GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 603 - PUNJAB AND HARYANA HIGH COURT

2016 (6) TMI 603 - PUNJAB AND HARYANA HIGH COURT - TMI - Liquor licences - power/authority to add, delete or cancel any kind of category of licence in the Excise policy without amending the relevant Acts and the Rules where there is a chart of liquor licences - Held that:- (i) The respondent is empowered to incorporate sub clause (ii) of clause 2.14 in the Excise Policy 2016-17 but the same is held to be invalid and inoperative to the extent it does not prescribe the manner and the method of its .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

after taking corrective measures and inviting fresh applications/offers, in case no fresh offer or application comes forth, the allotments, if any, already made shall continue for the rest of the period. - CWP No.5593 of 2016 (O&M) - Dated:- 9-6-2016 - MR. AJAY KUMAR MITTAL AND MRS. RAJ RAHUL GARG, JJ. For The Petitoner : Mr. Mohan Jain, Sr. Advocate with Mr. Vikram Jain, Mr. Arastu Chopra, Mr. Fateh Saini, Advocates, Mr. Ashish Aggarwal, Sr. Advocate with Ms. Ritu Pathak, Advocate, Mr. Sandeep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

created/added Clause 2.14 of L-1A licence in the Excise Policy dated 13.3.2016 for the year 2016-17, Annexure P.1 being arbitrary, illegal and against the provisions of the Punjab Excise Act, 1914 (in short, the Act ) and the Punjab Liquor Licence Rules, 1956 (for brevity, the Rules ) as Excise department has no power/authority to add, delete or cancel any kind of category of licence in the Excise policy without amending the relevant Acts and the Rules where there is a chart of liquor licences. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2016. The petitioner is engaged in the business of liquor trade for the past so many years in the State of Punjab. In the month of March 2016, the State of Punjab announced its Excise policy for the year 2016-17 under the Act and the Rules. In the previous excise policy for the last year, there were different classes of licences mentioned in the Rules. The controversy arose when the State Government announced its excise policy for the year 2016-17 in which excise department has added a new dime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unit. ii) Any manufacturing company cannot issue the authority/consent letter to more than one person/company/firm/organization. iii) The manufacturing company will give this consent letter to that person/company/firm/organization who is at Arms Length Distance from the manufacturing company provided there is no promoter, director, partner in the manufacturing company or there is no holding, subsidiary, closely held company, fully/partially owned/financed/managed firm/company. iv) L-1A licensee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

