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2017 DIGILAW 302 (KAR)

Hemant Gulati v. State of Karnataka

2017-02-03

R.S.CHAUHAN

body2017
ORDER : Raghvendra S. Chauhan, J. 1. Mr. Hemant Gulati has challenged the legal validity of the Demand Notice dated 18.05.2015 passed by the Deputy Commissioner, Bangalore Urban District, Bangalore, whereby, the Deputy Commissioner has directed the Petitioner's to pay a penalty of Rs.7,61,500/- for having lifted lesser quantity of 7615 bulk litres of Liquor during the period from July 2011 to July 2014. The Deputy Commissioner has further informed the Petitioner's that in case the said penalty is not paid, further action will be taken in accordance with the Rules. 2. Briefly the facts of the case are, that the Petitioner's has been carrying on the business in the name and style of "M/s. Banjara Sarhand Foods Private Limited." The Petitioner's is engaged in the business of Multi-Cuisine Restaurant. On 24.06.2013, the Petitioner's had obtained CL-9 licence, under the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968, ("the Rules of 1968' for short), for the sale of Indian Liquor while serving meals or eatables in refreshment room (Bar) of the restaurant. According to the Petitioner's, he had first obtained CL-9 licence in the year 1997-98, and the licence has been duly renewed ever since then. 3. The Petitioner's was shocked to receive a show- cause notice, dated 22.04.2015, issued by the Deputy Commissioner, Bangalore City, respondent No.3, wherein, he was informed that for the period from July 2011 to July 2014, he was required to lift 7615 bulk litres of Liquor. Therefore, he is liable to pay penalty of Rs.7,61,500/-. 4. Immediately, Petitioner's replied to the said show-cause notice. He pleaded that because of certain repair works which had to be carried out in the restaurant, from February 2012 to November 2012, the entire quantity of bulk liters Liquor could not be lifted by him. However, notwithstanding the reply submitted by the Petitioner's, on 18.05.2015, the respondent No.3 issued a Demand Notice directing the Petitioner's to pay penalty of Rs.7,61,500/-. Hence, this petition before this Court. 5. Mr. Vybhav Ramesh, the learned counsel for the Petitioner's, has raised the following contentions before this Court:- Firstly, the Deputy Commissioner, Bangalore Urban District, is not the authorised authority to issue the Demand Notice. Hence, the Demand notice has been issued beyond his jurisdiction. Thus, the Demand notice is void ab initio. Hence, this petition before this Court. 5. Mr. Vybhav Ramesh, the learned counsel for the Petitioner's, has raised the following contentions before this Court:- Firstly, the Deputy Commissioner, Bangalore Urban District, is not the authorised authority to issue the Demand Notice. Hence, the Demand notice has been issued beyond his jurisdiction. Thus, the Demand notice is void ab initio. According to the learned counsel, such a Demand notice can be issued either by the Excise Commissioner, or by the Deputy Commissioner of Excise. However, it is the Deputy Commissioner of the Bangalore Urban District and not the Deputy Commissioner of Excise, who has issued the notice. Since the notice is void ab initio, it deserves to be set aside by this Court. 6. On the other hand, Mr. Kiran Kumar T.L., the learned counsel for the Revenue, has pleaded that the contentions raised by the learned counsel for the Petitioner's are highly misplaced: firstly, the Karnataka Excise Act, clearly makes a distinction between "a Deputy Commissioner" and a "Deputy Commissioner of Excise" secondly, Rule 5 of the Rules of 1968, bestows the power to grant a licence upon the Deputy Commissioner; thirdly, Rule 14 of the Rules of 1968, cast a duty upon the licensing authority i.e., either the Deputy Commissioner, or the Excise Commissioner to give an opportunity for hearing a licensee before imposing any penalty or taking any action under Rule 14 of the Rules of 1968. According to the learned counsel, since the licensing authority is the Deputy Commissioner, he was justified in issuing the Demand notice under Rule 14 to the Petitioner's; fourthly, that in case, the Petitioner's is aggrieved by the demand notice he has an efficacious alternative remedy, challenging the same, under Section 61(2) of the Act. Therefore, the Writ Petition is not even maintainable before this Court, for an efficacious alternative remedy has been granted by the Act itself. 7. In re-joinder, Mr. Vybhav Ramesh, learned counsel for the Petitioner's, submits that since the impugned demand notice has been passed ultra vires the jurisdiction of the Deputy Commissioner, and is void ab-initio, the Petitioner's need not take recourse to the alternative remedy provided under Section 61(2) of the Act. Therefore, the Petitioner's is well justified in invoking the jurisdiction of this Court. 8. Heard the learned counsel for the parties and perused the impugned demand notice. Therefore, the Petitioner's is well justified in invoking the jurisdiction of this Court. 8. Heard the learned counsel for the parties and perused the impugned demand notice. Section 2(5) of the Act, defines the term "Deputy Commissioner' as meaning the Deputy Commissioner of the Revenue District. Section 2(5)(a) of the Act defines the term "Deputy Commissioner of Excise' as meaning the Deputy Commissioner of Excise appointed under Section 4(A) of the Act. Thus, the Act itself makes a clear distinction between "the Deputy Commissioner" of a Revenue District, who is also referred to as "Collector of the District', and "the Deputy Commissioner of Excise". Therefore, the definition of the word "Deputy Commissioner' would necessarily have to be read in Rule 5 of the Rules of 1968. 