Distillery licence conditions may include supervisory staff cost as valid consideration for liquor manufacturing privilege.

A distillery licence condition requiring the licensee to bear the full cost of supervisory excise staff posted at its premises was treated as valid because the licence was issued under the Distillery and Warehouse Rules, not the M.P. Breweries Rules, 1970. The Court noted that the relevant conditions were framed under the M.P. Excise Act, 1915, which permitted the State to accept payment as consideration for granting the privilege to manufacture and supply liquor. On that basis, the staff cost formed part of the price of the privilege and not an unauthorized levy, and earlier decisions on establishment and supervisory charges supported that view.

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Issues: Whether the condition in the distillery licence requiring the licensee to pay the full cost of supervisory excise staff posted at its premises was legally valid and whether the High Court was right in striking down the levy by relying on Rule 22 of the M.P. Breweries Rules, 1970.

Analysis: The licence in question was issued under the Distillery & Warehouse Rules and not under the M.P. Breweries Rules, 1970. The relevant licensing conditions were framed under the M.P. Excise Act, 1915, particularly the powers to grant leases and to accept payment in consideration of such grants. On that basis, the State was entitled to recover a sum in consideration of granting the privilege of manufacture and supply of liquor, including the actual cost of supervisory staff posted at the licensee's premises. The amount was treated as part of the price or consideration for the privilege and not as an unauthorized levy. The earlier decisions upholding similar establishment charges and supervisory costs supported this conclusion.

Conclusion: The condition requiring payment of supervisory staff cost was valid and not ultra vires, and the High Court's contrary view was unsustainable.

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