2008 (11) TMI 730 - HC - Central Excise

Summary

Issues involved: Dispute over demand of license fee for a specific period u/s Bihar Excise Act, 1915 and Bihar Excise Rules, 2004.

Issue 1: Settlement of Excise shops and demand of license fee

The petitioner participated in the auction for settlement of Excise shops in Kishanganj district. The highest bid made by the petitioner was accepted, and the license was issued on a later date. The dispute arose when the Excise Superintendent demanded license fee for a period before the issuance of the license. The petitioner challenged this demand, leading to the present writ petition.

Issue 2: Interpretation of Bihar Excise Rules

The Bihar Excise Act, 1915, empowers the state government to frame rules for the settlement of licenses for retail sale of liquor. The Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 2004 govern the auction-cum-tender system for granting such licenses. These rules outline the procedure for accepting bids, issuing licenses, payment of fees, and consequences of default.

Issue 3: Commencement of license period and liability for license fee

Rule 24 of the Bihar Excise Rules addresses the commencement of the license period. It stipulates that the license is effective from the 1st of April of the excise year unless specified otherwise. The rule also clarifies that if shops are settled mid-year, the license starts from the settlement date approved by the Excise Commissioner. The contention arose regarding the liability to pay license fee from the date of settlement and the interpretation of the term "date of settlement."

In the judgment, the court analyzed the sequence of events leading to the issuance of the license to the petitioner. Despite the acceptance of the bid on 5th June, 2006, the license was issued on 5th July, 2006, after approval from the Excise Commissioner. The court emphasized that the liability to pay the license fee arises from the date of license issuance, not from the date of bid acceptance. The court rejected the argument that the license fee should accrue from the date of bid acceptance, highlighting the importance of the Excise Commissioner's approval in finalizing the settlement.

The court further clarified that the demand for license fee for the period prior to the issuance of the license was unjustified. Referring to Rule 24 and the interpretation of the term "date of settlement," the court held that the petitioner cannot be held liable for the fee before the official issuance of the license. Consequently, the court set aside the order demanding the license fee for the disputed period, ruling it as legally unenforceable.

Therefore, the court ruled in favor of the petitioner, setting aside the demand for license fee for the period in question and declaring it as invalid in the eyes of the law.