Court sets aside penalty order, remands case for fresh consideration, emphasizing natural justice principles.

M/s N.V. Distilleries Ltd. Versus The State of Haryana and others

M/s N.V. Distilleries Ltd. Versus The State of Haryana and others - Tmi Issues Involved:
1. Quashing of the penalty order dated 26.09.2014.
2. Dismissal of the appeal and review application by the Excise and Taxation Commissioner.
3. Adequate opportunity of hearing and principles of natural justice.
4. Interpretation of Section 61(1)(aaa) of the Punjab Excise Act, 1914.
5. Compliance with Rule 5 of the Haryana Imposition and Recovery of Penalty Rules, 2003.
6. Control and responsibility of the Excise Department over distilleries.

Detailed Analysis:

1. Quashing of the Penalty Order Dated 26.09.2014:
The petitioners sought quashing of the penalty order dated 26.09.2014, wherein a penalty of Rs. 27,30,000/- was imposed by the Collector-cum-Deputy Excise & Taxation Commissioner (Excise), Sonepat. The penalty was based on the detection of a consignment of IMFL without a permit or pass, leading to the seizure of 550 cases of liquor. The Collector held the petitioners, along with others, jointly and severally liable and imposed the maximum penalty of Rs. 500 per bottle.

2. Dismissal of the Appeal and Review Application:
The petitioners' appeal and review application were dismissed by the Excise and Taxation Commissioner, Haryana, vide orders dated 30.04.2015 and 26.05.2016, respectively. The petitioners challenged these dismissals in the instant petition.

3. Adequate Opportunity of Hearing and Principles of Natural Justice:
The petitioners contended that they were not afforded adequate opportunity of hearing, resulting in a violation of the principles of natural justice. The request for adjournment by the petitioners' representative was rejected without a valid ground. The court emphasized that an order with penal consequences cannot be passed without affording an opportunity of hearing. It was noted that the first request for adjournment should not have been outrightly rejected, especially when the maximum penalty was imposed.

4. Interpretation of Section 61(1)(aaa) of the Punjab Excise Act, 1914:
Section 61(1)(aaa) stipulates that import, export, transport, or possession of liquor in contravention of the Act invites a penalty of not less than Rs. 50 and not more than Rs. 500 per bottle. The petitioners argued that the penalty could not be imposed unless the liquor was seized from their possession. The court noted that the petitioners' liability needed to be examined in light of the control exercised by the Excise Department over the distillery.

5. Compliance with Rule 5 of the Haryana Imposition and Recovery of Penalty Rules, 2003:
Rule 5 provides that the Collector shall serve notice to the alleged offender to attend the proceedings not later than 7 days. The court interpreted this rule as directory, allowing for more time to be granted in appropriate cases. The court highlighted that denying any further time could lead to arbitrary actions by the authorities and emphasized the need for adherence to the principles of natural justice.

6. Control and Responsibility of the Excise Department Over Distilleries:
The petitioners argued that the distillery's functioning is under the control of the Excise Department, and no product can be removed without authorization. The court noted that the petitioners' defense, including the role of the Excise Department and the absence of irregularities in periodic inspections, needed to be considered by the Excise Authorities after granting adequate opportunity to submit a reply.

Conclusion:
The court allowed the petition, setting aside the impugned orders dated 26.09.2014, 30.04.2015, and 26.05.2016. The case was remanded to the Collector to decide afresh within three months after granting the petitioners an opportunity to file a reply. The court emphasized that nothing observed in the judgment would affect the merits of the case.