TaxTMI 
TaxTMI 
1974 (11) TMI 91
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....rar Excise Act 1915 which became applicable to Madhya Pradesh as the Central Provinces Excise Act, 1915. This will be referred to as the Madhya Pradesh Act. The Kerala Appeals are governed by the Abkari Act (Act No. 1. This will be referred to as the Abkari Act. Prior to 1 April, 1964 licences for sale of foreign liquor in Madhya Pradesh were granted by the excise authorities under the fee per bottle system. In 1964-65 the State decided that licences for foreign liquor would be disposed of by public auction to the highest bidder. The appellants then challenged in the Madhya Pradesh High Court the authority, of the State Government to hold public auction for grant of licences for foreign liquor. The appellants did not succeed because the Act was amended in 1964. The result of the amendment was that whereas formerly the State Government could grant lease only in respect of country liquor, the Amending Act empowered the Government to grant lease in respect of any liquor which meant both foreign and country liquor . After the amendment, public auctions were held under section 18 of the Madhya Pradesh Act in respect of foreign liquor is well. In 1956-66 public auctions were held in res....
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....ari Act deal with manufacture, possession and sale of liquor or intoxicating drug. Manufacture is prohibited except under the provisions of the Act, viz., licence granted by the Commissioner. The establishment and control of distilleries, breweries, warehouse etc. is by grant of a licence. Sections 17 to 23 of the Abkari Act deal with duties taxes and rentals. Section 17 of the Abkari Act speaks of duty on liquor or intoxicating drugs. Section 18A of the Abkari Act confers power on the Government to grant, on such conditions and for such period as the Government may deem fit the exclusive or other privilege (i) of manufacturing or supplying by whole- sale; or (ii) of selling by retail; or (iii) of manufacturing or supplying by wholesale and selling by retail any liquor or intoxicating drugs within any local area on his or their payment to the Government of an amount as rental in consideration of the grant of such privilege. The Act further states that the amount of rental may be settled by auction, negotiation or by any other method as may be determined by the Government, from time to time, and may be collected to the exclusion of, or in addition to, the duty or tax leviable under ....
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....ll liquor by lease. The Government can hold a public auction to grant lease. The State Government accepts payment of a sum in consideration of the grant of any lease. The amount of bid at a public auction represents the consideration for the grant of such right or privilege. The State Legislature is authorised to make a provision for public auction, by reason of power contained in Entry 8 of List II of the Constitution. That Entry empowers the State Government to legislate with regard to intoxicating liquor, that is to. say production, manufacture, possession, transport, purchase and sale of intoxicating liquor. Counsel on behalf of the appellants relied on the decision of this Court in Krishna Kumar Narula etc. v. The State of Jammu and Kashmir and Ors. [1967] 3 S.C.R. 50 as an authority for the proposition that a citizen has a fundamental right to do business to deal in liquor. This Court in Cooverjee B. Bharucha v. The Excise Commissioner and of Chief Commissioner, Ajmer [1954] S.C.R. 873 held that the grant of a lease either by public auction or for a sum is a regulation pertaining to liquor. It was contended on behalf of the citizen in Bharucha's case (supra) that every perso....
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....de which could be carried on by all persons is entrusted to one or more persons to the exclusion of the general public. That is not the case with the business of liquor. This Court in Narula's case (supra) referred to the decision in Bharucha's case (supra) and the concurrence of this Court in Bharucha's case (supra) with Crowley's case (supra) that there is no inherent right in a citizen to sell intoxicating liquor. In Narula's case (supra) this Court read the observations of this Court in Bharucha's case (supra) to have conceded the inherent and fundamental right of a citizen to carry on business in sale of intoxicating liquor. Bharucha's case (supra) in no uncertain terms repelled the citizens contention of inherent right to sell intoxicating liquor. Bharucha's case (supra) is a Constitution Bench decision. Narula's case is also a Constitution Bench decision. Narula's case (supra) cannot be said to have overruled Bharuchas case (supra). There is an earlier decision of this Court in State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals, Shillong [1957] S.C.R. 295 where it is said that no person has any absolute, right to sell liquor. In Kidwai's case (supra....
