TaxTMI 
TaxTMI 
2019 (9) TMI 1728
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....f 2016, 554 of 2016, 608 of 2016, 1324 of 2017, 1539 of 2017, 1154 of 2017, 1326 of 2017, 1188 of 2017, 1542 of 2017, 1538 of 2017, 1563 of 2017, 2454 of 2017, 1543 of 2017, 1148 of 2017, 2457 of 2017, 1150 of 2017, 1149 of 2017, 1544 of 2017, 1546 of 2017, 1187 of 2018, 1550 of 2018, 425 of 2018, 1186 of 2018, 1319 of 2018, 2804 of 2018, 2567 of 2017, 1323 of 2017, 1187 of 2017, 1545 of 2017, 1541 of 2017, 2568 of 2017, 1152 of 2017, 1540 of 2017, 2459 of 2017, 2566 of 2017, 1537 of 2017, 1818 of 2017, 2564 of 2017, 1536 of 2017, 2458 of 2017, 2563 of 2017, 828 of 2019, 8050 of 2014, 8876 of 2014, 8053 of 2014, 7204 of 2014, 7194 of 2014, 8048 of 2014, 8051 of 2014, 8052 of 2014, 8589 of 2014, 8588 of 2014, 8049 of 2014, 8356 of 2014, 8406 of 2014, 8355 of 2014, 8587 of 2014, 3255 of 2015, 2052 of 2015, 2301 of 2015, 3276 of 2015, 2056 of 2015, 2053 of 2015, 2054 of 2015, 2558 of 2015, 1940 of 2015, 3256 of 2015, 3258 of 2015, 3239 of 2015, 2624 of 2015, 1905 of 2015, 1712 of 2015, 3081 of 2015, 1866 of 2015, 2310 of 2015, 2303 of 2015, 2030 of 2015, 1713 of 2015, 3628 of 2015, 2104 of 2015, 3262 of 2015, 3259 of 2015, 2543 of 2015, 2055 of 2015, 1373 of 2015, 3266 of 2015, 2282 o....
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....nes may be treated as lead cases in so far as wholesalers are concerned and CWP Nos. 2069 and 2745 of 2015 filed respectively by Abhay Prashar and Amit Wine may be treated as the lead cases in so far as retail vends are concerned. What is under challenge 4. What is challenged in the writ petitioners filed by the manufactures/distillers/bottlers is Condition Nos. 10.28(A) and 10.29 of the Excise Policy for 2014-2015, by which an additional fee and a penalty was sought to be levied, if the manufacturers/distillers/bottlers failed (i) to manufacture the quantum of liquor for which they were granted license and (ii) to sell as much quantity of liquor for which they were granted the wholesale license to vend. 5. What is under challenge in the writ petitions filed by the wholesalers, is also the same Condition No. 10.28(A), but with specific focus on Condition No. 10.28(A)(8) of the Excise Policy for 2014-2015. 6. What is challenged by the retailers in these writ petitions is Condition No. 4.3 of the Excise Policy announced in respect of four consecutive years namely, 2013-14, 2014-15, 2015-16 and 2016-17. 7. Therefore, in essence, the challenge by the manufacturers/distil....
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....benchmark of 80% of the Minimum Guaranteed Quota. Similarly, the licensee shall also be liable to pay additional fee @ Rs. 56/- per proof litre on the unlifted quota of IMFS which falls short of 100% of the Minimum Guaranteed Quota of IMFS. The licensee shall also be liable to pay a penalty of Rs. 14/- per proof litre on the unlifted quota of IMFS which falls short of the benchmark of 80% of the Minimum Guaranteed Quota. The Asstt. Excise & Taxation Commissioner/Excise & Taxation Officer I/c of the District shall review the position of lifting of Minimum Guaranteed Quota on Quarterly basis. Lifting position for 1st quarter of the year 2014-15 shall be reviewed latest by 30 July, 2014, for the second quarter, it shall be reviewed latest by 30th October, 2014, for the third quarter latest by 15th January, 2015 and lifting position for the fourth quarter shall be reviewed positively by 10th March, 2015. The AETC I/c of the District shall ensure recovery of the additional fee as well as the amount of penalty on unlifted quota which falls short of the quarterly quota of the vend of such defaulting licensees with the prior approval of the Collector (Excise) of the concerned Zone who shal....
