Licence fee liability begins only after excise licence approval, not on mere acceptance of the highest bid.

Under the Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 2004, acceptance of the highest bid does not itself create a licence; the bid remains subject to approval by the Excise Commissioner, and the licence issues only after such approval. Where settlement occurs in the midst of the excise year, Rule 24 was read to make the licence commence from the date of settlement, treated here as the date of Commissioner approval. Until the licence was issued, the State had not parted with its exclusive privilege, so licence fee could not be charged for the earlier period. The demand was therefore held unjustified and unenforceable.

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Issues: Whether licence fee could be demanded for the period between acceptance of the highest bid by the auctioning authority and approval and issuance of the licence by the Excise Commissioner in a case where the settlement was made in the midst of the excise year.

Analysis: Under the Bihar Excise (Settlement of Licences for retail sale of country/spiced country liquor) Rules, 2004, the acceptance of the highest bid by the auctioning authority does not by itself confer a licence. The bid remains subject to approval by the Excise Commissioner, and only after such approval is the licence issued. Rule 24 provides that where a shop or group of shops is settled in the midst of the excise year, the licence commences from the date of settlement, which in the factual setting was taken to mean the date when the Excise Commissioner approved the accepted bid. Until the licence was issued, the State could not be said to have parted with the exclusive privilege in favour of the bidder, and the bidder could not be fastened with liability for licence fee for the earlier period.

Conclusion: The demand for licence fee for the period prior to issuance of the licence was held to be unjustified and unenforceable.

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