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2023 DIGILAW 881 (ALL)

Kuldeep Agarwal v. State Of U. P.

2023-04-04

PANKAJ BHATIA

body2023
JUDGMENT : (Pankaj Bhatia, J.) 1. Heard Shri Neeraj Sharma, learned counsel for the petitioner and Sri A.C. Tripathi, counsel for the respondents. 2. Present petition has been filed challenging the order dated 06.10.2021, 03.01.2020 and 27.10.2019 passed by the respondent no.1, 2 and 3. 3. Facts, in brief, are that the petitioner was granted a bar license of Hotel Ganesh Garden & Restaurant at Khaier, District Aligarh in the year 2012 under Rule 8(ii) of the Rules relating for vending foreign liquor read with Notification No.25535 and Notification No.10759; license fees is said to have been paid up to the year 2019 - 20. 4. It is alleged against the petitioner that an inspection was carried out at the bar of the petitioner on 02.10.2019 and in the said inspection, certain irregularities were found. From the inspection report it transpires that certain bottles of liquor which were of different shops were found in the bar of the petitioner for which the license was granted. It was also found that the bar was running on the date of prohibition through salesman. In terms of the search and seizure carried out, spot memo was prepared and an FIR was lodged on 03.10.2019 against the licensee and the salesman on the same allegations as recorded in the search and seizure memo. 5. In terms of the said inspection, several irregularities were found in the licensed premises; the petitioner was served with a show cause notice on 03.10.2019 (Annexure -2). The infractions recorded in the search and seizure memo were stated in the show cause notice and it was stated that on the basis of the infractions, it transpires that the petitioner had violated Condition No.5, 6 and 7 of the license and further loss of revenue was caused as there was a provision for charging a special fees for serving liquor at the bar. 6. In the light of the infractions and on the allegations that prima-facie, the licensee was breaching Condition Nos.5, 6 & 7 of the licensee and was evading the payment of special fees, the petitioner was called upon to show-cause as to why the steps may not be taken for cancellation of the license. The petitioner was required to submit a reply within a period of seven days. Simultaneously, alongwith the said show-cause notice, a suspension order was also passed against the petitioner. 7. The petitioner was required to submit a reply within a period of seven days. Simultaneously, alongwith the said show-cause notice, a suspension order was also passed against the petitioner. 7. The petitioner submitted a reply to the said show-cause notice on 12.10.2019 before Respondent No.3 (Annexure -3) denying the allegations as levelled in the show-cause notice on all grounds and in addition to the said denial, made a request that the case of the petitioner be considered for compounding in terms of the mandate of Section 74 of the U.P. Excise Act (hereinafter referred to as 'the Act'). 8. After considering the reply filed by the petitioner, an order came to be passed on 27.10.2019 (Annexure -4) whereby in exercise of powers conferred by virtue of Rule 18(1) of The Uttar Pradesh Excise Settlement of Licenses for Retail Sale of Foreign Liquor (Excluding Beer) (Seventeenth Amendment) Rules, 2019 and The Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Beer) Rules, 2001 as amended in the year 2019 (hereinafter referred to as ‘the Rules, 2019’), license of the petitioner was cancelled. 9. The petitioner approached this Court by filing a writ petition challenging the order of cancellation dated 27.10.2019. The said petition was dismissed on the ground of availability of alternative remedy of appeal under Section 11(1) of the Act. The petitioner preferred an appeal under Section 11(1) of the Act, which too was dismissed vide order dated 03.01.2020. The petitioner once again filed a writ petition challenging the appellate order. The said writ petition was dismissed on the ground of availability of remedy of revision before the State Government. The petitioner preferred a revision under Section 11(2) of the Act before the State Government. The revision also came to be dismissed on 06.10.2021. All the said three orders are under challenge in the present writ petition. 