9911796707
TMI Blog2007 (6) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... produced at Kasauli Distillery, petitioner imported some quantities of Malt Spirit of over proof strength from its own Distillery at Mohan Nagar in Uttar Pradesh, after getting import permits from the Collector Excise, Himachal Pradesh. The petitioner also transported some quantities of Malt Spirit of over proof strength from M/s Rangar Breweries Ltd., Mehatpur, Distt. Una as well as some quantities of spirit from its Distillery at Mohan Nagar, Distt. Ghaziabad to Solan Brewery during the year 1997-98 and 1998- 99. It was further alleged that prior to 1.4.1996 there was no provision which required payment of permit/transport fee on transportation of I.M.F.S., country spirit, beer etc. It was alleged that it was for the first time that permit/transport fee was levied as per announcement for excise auctions for the year 1996-97 dated 12.3.1996. It was alleged that as per the letter issued by the Excise Taxation Commissioner, Himachal Pradesh, a permit fee at the rate of ₹ 2.50 per bulk litres on denatured spirit, ₹ 2.00 per proof litre and ₹ 1.00 per proof litre on foreign spirit and country liquor respectively was leviable. It was alleged that the permit fee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s IMFS), It was alleged that the petitioner company has been granted permission to manufacture IMFS and beer and the excise licence was granted by the State Government. It was alleged that till 1983 the State Government was charging ₹ 1000/- per annum as fee for distillery licence and ₹ 500/- per annum for brewery licence under the Excise Act. The same was raised to ₹ 75,000/- per annum for distillery licence and ₹ 10,000/- per annum for brewery licence in 1993. Thereafter, the State resorted to imposition of licence fee on per bottle basis and accordingly, the distillery licence fees which was only ₹ 1000/- per annum in 1983 became around ₹ 12 Lacs in 1996-97 and the brewery licence has arisen from ₹ 500/- per annum to over ₹ 8 Lacs per annum in 1996- 97. It was alleged that this fee was being sought to be charged in addition to the excise duty and various other levies which are being paid by the petitioner to the State Exchequer. The petitioner has challenged the imposition of licence fee as without an authority of law being unconstitutional, arbitrary and ultra vires the Constitution. It was alleged that the fee is not in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was also paying licence fees on license in Form L-1 and L-1A attached to Distillery and Brewery amounting to ₹ 60,000 and ₹ 1,60,000/-. Thus it was pleaded that the impugned levies are detrimental to the petitioner as well as to the public at large as well as State of H.P. which levy is arbitrary and unconstitutional, hence the writ petition filed challenging the levy of the fees raised by the State Government vide impugned notifications. In reply filed by the respondents to the writ petition they have pleaded they the petitioner has been granted the Distillery licence on his request and subject to the conditions as stipulated in the said licence which was to manufacture various types of spirit. It was pleaded that the first condition of the licence was that the licensee shall observe the provisions of the Punjab Excise Act, 1 of 1914 and all rules made thereunder applicable to manufacture, issue and sale of spirit. The licence was granted for a period of one year which was in the nature of a contract subject to fulfillment of the conditions and strict observance of the rules governing the licence. It was pleaded that the Government is the exclusive owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to the State of Himachal Pradesh were framed under the Punjab Excise Act, 1914, which provide for the grant of licence in Form D-2 for the manufacturing of intoxicating liquors. Likewise the Punjab Brewery Rules provide for the grant of licence in Form B-1 for the manufacturing of Beer. It was pleaded that under Entries 8 and 51 of List II read with Entry 84 of List I of the Seventh Schedule to the Constitution, the State Legislature has the exclusive privilege to legislate on intoxicating liquors or alcoholic liquor for human consumption. Therefore, the State has the exclusive power to make law with respect to manufacture and production of intoxicating liquors. The Government was the exclusive owner of the privilege to trade in liquor. The citizens do not have any fundamental right to trade or carry on the business in the properties or rights belonging to the Government. The licences granted to the petitioner are in the nature of parting with the exclusive right of the State for a price or consideration and that too on his request, The petitioner as such using the right of the State is obliged to pay the price or consideration in lieu of that. The licences are granted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the question of quid pro quo between the services rendered by the State at the rate of levy of fee charge arises for consideration and there has to be co-relation in between the services rendered by the State in charging this specific levy and the rate of levy of fee being charged for some services. It was submitted that there has to be proof of the amount being spent by the State for the services rendered by the State and since there was no proof on record which was quid pro quo before levy of any fees, therefore, it was unconstitutional. The learned counsel for the petitioner has relied upon the following decisions: The decision in State of U.P. and others Vs. Vam Organic Chemicals Ltd. and others, (2004) 1 Supreme Court Cases 225, shows that it was observed in para-44 of the judgment as under: Besides, the fee is required to be justified with reference to the cost of such regulation. The industry is already paying a fee under Rule 2 for such regulation. Indeed, the justification for levying the fee under Rule 3(a) is the identical justification given by the State for levying the fee under Rule 2. Presumably, a full complement of excise officers and staff are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of scheduled industries in Industries (Development and Regulation) Act detracts from the power of States to impose any levy. Levy of vend fee cannot also be justified as a pre-constitutional levy. On the other hand, the learned Advocate General had submitted that the State Government has to spend extra amount for the services being rendered at the time of grant of licence to import spirit in the State by issuing necessary permits for the same, maintaining a record of the permits and for keeping the staff at the barriers for checking as to whether the spirit being imported