TaxTMI 
TaxTMI 
TaxTMI 
1980 (4) TMI 300
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....ch were being brought into force. The amended rules issued by the Excise and Taxation Commissioner (Financial Commissioner) were published in the Government Gazette dated March 31, 1967 and came into effect on April 1, 1967. In the auction held on March 27, 1967 for the retail vend known as "Biswan Meel", Sonepat, respondents offered the highest bid for a quota of 62,100 proof litres for which they became liable, under condition 14(iii) of the auction, to pay an amount calculated at the rate of Rs. 17,60 per litre, that is to say, Rs. 10,92,960.00. On the bid being knocked in their favour, respondents deposited a sum of Rs. 45,527.50, being 1/24th of the total amount payable by them, by way of security for the due performance of the terms of the auction, as required by condition No. 15(1) of the auction and Rule 36(22-A) of the Punjab Liquor Licence Rules, 1956 as amended. They started operating the vend from April 1, 1967. The successful bidder who is granted licence for retail sale of country liquor is required by condition No. 15(ii) of the auction read with Rule 36(23)(2), to pay the licence fee in 22 equal instalments, each instalment being payable before the 10th and 25th o....
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....enue. On July 18, respondents filed the present Writ Petition in the High Court challenging the legality of the aforesaid notice. The High Court allowed the Writ Petition and quashed the order cancelling the respondents' licence and calling upon them to pay the difference between the amount payable by them under their bid and the amount realised in the reauction of the vend. It has given to the appellants a certificate to appeal to this Court under Article 133(1)(a) of the Constitution since the subject matter in dispute was of the value of more than Rs. 20,000 at the time when the Writ Petition was filed, as also on the date of the proposed appeal. It is no longer in dispute that the auction at which the respondents' bid was accepted is governed by the Punjab Liquor Licence Rules, 1956 as amended by the notification dated March 31, 1967 issued by the Excise and Taxation Commissioner, Haryana, which came into force on April 1, 1967. The amended rules, in so for as they are relevant for our purpose, read thus: 36. (1) Subject to such changes as the Financial Commissioner may make each year before the annual auctions the Collector shall, on the basis of the probable sales during the....
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.... or by private contract in accordance with the procedure laid down in this rule and any deficiency in the licence fee and all expenses of such resale or attempted resale shall be recoverable from the defaulting licensee in the manner laid down in section 60 of the Punjab Excise Act, 1914........ The High Court has summarised correctly the position emerging out of these rules in these words: "The auction is on the basis of the quota that has to be lifted for each particular shop. In order to convert it in terms of money, each proof litre bid is multiplied by Rs. 17.60 and that is how, the fee for a particular shop is fixed. The licensee is required to deposit one-twenty-fourth of the amount so arrived at as security. He is then to lift the quota specified for each month in the Rules and if he fails to do so, the amount shortlifted in terms of the licence-fee for that month is deducted from his security amount and he is required to make good the deficiency in the security. He may not sell even a litre of liquor; but whatever quota of liquor he has bid for, the money value of that quota by multiplying it by Rs. 17.60 per ....
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....instant case follows Bhajan Lal; the judgment under appeal must therefore be upheld. But after the decision of the High Court in Bhajan Lal (supra) was affirmed by this Court on August 21, 1972, the legal position has been further examined by a Constitution Bench of this Court in Har Shankar & Ors. v. The Dy. Excise & Taxation Commissioner & Ors. The learned Solicitor General places strong reliance on that decision and contends that the judgment of the High Court must, in the light of that decision, be over-ruled. We must proceed to consider the decision in Har Shankar straightaway. Har Shankar was a case from Punjab and though the instant case is from Haryana, the liquor auctions in both the cases are governed by the Punjab Excise Act, 1 of 1914, and the Punjab Liquor Licence Rules, 1956, as amended from time to time. Har Shankar's case has an interesting relationship with the present proceedings because it was as a result of the decision of the Punjab and Haryana High Court in the instant case, which was rendered on March 12, 1968 that the Punjab Liquor Licence Rules were further amended on March 22 and the auction impugned in Har Shankar was held on March 23, 1968. The liabilit....
