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2017 (8) TMI 1479 - HC - VAT and Sales TaxLevy of Penalty under Rule 14 (2) of the Karnataka Excise (Sale of Indian and Foreign Liquor) Rules, 1968 - penalty imposed for the short-lifting of the liquor during the period in question. Whether it’s “omission” or “repeal” with effect from 01.08.2014 divests the Excise Authorities to invoke the said Rule and demand the penalty/damages for short lifting of the liquor from the State Board Corporation for the period when the said Rule-14(2) on the Statute Book, between 01/04/2003 to 01/08/2014? Held that:- The said contention is fallacious and not sustainable. Rule 132-A of the Defence of India Rules, 1962, relating to prosecution was omitted and Rule 10 and 10-A in the Central Excise Rules relating to recovery of excess refund or rebate was omitted - such omission of enactment would also amount to ‘repeal’ and Section 6 of the General Clauses Act would apply and save the action taken under the repealed provision. Levying of penalty/damages under Rule 14(2) of the State Excise Rules, 1968 in question, as contended by Mr.K.P.Kumar himself is that the said Rule is a charging provision and except the said Rule, there was no other provision for imposing the said penalty/damages for short lifting of liquor quantity. If it is a charging provision, as it appears to be, there is no reason to treat the ‘Rule’ 14(2) as anything different from a ‘Section’ or ‘enactment’ or a ‘provision’ covered by the scope of Section 6 of the General Clauses Act, 1897 - In 1897, when India was not independent and no ‘Rules’ under delegated powers to the State Government were framed at that time therefore absence of word ‘Rule’ in Section 6 of the General Clauses Act, 1897 in the context of situation then obtaining should not allow the levy of Penalty/damages under Rule like Rule 14 (2) of present Excise Rules to lapse by holding that Section 6 of the General Clauses Act does not apply to Rules. It is only after the State Re-organization Act, 1956 that States in India started enacting such Rules under their delegated powers under the relevant Acts. Merely because it is a ‘Rule’ enacted by the State Legislature under the delegated powers under Section 71 of the Karnataka State Excise Act, 1965, it does not lose the legislative sanction and sustainability as a charging provision and its omission or repeal cannot deprive the Respondents-Excise Department to invoke and apply this provision by virtue of Section 6 of the General Clauses Act for demanding the penalty/damages for the short lifting of the liquor, for the period during which the said Rule 14 (2) existed on the Statute Book. The same will be clearly saved by virtue of Section 6 of the General Clauses Act, 1897 enacted much prior to independence of India even though the word ‘Rule’ is not separately mentioned in Section 6 of the Act. The contention of petitioner is held to be devoid of merit and the action of the Respondents-Excise Department for demand of such penalty/damages for compensating the loss of revenue caused to the State by such short lifting of liquor quantity cannot be held to be without jurisdiction or illegal. It would be appropriate here to consider the judgment of the Hon’ble Supreme Court in the case of M/s. Guljag Industries Vs. Commercial Tax Officer and others [2007 (8) TMI 344 - SUPREME COURT] wherein the Hon’ble Supreme Court dealing with the case of levy of Penalty from the Consignors or Consignee or even Transporters for not carrying on Declaration Form prescribed under the provisions of Section 78(2) of the Rajasthan Sales Tax Act for regulating the checking of the Transit movement of goods for sale. The premise of Rule 14 (2) for recovering ‘Loss of Revenue” to State caused by short lifting of liquor quantity, is in corollary to ‘Penalty’ recovered under Rule 21 (5) of MMDR (Mine & Mineral Development Regulations), in the case of COMMON CAUSE VERSUS UNION OF INDIA AND ORS. AND PRAFULLA SAMANTRA AND ANR. VERSUS UNION OF INDIA AND ORS [2017 (8) TMI 1446 - SUPREME COURT OF INDIA], relying upon its previous decision in the case of Karnataka Rare Earth case [2004 (1) TMI 686 - SUPREME COURT] held that such compensation to State should be fully recovered even if illegal mining of ore, was done on any land, even if not covered by mining lease or Mining Plan. This judgment is on all fours to the present case. This Court is further of the view that the said fiscal liability in the name of Penalty under Rule 14 (2) of the Excise Rules of 1968 is actually the price or the liquidated damages to be paid by the Excise Licencees or vendors of liquor for the breach of contract on their part for short-lifting of the prescribed quantity of liquor from the State Beverage Corporation. That is why there is no need to go into the question of mens rea or opportunity of hearing or raising an objection in that regard - This Court also does not find any merit in the contention No.III that measure of Penalty under Rule 14 (2) cannot be assailed on different price range for different types of liquor. It is for the Legislature to adopt such measure and no illegality or arbitrariness is seen in such a measure adopted in Rule 14(2) in the present case. This Court is of the view that while upholding the levy, about its mathematical computation and assessment, the petitioners can be given even now an opportunity of hearing. Therefore, the Respondent authorities are directed to pass speaking adjudication orders, in cases where Objections are now filed about the quantum of penalty and damages under Rule 14 (2) of the Excise Rules of 1968, within a period of one month from today - Petition disposed off.
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