10. Shri Neeraj Sharma, learned counsel for the petitioner argues that the grant of license is governed by the U.P. Excise Act and the Rules framed thereunder. He draws my attention to the specific Rules of 2019 framed with regard to sale of beer as well as the sale of wine and liquor other than beer. 11. He argues that in terms of the said Rules, a specific power with regard to cancellation of license is prescribed under Rule 18. He draws my attention to the specific Rules of 2019 framed with regard to sale of beer as well as the sale of wine and liquor other than beer. 11. He argues that in terms of the said Rules, a specific power with regard to cancellation of license is prescribed under Rule 18. He argues that power to cancel license under Rule 18 can be invoked by the licensing authority in the event of any of the conditions specified in Clause (a) to (i) of Rule 18(1). He argues that Rule 18(5) prescribes for compounding breaches pertaining to the retail licenses on terms indicated in the table as contained in Rule 18(5). He further argues that in any event, the power to compound the infractions is contained in Section 74 of the Act, which power has not been exercised by the authorities despite there being a request in the objections filed in the show-cause notice. 12. He further argues that the show-cause notice had alleged infractions/violation of Condition Nos.5, 6 & 7 of the license granted to the petitioner as well as the allegation that there was an evasion of special fees by the petitioner, thus, the petitioner could have been expected to give reply only to the allegations levelled against him. He argues that there was no averment in the show-cause notice with regard to any breach/conditions prescribed under Rule 18(1)(a) to (i) of the 2019 Rules and in that regard, he submits that the authorities have exceeded in passing the order in excess of the allegations levelled in the show-cause notice. 13. He further argues that the allegations as levelled in the search and seizure memo are that the liquor was meant for the shop situate at Lodha and foreign liquor shop Khaier Aada (of which the petitioner and his wife are licensees) and subsequently, in respect of the shop at Lodha, the respondents have themselves proceeded to compound the offences and have regularized the license and, it was incumbent upon the respondents to have compounded the infractions. 14. 14. In respect of the allegations levelled against the petitioner in the show-cause notice, he draws my attention to the specific allegation that the bar was found open on the date the sale is prohibited i.e. 2nd October and with regard to the said allegation, he argues that Rule 18(5) and the table annexed thereto specifically provides for compounding of the said infraction on payment of fees as prescribed. He argues that in terms of the power conferred under Section 34 of the Act and the Rule, the word used is "may" and not "shall", and thus, a wide discretion vests in the licensing authority to cancel or not to cancel the license, however, the said discretion should be exercised in terms of the mandate of the Rules and not in an arbitrary manner. He, thus, argues that the orders impugned passed against the petitioner are liable to be quashed as being arbitrary and in violation of the spirit of the Act and the Rules framed thereunder. 15. Shri A.C. Tripathi, learned counsel appearing for the respondents vehemently opposed the writ petition and argues that the infractions alleged in the show-cause notice and found during the search and seizure operation were serious in nature and no error has been done in cancelling the license through impugned order. 16. Controverting the argument of learned counsel for the petitioner, Shri A.C. Tripathi argues that Rule 18 has been framed in terms of the power conferred by Section 41 of the Act. On a plain reading of provisions of Rule 18(1), infractions contained in Clause (a) to (i) provide for grounds for suspension or cancellation. He argues that argument of Shri Neeraj Sharma that all the offenses are compoundable as provided under Rule 18(5) is incorrect for the simple reason that the infractions contained in Rule 18(1) are not mentioned in the table specified in Rule 18(5) and thus, both the two Rules being Rule 18(1) and Rule 18(5) operate in different spheres and on that count, argument of counsel for the petitioner is liable to be rejected. 17. 17. He further argues that another argument of counsel for the petitioner with regard to Section 74 of the Act is also liable to be rejected as Section 74 is itself divided into two parts; one pertaining to the infractions and the power flowing from Section 34, and the other in respect of offences which are punishable under Section 64 and Section 68. He argues that both can be compounded separately in terms of the powers conferred, however, in the present case, the cancellation proceedings have not emanated from Section 34 and in fact, have emanated from Rule 18(1) and thus, the powers of compounding provided for under Section 74 cannot be availed of. 18. He, thus, argues that once that power was not available, the licensing authority has not made any error in not considering the request for compounding as prayed in the reply to the show-cause notice. 