there was procedure in the excise policy that the person who was licensee of L-1 wholesale licence shall take the liquor directly from the manufacturing company. After adding L-1A licence, it has been specified that a person who is holder of L-1 licence will now have to take the liquor for sale from the L- 1A licensee i.e. newly created category of licence in the excise policy for the year 2016-17. It has been further claimed that the new licence has been created to monopolize the liquor trade a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Act and the Rules. Further, it is also not specified who is the competent authority to grant the L-1A licence and who is responsible to legally monitor or scrutinize the application for grant of L- 1A licence. No criteria has been prescribed for the manufacturer to give letter of consent if more than one person shows interest for its L-1A licence. The projected number of IMFL L-1A licensees in the State of Punjab is fixed at three and there will be just two L-1A liquor licence for Beer in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en filed by Additional Excise and Taxation Commissioner, Punjab for and on behalf of respondents No.1 to 3, wherein it has been inter alia stated that L-1A licence is in existence since the year 2011 and is part of the 1956 rules. The only amendment which has been done for the year 2016-17 is that earlier L-1 licencee could purchase the liquor from manufacturer also but it was matter of practice that L-1 licencee used to purchase liquor from L-1A licensee. This practice has been made as a rule n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the State Government has power to frame rules to regulate the liquor business. Thus, the policy in question is in consonance with the Act and the Rules. On these premises, prayer for dismissal of the writ petition has been made. 5. A short affidavit by Additional Excise and Taxation Commissioner, Punjab dated 5.4.2016 has also been filed justifying the addition of L-1A licence in the excise policy for the year 2016-17. 6. We have heard learned counsel for the parties. 7. The controversy in thes .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and does not suffer from the vice of arbitrariness? 8. The marathon submissions made with vehemence by learned counsel for both the parties requires issue (c) to be sub-categorized as under:- (i) Whether the action of the respondents in creating Licence L-1A category in the Excise Policy for the year 2016-17 is legal and valid as the policy was issued on 13.3.2016 whereas Punjab Liquor Excise Rules, 1956 were amended incorporating Licence 1-A in modified form on 23.3.2016? ii) Whether the sub c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SCR 295, Nagendra Nath Bora and another vs. The Commissioner of Hills Division and Appeals, Assam and others, (1958) 1 SCR 1240 and Amar Chandra Chakraborty vs. Collector of Excise, Government of Tripura and others, (1973) 1 SCR 533, emphasized that the trades which were injurious to health and welfare of the public could be restricted by the State and that elimination and exclusion from the business was inherent in the nature of liquor business as it was treated as a class by themselves by all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er:- 58. In our opinion, the true position governing dealings in intoxicants is as stated and reflected in the Constitution Bench decisions of this Court in Balsara's case, Cooveriee's case, Kidwai's case, Nagendra Nath's case, Amar Chakraborty's case and the R.M.D.C. case, as interpreted in Harinarayan Jaiswal's case and Nashirwar's case, There is no fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubject to governmental control. (page 538). This power of control is' an incident of the society's right to self-protection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime. (pp. 539, 540, 541). 11. Subsequently, another Constitution Bench in Khoday Distilleries Limited and others vs. State of Karnataka and others, (1995) 1 SCC 574 delving into the issue, whether the citizen has a fundamen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ong with the said qualifications. Even the rights guaranteed under the Constitutions of the other civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are made explicit by clauses (2) to (6) of Article 19 of our Constitution. (b) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently viciou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

article which is res extra commerce being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited. (d) Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hen it is used and consumed for medicinal purposes. (e) For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19(6) or even otherwise. (f) For the same reason, again, the State can impose limitations and restrictions on the trade or business in potable liqu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

licences to do trade or business in the same, to others. (g) When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business. (h) The State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method ado .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fact that the State levies taxes or fees on the production, sale and income derived from potable liquor whether the production, sale or income is legitimate or illegitimate, does not make the State a party to the said activities. The power of the State to raise revenue by levying taxes and fees should not be confused with the power of the State to prohibit or regulate the trade or business in question. The State exercises its two different powers on such occasions. Hence the mere fact that the S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

general public. (l) Likewise, the State cannot prohibit trade or business in industrial alcohol which is not used as a beverage but used legitimately for industrial purposes. The State, however, can place reasonable restrictions on the said trade or business in the interests of the general public under Article 19(6) of the Constitution. (m) The restrictions placed on the trade or business in industrial alcohol or in medicinal and toilet preparations containing liquor or alcohol may also be for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ia of eligibility for grant of licence in Form L-1, whether it was violative of Articles 14, 16 and 19(1)(g) of the Constitution of India. Considering the law on the issue, it was again expressed that there is no fundamental right to trade in intoxicants like liquor and the plea of the petitioner therein to the contrary was emphatically repelled with the following observations:- "The contention that a citizen of this country has a fundamental right to trade in intoxicating liquors refuses t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

commercium (outside commerce).Article 47 of the Constitution, it pointed out, requires the State to endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and all drugs which are injurious to health. For the same reason, the Bench held, the State can treat a monopoly either in itself or in an agency created by it for the manufacture, possession, sale and distribution of liquor as a beverage. The holding is emphatic and unambiguous. Yet an arg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