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....and category-wise Minimum Sale limit in terms of proof liters has been prescribed as per details vide Annexures-E & F. Therefore, the afore-mentioned L-1, L-1B and L-1BB wholesale license-holders, whose Annual Sale-limits is less than 40,000 Pls, above 40,000 Pls but less than 80,000 Pls, above 80,000 Pls but less than 1,20,000 Pls and above 1,20,000 Pls during the year 2014-15, their existing Annual Sale-limits are enhanced upto 30%, 20%, 16% and 6% respectively. However, while enhancing the existing minimum Annual Sale-limits of these various licensees upto 30%, 20%, 16% and 6% referred to above as the case may be, the Excise and Taxation Commissioner, Himachal Pradesh reserves the right to rectify the clerical errors of calculations in allocating the Annual sale targets of such wholesale licensees for the year 2014-15 during the financial year as and when it may be necessary to do so. The Annual Benchmarks of sale limits fixed for the year 2014-15 to such afore-mentioned licensees have been assigned keeping in view the fact that the licensees in the higher range of Annual Sale-limits are not allocated lesser Annual Benchmarks of sale in totality as compared to the licensees fall....
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....osited previously on account of additional fee and the penalty with the prior approval of the Collector (Excise) of the concerned Zone. However, the afore-mentioned order of the Collector (Excise) of the Zone concerned shall be subject to the prior approval of the Excise & Taxation Commissioner (H.P.). The Collector (Excise) of the Zone shall further ensure sending of the quarterly reports of the Zone to the Excise & Taxation Commissioner, Himachal Pradesh District-wise and licensee-wise at least before the end of the quarter subsequent to the quarter to which the report relates for the first three quarters and for the last quarter on 31st March of the Financial Year itself. 10.29: Provision regarding Annual Sale Limits of the Manufacturers of Country Liquor and Indian Made Foreign Spirit. Each Manufacturer/Bottler of Country liquor and IMFS within the state including L-1B and L-1BB licensees shall be mandatorily required to manufacture/bottle and ensure sale of Minimum Annual Production Capacity Benchmark of the Unit/Plant for the year 2014-15 which has been determined based on formula of Minimum Capacity created and utilized on pro-rata basis of total quota pres....
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....censees. An additional fee of Rs. 5/- per proof litre and penalty @ Rs. 7/- per proof litre separately in the case of Country liquor manufacturers and an additional fee @ Rs. 28/- per proof litre and penalty @ 14/- per proof litre separately in the case of IMFS manufacturers shall be leviable and imposable on the underproduced/unsold quota of Country liquor or IMFS as the case may be which falls short of the afore-mentioned prescribed Annual quantity/percentage of the Minimum Annual Production Capacity Utilization Limit/sale of each such Distillery with Bottling license/Bottling Plant as indicated against the names of each one of them in Annexures 'D' and 'E' annexed herewith and applicable for the year 2014-15. In case, the defaulting licensee manufacturers and sells his under-produced/unsold quota of any quarter in subsequent quarters or latest by 10th March, 2015 thereby attaining the prescribed under-produced/unsold limit of such Minimum Annual Production Capacity Utilisation Limit/sale-limit, such licensee shall be entitled to set off the amount so deposited previously on account of additional fee and the penalty with prior approval of the Collector (Excise) co....
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.... 40,000 proof litres of IMFS by the L-1 category of First Range of Licensees is mandatory; (ii) that in case the sale of IMFS falls short by the Minimum Quota, the Licensee is liable to pay an additional fee of Rs. 28/- and penalty of Rs. 14/- per proof litre separately on the shortage; (iii) that a licensee who has not made the minimum sale of IMFS, as per the prescribed sale limit for the year 2014-2015 shall not be eligible for renewal of licence for 2015-16; (iv) that each manufacture/bottler of country liquor and IMFS within the State including L.1-BB licensee should mandatorily manufacture/bottle and ensure sale of Minimum L-1 Production Capacity Benchmark of the Unit/Plant; (v) that in case a licensee is guilty of short manufacturing/short selling, he will be liable to pay an additional fee of Rs. 5/- per proof litre with penalty of Rs. 7/- per proof litre, in addition to the licence fee for the entire quota in respect of country liquor; (vi) that in case of failure on the part of the licensee to produce/sell the quota allotted of IMFS he shall pay an addition fee of Rs. 28/- per proof litre and a penalty of Rs. 14/- per proof litre. 13. Thus, what is under challenge in t....
