1975 (12) TMI 160 - SC - Central Excise

Whether the High Court erred in holding that the State Government had the power to require the appellants to pay the amounts under demand as they represented consideration for the contracts Reduction of the licence fees for the liquor shops Whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same? Held that - It is well settled that as the State has the exclusive right and privilege of manufacturing and selling liquor, it has the power to hold a public auction for the grant of such a right or privilege and to accept the payment of a sum therefor. It was therefore permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of the exclusive privilege of manufacturing and selling liquor. It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees. As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law. Moreover, the question whether the circumstances mentioned in the note were at all in existence in the case of the appeals under consideration, was a question of fact which could not be tried in these proceedings. The High Court has rightly rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Court s decisions in Nashirwar s case (1974 (11) TMI 91 - SUPREME COURT) and Har Shankar s case (1975 (1) TMI 89 - SUPREME COURT). Appeals dismissed.

Issues Involved:
1. Liability of the appellant to pay the licence fee despite not being able to establish the outstill shop.
2. Claim for reduction of the licence fees due to speculative bids and enmity.
3. Refund of fees on the ground of no quid pro quo.

Issue-wise Detailed Analysis:

1. Liability of the appellant to pay the licence fee despite not being able to establish the outstill shop:
The appellant Ayodhya Prasad, who won the bid for establishing an outstill shop, faced opposition from villagers and was unable to secure a suitable location. Despite his efforts to establish the shop first at Bharbharia and then at Chittimitti, he could not operate the shop. The High Court ruled that the appellant was still liable to pay the licence fee as the responsibility for finding a suitable site was his, and the department was not responsible for providing the location. The appellant retained the licence and continued to bid in subsequent years, thereby preventing others from establishing the outstill. The court found no justification for the argument that nothing was payable because the appellant could not locate the shop despite his efforts.

2. Claim for reduction of the licence fees due to speculative bids and enmity:
Appellants Thakur Prasad Sao and others claimed losses due to speculative bids and enmity with Bishwanath Prasad and his brother. They argued that the Deputy Commissioner failed to refuse speculative bids, resulting in uneconomic licence fees. The High Court dismissed their writ petitions, stating that the instructions in paragraphs 130 and 93 of the Regulations did not create any enforceable rights. Instruction No. 93 allows the presiding officer to refuse speculative bids, but it does not mandate the acceptance of the highest bid. Instruction No. 130 gives the Board the discretion to reduce licence fees under section 39 of the Act, but it is not an absolute right. The High Court found no grounds for reducing the fees as the appellants did not prove that the bids were speculative or that the Collector failed in his duty.

3. Refund of fees on the ground of no quid pro quo:
In Civil Appeal No. 1105 of 1975, the appellant sought a refund of fees, arguing that there was no quid pro quo. The High Court rejected this contention, stating that the amounts were payable for the exclusive privilege granted under section 22 of the Act. The court relied on previous decisions, including Nashirwar v. State of Madhya Pradesh and Har Shankar v. Deputy Excise and Taxation Commissioner, which established that the State has the exclusive right to grant such privileges and accept payment. The High Court found that the fees were a consideration for the exclusive privilege and not subject to refund.

Conclusion:
The Supreme Court upheld the High Court's judgments, dismissing all the appeals with costs. It ruled that the appellants were liable to pay the licence fees despite their inability to establish the outstill shops, and there was no basis for reducing the fees due to speculative bids or enmity. The claim for a refund on the ground of no quid pro quo was also rejected. The court ordered that the amounts in question could be recovered in instalments over three years for appellants who could furnish security for payment within that period. Appeals dismissed.

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