19. He further argues that although in the show-cause notice, there is a reference to violation of Condition Nos.5, 6 & 7 of the license, however, on the composite reading of the show-cause notice, various allegations which are traceable to infractions contained in Rule 18(1)(a) to (i) can be traced and thus, the submission of counsel for the petitioner on that count that the show-cause notice was vague is liable to the rejected. 20. In the light of the submissions made by the parties, following questions emerge for determination: i. Whether the show-cause notice, which alleges violation of Condition Nos.5, 6 & 7 of the license is enough to take action for cancellation by taking recourse to Rule 18(1)(a) to (i) of the Rules, 2019 ? ii. Whether the offences under Rule 18(1)(a) to (i) of the Rules, 2019 are compoundable under Rule 18(5) ? iii. Whether the allegation of opening of the shop/restaurant on the day of prohibition is a compoundable offence in terms of the mandate of Rule 18(5) ? 21. To decide the said issues as framed above, it is essential to see the scheme of the Act and the Rules framed therein. 22. It is well settled that there is no right of license and it is only a privilege granted by the State Government as held by the Hon'ble Supreme Court in the case of Nashirwar & Ors. v. State of Madhya Pradesh & Ors.; (1975) 1 SCC 29 . 23. 22. It is well settled that there is no right of license and it is only a privilege granted by the State Government as held by the Hon'ble Supreme Court in the case of Nashirwar & Ors. v. State of Madhya Pradesh & Ors.; (1975) 1 SCC 29 . 23. The U.P. Excise Act makes a special provision empowering the State Government to grant license for the sale of liquor and the other intoxicant and for charging excise duty on the same. The said Act also empowers the licensing authority to take action for cancellation or suspension of the license so granted in terms of the powers under Section 34 of the Act. Section 34 reads as under: "34. Power to cancel or suspend licenses, etc.-(1) Subject to such restrictions as the State Government may prescribe, the authority granting any license, permit or pass under this Act may cancel or suspend it — (a) if any duty or fee payable by the holder thereof be not duly paid; or (b) in the event of any breach by the holder of such license, permit or pass or by his servants, or by any one acting on his behalf with his express or implied permission of any of the terms or conditions of such license, permit or pass; or (c) if the holder thereof is convicted of any offence punishable under this Act or any other law for the time being in force relating to revenue, or of any cognizable and non-bailable offence, or of any offence punishable under the Dangerous Drugs Act, 1930, or under the Merchandise Marks Act, 1889, or of any offence punishable under sections 482 to 489 (both inclusive) of the Indian Penal Code; or (d) where a license, permit or pass has been granted on the application of the grantee of an exclusive privilege under this Act, on the requisition in writing of such grantee; or (e) if the conditions of the license or permit provide for such cancellations or suspension at will. (2) When a license, permit or pass held by any person is cancelled under clause (a), (b) or (c) of sub-section (1), the authority aforesaid may cancel any other license, permit or pass granted to such person by, or by the authority of the State Government under this Act or under any other law for the time being in force relating to excise revenue or under the Opium Act, 1878. (3) No Compensation or refund claimable for cancellation or suspension of license, etc. under this section.-The holder shall not be entitled to any compensation for the cancellation or suspension of his license, permit or pass under this section nor to refund of any fee paid or deposit made in respect thereof." 24. In addition to the powers conferred under Section 34 of the Act, further powers have been conferred under Section 35 of the Act. 25. It is interesting that Section 40 and Section 41 of the Act empowers the State Government and Excise Commissioner to make rules for enforcing and regulating the provisions of the Act. Section 40 and Section 41 are quoted herein below: “40. Power of State government to make Rules.