was in accordance with the permit issued or not. It was submitted that it is not possible to place on record as to how much extra staff was being placed at the barriers for implementation of the orders issuing import permit in favour of the petitioners. It may be that the same staff posted was doing this additional work or some extra staff was posted in view of the import licence given in favour of the petitioners which requires deployment of extra staff and it is not necessary that before said levy is charged, the State Government should place on record the details of the amount being spent by it in serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities. Hence, the fee leviable and payable by the manufacturers under the impugned notification is in the nature of regulatory fee for which quid pro quo is not necessary. It was held that the rate of fee was also reasonable. The above decision suggests that for imposing such a levy quid pro quo is not necessary and it is not necessary that the State must furnish particulars of the amount being spent by it on the services rendered by the State. The learned Advocate General had also relied upon the decision in Southern Pharmaceuticals and Chemicals, Trichur and others Vs. State of Kerala and others, (1981) 4 Supreme Court Cases 391. The observations made in paras 18 and 19 are relevant and are being reproduced below: No citizen has any fundamental right guaranteed under Article 19)1)(g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors. The power to legislate with regard to intoxicating liquor carries with it the power to regulate the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for the purpose of interfering with the right of citizens in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State to control and regulate its supply from a distillery or a spirit warehouse in the State under and in accordance with the terms and conditions of a licence or permit its import from outside by grant of a privilege and charge a fee for the same. A fee may be charged for the privilege or benefit conferred, or service rendered, or to meet the expenses connected therewith. A fee may be levied to meet the cost of supervision and may be, something more. It is in consideration for the privilege, licence or service. The State is undoubtedly entitled to levy excise duty on the rectified spirit issued from a distillery under Section 17(f) of the Act read with Rule 13 of the Kerala Rectified Spirit Rules, 1972, but it refrained from making any such levy by reason of Rule 21 of the Central Rules and has, therefore, by proviso to Rule 8, allowed a manufacturer of medicinal and toilet preparations to draw rectified spirit from a distillery without payment of duty. It is thus a privilege conferred on the licensee. To claim the privilege he must comply with the conditions prescribed. If one of the conditions is the payment of cost of establishment under Section 14(e) of the Act read with Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of Articles 301-304 to the liquor trade. On the contrary numerous judgments expressly hold these articles to be in applicable to trade, commerce and intercourse in liquor. The Apex Court also held that the freedom guaranteed by Article 301 is not available to liquor because it is a noxious substance injurious to public health, order and morality. Therefore regulation in the interest of public health and order takes the case out of Article 301: regulation for the purpose of Article 301 not being confined to such regulations alone which will facilitate the trade. It was further held in para 150 as under : The decision of the Supreme Court in case of Kalyani Stores, AIR 1966 SC 1686, is not applicable to the facts of the present case. The Punjab Act is an existing law under Article 366(10) of the Constitution and its continued application is saved by Article 372 thereof. It is also saved by Article 305 from attack under Articles 301 and 303 of the Constitution. It is well within the legislative competence of the State. It is clear from the above discussion that the fees are mainly chargeable for the services being rendered by the State Government and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pirit for human consumption which require deployment of extra staff and other expenses. It was within the powers of the State Government under Punjab Excise Act, 1914 and the Rules made thereunder to levy this fees. The provisions of the Punjab Excise Act and Rules framed thereunder in this regard though were alleged to be ultra vires the Constitution and were alleged to be liable to be struck off, but no specific arguments were advanced as to how they are ultra vires the Constitution. In regard to the plea raised by the learned counsel for the petitioner that the State Government was not competent to levy such a fees and before levying such a fee , the expenditure likely to be incurred or to be incurred was a quid pro quo before such a levy could be imposed. I have already mentioned above that this fees could be levied by the State Government under its powers and there was no condition of quid pro quo in view of the latest law of the Hon ble Apex Court and, therefore, the impugned notifications issued under the provisions of Punjab Excise Act and Rules framed thereunder were within the legislative competence of the State and they cannot be held to be the ultra vires of the Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the import fee which was prior to getting his privilege of importing. It was held in Para 150 in the above case that the Punjab Excise Act, 1914, is an existing law under Clause 10 of Article 366 of the Constitution and its continued application is saved by Article 372 of the Constitution. It is also saved by Article 305 of the Constitution from attack under Article 301 and 303 of the Constitution. It was observed that it is well within the legislative competence of the State. Thus, the provisions of Punjab Excise Act were held to be within the legislative competence of the State and the notifications issued were held to be valid. The licensee was also liable to pay all payments which may become due to Government and as such, it was in the nature of contract in between the petitioner and the State Government and once the licence fees are enhanced in exercise of the powers vested in the State Government under the Constitution and under the provisions of the Punjab Excise Act and Rules made thereunder, the licence fee could have been enhanced by the State Government since the petitioners have got no right to deal in the trade of liquor and accordingly, the enhancement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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