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....(iv) Imported Foreign Spirit (B.I.I) Rs. 220/- per proof litre (v) Imported Foreign Spirit (B.I.O.) Rs. 240/- per proof litre. (vi) Imported Beer (B.I.O) Rs. 35 per bulk litre. (vii) Imported Wine & Cider (B.I.O) Rs. 30/- per bulk liltre. (viii) Indian Made Wine & Cider (Imported through S-1B licenses only) Rs. 28/- per bulk litre. (ix) RTD Beverages (a) Rs. 21/- per bulk litre in the case of alcoholic contents upto 5% (b) Rs. 28/- per bulk litre in the case of alcoholic contents exceeding 5% but not exceeding 8%" 15. Similarly the minimum guaranteed quota of country liquor and the foreign spirit and the annual license fee fixed for the year 2014-2015 were as follows: "4.1 The Minimum Guaranteed Quota (MGQ) has been fixed at 2,00,80,700 proof litre of Country Liquor and 1,72,13,500 proof litre of Foreign Spirit Indian Made Foreign Spirit (IMFS) & imported Foreign Spirit (IFS) both bottled in India (B.I.I.) and bottled in original (B.I.O.) for the State. No quota has been fixed for Beer, Wine, Cider and RTD Beverages. The district-wise allotment of the MGQ for the year 2014-2015 is as under:- Name of District Minimum Guarantee....
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....pugned policy conditions, by the manufacturers, some of whom also hold subsidiary licenses to wholesale vend of liquor, as projected by Mr. K.D. Sood, learned Senior Counsel is on the following grounds: (i) That the levy of additional fee, for the purpose of compensating the State for the loss of revenue in the form of duty of excise, has been repeatedly held by courts to be ultra vires and that therefore, there cannot be any such levy. (ii) That the manufacturers as well as the wholesalers are not entitled as per the statutory prescriptions and the license conditions, to sell liquor in the open market, but they are obliged to sell whatever is manufactured and/or held in stock by them only through the retailers and that too upon the production of passes/permits by the retailers and hence the manufacturers and wholesalers cannot be penalized with the levy of additional fee and penalty for not achieving the target when the achievement of target depends upon the performance of somebody else; (iii) That in any case, no penalty can be levied through the Excise Policy issued year after year, especially when there are special provisions for levy of penalty under....
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....admitting, to be valid. Response of the State 21. In response to the aforesaid contentions, it is argued by Mr. Ajay Vaidya, learned Senior Additional Advocate General- (i) that the minimum guaranteed quota for the manufacturers is fixed every year by the State Government, after the approval of the Cabinet, by taking into consideration, the production/sale for the previous year, the optimum capacity utilization of the Unit etc.; (ii) That the State is the exclusive owner of the privilege to trade in liquor and the citizens do not have any fundamental right to carry on the business to manufacture and sell liquor. (iii) That the Himachal Pradesh Excise Act, 2011 prohibits the manufacture, possession and sale of any intoxicant, except under the authority and subject to the terms and conditions of a license granted by the Financial Commissioner; (iv) That Section 27 of the said Act empowers the Government to grant lease to any person, of the right of manufacturing, supplying, selling and of storing for manufacture or sale, liquor, upon payment of "such sum" in addition to excise duty or countervailing duty and hence the levy under challenge is ....
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....n common ground in their attack to the impugned policy conditions, to a great extent, their right to challenge the impugned policy conditions, vis-a-vis. the obligations cast upon them under the licenses, are placed on different turfs. Therefore, we may have to deal with the cases of these three categories of writ petitioners separately, as the prism through which their rights have to be seen, has different colour variations. 23. That these three categories of persons have different sets of rights and obligations arising under the respective licenses and that therefore, their grounds of challenge to the impugned policy conditions have to be tested on different parameters, can be best understood, if we have a look at (i) the different types of licenses contemplated by the Rules, (ii) the different types of fees stipulated by the Rules and (iii) the different types of obligations cast upon them by the Rules. Therefore, let us now take a look at the statutory provisions before we deal with the cases of each of these three categories of persons. A survey of the Statutory provisions: 24. Until the State of Himachal Pradesh became an independent State, the law relating to import....
