Proportionate licence fee applies when court restraints or external factors prevent full-year use of an FL-3 licence.

Rule 14 of the Foreign Liquor Rules is stated to require full annual fee when an FL-3 licence is granted during a financial year, but that principle does not extend to situations where the licensee cannot use the licence for the full period because of court orders or other extraneous factors beyond its control. Where interim restraint or similar circumstances make the licence effectively available only for a truncated period, the fee burden is confined to actual availability. The same approach applies where renewal is obtained only for the tail end of the year and the licensee could not realistically decline renewal without affecting future entitlement. Excess fee is therefore refundable on a proportionate basis.

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Issues: Whether a licensee granted an FL-3 licence for only a part of the financial year, or prevented from utilising the licence for the full year because of court orders or other extraneous factors beyond its control, is liable to pay the full annual fee under Rule 14 of the Foreign Liquor Rules or only proportionate licence fee.

Analysis: Rule 14 requires payment of the full annual fee where a licence is granted in the course of a financial year, but that rule does not govern cases where the licensee is unable to use the licence for the full period for reasons not attributable to it. The principle that no person should suffer prejudice because of an act of court applies where interim orders or other judicial restraints prevent utilisation of the licence. Where the licence is effectively available only for a truncated period because of circumstances extraneous to the licensee, the fee burden must be confined to the period of actual availability. The same principle applies where renewal is obtained only for the tail end of the relevant year and the licensee could not have realistically declined the licence without prejudicing its future entitlement.

Conclusion: The licensee is entitled to pay only proportionate licence fee for the period during which the licence could actually be used, and refund of excess fee was warranted. The appeal was therefore allowed in favour of the assessee.

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