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TMI Blog2017 (3) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... hya Pradesh Distillery Rules, 1995 pertaining to year 199596, 199697 and 199798. 3. The Respondents aggrieved by the above notice filed a writ petition in the High Court of Madhya Pradesh, Bench at Indore being Writ Petition No. 589 of 1999. The Respondent in its writ petition placed reliance on a judgment of this Court in M/s. Lilasons Breweries (Pvt.) Ltd. versus State of Madhya Pradesh and Others, (1992) 3 SCC 293, in which case Rule 22 of Madhya Pradesh Brewery Rules, 1970 which also entitled the State to realise from the brewery charges on officers exceeding five per cent of the duty leviable was struck down. Respondents pleaded in the writ petition that Rule 4(41) of the Rules, 1995 is also non est and void, consequently demand raised on the strength of such rule is liable to be struck down. In the writ petition following prayers were made in Para 7 by the Respondents: "(i) A writ, direction or order in the nature of mandamus or as deemed fit be issued quashing the order Annexure/2 and it be declared that no demand can be raised under Rule 4(41) of the Distillery Rules. (ii) Such other relief be granted as deemed fit. (iii) This petition be allowed with costs." 4. A c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by Rule 4(41) could not have been struck down. It is submitted that Rule 4 (41) is intra vires and the State in accordance with the M. P. Excise Act, 1915 is fully entitled to realise the above demand. The demand raised under Rule 4(41) was fully covered under Section 27 and 28 of the M.P. Excise Act, 1915. Learned Counsel submits that licensee having taken the licence under the conditions, as contained under Rule 4(41) of Rules 1995, cannot turn round and challenge the demand. He submits that provisions for realization of establishment charges from licensee are contained in different Excise Acts of various States and such provisions have been held to be intra vires, by this Court. 13. Shri Mehta, learned counsel appearing for the respondents, refuting the submissions of the learned counsel for the appellants contends that the judgment of Lilasons (supra) is fully applicable in the facts of the present case and had rightly been relied by learned Single Judge for quashing the demand. Learned counsel submits that in the writ petition, there were specific grounds, challenging the vires of Rule 4(41) and the mere fact that no specific relief was claimed in the writ petition is inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus sell intoxicating liquors by retail; it is not a privilege of a citizen of the State or of a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be entirely prohibited, or be permitted under such conditions as as will limit to the utmost its evils. The manner and extent of regulation rest in the discretion of the governing authority. That authority may vest in such officers as it may deem proper the power of passing upon applications for permission to carry it on, and to issue licences for that purpose. It is a matter of legislative will only." 17. This Court in Cooverjee B. Bharucha versus The Excise Commissioner, Ajmer, AIR 1954 SCC 220, speaking through Mahajan, C.J., after approving the above passage of Field, J. stated: "These observations have our entire concurrence and they completely negative the contention raised on behalf of the petitions. The provisions of the Regulation purport to regulate trade in liquor in all its different spheres and are valid." 18. Mahajan, C.J., further held in above case: "It can also not be denied that the State has the power to prohibit the trades which are illegal or imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights." 21. While delving into the nature of licence fee charged for granting the privilege to manufacture/sale intoxicant, Constitution Bench further laid in para 59: "The amount charged to the licensees is not a fee properly socalled nor indeed a tax but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transactions." 22. Those who come forward to seek the above privilege of the State to manufacture or sell the liquor have to abide by the statutory regulations and terms and conditions of the licence. The privilege is not thrust upon anyone rather it is sought by intending persons or parties by participating in auctions for settling such right or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Chapter, the State Government may accept payment of a sum in consideration of the grant of any lease under Sec. 18. 