2013 (9) TMI 653 - HC - Indian Laws

Court upholds liability for excise license dues, criticizes petitioner's subletting and benami business

The Court dismissed the writ petition challenging a demand notice for excise license dues under the U.P. Excise Act. The petitioner's involvement in ... Liquor licence - Sub letting of license - Held that:- licence granted under the U.P. Excise Act could not be sub-let on the strength of power of attorney. A liquor licence is given to a person considering his financial status, and subject to good conduct. No one is entitled to get a licence in the name of third person, and thereafter to run the business benami through a power of attorney executed by the licencee. The entire arrangement was illegal - it is admitted that the petitioner, who is also Ex-chairman of Nagar Palika Parishad, was given licencee, for sale of liquor in whole sale in the entire district Saharanpur At the same time, he was also running the business of sale of liquor in retail benami in the name of respondent Nos. 5 and 6, for which entire licence fee, bank guarantee etc had been given/deposited by him. Petitioner had agreed in the compromise, entered between him and respondent Nos. 5 and 6, that any liability in relation to excise licence to any department will be borne by the plaintiff-petitioner in respect of FL-2 licence, he cannot escape from the liability to repay the amount, which was actually deposited by him and refunded to him. It is not his case that the amount refunded by the Excise Department was not received by him. The petitioner himself was running the business benami through respondent Nos. 5 and 6. He has deposited the licence fee, bank guarantee for and on behalf of respondent Nos. 5 and 6, for running the business. As a tracepoint of the amount refunded by the State Government, the petitioner cannot escape from the liability of recovery of levy amount of which the levy has been made valid retrospectively - Decided against assessee. Issues:Challenge against demand notice of excise license dues under U.P. Excise Act for recovery under U.P. Zamindari Abolition & Land Reforms Act 1950.Detailed Analysis:1. The petitioner contested a demand notice for excise license dues under the U.P. Excise Act, sought to quash the recovery citation, and avoid payment. A private arrangement was made to pay dues for others to prevent prosecution. A compromise was reached in a civil suit for refund, specifying the distribution of refunded amounts.2. The State Government amended laws on assessed fees retrospectively, requiring repayment of refunded amounts. The Excise Commissioner directed recovery from individuals, including the petitioner, for dues paid on behalf of others. The petitioner argued against liability for dues of licensees he assisted financially.3. The Court found the petitioner's claims unconvincing. The petitioner's involvement in licensing activities, financial dealings, and agreements with license holders indicated his responsibility for dues. The Court highlighted discrepancies in the petitioner's statements and actions, leading to the dismissal of the writ petition.4. The Court emphasized the illegality of subletting a liquor license through a power of attorney and criticized the petitioner's actions in running a business benami. It noted the petitioner's admission of holding licenses and conducting business through others, indicating his direct involvement in the licensing process and financial transactions.5. The Court concluded that the petitioner, having deposited fees and guarantees on behalf of license holders, could not evade liability for repaying refunded amounts. The petitioner's active role in licensing matters and financial transactions made him accountable for dues, especially after the retrospective validation of levies.6. Ultimately, the Court dismissed the writ petition, holding the petitioner accountable for the excise license dues and rejecting his attempts to avoid repayment based on the complex financial arrangements and agreements involved in the case.