2017 (6) TMI 1269 - HC - Central Excise

High Court dismisses challenge to Excise demand notice for liquor shortfall, stresses importance of complete facts

Lakshmi Bar & Restaurant Versus The State of Karnataka and Ors.

The High Court of Karnataka dismissed the Writ Petition filed by a bar and restaurant licensee challenging a demand notice of Rs. 7,73,100 by the Excise ... Principles of natural justice - demand raised without an opportunity of being heard - Short lifting of liquor under Rule 14(2) of the Karnataka Excise (Sale of Indian & Foreign Liquor) Rules, 1968 - Held that:- Before deletion of Sub-rule (2) of Rule 14 of the Karnataka Excise (Sale of Indian & Foreign liquor) Rules, 1968, although the second proviso to the said Rule provided for an opportunity of hearing to the licencee, if he fails to lift the minimum quantity of liquor so fixed per month, which quantity was specified in the said rule itself, before the penalty at the rate of ₹ 100/- for every bulk litre on the quantity short lifted, is imposed and if there are two such monthly defaults, the licence itself was liable to be cancelled and the second proviso to Rule 14 provided that the licencing authority shall give a reasonable opportunity of being heard, before levying the penalty or cancelling the licence. From the facts in the present case, it is not seen anywhere that the petitioner had raised any objection or has given any explanation suitable or otherwise for such short lifting of the liquor from the respondent, Department or its authorized licencee/manufacturer. Even if the principles of natural justice were to be complied with as argued by the learned counsel for the petitioner, the same cannot yield anything in the facts of the present case - the petitioner has presented this Writ Petition with incomplete picture of the facts. This court is not inclined to entertain this petition on the short ground of alleged breach of principles of natural justice and on the contrary, this court is fully satisfied that the case does not merit any relief in the present case - petition dismissed. Issues:1. Alleged short lifting of liquor by the petitioner leading to demand notice by the Excise Department.2. Validity of demand notice and opportunity of hearing for the petitioner.3. Concealment of material facts by the petitioner.4. Application of principles of natural justice in the case.Analysis:1. The petitioner, a bar and restaurant licensee, challenged a demand notice of Rs. 7,73,100 raised by the Excise Department for alleged short lifting of liquor under Rule 14(2) of the Karnataka Excise Rules. The petitioner sought quashing of the demand notices, citing lack of opportunity for a hearing.2. The Excise Department contended that the petitioner did not object to the demand notices and even provided an Undertaking for payment of the penalty for short lifting of liquor for the previous year. The Deputy Commissioner issued an order directing payment based on the Undertaking, which was not challenged in the Writ Petition filed by the petitioner.3. The court noted that the Rule providing for opportunity of hearing before penalty imposition was deleted in 2014. The petitioner failed to raise objections or provide explanations for the short lifting of liquor, and even concealed material facts about the Undertaking and subsequent order by the Deputy Commissioner.4. Emphasizing the importance of presenting complete facts in a Writ Petition, the court held that concealment of material facts can lead to dismissal of the case. Despite arguments about breach of natural justice, the court found no merit in the petitioner's case and dismissed the Writ Petition, refusing to entertain it further.This detailed analysis covers the issues of alleged short lifting of liquor, validity of demand notice, concealment of material facts, and application of principles of natural justice in the judgment delivered by the High Court of Karnataka.