27.2 Nothing contained in subsection (1) shall be construed to preclude the State Government from enhancing or reducing the sum received in consideration of a grant of any lease under Section 18 during the course of a financial year or during the currency of a licence and power to enhance or reduce the sum shall include power to give retrospective effect to such enhancement or reduction from a date not earlier than the commencement of the financial year." 27. Chapter VI deals with the licences, permits and passes. Section 28 is as follows: "28. Form and conditions of licence etc. (1). Every permit or pass issued or licence granted under this Act shall be issued or granted on payment of such fees, for such period, subject to such restrictions and conditions and shall be in such form and contain such particulars as may be prescribed. (2). The conditions prescribed under Subsection (1) may require, inter alia the licensee to lift for sale, the minimum quantity of country spirit or Indianmade liquor, fixed for his shop and to pay the penalty at the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of M/s. Leela Sons Brewery Rule 4(41) of the Distillery Rules is also non est and void. Consequently no demand can be raised on the strength of such a rule hence the demand in Annexure/1 is liable to be struck down. AS per the law declared by the Hon'ble Supreme Court Old Rule 22 of the Brewery Rules is ultra vires and consequentially Rule 4(41) of the Distillery Rules is non est. Hence it is not necessary to seek separate relief to strike down Rule 4(41)." 32. Learned counsel for the Respondents has also placed reliance on the judgment of this Court in Godrej Sara Lee Limited versus Assistant Commissioner (AA) and Another, (2009) 14 SCC 338, in support of the proposition that when the order of an statutory authority is questioned on the ground that same suffers from lack of jurisdiction, the fact that no specific prayer has been made is inconsequential. In above case, following was held in Para 12 & Para 13: "12.It is true that the appellant, in its writ petition, has not made a specific prayer that the said Notification dated 2112006 was ultra vires or otherwise illegal but, as indicated hereinbefore, a specific ground in that behalf h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the order can be examined only after considering the statutory provisions invoked therein. The court may reach a conclusion that the order suffers from lack of jurisdiction." "14. In case, the petitioner was serious about the matter, he could have amended the memo of appeal and that application could have been considered sympathetically by the High Court as held by this Court in Harcharan v. State of Haryana. The facts mentioned in this petition depict an entirely different picture and it gives an impression as if the High Court had not enhanced the compensation though demanded by the petitioner for want of payment of court fees which he could not afford to pay due to paucity of funds." The above case also in no manner helps the respondents. 38. There is an another reason due to which, the above submission of learned counsel for the respondents cannot be accepted. As noted above although, in Para 9 of the Writ Petition, petitioner have pleaded that in view of the judgment of M/s. Lilasons Rule 4(41) of the 1995 Rules is non est and void. But, there was no specific prayer in the writ petition. The reason for not making the specific prayer declaring Rule 4(41) as ultra vires w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the M. P. Brewery Rules 1970 was questioned. Rule 22 of the aforesaid Rules has been extracted in Para 2 of the judgment which is to the following effect: "2. Vires of Rule 22 of the Madhya Pradesh Brewery Rules, 1970 framed under Section 62 of the Madhya Pradesh Excise Act, 1915 stands questioned. That rule says: "22. Excise Commissioner to appoint officer in charge of brewery.- Every brewery shall be placed by the Excise Commissioner under the charge of an Excise Inspector to be designated as officer in charge of the brewery. The Excise Commissioner will further appoint such other officers of the Excise Department as he may deem fit to the charge of breweries. The pay of all such officers shall be met by the Government; provided that when the annual charges exceed five per cent of the duty leviable on the issues made from the brewery to districts within the State, the excess shall be realised from the brewer." 