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2013 (4) TMI 437 - HC - VAT and Sales Tax


Issues Involved:
1. Validity of opening new liquor shops in light of Article 47 of the Constitution and the preamble of the U.P. Excise Act, 1910.
2. Alleged arbitrariness in the decision to open new liquor shops.
3. Compliance with excise policy regarding the percentage increase in new liquor shops.
4. Violation of the rule prohibiting new shops within a 500-meter radius of existing shops.
5. Adequacy of notice given to existing license holders regarding the opening of new shops.
6. Requirement for advance intimation under Section 24-A (3) of the U.P. Excise Act.

Issue-wise Detailed Analysis:

1. Validity of Opening New Liquor Shops:
The petitioners argued that opening new liquor shops contravenes Article 47 of the Constitution and the preamble of the U.P. Excise Act, 1910, which promotes prohibition. However, the court referred to the Supreme Court's decision in Khodey Distilleries Ltd. Vs. State of Karnataka, which held that the State's power to regulate and restrict the business in potable liquor includes the power to carry on such trade to the exclusion of others. The State can regulate the production, supply, and consumption of liquor in the interests of public health and welfare. The court concluded that the State has the right to open new liquor shops to raise revenue, and this action does not violate Article 47.

2. Alleged Arbitrariness in Decision:
The petitioners claimed that the decision to open new liquor shops was arbitrary, citing a report from November 2012 indicating that sales targets were not met. The court found this argument unconvincing, noting that the report did not prove a decrease in liquor sales and that the decision was based on extensive surveys and reports from Excise Inspectors and Collectors. The excise policy authorized the Excise Commissioner to increase the number of shops up to 15%, with additional increases requiring State Government approval. The court found no arbitrariness in the decision-making process.

3. Compliance with Excise Policy:
The petitioners contended that the increase in new shops exceeded the 15% limit specified in the excise policy. The court clarified that the 15% limit applies to the entire state, not individual districts. The increase in Kanpur Nagar was approved by the State Government, and there was no evidence that the overall increase in the state exceeded 15%. Thus, the court found no violation of the excise policy.

4. Violation of 500-Meter Rule:
The petitioners argued that new shops were located within a 500-meter radius of their existing shops, violating U.P. Number and Location of Excise Shop Rules, 1968, and U.P. Excise Settlement of Foreign Liquor Rules, 2001. The court noted that the exact locations of the new shops had not been finalized, and the petitioners could raise objections during the boundary-fixing process. The court found this argument premature.

5. Adequacy of Notice to Existing License Holders:
The petitioners claimed they were not given prior notice of the new shops before renewing their licenses. The court found that the excise policy was published in newspapers and available on the Excise Commissioner's website. The policy outlined three phases for renewal and allotment, and the petitioners, being in the excise business, were expected to be aware of these developments. The court concluded that adequate notice was given.

6. Requirement for Advance Intimation:
The petitioners argued that Section 24-A (3) of the U.P. Excise Act required advance intimation of new licenses. The court clarified that this provision mandates wide publicity, not individual notice. The Collector's notice in newspapers fulfilled this requirement, and the court found no violation of Section 24-A (3).

Conclusion:
The court dismissed the writ petitions, finding no merit in the petitioners' arguments. The decision to open new liquor shops was deemed lawful, non-arbitrary, and in compliance with relevant rules and policies.

 

 

 

 

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