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....s own enactment known as Himachal Pradesh Excise Act, 2011 (HP Act 33 of 2012). By Section 82 of H.P. Act 33 of 2012, all the provisions of Punjab Act 1 of 1914, except a few, such as Section 58, got repealed. This is perhaps for the reason that the H.P. Liquor License Rules, 1986 were issued in exercise of the powers conferred by Section 58(1) of the Punjab Act 1 of 1914. In fact, Section 80(1) of H.P. Act 33 of 2012 also confers Rule making powers upon the Statement Government. Sub-Section (2) of Section 80 lists out the matters in respect of which the Government was empowered to make Rules. The list of matters included in Section 80(2), is comprehensive. Clause (d) of Sub-section (2) of Section 80 of the H.P. Act 33 of 2012 is more detailed than Clause (d) of Section 58(2) of the Punjab Act 1 of 1914. What was included in Clause (e) of sub-Section (2) of Section 58 of the Punjab Act 1 of 1914, was included as Clause (i) of sub-Section (2) of Section 80 of the H.P. Act 33 of 1914. Clause (j) of sub-Section (2) of Section 80 of the H.P. Act 33 of 2012 is also in pari materia with Clause (f) of Section 58(2) of the Punjab Act 1 of 1914. 29. Despite sub-Section (2) of Section 80 ....
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.... other provisions contained in Part-C deal only with the issues relating to fixed fees and assessed fees. While the matters relating to fixed fees are dealt with in Rules 27 to 29, under Part-C(i), the provision relating to assessed fee is dealt with, only in Rule 30 under Part-C(ii). The third category of fee indicated in Rule 26 namely "fees fixed for allotment" is actually taken to Part-F of the Rules. 34. For the purpose of easy appreciation, but with an element of approximation (if not mistakes), the different types of licenses contemplated by Part-A of the Rules, the category into which they fall and the nature of the fee chargeable in respect of the same, are presented in a tabulation as follows: Types of licenses Category into which they fall Type of fee payable L.1, L.1-A, L.1-B, L.1-BB, L.1-C & L.13 Wholesale vends Fixed fee alone L.2-A, L.9-A, L.10-BB, L.12-AA & L.14-C Certain types of retail vends Fixed fee alone L.3, L.3-A, L.4, L.4-A, L.5, L.5-A, L.6, L.7, L.8, L.9 & L.12-C Different types of retail vends A combination of fixed fee and assessed fee L.12-A & L.12-B Two different types of retail vends Assessed fee only, bu....
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....of additional fee, for the purpose of compensating the State for the loss of revenue in the form of duty of excise, has been repeatedly held by courts to be ultra vires and that therefore, there cannot be any levy unauthorized by the Act and the statutory rules. Reliance is placed in this regard by the learned Senior Counsel for the petitioners upon the decision of the Supreme Court in B.C. Banerjee vs. State of M.P. (AIR 1971 SC 517). It was held in the said decision that "no tax can be imposed by any by-law or rule or regulation unless the statute under which the subordinate legislation is made specifically authorizes the imposition, even if it is assumed that the power to tax can be delegated to the executive". It was further held in the said decision that the basis of the statutory power cannot be transgressed by the rule making authority and that a rule making authority has no plenary power. 41. The decision in B.C. Banerjee was also cited with approval by two larger Benches, one in State of Madhya Pradesh vs. Firm Cappulal (AIR 1976 SC 633) and another in Excise Commissioner U.P. vs. Ram Kumar (AIR 1976 SC 2237). B.C. Banerjee was followed even in Lilasons Breweries Pvt. L....
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....duty leviable under this Chapter, accept a sum in consideration of the lease of any right under section 27." 27. Grant of leases of manufacture, sale etc. - (1) The State Government may lease to any person, competent to contract, on payment of such sum in addition to excise duty or countervailing duty, on such conditions and for such period, as it may deed fit, the right- (a) of manufacturing or of supplying by wholesale, or of both, or (b) of selling by wholesale or by retail, or (c) of storing for manufacture or sale, any country liquor, foreign liquor, beer, wine spirit within any specified area." 47. Again, Section 28(1) empowers the Financial Commissioner to grant any license, permit or pass upon payment of such fees, if any and subject to such restrictions and on such conditions as the Financial Commissioner may direct. Section 28(1) reads as follows: 28. Fees and other conditions for grant of licenses, permits and passes.-(1) Every license, permit or pass, under this Act, shall be granted- (a) on payment of such fees, if any, (b) in such form and containing such particulars, (c) subject to su....