43. This Court after noticing Rule 22 and the provisions of M.P. Excise Act, 1915, Sections 18, 25, 27 and 28, recorded its conclusion in paragraphs 8 and 9 which are extracted below: "8. Now is the demand a further duty and hence a further tax or is it a further fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd outright. But if it is an additional payment under Section 27 as consideration for the grant of licence, or a further fee or condition of licence, as contended by the respondentState then it may have to be sustained. It would be relevant to take note of another decision of this Court in Panna Lal v. State of Rajasthan at this stage in which the contractual obligation of the licensee to pay the guaranteed or stipulated sum mentioned in the licence was held not to be dependent on the quantum of liquor held by him and no excise duty was held charged or chargeable on undrawn liquor under the licence. The aforesaid case cannot advance the defence of the State for there is no lump sum payment stipulated as such in the instant licence. The licence only mentions that the licensee would be bound by the Brewery Rules. The High Court in that situation went on to lean on Sections 62(2)(h) and 28 when discovering there was no express provision in the Act for realisation of charges in respect of pay of officers posted for control of breweries. But when we analyse the latter part of Rule 22, the following position emerges: (i) The pay of all such officers shall be met by the Government; [the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The basis of judgment of Lilasons's case (supra) was the judgment in Bimal Chandra Banerjee vs. State of Madhya Pradesh Etc., 1970(2) SCC 467. In Bimal Chandra Banerjee's case this Court had occasion to examine the provisions of Madhya Pradesh Excise Act, 1915 inclusive of Sections 27 and 62(2)(h). From paragraph 8 of the judgment, as quoted above, it is clear that compulsory payment of excise duty on the quantity of liquor which could not be lifted by the licensee was held to be illegal. In Bimal Chandra Banerjee's case it was held that rule making authority has not been conferred with any power to levy duty on any articles which do not fall within the scope of Section 25 and the Legislature has levied excise duty only on those articles which come within the scope of Section 25, i.e., those excisable articles which have been manufactured under any licence. After referring Banerjee's case, Lilasons relied on to two other judgments, namely, State of M.P. v. Firm Gapulal, (1976) 1 SCC 791 and Excise Commissioner, U.P. v. Ram Kumar, (1976) 3 SCC 540. Both the above cases laid down the same proposition. 45. Judgment in Banerjee's case was delivered on 19th August, 1970. There has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lilasons cannot be relied on for finding out as to whether demand under Rule 4(41) is beyond the scope of Section 28. 47. A threeJudge Bench of this Court in State of M.P. and others vs. KCT Drinks Ltd., (2003) 4 SCC 748, had occasion to consider the M.P. Excise Act, 1915 , Section 27. In the above case condition 8 of the licence provides that the licensee shall pay the full cost of excise supervisory staff posted at the premises of the licensee. Although, judgment of Lilasons was cited before threeJudge Bench but, however, this Court upheld Clause 8 of the licence and laid down following in paragraphs 7 and 11: "7. In view of Sections 18 and 27, the State Government is entitled to accept payment of a sum in consideration of grant of any lease in lump sum in addition to any duty leviable under the Act on terms and conditions which are mentioned in the licence deed. Condition 8 of the licence provides that the licensee shall pay the full cost of excise supervisory staff posted at the premises of KCT Drinks, Mandideep, District Raisen. 11. In view of the aforesaid settled legal position, the condition empowering the State Government to recover the actual cost of supervisory staf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the establishment are more than 150% of the total income of the distillery. On the face of it, the demand is arbitrary and unreasonable. On the face of it, the demand is arbitrary and unreasonable. It is liable to be struck down on this count leave aside the question of validity of the Rule 4(41)." 52. The High Court has observed that establishment charges to the extent of 5% ought to be borne by the State goes to show that the expenses on the establishment are supposed to be within reasonable limits and demand appears to be arbitrary and unreasonable. But a perusal of the writ petition indicates that no sufficient foundation was laid in the writ petition to enter into the issue as to whether the demand is arbitrary and unreasonable. From the details of the demand as noted above, it is further clear that in the demand for the year 199697 expenditure on salary was shown as Rs. 4,36,897/but no figure pertaining to the Revenue of the said year is mentioned, whether the distillery could function during the relevant period and without there being any Revenue how the expenditure on salary is fastened on respondent, is not explained. 53. Learned counsel for the respondent has further st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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