2013 (1) TMI 771 - SC - Central Excise

Supreme Court sets aside High Court order, restores Excise Commissioner decision on liquor licence fee liability.

State of Bihar and Others Versus Nirmal Kumar Gupta

The Supreme Court allowed the appeal, setting aside the High Court's order and restoring the Excise Commissioner's decision. The Court held that the ... Whether the Division Bench of the High Court of Judicature at Patna has correctly interpreted the effect and impact of the Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 2004 (for short “the Rules”) and the sale notification published by the Collector of Kishanganj in Excise Form 127 for various excise shops in groups in the said district for the year 2006- 07 and the terms of licence? Issues Involved:1. Interpretation of the Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 20042. Validity of the demand for licence fee from the date of settlement3. Concept of condonation of default in the context of excise laws4. Applicability of Article 14 of the Constitution in the context of liquor tradeIssue-wise Detailed Analysis:1. Interpretation of the Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 2004The central issue was whether the Division Bench of the High Court correctly interpreted the Bihar Excise Rules, 2004, and the sale notification published by the Collector of Kishanganj. The Rules and notification stipulated the terms for the settlement of excise shops for the financial year 2006-07. The High Court referred to Rules 16, 17, 20, 22, and 24 and concluded that the respondent could not be held liable for the licence fee from 5th June 2006, as the licence was issued on 5th July 2006.2. Validity of the Demand for Licence Fee from the Date of SettlementThe High Court opined that the respondent was not liable to pay the licence fee from 5th June 2006, as the licence was issued on 5th July 2006. However, the Supreme Court disagreed, emphasizing that Rule 24 clearly states that the licence shall commence from the date of settlement if settled in the midst of the excise year. The Court noted that the respondent was aware of the terms and conditions and thus liable to pay the licence fee from the date of settlement, i.e., 5th June 2006.3. Concept of Condonation of Default in the Context of Excise LawsThe High Court's interpretation suggested that the default in payment of advance security was condoned by the authorities. However, the Supreme Court clarified that under the Rules, there is no provision for condonation of default. The Rules explicitly state that failure to deposit the advance security within the prescribed time results in the cancellation of the settlement and forfeiture of the deposited amount. The Court held that the concept of condonation of default is alien to the nature of the trade in liquor.4. Applicability of Article 14 of the Constitution in the Context of Liquor TradeThe Court reiterated that trade in liquor is inherently noxious and pernicious, and the State has the exclusive right to regulate it. The Court referred to several precedents, emphasizing that no citizen has a fundamental right to trade in liquor and that the State's policies in this regard are not subject to the same level of scrutiny under Article 14 as other trades. The Court concluded that the High Court erred in applying the principle of condonation of default and that the respondent was liable to pay the licence fee from the date of settlement.ConclusionThe Supreme Court allowed the appeal, set aside the High Court's order, and restored the order of the Excise Commissioner. The Court held that the respondent was liable to pay the licence fee from the date of the settlement, i.e., 5th June 2006, and that the concept of condonation of default was not applicable in this context. The parties were directed to bear their respective costs.