-(1) The State Government may make rules for the purpose of carrying out the provisions of this Act or other law for the time being in force relating to excise revenue: Provided that the Uttar Pradesh Licensing under the Surcharge Fee System Rules, 1968 made by the Excise Commissioner, Uttar Pradesh, with the previous sanction of the State Government, as amended by the Excise Commissioner, Uttar Pradesh, from time to time, before the commencement of this Act, shall until altered or repealed by the State Government rules made under this section be deemed to be and always to have as valid and effective as if the said rules were duly made by the State Government under this section. (2) In particular and without prejudice to the generality of the foregoing provision, the State Government may make rules — (a) regulating the delegation of any powers by the Excise Commissioner or Collector under section 10 (2) (h); (b) prescribing the powers and duties of officers of the Excise Department; (c) prescribing the manner in which appeals or revisions shall be presented and the procedure for dealing with such appeals and revisions; (d) regulating the import, export, transport or possession of any intoxicant; (e) regulating the periods and localities for which and the persons to whom licenses for the vend by wholesale or by retail of any intoxicant may be granted; (f) prescribing the procedure to be followed and the matters to be ascertained before, any license for such vend is granted for any locality ; (g) for the prohibition of the sale of any intoxicant to any person or class of persons; (h) for the grant of expenses to witnesses and compensation for loss of time to persons released under section 49 on the ground that they have been improperly arrested and to persons charged before a Magistrate with offences punishable under the Act but acquitted; (i) regulating the power of Excise Officers to summon witnesses from a distance under the provisions of section 49; (j) for declaring the Excise Officers to whom, and the manners in which, information or aid should be given under section 56; (k) for the prohibition of the employment by the license-holder of any person or class of persons to assist in his business in any capacity whatsoever; (l) for the prevention of drunkenness, gambling or disorderly conduct in or near any licensed premises and the meeting or remaining of persons of bad character in such premises. (m) for the grant of rewards to officials, officers or informers by the Collector out of and up to fifty per cent of composition fee and by the Magistrate trying the case, out of and up to fifty per cent of fine recovered under the Act. (3) * * *" "41. (m) for the grant of rewards to officials, officers or informers by the Collector out of and up to fifty per cent of composition fee and by the Magistrate trying the case, out of and up to fifty per cent of fine recovered under the Act. (3) * * *" "41. Power to Excise Commissioner to make Rules.- (1) The Excise Commissioner subject to the previous sanction of the State Government may make rules ; (a) regulating the manufacture, supply, storage or sale of any intoxicant including — (i) the erection, alteration, repair, inspection, supervision, management and control of any place for the manufacture, supply, storage or sale of such article and the fittings implements and apparatus to be maintained therein ; (ii) the cultivation of the hemp plant (cannabis sativa); (iii) the collection of portions of the hemp plant (cannabis sativa) from which any intoxicating drug can be manufactured and the manufacture of any intoxicating drug therefrom ; (b) regulating the deposit of any intoxicant in a warehouse and the removal of any intoxicant from any such warehouse or from any distillery brewery or manufactory; (c) prescribing the scale of fees or the manner of fixing the fees payable for any licence, permit or pass including any consideration for the grant of any exclusive or other privilege granted under section 24 or section 24-A or for sorting of any intoxicant: Provided that nothing contained in this clause shall be construed to prevent the State Government from levying by notification made from time to time, any fee, including vend fee, as part of consideration for the granting of any such privilege. Explanation— (1) Fees may be prescribed under this sub-clause at different rates for different classes of licences, permits, passes or storage and for different areas; (2) The manner of fixing such fee or consideration includes any one or more of the following manners, namely :— (i) auction, (ii) invitation of tenders, (iii) assessment on the basis of sales made or quota lifted under the license, permit or pass. (d) regulating the time, place and manner of payment of any duty or fee ; (e) prescribing the restrictions under and the conditions on which any license, permit or pass may be granted, including provision for the following matters — (i) the prohibition of the admixture with any intoxicant of any substance deemed to be noxious or objectionable; (ii) the regulation or prohibition of the reduction of liquor by a licensed manufacturer or licensed vendor from a higher to a lower strength; (iii) the fixing of the strength price or quantity in excess of or below which any intoxicant shall not be sold or supplied, and of the quantity