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....in B.C. Banerjee and another of the type that arose in Panna Lal. Firm Cappulal was found on facts, by the Supreme Court to be of B.C. Banerjee type. Therefore, Firm Cappulal may not be of any assistance to the petitioners. 51. Since B.C. Banerjee was not distinguished in Firm Cappulal but was held only to be of a different type, the question again came up for consideration in Excise Commissioner vs. Ram Kumar, cited supra. But in Ram Kumar, what was sought to be levied was "still head duty" on the quota allotted and a compensation equal to the still head duty, to the extent of shortfall. Thus, Ram Kumar was actually a case of levy of duty and hence the Court distinguished the decision in Panna Lal and held that the issue is settled in B.C. Banerjee. After finding on facts that what was levied was a duty disguised as compensation, the Court held in Ram Kumar that the same was impermissible in law as it represented in reality, a demand for excise duty on the unlifted quantity of liquor. In para 18 of the report, what was opined by the Supreme Court in Ram Kumar was "that the demand made by the State, though disguised as compensation, was in reality a demand for excise duty on the....
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....d on the parameters of performance, failure or breach etc. 57. To escape the wrath of B.C. Banerjee, the respondents have taken a stand in these cases that additional fee and penalty do not partake the character of a tax or duty and that they fall only in the realm of contractual condition. If it is so, an obligation for the breach of a contract cannot be imposed upon a person who cannot be held responsible for the breach of contract, especially when the fulfillment of the contractual conditions depends upon what the State does and what another set of licensees namely the retailers, do. 58. By imposing a restriction upon the manufacturers and wholesalers from selling their product directly in the open market, through statutory prescriptions, the State has tied their hands. To say thereafter that these licensees, whose hands were tied by the State, failed to swim the English Channel, making them liable for certain consequences, would be completely arbitrary. Therefore, the second contention raised by the learned Senior Counsel for the petitioners is well founded. 59. The third contention of the learned Senior Counsel for the petitioners is that no penalty can be levied thro....
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....o different fields. 62. The last contention of Mr. K.D. Sood, learned Senior Counsel for the manufacturers is that the levy of additional fee and penalty upon all the three stake-holders, namely the retailers, wholesalers and the manufacturers will have a cascading effect leading to the collection of three times the revenue and hence it is unreasonable and arbitrary. 63. There can be no quarrel about the fact that a taxing Statute cannot be tested on the ground of reasonableness. But the respondents have taken a positive stand that the additional fee and penalty do not partake the character of a tax or excise duty. Therefore, the contention whether what is sought to be levied is reasonable or not, can be tested. 64. As we have pointed out earlier, the manufacturers/distillers/bottlers as well as the wholesalers are aggrieved only by condition Nos. 10.28A and 10.29 of the Excise Policy for only one year, namely 2014-2015. But insofar as the retailers are concerned, they are aggrieved by a similar condition contained in condition No. 4.3 of the Excise Policy for four consecutive years, namely 2013-2014 to 2016-2017. Therefore, the argument of the learned Senior Counsel for t....
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....ith. Therefore, naturally the quantity that was not sold, was the quantity that never reached the market. (Even assuming that the retailers indulged in selling spurious liquor, the quantity of authenticated liquor sold by them will remain the same) 70. The wholesalers and the manufacturers are made liable to pay Rs. 28/- per proof Ltrs. towards additional fee and Rs. 14/- per proof Ltrs. towards penalty for the unlifted quantity. Therefore, what is collected from the manufacturers and the wholesalers is virtually Rs. 56/- per proof Ltrs. towards additional fee and Rs. 28/- per proof Ltrs. towards penalty (as each of the two will pay Rs. 28/- per proof Ltrs. towards the additional fee and Rs. 14/- per proof Ltrs. towards the penalty). 71. In addition, the retailers are also imposed with an obligation to pay the additional fee on the unlifted quota of IMFS, @ Rs. 56/- per proof Ltrs. Therefore, for the first quarter of 2014-2015, a manufacturer was required to pay an additional fee of Rs. 28/- per proof Ltrs., the wholesaler was required to pay an additional fee of Rs. 28/- per proof Ltrs. and the retailer is required to pay an additional fee of Rs. 56/- per proof Ltrs. This ma....
