2021 (6) TMI 762 - HC - Indian Laws

Suspension of operation of the excise licences of the petitioner - allegation is that certain quantum of liquors that were placed in the premises without any lock and key - Compounding of Offences - sale of Indian and Foreign liquors and claims - HELD THAT - The entirety of the observations of the first appellate authority in regard to the alleged discrepancies are theoretical and do not reveal any independent application of the material that are stated to be available on record or the responses that have been furnished by the petitioner. As regards the reference to the violation of orders to contain the pandemic, those offences have been compounded and as I have indicated in paragraph-4, proceedings cannot be continued any further, qua those offences. The impugned orders of original and appellate authorities are set aside. The respondents are granted liberty to issue a show cause notice afresh indicating the violations and furnishing all materials on the basis of which the allegations are based. After receipt of response from the petitioner, hearing the petitioner and consideration of all materials, the officer will pass an order within a period of eight (8) weeks and the application of the petitioner for renewal of its licence shall be considered thereafter and subject to such order. In the present matter, bearing in mind the nature of the order that has been passed by me, a detailed enunciation of this issue may not be necessary, since there is no identity between the issue raised in show cause notice dated 21.04.2020 and the issue based upon which order of cancellation dated 29.03.2020 has been passed - continuation of the proceedings pursuant to show cause dated 21.04.2020 is, as observed by me earlier, misconceived since it turns on an entirely different set of issues. The authorities have proceeded to compound the offence committed under the Excise Act, which, in my considered view, is contrary to the object and intendment of the Disaster Management Act. The control exercised by the Centre and State under the DM Act is in public interest and to control the situation caused by the prevailing disaster, in this case, the COVID 19 pandemic. Any restrictions placed on the activities and movement of the public is also for the aforesaid reason only - Petition disposed off.

Summary

Issues:
1. Suspension and cancellation of excise license
2. Compounding of violations
3. Interpretation of Section 44 of the Puducherry Excise Act, 1970

Analysis:

Suspension and Cancellation of Excise License:
The petitioner, a liquor business firm, received a show cause notice alleging liquor storage without proper security measures and violation of closure orders during the pandemic. The petitioner compounded the violation by paying a fine, which, in the court's view, conclusively closed the suspension proceedings related to these allegations. However, a subsequent notice for suspension was issued, which the court deemed as a fatal flaw since the earlier suspension proceedings were closed. The court held that the subsequent proceedings were misconceived and set aside the orders of cancellation by the appellate authority. The respondents were directed to issue a fresh show cause notice with detailed violations and materials, followed by a new order within eight weeks.

Compounding of Violations:
The court highlighted that compounding of the offense related to the curfew violation during the Disaster Management Act, 2005, was improper. The Disaster Management Act did not allow for compounding of offenses, and the compounding under the Excise Act was contrary to the purpose of the Disaster Management Act. The court emphasized that compounding offenses under the Excise Act for violations during the pandemic was against public interest and the control measures imposed. The court ruled that compounding for violations under the Disaster Management Act was not permissible, even if the parent enactment allowed compounding.

Interpretation of Section 44 of the Puducherry Excise Act, 1970:
A legal issue arose regarding the interpretation of Section 44 of the Puducherry Excise Act, 1970, which deals with compounding of offenses. The revenue argued that proceedings for suspension and cancellation could continue even if some issues were compounded by the licensee. The court clarified that if a show cause notice addressed multiple issues and the licensee compounded a portion, proceedings could continue for the remaining allegations. In this case, the court found no identity between the issues raised in the show cause notices, and the proceedings based on different issues were deemed misconceived. The court granted liberty for the Excise Officer to issue a fresh show cause notice for any other irregularities.

In conclusion, the court set aside the orders of the original and appellate authorities, directing a fresh show cause notice with detailed violations, emphasized the impropriety of compounding violations under the Disaster Management Act, and clarified the interpretation of Section 44 of the Puducherry Excise Act, 1970.