in excess of which denatured spirit shall not be possessed, and the prescription of a standard of quality for any intoxicant; (iv) the prohibition of sale except for cash; (v) the fixing of the days and hours during which any licensed premises may or may not be kept open, and the closure of such premises on special occasions ; (vi) the specification of the nature of the premises to which any intoxicant may be sold and the notices to be exposed at such premises ; (vii) the form of the accounts to be maintained and the returns to be submitted by license-holders; and (viii) the regulation of the transfer of licenses ; (f) (i) declaring the process by which spirit manufactured in India shall be denatured ; (ii) for causing such spirit to be denatured through the agency or under the supervision of its own officers; (iii) for ascertaining whether such spirit has been denatured ; (g) providing for the destruction or other disposal of any intoxicant deemed to be unfit for use ; (h) regulating the disposal of confiscated articles." 26. In terms of the rule making power conferred under Section 41 of the Act, the State Government has made Rules known as "Uttar Pradesh Excise Settlement of Licenses for Retail Sale of Foreign Liquor (Excluding Beer) (Seventeenth Amendment) Rules, 2019. Rule 18(1) to (5) thereof provide for suspension/cancellation and compounding of the license and penalties, which are quoted herein below: “18. Suspension and cancellation of the license and penalties. Rule 18(1) to (5) thereof provide for suspension/cancellation and compounding of the license and penalties, which are quoted herein below: “18. Suspension and cancellation of the license and penalties. -(1) Licensing authority may suspend or cancel the license:- (a) if any bottle is found in the licensed premises on which duty has not been paid and which does not carry the security Code affixed duly approved by the Excise Department as proof of payment of duty. (b) if any other kind of liquor or intoxicating drug (for which license is not granted) is found in the licensed premises. (c) if any liquor of intoxicating drug is found in the possession of the licensee against the provisions of the Act of rules. (d) if the affidavit submitted by the licensee at the time of application is found incorrect and assertions made therein are found to be false. (e) if the licensee is convicted of an offence punishable under the Act or any other law for the time being in force relating to revenue, or of any cognizable and non-bailable offence, or any offence punishable under the Narcotics Drugs and Psychotropic Substances Act, 1985 or of any offence punishable under Sections 482 to 489 of the Indian Penal Code, 1860. (f) if any bottle/container is found in the licenced premises on which maximum retail price is not printed and (g) if it is found that the licence has been obtained in a false name and the licensee is holding the licence on behalf of some other person. (h) If any caramel, colour, essence, hologram/ shrink sleeve or barcode, lebel, capsule, seal or other illegal material found in licence premises. (i) If any Adulteration with water or any other substance/dilution of liquor mixing of low category liquor with high category liquor is found in licence premises. Action under other relevant provisions of law shall also be taken (2) The licensing Authority shall immediately-suspend the license and issue a show cause notice for cancellation of license and forfeiture of security deposit. The licensee shall submit his explanation within 7 days of the receipt of notice. Thereafter, the licensing authority shall pass suitable orders after giving due opportunity of hearing to the licensee, if he so desires. (3) The licensee shall not be entitled to claim any compensation or refund for suspension or cancellation of licence under this rule. The licensee shall submit his explanation within 7 days of the receipt of notice. Thereafter, the licensing authority shall pass suitable orders after giving due opportunity of hearing to the licensee, if he so desires. (3) The licensee shall not be entitled to claim any compensation or refund for suspension or cancellation of licence under this rule. (4) In case the licence is cancelled the licensee may also be blacklisted and debarred from holding any other excise licence. (5) Matter of compoundable breaches pertaining or retail licenses such as below, shall be imposed with minimum compounding fee- S. No. Type of violation For first time (in Rs) For second time (in Rs) For third time (in Rs) 1 2 3 4 5 1 Shop found opened before or after the stipulated time. 2500 3000 5000 2 Unauthorised sales man found to be making sale. 5000 7000 10,000 3 Stock register not produced when asked for. 10,000 15,000 20,000 4 Stock register found incomplete. 