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....e bids involved. The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Government. The Government's acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them. The successful bidders were then granted licences evidencing the terms of contract between them and the Government, under which they became entitled to sell liquor. The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit. Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of trading transactions. Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through th....
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.... filed by the respondents has to be upheld. We hold accordingly that the High Court was in error in entertaining the writ petitions for the purpose of examining whether the respondents could avoid their contractual liability by challenging the Rules under which the bids offered by them were accepted and under which they became entitled to conduct their business. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so; and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business. Learned counsel for the respondents has called our attention to the distinction, which this Court drew in Har Shankar, (supra) between the Rules which were impugned in Har Shankar on one hand, and those which were impugned in Bhajan Lal, (supra) and in the instant case on the other. There is no doubt that such a distinction exists. In fact, the judgment of the Punjab and Haryana High Court which is impugned before us was specifically referred to at page 282 of the Report in Har Shankar but was distinguished on the ground that the rules in the two sets of cases were different. As we have a....
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..... The High Court has recorded in its judgment a concession said to have been made by the learned Advocate General on behalf of the State of Haryana that "Rs. 17.60 is the still-head duty per proof litre". In the application dated May 2, 1968 filed by the State Government in the High Court for certificate to appeal to this Court, it was stated that in the interest of justice it was necessary that the points involved in the writ petition be decided by the Supreme Court since they affected "lacs of rupees as excise duty". This makes it plausible that the concession was made. But considering the tenor of the arguments advanced on behalf of the State Government in the High Court, it does not appear likely that any concession was made by the Advocate General regarding the nature of the charge. It is disputed before us that the Advocate General made any such concession and indeed even in the Memorandum of Appeal which was filed in this Court, it was stated specifically that the High Court was in error in saying that the Advocate General had made the particular concession and that, as a matter of fact, "it was vehemently argued by the Advocate General that the auction was only in terms of....
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.... imposed on liquor not lifted or purchased by them. In Panna Lal v. State of Rajasthan it was held by this Court that the licence fee stipulated to be paid by the licensees was the price or consideration or rental which the Government charged them for parting with its privilege and that it was a normal incident of trading or business transaction. It is true that the Court also said that no excise duty could be collected on undrawn liquor but it held that while enforcing the payment of the guaranteed sum or the stipulated sum mentioned in the licences, the Government was not seeking to levy or recover excise duty on undrawn liquor. In the instant case too, what the Government is trying to recover from the respondents is in essence the price of the privilege with which it has parted in their favour and not excise duty on undrawn liquor. Strong reliance was placed by the respondents on the decisions of this Court in Bimal Chandra Banerjee v. State of Madhya Pradesh, State of Madhya Pradesh v. Firm Gappulal etc. and Excise Commissioner, U.P., Allahabad v. Ram Kumar in support of their contention that what they are called upon to pay by the Government is excise duty. In Bimal Chandra ....
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....naged to have his bid accepted. These irregularities it is contended, resulted in the startling consequence that whereas in the auction held on March 27, 1967 the highest bid, namely, of the respondents was for a quota of 62,100 litres equivalent to Rs. 10,92,960.00. in the reauction held on May 23, 1967 the highest bid was only for a quota of 15,000 proof litres equivalent to Rs. 2,46,400.00. In the counter-affidavit dated August 16, 1967 filed by Shri Pritam Singh, Deputy Excise & Taxation Commissioner, the allegations made in paragraph 14 of the writ petition are denied by saying that the reauction held on May 23, 1967 "was duly published in accordance with rules". The High Court has rejected the contention of the respondents in this behalf. But it seems to us that its judgment on this aspect of the matter suffers, with respect, from a misunderstanding of the grievance of the respondents. Their main grievance that due publicity was not given to the reauction, as a result of which proper bids were not received, has been overlooked by the High Court and it merely dealt with the question whether the respondents themselves had notice of the reauction and whether the date of the re....