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TMI Blog2021 (2) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... cts. Inherent lack of Jurisdiction - HELD THAT:- It appears that the same may not be entirely correct, in the face of the proceedings as they stand today. Though it is true, no prior notice had been issued to the petitioner to cancel his Majhenpurwa license before the order dated 28.05.2019 came to be passed, two different appeals were filed by the petitioner against that order- one against the cancellation of the Gehrukheda license (Excise Appeal no. 31 of 2019) and the other against the cancellation of the Majhenpurwa license (Excise Appeal no. 32 of 2019). While allowing appeal no. 32 of 2019 on 10.08.2019, the appeal authority specifically observed that the licensing authority may issue a fresh notice to the petitioner to cancel the Majhenpurwa license. That order has attained finality. The ground of patent lack of jurisdiction to cancel the Majhenpurwa license may have existed with the petitioner, when that license came to be cancelled first, on 28.05.2019. Upon order dated 10.08.2019 passed in Excise Appeal No. 32 of 2019, the licensing authority issued the notice dated 29.08.2019. On that date the Gehrukheda license of the petitioner stood cancelled. As further discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t itself bring out existence of reason/s so grave and serious as may give rise to a satisfaction with the licensing authority, that all or any other license of that licensee be also cancelled in the interest of revenue. Illustratively, but not in any way exhaustively, those may be cases of large scale or organized evasion or avoidance of excise duty; breach of terms and conditions made by way of a regular business practice adopted by the licensee; disentitlement earned to hold any excise license, due to any of the specified convictions or operation of law or any other reason/ground that may spring form the facts already proven in the earlier proceeding, to cancel one or more licence of the same licensee, under section 34(1)(a) or (b) or (c) of the Act - oming to the facts of the present case, it would be wholly pre-mature to reach a conclusion that the ground specified in the showcause notice is wholly insufficient or is sufficient for the purposes of examining the correctness or otherwise of the cancellation of the Majhenpurwa licence. It is so because the basic facts giving rise to the cancellation of the Gehrukheda licence, have yet not attained finality. By the order passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner - at village Majhenpurwa, District Fatehpur. Upon amendment, the petitioner has also challenged another order dated 17.06.2020 passed by Additional Excise Commissioner (Administration) Uttar Pradesh. At the outset, it may be noted that the order dated 17.06.2020 was passed with reference to the other country liquor shop license of the petitioner at Village Gehrukheda. That controversy has been dealt with a separate order passed in Writ-Tax No. 277 of 2020 decided on 19.01.2021. Therefore, the challenge raised in the present petition to the aforesaid order dated 17.06.2019, is misconceived. It is accordingly rejected. 3. Undisputedly, for the Excise Year 2018-2019, the petitioner held two country liquor shop excise licenses. One for his shop at village Gehrukheda (hereinafter referred to as the Gehrukheda license) and another for his shop at village Majhenpurwa (hereinafter referred to as the Majhenpurwa license ). Vide order dated 25.3.2019, the Gehrukheda license of the petitioner was suspended, arising from the facts noted during an inspection dated 23.3.2019. Then, vide order dated 28.05.2019, the licensing authority proceeded to cancel both the licenses of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise from the proceedings that are wholly without jurisdiction in as much as no violation had been noted with respect to the Majhenpurwa license. Another jurisdictional defect has been cited as no notice had been issued before cancelling the petitioner's Majhenpurwa license vide order dated 28.05.2019. That jurisdictional defect did not stand cured by the observations made in the appeal order dated 16.08.2019. Then referring to Section 34 of the United Provinces Excise Act, 1910 (hereinafter referred to as the Act ) and Rule 21 of the Uttar Pradesh Excise Settlement of Licenses for Retail Sale of Country Liquor) Rules, 2020 (hereinafter referred to as the Rules ), he would submit, unless a specific violation had been noted as to the operation of the Majhenpurwa license, that license could never be cancelled merely because any other violation may have been alleged against the petitioner with respect to the Gehrukheda license. Alternatively, it has been submitted, the allegations made in the notice even if accepted on their face value, are vague and such as may never fall within the scope of Section 34 of the Act or Rule 21 of the Rules or any of the terms and conditions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the Gehrukheda license. Then affidavits have already been exchanged. No useful purpose may be served in requiring the petitioner to approach the revising authority at this stage, in such facts. 9. As to inherent lack of jurisdiction, claimed by the petitioner, it appears that the same may not be entirely correct, in the face of the proceedings as they stand today. Though it is true, no prior notice had been issued to the petitioner to cancel his Majhenpurwa license before the order dated 28.05.2019 came to be passed, two different appeals were filed by the petitioner against that order- one against the cancellation of the Gehrukheda license (Excise Appeal no. 31 of 2019) and the other against the cancellation of the Majhenpurwa license (Excise Appeal no. 32 of 2019). While allowing appeal no. 32 of 2019 on 10.08.2019, the appeal authority specifically observed that the licensing authority may issue a fresh notice to the petitioner to cancel the Majhenpurwa license. That order has attained finality. 