10,000 15,000 20,000 5 Tempering with bottles and quarters or their labels or bar code, pilfer proof cap or seals. 10,000 15,000 20,000 6 Found having recourse to inducement to the customer with a view to increasing sales such as dancing or gambling. 5000 7000 10,000 7 To store duty paid stock in unauthorised premises/ warehouse. 20,000 25,000 30,000 8 Duty paid stock being found in excess of account. 25,000 30,000 50,000 9 Found selling of loose liquor. 5000 10,000 15,000 10 Found making sale of liquor during days of prohibition and closure. 30,000 40,000 50,000 11 Any alteration in the premises without permission. 20,000 25,000 30,000 12 Found selling of liquor above the prescribed MRP. 75,000 150000 Proceeding of cancellation of license 13 Non-displaying of essential information according to rule or displaying faulty information on the signboard installed outside the premises. 5000 10,000 20,000 14 On being found no proper arrangement of cleanliness in the shop. 2000 5000 10,000 15 Any other irregularity which is not mentioned under serial - 01 to 14 2,000 5,000 10,000 27. 5000 10,000 20,000 14 On being found no proper arrangement of cleanliness in the shop. 2000 5000 10,000 15 Any other irregularity which is not mentioned under serial - 01 to 14 2,000 5,000 10,000 27. To decide the first issue as recorded above, the show-cause notice served upon the petitioner and as contained in Annexure – 2, refers to the search carried out at the licensed premises and the recovery of the liquor from the said premises, and after recording the summary of the search carried out at the premises proceeds to allege against the petitioner that the said averments were in violation of Condition Nos.5, 6 & 7 and has caused a loss of special fees of excise duty; the said grounds were alleged for proposing the cancellation of the license and for confiscation of the license fees. Condition Nos.5, 6 & 7 of the license granted to the petitioner are as under: ^^5& ‘kjkc dsoy iSxksa ¼iSx cjkcj 50 feŒyhŒ esa½ cspk tk;sxkA dksbZ fcdzh eqgj cUn cksryksa esa ugha dh tk;sxhA 6&ykblsal /kkjh ,yŒ ,yŒ & 2 ls dsoy 750 feŒyhŒ DokVlZ esa lEHkkj.k izkIr djus ds gdnkj gksaxsA mUgsa vius LVkWd esa fuil vkSj fiUVl j[kus dh vuqKk ugha gksxhA 7& ckj dk 14 vizSy ¼vEcsMdj t;Urh½] 15 vxLr ¼LorU=rk fnol½] 02 vDVwcj ¼xk¡/kh t;Urh½] 26 tuojh ¼x.krU= fnol½ dks vodk’k jgsxkA^^ 28. It is well settled that the show-cause notice is issued to put the assessee/licensee on guard and to enable him to file a reply to the allegations contained in the show-cause notice and infractions, which are alleged against the licensee in the said show-cause notice. 29. It is gainful to note the judgment of the Hon’ble Supreme Court in the case of Kaur & Singh v. Collector of Central Excise, New Delhi; 1997 (94) E.L.T. 289 wherein the Supreme Court following the earlier two judgments in the case of Collector v. H.M.M. Ltd.; 1995 (76) E.L.T. 497 and Raj Bahadur Narayan Singh Sugar Mills Ltd. v. U.O.I.; 1996 (88) E.L.T. 24 recorded in Para – 3 as under: “3. This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. [See Collector of Central Excise v. H.M.M. Limited, 1995 (76) E.LT. 497 and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India, 1996 (88) E.L.T. 24 ].” 30. The Hon’ble Supreme Court further had the occasion to consider the need for issuance of a show-cause notice and the requirements in the show-cause notice to satisfy the test of fairness in the case of Oryx Fisheries Private Limited v. Union of India; 2011 (266) E.L.T. 422 wherein the Supreme Court recorded as under: “24. It is well settled that a quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating a show cause proceeding. A show cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. 25. Expressions like "a reasonable opportunity of making objection" or "a reasonable opportunity of defence" have come up for consideration before this Court in the context of several statutes. 26. A Constitution Bench of this Court in Khem Chand v. Union of India and Others, reported in AIR 1958 SC 300 , of course in the context of service jurisprudence, reiterated certain principles which are applicable in the present case also. 27. Chief Justice S.R. Das speaking for the unanimous Constitution Bench in Khem Chand (supra) held that the concept of "reasonable opportunity' includes various safeguards and one of them, in the words of the learned Chief Justice, is: "(a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges leveled against him are and the allegations on which such charges are based," 28. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge-sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony.” 31. The Hon’ble Supreme Court further had the occasion to consider the scope of a show-cause notice and its intent in the case of Collector of Central Excise v. H.M.M. Limited; 1995 (76) E.L.T. 497 and held that a show-cause notice invoking a particular provision must specifically allege in the show-cause notice and in the absence of such averments, the said show-cause notice is not sustainable. 