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....he bidders. Fresh tenders were called for. The State accepted the tender in respect of one shop and rejected the others. The remaining seven shops were sold by private negotiation for substantially higher prices. The respondent whose highest bid was rejected applied to the High Court for a direction to the Government to confirm his bid. Section 22 of the Orissa Excise Act which governed that case stated that "the State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege (e) of manufacturing and supplying wholesale and selling retail, any country liquor or in- toxicating drug within any specified local area". Section 29(2) of the Orissa Excise Act dealt with the payment for grant of exclusive privilege. Section 29(2) of the Act stated that the sum payable shall be-determined by calling tenders or by auction or otherwise. In Hari Naryana's case (supra) this Court held that the right to trade in intoxicating liquor is subject to regulations and restrictions and upheld the public auction of the right or privilege of selling liquor 'as an attribute of collection of State revenue. In the recent decision in Amar Chandra ....
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.... to enforce prohibition laws in respect of liquor. Das, C. J. in State of Bombay v. R. M. D. Chamarbaugwalla [1957] 874 said that gambling could not be regarded as trade or business within the meaning of Article 19 (1) (f) and (g) and Article 301. 'Inherently vicious activities cannot be treated as entitling citizens to do business or trade in such activities. No one can deal in counterfeit coins or currency notes, Das, C. J. held that activities. which are criminal, or dealing in articles or goods which are res extra co commercium could not have been intended to be permitted by Article 19(1)(f) and (g) relating to fundamental rights to trade or business. In our country the history of excise shows that the regulations issued between 1790-1800 prohibited manufacture or sale of liquors without a licence from a Collector.. In 1808 a regulation was introduced in the Madras Presidency which provided that the exclusive privilege of manufacturing and selling arrack should be farmed in each district. in 1820 the law was amended to authorise the treatment of toddy and other fermented liquors in the same way as spirits by allowing Collectors to retain the manufacture and sale under direct m....
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....y, several it fees, vend fees, outstill duties are also levied.Manufacture or sale of liquor is forbidden except under licences which are generally granted by auction to the highest bidders. The manufacture of country spirit is done in Government distilleries or under the direct supervision of the excise staff. All supplies are drawn from Government warehouses which ensures that the liquor is not more than of the prescribed strength. The licensed sellers have to sell the country spirit between fixed hours and at fixed selling rates. As in the case of country spirit, the right of tapping and selling toddy is also auctioned. In addition to the licence, in some States the licensee has to pay a tree tax to Government. Traditionally tobacco, opium and intoxicating liquors have been the subject matter of State monopoly. (See section IV of the Madras Regulation XXV of 1802 relating to permanent settlement of land revenue). Section IV states that the Government having reserved to itself the entire exercise of its discretion in continuing or abolishing, temporarily or permanently, the articles of revenue included, according to the custom and practice of the country, under the several heads....
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....sing out of manufacture and sale of intoxicating liquors is one of the sources of the State Exchequer. One of the principal sources of State revenue is customs and excise. In England sale of intoxicating liquors although perfectly lawful at common law is subject to certain statutory restrictions. These restrictions are primarily of two kinds; those designed for the orderly conduct of the retail trade and those designed to obtain revenue from the trade whether wholesale or retail. Trade in liquor has historically stood on a different footing from other trades. Restrictions which are not permissible with other trades are lawful and reasonable so far as the trade in liquor is concerned. That is why even prohibition of the trade in liquor is not only permissible but is also reasonable. The reasons are public morality, public interest and harmful and dangerous character of the liquor. The State possesses the right of complete control over all aspects of intoxicants, viz., manufacture, collection, sale and consumption. The State has exclusive right to manufacture and sell liquor and to sell the said right in order to raise revenue-. That is the view of this Court in Bharucha's case (supr....