2014 (1) TMI 1518 - HC - VAT and Sales Tax

Demand of license fees - Petitioner at the time of application for grant of liquor licence had submitted a plan wherein the areas including the bar area were distinctly shown. On the basis of the said application, the licence in the category of L-5 was granted and the licence specifically mentioned Orbit Bar attached to dining hall of Orbit, Mandarian and Gulnar Restaurants - However, Orbit Bar was located on the ground floor in the centre of Hotel Janpath and on three sides around the Bar, there was space for restaurants and on the fourth side there was a passage. The entire area where the bar and the restaurants were situated were interconnected and there was no door fixed to separate them from each other - Collector of Excise held that the licencee was required to deposit licence fee for two other restaurants. Held that - Order dated 08.05.1992 and the consequent memorandum dated 09.06.1992 are not sustainable. The order dated 01.04.1985 was passed pursuant to the first show cause notice that had proposed two actions. Firstly, deletion of two out of three restaurants and secondly recovery of additional licence fee for the period the three restaurants were run by the petitioner as attached to the ORBIT Bar in terms of the licence granted by the respondents - Collector of Excise only deleted names of the two restaurants that had been inadvertently allowed and treated as attached with the Orbit Bar . No penalty or direction for payment of any licence fee for the said two restaurants was passed. Adjudicating authority upon examination and due consideration, did not think and consider appropriate to levy penalty, or direct deposit of any additional licence fee. To this extent proceedings were dropped, in favour of the petitioner. Apparently the authority felt that the error or mistake was of the department and no fault could be attributed to the petitioner. The order dated 01.04.1985 was complied with and had become final. The order did not find wrong doing on the part of the petitioner but holds that the restaurants were added inadvertently - while the presence of two parties besides the deciding authority will prima facie and in the absence of any other factor impose upon the authority the duty to act judicially, the absence of two such parties is not decisive in taking the act of the authority out of the category of quasi-judicial act if the authority is nevertheless required by the statute to act judicially. The Collector of Central Excise while adjudicating upon the first show-cause notice was clearly performing quasi judicial function. There is no power of review conferred upon the Collector of Central Excise to review the order dated 01.04.1985 of the nature passed on the first show-cause notice. The collector thus could not have issued a second show cause notice and that also after a gap of about 5 years. The first show-cause notice required the Petitioner to show-cause as to why additional license fee be not charged but the same was not charged and this amounted to dropping of the show-cause notice to that extent. The Order dated 01.04.1985 also records that the three restaurants were inadvertently attached to the bar - order dated 08.05.1992 and the consequent demand raised by the respondents vide memorandum dated 09.06.1992 are not sustainable and are hereby set aside. In case, the petitioner has paid or deposited any amount pursuant to the interim order of this Court dated 19.06.1992 for stay of the memorandum dated 09.06.1992, the petitioner shall be entitled to refund of the same with interest @ 12% per annum - Decided in favour of assessee.

Issues Involved:

1. Validity of the order dated 08.05.1992 by the Commissioner of Excise.
2. Validity of the memorandum dated 09.06.1992 by the Collector of Excise.
3. Legitimacy of the demand for Rs. 9,68,750/- raised on the petitioner.
4. Compliance with the terms of the L-5 licence granted to the petitioner.
5. Authority of the Excise Department to issue a second show-cause notice after the finalization of the first.
6. Legal principles governing quasi-judicial decisions and the power of review in the absence of statutory provisions.

Detailed Analysis:

1. Validity of the Order Dated 08.05.1992 by the Commissioner of Excise:

The petitioner challenged the order dated 08.05.1992, which rejected their appeal against the demand for additional licence fees. The court found that the original order dated 01.04.1985, which deleted two restaurants from the L-5 licence without imposing additional fees, had become final. The Commissioner's order to charge additional fees was thus unsustainable, as it contradicted the finality of the 1985 order.

2. Validity of the Memorandum Dated 09.06.1992 by the Collector of Excise:

The memorandum dated 09.06.1992, raising a demand of Rs. 9,68,750/-, was issued pursuant to the Commissioner's order. The court held that since the Commissioner's order was invalid, the memorandum based on it was also unsustainable. The demand was quashed as it was not supported by any statutory provision or rule.

3. Legitimacy of the Demand for Rs. 9,68,750/- Raised on the Petitioner:

The court observed that the petitioner had complied with the terms of the L-5 licence, which included three restaurants. The demand for additional fees was based on an error by the respondents, not the petitioner. The court emphasized that the petitioner could not be penalized for an inadvertent error by the Excise Department, and the demand was therefore illegitimate.

4. Compliance with the Terms of the L-5 Licence Granted to the Petitioner:

The petitioner had obtained an L-5 licence for the Orbit Bar, which included three attached restaurants. The court noted that the petitioner had adhered to the licence terms and had stopped serving liquor in the two restaurants once they were deleted from the licence by the 1985 order. No violations were recorded during inspections, and the petitioner had duly complied with the licence conditions.

5. Authority of the Excise Department to Issue a Second Show-Cause Notice:

The court ruled that the Excise Department lacked the authority to issue a second show-cause notice in 1989, four years after the finalization of the first notice in 1985. The first show-cause notice had proposed additional fees, which were not imposed, and the matter was considered resolved. The second notice was deemed an impermissible review of the earlier quasi-judicial decision.

6. Legal Principles Governing Quasi-Judicial Decisions and the Power of Review:

The court reiterated that quasi-judicial authorities cannot review their decisions unless explicitly empowered by statute. Citing Supreme Court precedents, the court emphasized that the power of review must be conferred by law and is not inherent. The 1985 order was a quasi-judicial decision that had resolved the issue, and the subsequent attempt to impose additional fees was beyond the authority of the Excise Department.

Conclusion:

The court set aside the order dated 08.05.1992 and the memorandum dated 09.06.1992, deeming them unsustainable. It held that the petitioner was entitled to a refund of any amount paid pursuant to the interim order, with interest. The petition was allowed, with no orders as to costs.

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