32. The Hon’ble Supreme Court once again had the occasion to consider the scope of show-cause notice issued under the Customs Act in the case of Aban Loyd Chiles Offshore Ltd. v. Commr. Of Cus., Maharashtra; 2006 (200) E.L.t. 370 , wherein the Supreme Court recorded as under: “20. The proviso to Section 28 can be invoked where the payment of duty has escaped by reason of collusion or any willful misstatement or suppression of facts. So far as 'misstatement or suppression of facts' are concerned, they are qualified by the word "willful". The word "willful" preceding the words "misstatement or suppression of facts" clearly spells out that there has to be an intention on the part of the assessee to evade the duty. 21. This Court while interpreting Section 11A of the Customs Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful mis-statement of suppression of fact with intent to evade the payment of duty. It has been observed: "... It has been observed: "... Therefore, in order to attract the proviso to Section 11A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful mis-statement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of willful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act." 22. It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held: "...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso.…" 23. In the present case we find that in the show cause notice it is not alleged that duty of custom could not been levied or paid by reason of collusion or willful misstatement or willful suppression of facts. In the present case we find that in the show cause notice it is not alleged that duty of custom could not been levied or paid by reason of collusion or willful misstatement or willful suppression of facts. The appellants were not put to notice which of the various omissions or commissions stated in the proviso were committed by them to extend the period of limitation from six months to five years. The appellants having not been put to notice did not have the opportunity to meet the case of the Department.” 33. The Supreme Court also had the occasion to consider the scope of a show-cause notice in the case of Collector of Central Excise, Banglore v. Gammon Far Chems Ltd.; (2003) 11 SCC 693 wherein the Supreme Court held as under: “5. This para precludes a person from availing the benefit of exemption under the notification if clause (a) or clause (b) applies. Had the Revenue proceeded on the basis of facts which make out a case under para 2 of the notification, extracted above, it would have been valid for the Tribunal (sic Collector) to have recorded the finding which it did. The show-cause notice, as noted above, did not proceed on the footing that the assessee did not disclose the fact of production of goods in two factories by the same manufacturer or in a factory by more manufacturers than one. The simple case of the Revenue was that by not disclosing the fact that M/s Freyssinet Prestressed Concrete Co. Ltd. is a subsidiary of M/s Gammon India Ltd. of which the assessee is a division, there has been a suppression of fact which entitled the Collector to invoke the proviso to Section 11-A of the Central Excise Act. On this aspect, the finding recorded by the Tribunal (sic a Collector) is not in accord with the case of the Revenue. We are, therefore, of the view that it is not open to the Revenue to make out a new case for invoking the proviso to Section 11-A of the Central Excise Act.” 34. The petitioner in the show-cause notice in question, alleges infraction of Condition Nos. 5, 6 & 7 referred to above. In the cancellation order, the appellate order and the revisional order, there is no finding to the effect that there was any violation of Condition Nos. The petitioner in the show-cause notice in question, alleges infraction of Condition Nos. 5, 6 & 7 referred to above. In the cancellation order, the appellate order and the revisional order, there is no finding to the effect that there was any violation of Condition Nos. 5 & 6, the only finding is in respect of Condition No.7, thus, it could not be presumed that while giving a reply to the show-cause notice, the petitioner had to presume that any infraction as contained in Rule 18(1)(a) to (i) were also alleged against the petitioner. In the event, respondents were of the view that the action is proposed to be taken for violation of conditions specified in Rule 18(1)(a) to (i), it ought to have been specifically stated. 35. To that extent, the submission of Shri A.C. Tripathi that the violations referred to in Rule 18(1)(a) to (i) were implicit in the show-cause notice, deserves to the rejected. 