub-clause (3) and (4) thereof would show that there is no stipulation therein that a licensee will not be allowed to lift liquor against instalments paid by him beyond the stipulated time. He vehemently submitted that once the Excise Department accepts the instalment from the licensee beyond the stipulated time, it cannot refuse to supply the liquor against the instalments so accepted by the Department. He vehemently submitted that once the Excise Department accepts the instalment from the licensee beyond the stipulated time, it cannot refuse to supply the liquor against the instalments so accepted by the Department. Alternatively, he submitted that in case it is held that sub clause (3) and (4) of Clause 13 of the Liquor Policy authorise the Department to accept deposit of instalments beyond the stipulated time and yet not supply liquor against such instalments accepted, then sub-clauses (3) and (4) of Clause 13 of the Liquor Policy would be ultra vires section 25 of the M.P. Excise Act, 1915 (for short Excise Act) and Article 14 of the Constitution of India. He referred to the provisions of section 25 of the Excise Act as well as the decision of the Supreme Court in Slate of M.P. v. Firm Gappulal, [1976 JLJ 597 = AIR 1976 SC 633 ] in support of his contention that against· payment of duty, supply of liquor has to be made by the State Government. 4. Mr. Sanjay Yadav, learned Government Advocate for the State of Madhya Pradesh, on the other hand, relied on the reply filed on behalf of the respondents and submitted that the State Government was fully empowered to frame the liquor policy for the year 2005-2006 including clause 13 thereof and that sub-clause (3) and (4) of clause 13 do not in any way violate the provisions of the Excise Act and the Rules framed there under. He further submitted that the said sub-clauses (3) and (4) of clause 13 of the Liquor Policy also do not violate the provisions of Art. 14 of the Constitution. He submitted that a plain reading of the impugned circular dated 9.8.2005 of the Excise Commissioner would show that the same is consistent with the provisions of clause 13 of the Liquor Policy for the year 2005-2006 and the same is not, in any way ultra vires section 25 of the Excise Act or Article 14 of the Constitution. 5. We have considered the aforesaid submissions of Mr. Tankha and Mr. 5. We have considered the aforesaid submissions of Mr. Tankha and Mr. Yadav and we find that sub-clause (3) of clause 13 of the Liquor Policy for the year 2005-2006 provides that in case the licensee fails to deposit any instalment of licence fee before the expiry of next instalment due, then his licence is liable to be cancelled and an alternative· arrangement can be made to operate the concerned liquor shop. The said provision in sub-clause (3) of clause 13 of the Liquor Policy for the year 2005-2006 does not say that whenever the licensee fails to deposit the licence fee before the expiry of next instalment due, the licence of the licensee shall be cancelled or will stand automatically cancelled. It only confers a right on the Excise Department to cancel the licence of licensee if he fails to deposit the instalment of licence fee before the expiry of the next instalment due. Where, therefore, the default is made by the license in not making the deposit of instalment of licence before the expiry of next instalment due, the Department mayor may not exercise such right to cancel the licence and in the event, it does not exercise such right an accepts the deposit of instalment of licence fee beyond the stipulated time liquor will have to be supplied to the licensee against the instalment 0 licence fee deposited and accepted beyond the stipulated time. Obviously the Department cannot on the one hand accept and appropriate the licence fee paid by the licensee beyond the stipulated time and thereafter refuse to supply the liquor to the licensee against the instalment of licence fee deposited and appropriated after the due date. In Bimal Chandra Banerjee' case [ AIR 1971 SC 517 ] and in Pannalal's case [ AIR 1975 SC 2008 ], the Supreme Court has held that no excise duty is or can be collected on an undrawn liquor. The said decisions of the Supreme Court have been relied on in State of M.P. v. Firm Gappulal (supra) cited by Mr. Tankha wherein the Supreme Court has interpreting the provisions of the M.P. Excise Act, 1915 held that the State could not levy excise duty on undrawn liquor as the State does not possess such powers. 6. The said decisions of the Supreme Court have been relied on in State of M.P. v. Firm Gappulal (supra) cited by Mr. Tankha wherein the Supreme Court has interpreting the provisions of the M.P. Excise Act, 1915 held that the State could not levy excise duty on undrawn liquor as the State does not possess such powers. 6. On a reading of the impugned circular dated 9.8.2005, we find that all that the Excise Commissioner has stated therein is that in some of the districts, licence fee was being collected beyond the time as stipulated in clause 13 of the Liquor Policy for the year 2005-2006. In the said circular, the Excise Commissioner has nowhere stated that even if the Excise Department has 'accepted the instalment of licence fee beyond the stipulated time, the Excise Department will not make any supply of stocks of liquor against such deposits of instalment of licence fee beyond the stipulated time. To us, it appears that the Excise Commissioner has directed the district authorities to be strict in implementing the clause 13 of the Liquor Policy for the year 2005-2006 by ensuring that the licence fee is deposited within the stipulated time as provided in sub-clause (3) of clause 13 of the Liquor Policy for the year 2005-2006. 7. For the aforesaid reasons, we hold that sub-clause (3) and (4) 0 clause 13 of the Liquor Policy for the year 2005-2006, or that the circular dated 9.8.2005 of the Excise Commissioner, are not ultra vires section 2 of the Excise Act or Article 14 of the Constitution. But, as we have said above, if the Excise authorities accept the licence fee beyond the stipulate time as mentioned in sub-clause (3) of clause 13 of the Liquor Policy to the year 2005-2006, they will be obliged to supply stocks of liquor against such deposit of licence fee beyond the stipulated time. If they refuse t accept the instalment of licence fee beyond the stipulated time as mentioned, in sub-clause (3) of clause 13 of the Liquor Policy for the year 20052006, they will be entitled to cancel the licence of the licensee and make alternative arrangement in respect of the concerned liquor shop. 8. If they refuse t accept the instalment of licence fee beyond the stipulated time as mentioned, in sub-clause (3) of clause 13 of the Liquor Policy for the year 20052006, they will be entitled to cancel the licence of the licensee and make alternative arrangement in respect of the concerned liquor shop. 8. In the present case, we find that by interim orders passed by this Court 00 31.8.2005, the petitioner has been allowed to lift stocks of liquor against the instalments of licence fee paid by the petitioner beyond the stipulated time. In respect of the instalments of licence fee paid by the petitioner henceforth, the Excise authorities will be entitled to act in accordance with different sub-clauses of clause 13 of the Liquor Policy for the year 2005-2006 and the circular dated 9.8.2005 of the Excise Department as interpreted in this judgment. By the interim order dated 31.8.2005, the petitioner had been directed to pay interest at the rate of 120/0 on the instalments of licence fee paid late. Since there is no provision either in the terms and conditions of the licence or in the M.P. Excise Act, 1915, or the Rules made thereunder and the liquor policy of the year 2005-2006 for payment of interest, we direct that the interest amount already paid by the petitioner be adjusted towards the annual licence fee payable by the petitioner in future. 9. The writ petition is disposed nf accordingly without any order as to costs.