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TMI Blog1982 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... group of writ petitions filed under Art. 32 of the Constitution whereby the petitioners, who carry on business, inter alia, of the wholesale vend of beer and Indian Made Foreign Liquor at various places in the State of U.P. on the strength of licences granted to them in Form FL-2 under the U.P. Excise Act, 1910, have challenged the constitutional validity of ss. 1(2), 3 and (5) of U.P. Excise (Amendment) ordinance No. 4 of 1979 as also the constitutional validity of ss. 1(2), 3 and 5 of U.P. Excise (Amendment) Act No. 13 of 1979 (which replaced the said ordinance No. 4 of 1979) as being violative of their fundamental rights under Arts. 14, 19 and 31 of the Constitution; the petitioners have also sought a declaration that s. 30(2), proviso to cl. (c) of s. 41 and Explanations I and II to cl. (c) of s. 41 of the U.P. Excise Act 1910 as amended by ss. 3 and 5 of the said ordinance No. 4 of 1979 as well as by ss. 3 and 5 of the said Act No. 13 of 1979 and the provisions of sub-s. (2) of s. 1 of the said ordinance (No. 4 of 1979) as well as of the said Act (No. 13 of 1979) are ultra vires the Constitution and have prayed for the issuance of an appropriate writ, order or direction restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced whereunder FL-2 licences were auctioned under the provisions of paragraph 373 of the U.P. excise Manual Vol. I and fixed free . being the highest bid (auction money) accepted at such auction came to be charged for the grant of FL-2 licences and this system was introduced on the strength of the amendments that were made in the Principal Act of 1910 by the Amending (Re-enactment and Validation) Act 5 of 1976. Three or four amendments made by Act 5 of 1976 are material and we shall refer to these presently: A new s. 24A dealing with the grant of exclusive or other privilege in respect of foreign liquor was introduced in the Principal Act, which reads as under: 24-A. Grant of exclusive or other privilege in respect of foreign liquor. (1) Subject to the provisions of Section 31, the Excise Commissioner may grant to any person a licence or licences for the exclusive or other privilege: (a) of manufacturing or of supply by wholesale, or of both; or (b) of manufacturing or of supplying by wholesale, or of both and selling by retail; or (c) of selling by wholesale (to wholesale or retail vendors); or (d) of selling by retail at shops (for consumption 'off' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) runs thus: (C) Prescribing the scale of fees or manner of fixing the fees payable for any licence, permit or pass including any consideration for the grant of any exclusive or other privilege granted under Section 24 or Section 24-A or for storing of any intoxicant. In exercise of the power so conferred upon him under the amended cl. (c) of s. 41, the Excise Commissioner with the previous sanction of the State Government framed Rules called the U.P. Excise (Wholesale and Retail Vend of Foreign Liquor) (2nd Amendment) Rules, 1976 by issuing the Notification No. 27/Licence-3 dated 14th April, 1976, which were brought into force with effect from the date of publication in the Gazette, namely, 14th April, 1976, by this Notification the existing Rules 639, 641 and 642 as appearing in Excise Manual Vol. I (1962 End.) were amended; Rule 639(2) as amended provides that licences in form FL-2 shall be settled by public auction while Rule 641 as amended provides that the fee for a licence in Form FL-2 shall be the amount of money accepted at the auction of the licence as 'fixed fee' together with an 'assessed fee' charged on the basis of the scales of surcharge fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 528 of 1979, being typically representative of the group, are stated. The petitioners in that petition are liquor dealers and carry on business inter alia of wholesale vend of beer and Indian Made Foreign Liquor and for that purpose have wholesale depots in various districts in the State of U.P. For the financial years 1976-77 and 1977-78 they acquired by auction bids wholesale vending rights in respect of Indian Made Foreign Liquor at Agra, Meerut, Varanasi, Kanpur, Bareilly and Dehradun; for the financial year 1978-79 they similarly acquired wholesale vending rights in Indian Made Foreign Liquor at Agra, Meerut and Varanasi and for the financial year 1979-80 they acquired by auction similar rights at Agra, Meerut, Ghaziabad and Pilibhit. In other words being the highest bidder at these places for these years licences for the wholesale vend of Indian Made Foreign Liquor in Form FL-2 were granted to them. At the time of acceptance of their bids at these auctions the petitioners deposited the entire auction money called the fixed fee in respect of each of the said years with the respondents. The petitioners' case is that thereafter the respondents are seeking to levy and recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention raised by Counsel for the petitioners has been that as per the newly inserted condition in FL-2 licence the assessed fee was required to be prescribed by Government and announced at the time of auction but in the instant case such assessed fee has been prescribed by the Excise Commissioner and not by the State Government and was not announced at the time of the auction and for this reason also the same would not be recoverable. As will be shown presently none of these contentions has any merit and each one is liable to be rejected. As regards the first contention a plain reading of s. 30(2) prior to its amendment by U.P. Ordinance No. 4 of 1979 and by U.P. Act No. 13 of 1979 will show that there is no substance in it. The said provision ran thus: 2. The sum payable under sub-sec. (1) may by determined either by auction or by calling tenders or otherwise. In other words, the consideration for the grant of FL-2 licence could be determined either by auction or by calling tenders or otherwise. The phrase or otherwise was sufficiently wide and conferred on its plain grammatical construction power on the State Government or the Excise Commissioner to grant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were published in the Gazette and brought into force with effect from 14th of April, 1976 and admittedly all auctions for the financial year 1976-77 were held subsequent to that date. Under the amended Rule 641 it was clearly provided that the fee for the FL-2 licence shall be the amount of money accepted at the auction of the licence as fixed fee together with the assessed fee charged on the basis of the scales of Surcharge fee prescribed in the next following Rule and the amended Rule 642 prescribed the scales at which the assessed fee would be so charged. In other words, the bidders who gave their bids must be deemed to have knowledge of the provisions of the aforesaid Rules subject to which the auctions were held and therefore it is difficult to accept the contention that the bidders including the successful bidder whose highest bid was accepted offered their bids believing that only fixed fee would be charged. Secondly, the averment of the petitioners that at the time of these auctions the bidders were not informed that any assessed fee had been fixed or prescribed which would be payable by the successful bidder is not quite correct. It has been admitted by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cence which states that the assessed fee at such scales of surcharge fee as may be prescribed by the Government shall also be payable by the licensee while actually the scales of surcharge fee have been prescribed by the Excise Commissioner by framing the amended Rule 642 in exercise of the powers conferred upon him by cl. (c) of 41 of the Principal Act. Counsel urged that scales of surcharge fee ought to have been prescribed by the Government. In this connection we might refer to sec. 24B(c) which expressly declares that the Excise Commissioner as the head of the Excise Department of the State shall be deemed, while determining or realising such fee, to act for and on behalf of the State Government . It is thus clear that the Excise Commissioner has been statutorily declared to be the agent of the State Government and while determining such fee by framing the amended Rule 642 he acted for and on behalf of the State Government. In other words, scales of assessed fee under Rule 642 must be deemed to have been prescribed by the State Government. As regards the alleged non announcement at the time of the auctions we have already dealt with that aspect of the matter while dea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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