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..... 5000/- per case, was Rs. 55/- per proof Ltrs.). 75. But for the purpose of calculation we have taken a figure that is most advantageous to the State. If this figure of Rs. 80/- per proof Ltrs. is taken as the duty of excise for IMFS for the year 2014, then the amount that the State would have collected per proof Ltrs. would have been Rs. 299/- per proof Ltrs. (Rs. 219 towards the license fee and Rs. 80/- per proof Ltrs. towards the excise duty). 76. As we have pointed out earlier, the yearly quota allotted for Mohan Meakin was 9,79,352.740 proof Ltrs. The quota for the first quarter was 2,44,838.184 proof Ltrs. If this entire quantity had been lifted, the State would have secured a revenue of little less than about Rs. 7.30 crores (rupees seven crores thirty lacs). (Rs. 2,44,838.184 x Rs. 299). 77. But what was lifted was 85.549.500 proof Ltrs., providing an actual revenue of around Rs. 2.55 crores (rupees two crores fifty five lacs). Therefore, we would have normally expected a short fall of around rupees five crores. 78. But the annual license fee of Rs. 219/- per proof Ltrs. is payable not on the actual quantity of sale but on the minimum guaranteed quota. The peti....
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....(rupees two crores and forty six lacs). 84. In other words, the actual loss of revenue (in the form of duty of excise) for the State, due to the deficit in the production-cum-sale was around Rs. 2.00 crores for the first quarter of 2014-2015 in respect of one manufacturer. But what was sought to be collected by way of additional fee and penalty for compensating this loss of revenue, was Rs. 2.46 crores. Therefore, the last contention of the learned Senior Counsel for the petitioners/manufacturers that the levy of additional fee and penalty upon all the three categories of persons for the very same deficit in sale has a cascading effect, merits acceptance. 85. Thus, two out of four grounds raised by the manufacturers may have to be upheld. Contentions on behalf of the wholesalers: 86. The first ground on which the wholesalers assail the impugned policy conditions is that neither the Act nor the Rules contemplate any levy for not selling the quota allotted, except sub-Rule (22) of Rule 35-A of the Rules and hence, the levy of additional fee and penalty is unauthorized. 87. But the aforesaid contention may not be wholly correct. As we have pointed out earlier, the Himac....
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.... of a confusion in the manner in which the Rules are grouped. As we have pointed out elsewhere, the matters relating to fixed fees are grouped under Part-C(i) in Rules 27 to 29. The provision relating to assessed fees is given in Part-C(ii), in Rule 30. But fee for allotment, renewal, auction etc., spoken to by Rule 26(c) is taken to Part-F. 92. Rule 34 reserves for the Financial Commissioner, the right to grant all or any of the licenses indicated in Rule 1, by auction or by negotiation or by private contract or by any other arrangement. But this power is not available to the Financial Commissioner in so far as the licenses which can be granted on fixed fee or assessed fee or both. This is made clear by Rule 34 itself. Rule 35(1) makes it clear that the licenses for certain types of retail vends of foreign liquor can be granted only by allotment or renewal on fixed fee. Therefore, it appears that what is dealt with by Rule 26(c) is not a third category of fee, though, such an impression is created. 93. Apart from the three categories of fees indicated in Rule 26, there are also other types of fees, indicated in Rule 35. Rule 35(5) speaks about the rates of application fee, r....
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....t neither before nor after the said year, any such levy was made, does not take the petitioners anywhere. In a writ petition, we are only concerned with the question whether a levy is authorized or unauthorized. The fact that the respondents never imposed such a levy in the past, does not make it invalid. Similarly, even if the respondents had levied it for any number of years, the same would not become legal, if it is unauthorized by law. Hence, the second ground of attack has to fail. 97. The third ground of attack by the wholesalers is that they are not permitted by the Statute to sell the available stock in the open market and that they are supposed to sell the liquor only through the retails upon production of passes and permits and that therefore, they cannot be penalized for any failure on the part of the retailers to lift the guaranteed quota. This contention of the wholesalers is similar to one of the contentions of the manufacturers. The contention of the manufacturers has been upheld in this regard. Therefore, on the same logic, the third ground of attack made by the wholesalers has to be upheld. Contentions on behalf of retailers: 98. The first contention of th....
