2013 (7) TMI 815 - HC - Indian Laws

Refund of licence fee along with interest for the period of cancellation of licence of Hotel-Bar Licence - The Licencing Authority considered the representation of the residents and without affording any opportunity of being heard to the petitioner, cancelled the aforesaid licence granted to the petitioner on 22.6.2003 - Section 31 of the C.G. Excise Act, 1915 shows that the power given to the Licencing Authority for cancellation of the licence to be exercised on certain conditions which are enumerated in Clauses (a) to (g) of sub-section (1) of section 31of the C.G. Excise Act, 1915. If any of the above conditions mentioned in sub-section (1) of Section 31 appears to be there, the Licencing Authority entitled to cancel the licence of the concerned licencee after giving due opportunity of hearing to him/her and if a licence is cancelled on the above breach, then only, under sub-section (3) of Section 31, the holder of a licence, permit or pass shall not be entitled to any compensation for its cancellation or suspension nor to the refund of any fee paid or deposit made in respect thereof - The Licencing Authority has taken a view that the cancellation of the licence was not u/S 31 (1), therefore, the petitioner was not entitled to any refund as per sub-section (3) of Section 31. Section 32 of the Act, 1915 The section provides power to the Licencing Authority to withdraw licences. It provides that whenever the authority which granted any licence under this Act considers that such licence should be withdrawn for any cause other than those specified in Sec.31, it shall remit a sum equal to the amount of the fees payable in respect thereof for fifteen days, and may withdraw the licence either- (a) on the expiration of fifteen days notice in writing of its intention so to do, or (b) forthwith without notice. Sub-Section (3) of Section 32 further provides that when a licence is withdrawn under sub-section (1), any fee paid in advance or deposit made by the licencee in respect thereof shall be refunded to him, after deducting the amount (if any) due to the Government. Held that - The petitioner had deposited Rs.2,50,000/- as the licence fee for the period commencing from 30.4.2003 to 31.3.2004 - She was entitled to refund of the licence fee for the period of closure i.e. from 22.6.2003 to 31.8.2003 as would be determined on the basis of the total fee of Rs.2,50,000/- for the above period - Argument relating to refund of fee of one month, i.e. for the period in between 1.4.2003 to 29.4.2003, is concerned, the petitioner cannot make a claim for the same, because, for grant of the licence to the petitioner, she had paid the licence fee only on 26.4.2003. Thus, the grant itself became due in her favour on 26.4.2003 or immediately thereafter and not prior to it Thus, refund allowed along with simple interest at the rate of 6% per annum from 31.8.2003 till realization Decided in favor of Assessee.

Summary

Issues:
1. Validity of cancellation of Hotel-Bar licence
2. Entitlement to refund of licence fee for closure period
3. Interpretation of Sections 31 and 32 of the C.G. Excise Act, 1915

Issue 1: Validity of cancellation of Hotel-Bar licence
The petitioner's Hotel-Bar licence was cancelled by the Licencing Authority without providing an opportunity to be heard, based on objections raised by local residents regarding the Bar's location near a temple. The Single Judge of the High Court initially quashed the cancellation order. The petitioner subsequently sought a refund of the licence fee for the closure period and an additional month's fee. The Licencing Authority rejected the refund claim citing Section 31(3) of the Act, stating the cancellation was not due to any breach by the petitioner. The petitioner argued that since the cancellation was not under Section 31(1) but under Section 32, the refund should be governed by Section 32(3) of the Act.

Issue 2: Entitlement to refund of licence fee for closure period
The Court analyzed Section 31 of the Act, which provides conditions for licence cancellation and the subsequent refund entitlement. It was observed that the cancellation of the petitioner's licence did not fall under Section 31(1) as there was no breach of conditions by the petitioner. The Court determined that the cancellation was more in line with Section 32, allowing for a refund of the fee for the closure period, subject to deductions for any amounts due to the Government. The petitioner was found entitled to the refund for the closure period with simple interest.

Issue 3: Interpretation of Sections 31 and 32 of the C.G. Excise Act, 1915
The Court emphasized that the substance of the action taken by the Licencing Authority should be considered, not just the terminology used. Despite the loose use of the term "cancellation," the Court determined that the action was a withdrawal of the licence under Section 32, not a cancellation under Section 31. Therefore, the petitioner was entitled to a refund for the closure period. The Court directed the respondents to calculate and refund the licence fee for the closure period with interest, while dismissing the claim for an additional month's fee as the grant of the licence had already been made.

In conclusion, the Court partly allowed the petition, setting aside the order denying the refund and directing the refund of the licence fee for the closure period with interest. The respondents were ordered to bear their own costs and the petitioner's costs.