Interim relief in liquor licence fee disputes must balance revenue protection with the licensee's writ challenge.

In a challenge to recovery of liquor licence fee under the State excise regime, the Supreme Court noted that trade in liquor is a State-conferred privilege and that Article 47 supports strong regulatory control, including towards prohibition. It further stated that interim relief in fiscal matters must protect both parties and that an unconditional stay based only on an undertaking can expose the State to unrecoverable revenue loss if the writ petition fails. The Court therefore treated the balance of convenience as central and required a modified interim arrangement involving payment of half the licence fee with an undertaking for the balance, while recovery remained in abeyance pending final disposal.

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Issues: Whether the High Court was justified in granting an unconditional interim stay of recovery of the licence fee demanded from a liquor licensee, and what interim arrangement should govern the pending writ petition.

Analysis: The challenge concerned recovery of licence fee payable under the State excise regime for transport and use of rectified spirit and extra neutral alcohol in the manufacture of IMFL. The Court noted that the respondent did not manufacture rectified spirit itself and that the factual setting was distinguishable from the earlier case relied on, but it also emphasized that trade in liquor is only a State-conferred privilege and that Article 47 casts a constitutional duty to move towards prohibition. In revenue matters, interim relief must protect both sides. A complete stay on the basis of a bare undertaking would expose the State to substantial unrecoverable revenue loss if the writ petition ultimately failed.

Conclusion: The unconditional stay granted by the High Court was unsustainable. The Court directed a modified interim arrangement requiring payment of 50% of the licence fee and an undertaking for the balance, with recovery of the impugned fee kept in abeyance pending final disposal of the writ petition.

Final Conclusion: The appeal succeeded, the High Court's interim order was set aside, and interim relief was moulded so as to balance the State's revenue interest with the respondent's challenge to the levy.

Ratio Decidendi: In matters involving fiscal demands from liquor licensees, interim relief must be moulded on a balance of convenience that protects the State's revenue interest, and an unconditional stay based only on an undertaking is impermissible where the levy is seriously disputed.

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