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....le 35-A(22) is ultravires the Act. In fact the argument that the levy of additional fee and penalty are unauthorised by law goes contrary to the challenge to rule 35A(22). This is why, in the course of hearing, the learned Counsel gave up the challenge to the rule. As against the rigours of the impugned policy conditions, Rule 35A(22) is less harsh. Therefore, the challenge to the same was given up. Hence the contention of the retailers that the levy is unauthorized by law, is unsustainable. 101. The second contention advanced on behalf of the retailers is that due to the levy of additional fee and penalty, persons who sell less, end up paying more and hence the policy is arbitrary. 102. But once it is admitted that the levy is both authorized by the Rules and by the terms and conditions of contract, the petitioners cannot challenge the levy on the ground that it imposes a burden which is onerous. Winners and losers have to pay different prices and they cannot weigh the efforts taken, in terms of the return. 103. The third contention advanced on behalf of the retailers is that the levy of additional fee is in the nature of a penalty, as it is imposed for the breach of lice....
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....o. 4.3 for the year 2014-15 reads as follows: "The Assistant Excise and Taxation Commissioner/Excise and Taxation Officer I/C of the District shall review the position of lifting of minimum guaranteed quota on quarterly basis. Lifting position for the first quarter of the year 2014-15 shall be reviewed latest by 30th July, 2014, for the second quarter, it shall be reviewed latest by 30th October, 2014, for the third quarter latest by 15th January, 2015 and lifting position for the fourth quarter shall be reviewed positively by 10th March, 2015........... In case the defaulting licensee lifts his unlifted quota of any quarter in subsequent quarters or latest by 10th March, 2015 by attaining 100% benchmark of annual minimum guaranteed quota for the purpose of additional fee and 80% benchmark of the annual minimum guaranteed quota for the purpose of penalty, such a licensee shall be entitled to set off the amount so deposited previously with the prior approval of the Collector (Excise) of the zone concerned." 109. It appears from the extracted portion of condition No. 4.3 that what is to be taken into account for ascertaining the achievement of target, appears to be the qu....
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....even by issuing administrative instructions, if no Rule had been framed. He places reliance in this regard, upon the decision of the Supreme Court in Surinder Singh vs. Central Government (1986) 4 SCC 667. It was held in paragraph 6 of the said decision as follows: "Where a Statute confers powers on an Authority to do certain acts or exercise power in respect of certain matters, subject to Rules, the exercise of power conferred by the Statute does not depend on the existence of Rules unless the Statute expressly provides for the same. In other words, framing of the Rules is not a condition precedent to the exercise of the power expressly or unconditionally conferred by the Statute. The expression "subject to Rules" only means, in accordance with the Rules, if any. If Rules are framed, the powers so conferred on Authority could be exercised in accordance with these Rules. But if no Rules are framed, there is no void and the Authority is not precluded from exercising the power conferred by the Statute." 113. The decision in Surinder Singh was also followed in Orissa State (Prevention & Control of Pollution) Board vs. Orient Paper Mills, (2003) 10 SCC 421. It was held ther....
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.... any purposes. Insofar as the trade of manufacture and sale of liquor is concerned, the State has the exclusive privilege and citizens do not have any fundamental right to carry on the business of manufacture and sale of liquor. The Himachal Pradesh Excise Act, 2011 also prohibits the manufacture, possession and the sale of any intoxicant except under the authority and subject to the terms and conditions of a license granted by the Financial Commissioner. The licenses issued are in the realm of a contract and hence it is contended by the learned Senior Additional Advocate General that it was up to the licensees to enter into a contract or not. The licenses are renewed according the learned Senior Additional Advocate General, year after year and hence if the terms and conditions of the contract are not acceptable, it was always open to the licensees to walk out. No one, according to the learned Senior Additional Advocate General, compelled the licensees to enter into a contract. Having entered into a contract it is not open to them to challenge one of the conditions of contract. 119. In other words, the contention of the learned Senior Additional Advocate General is that it was u....
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.... 1 SCC 29], the Court explained that the trade in liquor has always stood on a different footing from other trades. It was also clarified that the State has the exclusive right or privilege of manufacture and sale of intoxicating liquor and that therefore, the consideration charged for the grant of such privilege, is neither a tax nor excise duty. 125. After citing with approval, the decision in Nashirwar, a Constitution Bench of the Supreme Court held in Har Shankar vs. Deputy Excise and Taxation Commissioner [(1975) 1 SCC 737] that the power of the Government to charge a price for parting with its rights and not the mode of fixing that price, that constitutes the essence of the matter. In paragraph 56 of the said decision, the Constitution Bench drew a distinction between a tax and a fee and indicated that the fixed fee charged to the vendors of foreign liquor need not bear any quid pro quo to the services rendered to the licensees. The Constitution Bench also traced the power of the Government to enter into contracts in this regard, to Article 298. To this extent, the learned Senior Additional Advocate General is right that the issue lies in the realm of contract. But beyond ....