liquor is a fundamental right under Article 19(l)(g). If it were not so, asked the learned counsel, reference to Article 19(6) has no meaning. We do not think that any such argument can be built upon the said observations. In clause (e), the Bench held, a monopoly in the State or its agency can be created "under Article 19(6) or even otherwise". Similarly, in clause (f), while speaking of imposition of restrictions and limitations on this business, it held that they can be imposed &quo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

view of this settled position of law, any argument impugning the policy decision of the State Government, as reflected in the impugned notification, based upon Article 19(l)(g) is totally out of place and merits outright rejection and we have no hesitation in doing so most emphatically. 13. Further, this issue has been subject matter of discussion and consideration in numerous other pronouncements of different courts and the view expressed therein has been repetition and in consonance with the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in business of liquor, the Full bench had elaborately considered it and expressed as under:- 25. The Constitution Bench of the Supreme Court in Har Shankar and Others etc. v. The Deputy Excise and Taxation Commissioner and others, etc., AIR 1975 SC 1121 while dealing with right to deal in the business of intoxicants approved the ratio of earlier decisions, namely, decision of the Constitution Bench in the State of Bombay vs. F.N. Balsara, AIR 1951 SC 318 and Cooverjee B. Bharucha v. Excise Commr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to do the business or deal in intoxicants. 26. Another constitution Bench of the Supreme Court in Khoday Distilleries Ltd. And Others v. State of Karnataka and Others, (1995)1 SCC 574 after taking note of all previous decisions on the nature of right to deal in business of liquor summarized the law on the subject as follows: "60. We may now summarise the law on the subject as culled from the aforesaid decisions. (a) The rights protected by Article 19(1) are not absolute but qualified. The q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any occupation, trade or business does not extend to practicing a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilized societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, (outside commerce). There cannot be busin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Constitution of India are not absolute but qualified and are circumscribed by conditions contained in clauses (2) to (6) of Article 19 thereof. In other words, the fundamental rights guaranteed under Article 19(1)(a) to (g) of the Constitution of India have certain restrictions as enumerated in clauses (2) to (6) of the said Article 19. Further, the State is empowered to restrict or prohibit trades which are injurious to health and welfare of the public. Thus, citizens cannot claim fundament .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has no fundamental right to carry on trade or business of liquor but where the State decides to grant the right or privilege to carry on this trade, in such a situation, the State cannot escape the rigour of Article 14. The relevant observations are quoted as under:- "The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants, its manufacture, storage, export, import, sale and possession. No one can claim as against the State .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the contention of the State Government and Respondents 5 to 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. The State cannot ride roughshod over the requirement of that article." In In Khoday Distilleries Ltd. and Others v. State of Karnataka and Others [(1995) 1 SCC 574], a Constitution Bench of this Court upon referring to a large number of decisions summed up its findings in the following terms .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of liquor. After elaborately discussing this issue and considering relevant decisions on the subject, it was held that every action of the State must be fully transparent on the public records satisfying the tests of Article 14 of the Constitution of India. If there is no transparency and fairness in the action of the State, the same cannot be sustained in the eye of law and such an action is clearly violative of Article 14 of the Constitution of India. The relevant observations read thus:- 16. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

illegal or mala fide. In a given case, the State could review its policy in public interest. It is well settled that if decision making process is vitiated by arbitrariness, unfairness, illegality or irrationality, this court could strike down the same as well as consequential actions, in exercise of its power of judicial review. 17. In Har Shankar and others etc. v. The Deputy Excise and Taxation Commissioner and others etc, AIR 1975 SC 1121, it was observed:- "53.In our opinion, the true .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39;s case (1972) 3 SCR 784 = (AIR 1972 SC 1816) and Nashirwar's case (AIR 1975 SC 360). There is no fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to prohibit absolutely every form of activity in relation to intoxicants its manufacture, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the state and indeed without such vesting these can be no effective regulation of various f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er has the power to prohibit absolutely every form of activity in relation to intoxicants its manufacturer, storage, export, import, sale and possession. No one can claim as against the State the right to carry on trade or business in liquor and the state cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others, the state cannot escape the rigour of Article 14. It cannot act arbitr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability." What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though the executive decision may not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