36. Coming to the second point of determination as to whether the infractions referred to in Rule 18(1)(a) to (i) are compoundable? Clearly the infractions referred to in Rule 18(1)(a) to (i) are not mentioned in the infractions which are said to be specified in the table annexed to Rule 18(5) and the same are different and thus, to that extent, the submission of Shri A.C. Tripathi deserves to be accepted and the arguments of Shri Neeraj Sharma are liable to be rejected on that count. If the intent of the legislature while framing the rules was to compound the offences referred to in Rule 18(1)(a) to (g), the same ought to have been mentioned in the list as has been done in respect of the infractions mentioned in the table attached to Rule 18(5). The argument of Shri Neeraj Sharma in respect of infractions referred to at Serial No.15 in the list attached to Rule 18(5) cannot be accepted as the infractions mentioned in Rule 18(1)(a) to (i) are in substance different and appear to be more rigorous infractions compared to infractions referred to in the table in Rule 18(5). 37. Coming to the third point of determination in respect of allegations levelled against the petitioner with regard to opening of the shop on the days which were prohibited and as contained in Condition No.7 to the license. 37. Coming to the third point of determination in respect of allegations levelled against the petitioner with regard to opening of the shop on the days which were prohibited and as contained in Condition No.7 to the license. Although, in the seizure memo, there is no averment that the liquor was being sold on the day of prohibition, however, while passing the cancellation order and in the show-cause notice, it was alleged and found that the petitioner was selling liquor on the day of prohibition, however, the said infraction clearly finds mentioned at Serial No.10 in the list attached to Rule 18(5) and thus, in terms of Rule 18(5), the said infraction falls within the compoundable offence and thus, it was incumbent upon the authorities to have passed an order in respect of compounding of the said offence as prayed by the petitioner, which has not been done in the present case. 38. Coming to the allegation levelled against the petitioner in respect of loss of special fees in the form of revenue on account of sale, the order passed by the Licensing Authority in its finding, after referring to the submissions, records the reason that on the basis of the above referred submissions, in the licensed premises on the date of prohibition (Gandhi Jayanti), foreign liquor of a different shop and beer of a different shop were recovered for which an FIR was lodged; on the basis of the said finding, the authority proceeded to record that on the basis of the illegal keeping of foreign liquor and beer, there was a loss of special fees to the State. 39. It is essential to notice that the special fees is chargeable for sale of liquor and beer at the restaurants, however, the said special fees or its loss can be caused only if the sale is effected. Merely by recovery of the liquor allegedly belonging to another shop and there being no finding in respect of the sale of such liquor, there is no basis whatsoever to record that loss of special fees was being caused and thus, to that extent, the finding recorded is wholly perverse. 40. On the basis of the findings as recorded above, this Court finds that the infractions in respect of Condition Nos.5 & 6 of the license which were alleged in the show-cause notice are not established and proved against the petitioner. 40. On the basis of the findings as recorded above, this Court finds that the infractions in respect of Condition Nos.5 & 6 of the license which were alleged in the show-cause notice are not established and proved against the petitioner. The infractions specified in Rule 18(1)(a) to (i) were not alleged in the show-cause notice, as such, the same are not established against the petitioner. 41. The infractions with regard to violation of Condition No.7 of the license stands partially justified, however, the same is compoundable at the rate of Rs.30,000/- in terms of the table under Rule 18(5). 42. The allegation with regard to loss of special fees is not sustainable. 43. The writ petition stands partly allowed. 44. It is directed that the respondents authorities shall pass a fresh order for compounding of the offence in respect of the infractions of Condition No.7 of the license at the rates specified in the table to Rule 18(5) (Serial No.10 of the list) by passing a fresh order within a period of one month from today. 45. The orders impugned in the present writ petition except to the extent as indicated above, are quashed. 46. Necessary consequences to follow.