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TMI Blog2003 (3) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 4.5.1993, the High Court quashed the levy of expenses incurred on supervision and establishment cost on the ground that Rule 22 of M.P. Breweries Rules, 1970 was struck down as ultra vires by this Court in case of M/s Lilasons Breweries (Pvt.) Ltd. v. State of Madhya Pradesh [(1992) 3 SCC 293]. In M/s Lilasons Breweries (Pvt.) Ltd. s case, this Court arrived at the conclusion that Rule 22 to the extent it permits raising a demand, which in sum and substance is additional excise duty, without its being actually due, is ultra vires the Act and beyond the rule making power of the State. Impugned judgment and order passed by the High Court is challenged by filing this appeal. It has been pointed out that the High Court proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to grant lease of right to manufacture, etc.The State Government may lease to any person, on such conditions and for such period as it may think fit, the right: (a) of manufacturing, or of supplying by wholesale, or of both, or (b) of selling by wholesale or by retail, or (c) of manufacturing or of supplying by wholesale, or of both, and selling by retail, any liquor or intoxicating drug within any specified area. 2. The licensing authority may grant to a lessee under sub-section (1) a licence in the terms of his lease; and when there is no condition in the lease which prohibits sub-letting, may, on the application of the lessee, grant a licence to any sub-lessee approved by such authority. Section 27 also empowers the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Rules leaves no manner of doubt that it was open to the appellant to grant the exclusive privilege of manufacturing and selling wine etc. to the respondent only provided it was, apart from making any other payment, also willing to pay the salaries and allowances referred to in the aforesaid provisions which for the sake of convenience have been described as establishment charges, and which were sought to be recovered as such under the impugned notice of demand. The respondent- Company was not under any obligation to take the licence. It was open to it to have refrained from taking any licence under the Act and the Rules if it was not willing to pay the price as required by the government for the grant of privilege to manufacture an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act and the Rules, it would not become illegal and vulnerable. In Shri Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. v. State of Gujarat Anr. [(1992) 2 SCC 42] validity of demand under Section 58A of the Bombay Prohibition Act, 1949 for maintenance of excise staff for supervision of manufacture of industrial alcohol was assailed on the ground of lack of legislative competence of the State. In that case, the Court observed thus: 4. According to learned counsel since the entire judgment of the High Court proceeded on privilege theory it cannot withstand the principle laid down in Synthetics and Chemicals Ltd. v. State of U.P. [(1990) 1 SCC 109]. Levy as a fee under Entry 8 of List II of Seventh Schedule or excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes the argument on behalf of the appellant. The aforesaid decision was referred to and relied upon in M/s Gujchem Distillers India Ltd. v. State of Gujarat [(1992) 2 SCC 399]. In view of the aforesaid settled legal position, the condition empowering the State Government to recover the actual cost of supervisory staff posted at the premises of respondent cannot be said to be in any way illegal or ultra vires as it constitutes the price or consideration which the Government charges to the licensee for parting with its privilege and granting licence. In this view of the matter, the impugned judgment and order passed by the High Court requires to be set aside. In the result, the appeal is allowed and the impugned judgment and order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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