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....r cannot produce the results, in these cases. 131. The reliance placed by the learned Senior Additional Advocate General on the decision of the Supreme Court in Rajendra Singh vs. State of Madhya Pradesh [(1996) 5 SCC 460] is also faulty for the very same reason. As seen from paragraph 3 of the said decision, the petitioner therein failed to pay even the bid amount and committed default. Cases where there is default in payment of the bid amount stand on a different footing from cases where the bid amount is paid in full, but an additional fee levied for failure to sell a fixed quantity, comes under challenge. 132. Placing strong reliance upon the decision of another Constitution bench in State of Punjab vs. Devans Modern Breweries Ltd. [(2004) 11 SCC 26], it was contended by the learned Senior Additional Advocate General that once it is accepted that what is sought to be levied is part of the privilege price, then the licensees had an option to opt out of the business, in case such levies were considered by them to be detrimental to their interests. Our specific attention is drawn to the last line of paragraph 103 of the report in the said decision. Drawing our attention to p....
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....session, transport, purchase and sale of intoxicating liquors, Entry 51 relates to duties of excise on alcoholic liquors manufactured or produced in the State. This contention of the learned Senior Additional Advocate General is intended to drive home the point that the State has the exclusive privilege to deal in liquor. 138. We have no quarrel with the above proposition. Right from Nashirwar and Har Shankar up to the latest decision in Devans, the Supreme Court has again and again confirmed this position. 139. It is next contended by Mr. Ajay Vaidya, learned Senior Additional Advocate General that condition No. 1.1 of the Policy Announcements for the year 2014-15 made it clear that liquor licenses are granted, subject not only to the provisions contained in the Act and the Rules, but also subject to the licensee fulfilling any other obligation as imposed by the orders of the Excise and Taxation Commissioner. Even in the distillery licenses issued in Form D-2, a condition is incorporated that the licensee should fulfill all the directions of the Excise and Taxation Commissioner. Therefore, it is contended that even the terms and conditions of contract recognize the power of ....
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.... they fetched a lesser amount giving rise to a claim for payment of the differential amount in terms of the contract. When this demand was challenged and the matter landed up in Supreme Court, the Supreme Court observed that several considerations indicated in the decision should be kept in mind while examining complaints of violation of statutory Rules. 144. But we have to keep in mind, a fundamental difference between cases where a party to a contract attempts to wriggle out of the contract on the ground of violation of the procedure prescribed by law, and cases where the conditions of contract are challenged as being violative of statutory prescription. In the case on hand, at least the retailers pitch their claim on the ground that the impugned policy conditions run contrary to the statutory Rules. This is an issue not covered by the decision in Rajendra Singh. Conclusion: 145. We made, in the course of hearing, four pointed queries to the learned Senior Additional Advocate General. After getting instructions from the officials of the respondents, the learned Senior Additional Advocate General submitted the response of the Department to those queries. The queries made ....
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....guaranteed quota; (ii) what actually is the minimum guaranteed quota in a particular year; and (iii) what are the consequences of failure to lift the minimum guaranteed quota. 148. Rule 35-A(22) occupies the field in respect of issues (i) and (iii). It leaves issue (ii) alone to be determined by the executive, year after year, depending upon the average annual consumption in the State, district-wise. Therefore, what is left unoccupied by the statutory Rules, where the executive can have a play in the joints, is the fixation of minimum guaranteed quota every year. Since the other two issues fall in the occupied field, the respondents cannot issue Annual Policy Announcements, without amending the Rules. 149. Just as a Statute cannot override the Constitution and just as a Rule cannot override a Statute, an executive instruction cannot override a Rule. Fixing a rate of additional fee and a rate of penalty, by ignoring the rate of additional fee stipulated in Rule 35-A(22), would tantamount to executive instructions overriding the statutory Rules. Therefore, condition No. 4.3 of the Excise Policy announced in respect of the years 2013-14, 2014-15, 2015-16 and 2016-17, is ultra vi....