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2019 DIGILAW 206 (ORI)

Shaw Wallace & Co. Ltd. v. State of Odisha

2019-03-12

K.R.MOHAPATRA, K.S.JHAVERI

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JUDGMENT : K.S. Jhaveri, J. Heard Mr. A.K. Patra, learned counsel for the petitioner and Mr. R.K. Mohapatra, learned Government Advocate for the State-opposite parties. 2. By way of this writ petition, petitioner has challenged the action of the opposite parties in imposing the penalty under Rule 39-A (7)(b) of Boards of Excise Rules, 1965. 3. Before going to the facts of the case, the new Rule 39-A (7)(b) of Boards of Excise Rules, 1965, on the basis of which penalty has been imposed is required to be gone through and the same reads as under: "39-A(7)(b) : If any stock of I.M.F.L./ Beer stored under Rule 33 (c) becomes unfit for human consumption owing to long storage or for other factors the licensee shall be squarely responsible and shall be liable to pay fine equal to five times the duty payable to the Government on the stock so spoiled." 4. Learned counsel for the petitioner contended that the cause of action for filing the present writ application arose on 16.01.1995 when the opposite party No.4 made a demand under Annexure-1 directing the petitioner to pay fine equivalent to five times the excise duty payable on liquor/beer which has been rendered unfit for human consumption. Petitioner was a license holder for operating a "bonded ware house" as well as "trade off ware house". The notification under Annexure-8 came to be issued by the opposite parties-authorities on 12.11.1991 pursuant to which a new rule i.e. Rule 39-A(7)(b) was introduced and on the basis of the said notification, the impugned order under Annexure-1 was passed, whereby he was directed to pay Rs. 6,24,438/- under the Board's Excise Rules 1965. 4.1 Learned counsel for the petitioner refers to relevant provisions of Sections 38, 39 and 90 of the Bihar and Orissa Excise Act, 1915, which reads as under: "38. Fees for, terms, conditions and form of, and duration of, licences, permits and passes. (1) Every licence, permit or pass granted under this Act- (a) shall be granted (i) on payment of such fees (if any), and (ii) subject to such restrictions and on such conditions, and (b) shall be in such form and contain such particulars, as the Board may [direct]. (1) Every licence, permit or pass granted under this Act- (a) shall be granted (i) on payment of such fees (if any), and (ii) subject to such restrictions and on such conditions, and (b) shall be in such form and contain such particulars, as the Board may [direct]. (2) Every licence, permit or pass under this Act shall be granted for such period (if any) as may be prescribed by Rule made by the [State Government] under Section 89, Clause (e). 39. Power of Board to reduce fees. - The Board may, if it thinks fit, at any time during the period for which any licence has been granted, order a reduction of the amount of fees payable in respect thereof during the unexpired portion of the grant." xxx xxx xxx 90. Power of Board to make rules. 39. Power of Board to reduce fees. - The Board may, if it thinks fit, at any time during the period for which any licence has been granted, order a reduction of the amount of fees payable in respect thereof during the unexpired portion of the grant." xxx xxx xxx 90. Power of Board to make rules. - The Board may make [rules]; (1) for regulating the manufacture, supply, or storage of any [intoxicant], and in particular, and with prejudice to the generality of this provision may make rules for regulating - (a) the establishment, inspection, supervision, management and control of any place for the manufacture, supply or storage of any [intoxicant], and the provision maintenance of fittings, implements and apparatus therein; (b) the bottling of liquor for purposes of sale; (c) the cultivation of the hemp plant; (d) the collection of portions of the hemp plant from which intoxicating drugs can be manufactured or produced, and the manufacture or production of intoxicating drugs there from; (e) the tapping of tari-producing trees and the drawing of tari from trees; (f) the making of tari-producing trees in areas notified under Section 14, Sub-section (1), and the maintenance of such marks; (2) for fixing the strength, price of quantity in excess of or below which any [intoxicant] shall not be supplied or sold, and the quantity in excess of which denatured spirit shall not be possessed, and for prescribing a standard of quality for any [intoxicant]; (3) for declaring how spirit manufactured in [India] shall be denatured; (4) for causing spirit manufactured to be denatured through the agency or under the supervision of [Government Officers]; (5) for ascertaining whether any spirit so manufactured has been denatured; (6) for regulating the deposit of any [intoxicant] in a warehouse established, authorised or continued under this Act, and the removal of any [intoxicant] from any such warehouse or from any distillery or brewery; (7) for prescribing the scale of fees or the manner of fixing the fees payable in respect of [* * *] any licence, permit or pass granted under this Act, or in respect of the storing of any [intoxicant]; (8) for regulating the time, place and manner of payment of such fees; (9) for prescribing the restrictions under which or the conditions on which any licence, permit or pass may be granted, and in particular, and without prejudice to the generality of this provision, may make rules for - (i) prohibiting the admixture with any [intoxicant] of any