2018 (5) TMI 1063 - HC - Indian Laws

Surrender of license to sell Liquor - Recovery of licence fee in addition to the basic licence fee consequent to surrender of licence for country made liquor by the petitioner - contention of the learned counsel for the petitioner is that as a result of surrender of such licence all that can be forfeited/ recovered from the petitioner is the basic licence fee and security amount and not the fee payable by him in respect of the Monthly Minimum Guaranteed Quantity - Section 36 of United Provinces Excise Act, 1910. Held that - the fee for the licence in question as referred in Section 36 of the Act, 1910 comprises of the basic licence fee and a licence fee . The licence fee is the excise duty leviable on the AMGQ which the licensee guarantees to lift for his retail shop during an excise year for the purpose of retail sale. This is a guarantee given by the Licensee at the time of grant of licence and he is bound by it, it being a contractual obligation entered into by him with open eyes. This is in addition to the basic licence fee and is remaining part of the consideration for the licence - MMGQ is nothing but 1/12th part of the AMGQ and the monthly installment of licence fee is nothing but 1/12th of the part of the licence fee in addition to the basic licence fee and is payable every month. This in nutsell is the fixed fee system referred in the long title of the Rules, 2002 and Rule 3 thereof which was accepted by the petitioner while accepting the licence and is the fee referred in Section 36 of the Act, 1910 - Rules 12 and 14 are not attracted in the present case. The petitioner is liable to pay the basic licence fee and licence fee in terms of Section 2(d) and 2(m) of the Rules, 2002 read with Section 36 of the Act, 1910 and Rule 19 of the Rules, 2002, which includes the monthly installment licence fee in respect of MMGQ which was part of AMGQ, which the petitioner had guaranteed to lift at the time of grant of licence and was also very well aware about the said facts - As regards the consequence of surrender of licence and cancellation as far as the State is concerned, they are similar, as, they entail a going back by the licence on the contractual obligation accepted by him. Petition dismissed - decided against petitioner.

Issues Involved:
1. Permissibility of recovery of 'licence fee' in addition to the 'basic licence fee' upon surrender of a licence for country-made liquor.
2. Interpretation of relevant provisions under the United Provinces Excise Act, 1910 and the Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Country Liquor) Rules, 2002.
3. Validity and enforceability of recovery notices and certificates issued to the petitioner.
4. Distinction between surrender and cancellation of a licence concerning fee recovery.

Issue-wise Detailed Analysis:

1. Permissibility of Recovery of 'Licence Fee':
The primary issue is whether the State can recover the 'licence fee' in addition to the 'basic licence fee' following the surrender of a licence for country-made liquor. The petitioner argued that only the basic licence fee and security amount should be forfeited, not the fee related to the 'Monthly Minimum Guaranteed Quantity' (MMGQ), as the quantity was not lifted post-surrender. The State contended that the 'licence fee' is part of the consideration payable for the licence and thus recoverable.

2. Interpretation of Relevant Provisions:
Section 36 of the United Provinces Excise Act, 1910, allows for the surrender of a retail sale licence with a one-month notice and payment of the fee for the entire licence period. The proviso to Section 36 permits the Excise Commissioner to remit the payable sum on surrender if sufficient reason is shown. The term 'fee' in Section 36 includes both 'basic licence fee' and 'licence fee' as defined in the Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Country Liquor) Rules, 2002. Rule 2(d) defines 'basic licence fee' as part of the consideration for the exclusive privilege of retail sale, payable before the licence grant. Rule 2(m) defines 'licence fee' as the remaining part of the consideration, equal to the excise duty on the Annual Minimum Guaranteed Quantity (AMGQ).

3. Validity and Enforceability of Recovery Notices:
The petitioner was granted a licence for the year 2002-03 and surrendered it on 28.10.2002. Despite this, he was liable to deposit the licence fee for the MMGQ till 31.03.2003 but failed to deposit ?2,97,778/-. Recovery notices were issued, and a recovery certificate was issued on 14.06.2003. The petitioner's appeal under Section 11 of the Act was dismissed, and a subsequent revision was also dismissed. The Court concluded that the petitioner is liable to pay the 'basic licence fee' and 'licence fee' as per Section 36 of the Act and Rule 19 of the Rules, 2002.

4. Distinction Between Surrender and Cancellation:
The petitioner argued for a distinction between surrender and cancellation of a licence, suggesting that cancellation is penal, whereas surrender is not, and thus should not entail the same recovery obligations. However, the Court found that both surrender and cancellation result in the licensee reneging on their contractual obligations. The Court noted that the provisions of the Act and Rules do not support a different treatment for fee recovery in cases of surrender versus cancellation.

Conclusion:
The Court held that the petitioner is liable to pay both the 'basic licence fee' and the 'licence fee' upon surrender of the licence. The recovery notices and certificates issued by the State were deemed valid and enforceable. The writ petition was dismissed, affirming the State's right to recover the full fee as stipulated under the relevant legal provisions.

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