relating to economic matters grant a certain measure of freedom or play' in the "joints" to the executive. "The problem of Government" as pointed out by the Supreme Court of the United States in Metropolis Theatre Company v. State of Chicago, (1912) 57 L Ed 730 "are practical ones and may justify, if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

licy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must now proceed to deal with the contention of the petitioners based on Article 14 of the Constitution." The above principles were reiterated in Khoday Distilleries Ltd. And others v. State of Karnataka and others, (1995) 1 SCC 5 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

business in articles res commercium. The view taken by this court in K.K.Narula case as well as in the second Synthetics and Chemicals Ltd. Case is not contrary to the aforesaid view which has been consistently taken by this court so far." This was also reiterated by majority of Judges in State of Punjab and another v. Devans Modern Breweries Ltd. And another, (2004) 11 SCC 26. It was observed in para 113:- "In my opinion, Articles 301 and 304(a) of the Constitution are not attracted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(AIR 1975 SC 1121 and Panna Lal v. State of Rajasthan (1975 (2) SCC 633). As noticed earlier, dealing in liquor is neither a right nor is the levy a tax or a fee. Articles 301-304 will be rendered inapplicable at the threshold to the activity in question. Further, there is not even a single judgment which upholds the applicability of Articles 301-304 to the liquor trade. On the contrary, numerous judgments expressly hold these articles to be inapplicable to trade, commence and intercourse in liq .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and others, (1996) 5 SCC 268, it was observed in para 5 by the Hon'ble Supreme Court that in a given set of facts, it may be open to the Government to evolve a new scheme and the court will not bind the Government to the policy which existed on the date of the application if the change in policy was necessary in public interest, which is as under:- "5. It would, therefore, be clear that grant of licence depends upon the policy prevailing as on the date of the grant of the license. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the same. Equally, the Government is left free to determine priorities in the matters of allocations or allotments or utilisation of its finances in the public interest. It is equally entitled, therefore, to issue or withdraw or modify the export or import policy in accordance with the scheme evolved. We, therefore, hold that the petitioners have no vested or accrued right for the issuance of permits on the MEE or NQE, nor is the Government bound by its previous policy. It would be open to the G .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it was observed:- 43. Government decisions regarding award of contracts are also open to judicial review and if the decisionmaking process is shown to be vitiated by arbitrariness, unfairness, illegality and irrationality, then the Court can strike down the decision- making process as also the award of contract based on such decision. This was so laid down by this Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 : AIR 1996 SC 11 : (1994 AIR SCW 3344). Initially the Supreme Court was of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in subsequent decisions and held that even arbitrary and unreasonable decisions of the government authorities while acting in pursuance of a contract would also be amenable to writ jurisdiction. This principle was laid down in Gujarat State Financial Corpn. v. Lotus Hotels (P) Ltd, (1983) 3 SCC 379 : AIR 1983 SC 848. This Court even went to the extent of saying that the terms of contract cannot be altered in the garb of the duty to act fairly. (See: Asstt. Excise Commr. v. Issac Peter, (1994) 4 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: (1981) 2 SCR 79: AIR 1981 SC 487, Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628 as also Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of Bombay, (1989) 3 SCC 293 : (1989) 2 SCR 751 : AIR 1989 SC 1642." 17. As recorded by Division Bench of this Court in Ram Chander s case (supra), the issue is answered in the affirmative. Article 14 of the Constitution of India would be clearly attracted wherever State decides to grant contracts or lic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of carrying out the provisions of this Act whereas Section 59 of the Act empowers the Financial Commissioner to make rules by notification in respect of the subject covered therein. Section 59 of the Act is in following terms:- 59. Powers of Financial Commissioner to make rules.- The Financial Commissioner may, by notification, makes rules. (a) regulating the manufacture, supply, storage or sale of any intoxicant, including :- (i) the character, erection, alteration, repair inspection, supervi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

