Licence fee liability in regulated liquor settlements begins on settlement date, and condonation by conduct does not apply.

In a regulated liquor settlement, the governing rules and licence conditions determine when liability to pay licence fee begins. Where a retail shop is settled in the midst of the excise year, Rule 24 treats the licence as commencing from the date of settlement, and the auction-purchaser remains liable from that date even if the licence is issued later. The required advance security also had to be deposited within the prescribed time. The doctrine of condonation by conduct was held inapplicable to liquor trade, since it is a regulated privilege and not an ordinary business right; a bidder who accepted the licence with full knowledge of the conditions could not avoid the statutory liability.

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Issues: Whether the licence fee payable for retail liquor shops settled in the midst of the excise year was chargeable from the date of settlement or only from the date of issuance of licence, and whether delay in deposit of advance security could be treated as condoned by conduct.

Analysis: The Rules required the highest bidder to deposit one-fourth of the annual licence fee as advance security within the prescribed time, and on final acceptance of the bid by the Commissioner, a licence would be issued. Rule 24 provided that where a shop or group of shops is settled in the midst of the excise year, the licence commences from the date of settlement, and the auction-purchaser remains liable to pay the bid money from the first day of the licence period even if the licence is issued later. Reading the notification, the terms of licence, and the rules together, the settlement in favour of the bidder created liability from the settlement date itself. The Court further held that the doctrine of condonation by conduct had no application in liquor trade, which is a regulated privilege and not an ordinary business right, and the bidder, having accepted the licence with full knowledge of the conditions, could not avoid the statutory liability.

Conclusion: The liability to pay licence fee arose from the date of settlement, not from the date of issue of the licence, and the plea of condonation was rejected in favour of the Revenue.

Ratio Decidendi: In a regulated liquor settlement, the express terms of the governing rules and licence conditions determine the commencement of liability, and where the rules provide that settlement in the midst of the excise year carries liability from the date of settlement, later issuance of the licence does not postpone payment.

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