article deemed to be noxious or objectionable; (ii) regulating or prohibiting the reduction of liquor by a licensed manufacturer or licensed vendor from a higher to a lower strength; . (iii) prescribing the nature and regulating the arrangement of the premises in which any [intoxicant] may be sold, and prescribing the notices to be exposed at such premises; (iv) prohibiting or regulating the employment by the licensee or any person or class of persons to assist him in his business; (v) prohibiting the sale of any [intoxicant] except for cash; (vi) prescribing the days and hours during which any licensed premises mayor may not be kept open, and providing for closing of such premises on special occasions; (vii) prescribing the accounts to be maintained and the returns to be submitted by licensees; and (viii) regulating the transfer of licences; (10) for prescribing the particulars to be contained in licences, permits or passes granted under this Act; (11) for the payment of compensation to licensees whose premises are closed under Section 26 or under any rule made under Subclause (vi) of Clause (9) of this Section; (12) for prescribing the time, place .and manner of levying duty on [intoxicant]; (13) for providing for the destruction or other disposal of any [intoxicant] deemed to be unfit for use; and (14) for regulating the disposal of things confiscated under this Act. Explanation - Fees may be prescribed under Clause (7) of this Section at different rates for different classes of [* * *] licences, permits passes or storage, and for different areas. Explanation - Fees may be prescribed under Clause (7) of this Section at different rates for different classes of [* * *] licences, permits passes or storage, and for different areas. [Validation of certain actions - Notwithstanding any judgment, decree, or order of any Court - (a) all grants made by way of licences for manufacture and retail sale of country liquor and for retail sale or intoxicating drug in respect of any place on or after the 7th day of August, 1965 shall be deemed to be licences granted to the persons concerned conferring an exclusive privilege under Section 22 of the Principal Act, for manufacture and retail sale of country liquor and, as the case may be, for retail sale of intoxicating drug at such place; and (b) all amounts paid or payable in respect of such grants shall be deemed to be sums paid or payable under Section 29 of that Act in consideration of the grant of exclusive privilege.]" 4.2 Learned counsel for the petitioner referring to the above provisions, submits that the new Rule 39-A(7)(b) was introduced in exercise of power under Section 90 of the Bihar & Orissa Excise Act, 1915, but nowhere in the Act neither the word 'penalty' is there nor it has been prescribed to impose penalty by framing rules, therefore, the Rule making authority has travelled beyond its scope and has imposed such conditions, which is ultra vires to the Act. 5. We have called upon the learned Government Advocate for the opposite parties to show any power of the State for imposition of such penalty, but the learned Government Advocate was not in a position to answer to the query. 5.1 Though this matter was filed in the year 1995, on 18.12.2018 the matter was admitted and order was passed for fixing the matter to 22.01.2019 for final hearing. However, no further reply has been filed by the opposite parties. A counter affidavit was filed on behalf of the opposite parties in the year 1995, wherein an endeavour has been made to show that the authority has rightly imposed penalty. However, no further reply has been filed by the opposite parties. A counter affidavit was filed on behalf of the opposite parties in the year 1995, wherein an endeavour has been made to show that the authority has rightly imposed penalty. It is stated that the said rule has been introduced to prevent storage and supply of unhealthy liquor which is unfit for human consumption and therefore in the said rule it is stipulated that if any stock of I.M.F.L./ Beer stored under Rule 33 (c) becomes unfit for human consumption owing to long storage or for other factors the licensee shall be squarely responsible and shall be liable to pay penalty. Therefore, it is submitted that the same cannot be said to be unreasonable and illegal. 6. Be that as it may, after going through the said counter, we are not in a position to find that the opposite parties have sufficient reason and power to impose such penalty, more particularly when Section 90 of the Act, which confers powers on Board to make Rules, does not empower to make rules for imposition of penalty, clause (b) under Rule 39-A (7) of Boards of Excise Rules, 1965 for imposition of penalty is without jurisdiction and is required to be struck down. The same is hereby struck down. 7. Consequentially, the demand made vide impugned order under Annexure-1 is quashed. It is directed that if the said amount has already been recovered from the petitioner, the same shall be refunded to the petitioner within a period of six weeks from the date of receipt of a copy of this order. If the refund is not made within the stipulated period, the petitioner will be entitled to interest @8% per annum on the refund amount from the date of deposit till the payment is made and, in such event, the said interest amount will be recovered from the salary of the Officer responsible for making delay and not from the exchequer of the State. 7.1 The writ petition is allowed to the extent indicated above. 7.2 All the Misc. Cases connected to the writ petition are also disposed of accordingly.