10. After the remand made, undisputedly, a notice dated 29.08.2019 was issued to the petitioner by the licensing authority requiring the petitioner to show cause why Majh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hable under this Act or any other law for the time being in force relating to revenue, or of any cognizable and nonbailable offence, or of any offence punishable under the [Dangerous Drugs Act, 1930,] or under the Merchandise Marks Act, 1889, or of any offence punishable under Sections 482 to 489 (both inclusive) of the Indian Penal Code; or (d) where a licence, permit or pass has been granted on the application of the grantee of an exclusive privilege under this Act, on the requisition in writing of such grantee; or (e) if the conditions of the licence or permit provide for such cancellations or suspension at will. (2) When a licence, permit and pass held by any person is cancelled under clauses (a), (b) or (c) of sub-section (1), the authority aforesaid may cancel any other licence, permit or pass granted to such person by, or by the authority of the State Government under this Act or under any other law for the time being in force relating to excise revenue or under the [Opium Act, 1878.] (3) The holder shall not be entitled to any compensation for the cancellation or suspension of his licence, permit or pass under this section nor to a refund of any fee paid or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as specified under section 34(1) read with Rule 21 of the Rules and terms and conditions mentioned on Form 5-C is/are established with respect to another/other license/s or another/other license/s may be cancelled merely because the licensing authority has already cancelled one license of the same licensee. 15. It may also be noticed, under section 35 of the Act, the licensing authority has been given a further power to cancel an existing license, for any cause other than those specified under section 34 of the Act. However, that power may be exercised accompanied with proportional remission of license fee. In Sri Basdeo Prasad Vs The State of Uttar Pradesh and another 1956 ALJ 81 , the power under Section 35 of the Act was held to be administrative but, discretionary. A key difference between cancellation of license made under Sections 34 and 35 of the Act is- upon a cancellation made under Section 35 of the Act, the licensee may retain a right to proportionate refund of deposits made by him (towards license fees etc.), whereas forfeiture of such deposits follows the canellation of a license made under Section 34 of the Act. 16. Under section 34(1) of the Act, an existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is imperative for him to remit the fee to the Committee. In other words, the Market Committee is entitled to collect market fee from the seller irrespective of whether the seller has realised it from the purchaser or not . 19. Similarly, necessarily, an implied discretion is vested in the licensing authority to cancel or to not cancel an existing license even if any condition under section 34(1) (a) to (i) or 34 (2) or 35 exists. In Sri Basdeo Prasad Vs The State of Uttar Pradesh and another (supra) , a division bench of this Court had clearly held the power to cancel a license under section 35 of the Act to be discretionary. There is no reason to hold Section 34(2) of the Act to be mandatory, as suggested by the learned Standing Counsel. It is a discretionary power. 20. Then, though it is necessary to establish violation of any of the stipulations contained in clauses (a) to (e) of sub-section (1) of section 34 of the Act to cancel an existing license, under that provision, there is nothing in the plain language of section 34(2) of the Act to oblige the licensing authority to establish an independent violation of clauses (a) to (e) of sub-section (1) of section 34 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icense held by him, he may stand exposed to proceedings for cancellation of each such license under section 34(1) of the Act, exclusively. If, however, one out of more license held by a licensee is cancelled, either under clause (a) or (b) or (c) of section 34(1) of the Act, it would expose such a licensee to cancellation of his another/other license/s, irrespective of a complete absence of any violation committed in the operation of the another/other license/s. That is the plain meaning of section 34(2) of the Act. 23. Other than excluding the contingencies specified under clauses (d) (e) of section 34(1) from the scope of applicability to the power conferred under section 34(2) of the Act, the legislature has vested a wide discretion on the licensing authority, in that regard. Thus, the legislative intent, is to confine the power under section 34(2) of the Act to situations involving specified violations - as to payment of fee, breach of any express or implied terms and conditions and conviction for any of the specified offences. Unless a license of a licensee is first cancelled for any such ground, another/other license/s of that licensee cannot be cancelled under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any other law , relating to excise revenue or under the Opium Act, 1878 . 27. In that view, the submission advanced by the learned Standing Counsel that cancellation of the other license follows as an automatic consequence of the first cancellation proceeding also does not merit acceptance. The provisions of Section 34(2) of the Act are discretionary and not mandatory as suggested by the learned Standing Counsel. Also it's application can never be an automatic consequence of cancellation of another excise license of a licensee. Being a power exercisable only in the interest of revenue against a licensee who has already suffered cancellation of one license u/s 34(1) of the Act; such a power would have to be exercised with extreme caution only in cases where upon facts proven in the earlier proceedings it appears to the licensing authority that continuance of another/other license/s of a licensee would be detrimental to the interest of revenue. It is this fact that would have to be proven in such proceeding initiated under Section 34(2) of the Act. 28. Thus, the proceedings under section 34(2) may arise purely in the core interests of revenue, owing to the deliber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusions whether the petitioner was in possession of tampered QR Code and Caps. Till the Appeal Authority reaches a firm conclusion as to that, in the facts of the present case, the cancellation of Majhenpurwa licence may not be examined, simultaneously. 31. Thus, for the purpose of clarification, it is stated that in case the petitioner succeeds in establishing that his Gehrukheda licence was not liable to be cancelled as he had not violated either section 34(1) (a) or (b) or (c) of the Act, the present proceedings to cancel the Majhenpurwa license would necessarily fall. However, if the Appeal Authority does reach a conclusion adverse to the petitioner (in that case), it would be for the Licensing Authority to then examine the existence or otherwise of an adequate reason or ground to exercise his extraordinary discretionary power to cancel the Majhenpurwa licence of the petitioner under Section 34(2) of the Act, keeping in mind the observations made above. 32. Ordinarily, if the present writ proceedings were being finalized during the Excise Year of 2018-2019, the petitioner may have remained entitled to restoration of his Majhenpurwa license. However, since that year is lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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