9. Rule -5 of Rules of 1968 is as under: "5. Grant of Licence. - On receipt of the application under Rule 4, [and subject to the provisions specified in Rule 4-A] the Deputy Commissioner or the Excise Commissioner, as the case may be, may require such other particulars as he may deem necessary and may make inquiries for verification of the particulars furnished by the applicant and also such other inquiries as he deems fit. If the Deputy Commissioner or the Excise Commissioner, as the case may be is satisfied that there is no objection to grant the licence applied for, he may grant the licence on payment of the fee prescribed under Rule 8 for such licence: Provided that no such licence shall be granted by the Deputy Commissioner except with the previous sanction of the Excise Commissioner] [Provided further that while considering the applications for grant of CL-7 licence, the Deputy Commissioner shall ensure that the applicant is in a position to provide good accommodation and facilities to the customers and the standard of refreshments, food and service are provided for. If the Deputy Commissioner is of the opinion that the hotel or the boarding house does not conform to the minimum standard required for running a hotel or boarding house or not suitable to grant licence, he may reject such application after giving reasons therefor.] 10. A perusal of Rule 5 of the Rules of 1968, clearly reveals that the said Rule empowers the Deputy Commissioner, or the Excise Commissioner to issue a licence to a person after the person has applied under Rule 5 of the Rules of 1968. A perusal of Rule 5 of the Rules of 1968, clearly reveals that the said Rule empowers the Deputy Commissioner, or the Excise Commissioner to issue a licence to a person after the person has applied under Rule 5 of the Rules of 1968. Therefore, the word "Deputy Commissioner' used in Rule 5 of the Rules of 1968 would naturally mean, "the Deputy Commissioner of the Revenue District" and not "the Deputy Commissioner of Excise". Moreover, under Rule 5 of the Rules of 1968, besides the Excise Commissioner, it is the Deputy Commissioner, who is the licensing authority. 11. The relevant extract of Rule 14 of the Rules of 1968 is as under: 14. Licensee to abide by the provisions of the Act etc.:-[(1)] The licensee or his successors or assignees shall have no claim whatsoever to the continuance or renewal of the license as the case may be, after the expiry of the period for which such licence was granted. [(2)] The licensees holding retail shop licences in Form CL-2 and Bar Licences in Form CL-9 shall lift for sale from a wholesale licensee (CL-1), the minimum quantity of liquor (excluding fenny, wine and beer) fixed per month for the shop based on the licence fee prescribed for each type of licence, overheads, other expenses incurred, location of the shop, area of operation, sale of liquor in the previous years, and similar factors to ensure that illicit liquor is not obtained by the licensees and sold in the shop to ensure that no attempt is made to undersell the liquor and thereby wholesome liquor obtained only from authorised sources is sold to the consumers. In case the licensee fail to lift the minimum quantity of liquor so fixed per month, he shall be liable to pay a penalty at the rate of Rs.100.00 for every bulk litre on the quantity short lifted: Provided that in case the licensee fails to lift the minimum quantity so fixed consecutively for two months, the licence may liable to be cancelled: Provided further that the licensing authority shall give the licensee, a reasonable opportunity of being heard before levying the penalty or cancelling the licence". 12. 12. A bear perusal of Rule 14 of the Rules of 1968 as extracted above, reveals that, according to the Second proviso, a duty has been imposed upon the licensing authority to give a reasonable opportunity of being heard before levying the penalty or cancelling the licence. Since the licensing authority is the Deputy Commissioner, he is required to give an opportunity of hearing to the Petitioner's or to a licensee. 13. Admittedly, the Deputy Commissioner, respondent No.3 had issued a show-cause notice on 22.04.2015 to the Petitioner's as required by the second proviso of Rule 14 of the Rules of 1968. Immediately, the Petitioner's had relied to the same, and he had brought out his difficulties for not being able to lift the bulk liquor as required under Rule 14 of the Rules of 1968. Therefore, an opportunity of hearing was certainly given to the Petitioner's as required by the second proviso. It is only thereafter that the impugned demand notice dated 18.05.2015 has been issued to the Petitioner's. 14. Considering the legal provisions mentioned above, the contentions raised by the learned counsel for the Petitioner's that the demand notice has been issued by an incompetent authority is certainly unacceptable. Under Rule 14 of Rules of 1968, the Deputy Commissioner of the Revenue District is certainly the competent authority to issue the said demand notice. 15. According to Section 61(2) of the Act, if any person is aggrieved by an order passed by the Deputy Commissioner under this Act, such a person is required to file an appeal before the Excise Commissioner within a period of 90 days from the date of communication of such an order. Thus, the Act clearly provides for an efficacious alternative remedy to a person who is aggrieved by the order passed by the Deputy Commissioner. Therefore, the contention raised by the learned counsel for the Revenue that an efficacious alternative remedy does exist is worthy of acceptance. 16. Moreover, the contention raised by the learned counsel for the Petitioner's, that since the order has been passed by an authority which is not competent to pass the impugned demand notice, since the demand notice is ultra vires, the said contention cannot be accepted in the light of the discussion aforementioned. 17. For the reasons stated above, this Court does not find any merit in the present Writ Petition. Hence, it is, hereby, dismissed.