warehouse and the removal of any intoxicant from any warehouse or from any distillery or brewery. (d) prescribing the scale of fees or the manner of fixing the fees payable in respect of any licence, permit or pass or in respect of the storing of any intoxicant; (e) regulating the time, place and manner of payment of any duty or fee; (f) prescribing the authority by, the restrictions under, and the conditions on, which any licence, permit or pass may be granted including provision for the follow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f any intoxicant except for cash ; (v) the fixing of the days and hours during which any licensed premises may or may not be kept open, and the closure of such premises on special occasions; (vi) the specification of the nature of the premises in which any intoxicant may be sold, and the notice to be exposed at such premises ; (vii) the form of the accounts to be maintained and the return to be submitted by license holders; and (viii) the prohibition or regulation of the transfer of licenses; (g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rformance of the conditions of the same. 19. By Clause (d) of Section 59 of the Act, the Financial Commissioner is authorized to make rules prescribing the scale of fees or the manner of fixing the fees payable in respect of any licence, permit or pass etc. in respect of the storing of any intoxicant. In pursuance of Section 59(d) of the Act, the Excise and Taxation Commissioner on whom the powers of the Financial Commissioner are conferred by the State Government, framed the Punjab Liquor Licen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rent kinds of licences thereunder has been specified. The category of licences that may be granted on fixed fee by inviting applications for a licencing unit has been prescribed under Rule 35 of the Rules. Rule 36 of the Rules prescribes the procedure for the grant of licences. Special conditions for grant of licences have been enumerated in Rule 38 of the Rules. The relevant portion of these rules is quoted below:- Rule 24. The fees payable in respect of licences under these rules are of the fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

000 L-1A dealing exclusively BIO brands L-1A (i) sale upto 1000 cases 2,00,000 15000 (ii) sale from 1001 to 50000 cases 5,00,000 15000 Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 35. (1) The following licences may be grrated on fixed fee by inviting applications for a Licencing Unit, namely :- (2) xxxxxxxxxxxxx A person shall not be allowed to submit more than 50 applications per licencing unit or group or zone in Corporation areas. However, in other urban areas and Nagar Panchayat areas, a person sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ilable in the office of the Assistant Excise and Taxation Commissioner (hereinafter referred to as AETC), In-charge of the district. The application Forms can also be downloaded from the website of the department (www.pextax.com). In addition, these application forms shall also be available in various bank branches authorized by the department for receipt of application forms. The applicant can submit his application for any Licensing Unit/Group/Zone of any district in any of the bank branches. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bove ₹ 10 crore ₹ 70,000/- The fee shall not be refundable or adjustable. If the first or any subsequent allotment procedure is cancelled by the department or, any application form is rejected by the department being invalid and not put to draw of lots, then the amount of application fee shall be refunded to the concerned applicant, after deducting two thousand rupees per application as processing fee. Out of the total proceeds from the sale of application form, fifty percent shall b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The licensee shall purchase Indian Made Foreign Liquor, Beer, Wine and Ready to Drink Beverages (Indian and Imported) from L-1A licensee." "(1-A) (i) A license in Form L-1A(IMFL) for the wholesale vend of Indian Made Foreign Liquor (except Beer), Wine and Ready to drink beverages to the L-1 licensee only, authorized to purchase liquor from distilleries, bottling plants and Wineries (Manufacturing units of IMFL, Wine and RTD) from both within and outside the State: (a) The licensee sha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e manufacturing unit/company shall issue consent letter to such person/company/firm/institution who/which is at arms length distance from the manufacturing unit/company i.e. he should not be the promoter/Director/partner etc. in the liquor manufacturing unit/company or not its holding, subsidiary, closely held company fully/partially owned/financed / managed firm/company; (Emphasis supplied). (e) Licensee shall maintain accounts of receipts and supply of liquor; (f) No breakage shall be allowed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, to the L-1 licensee only authorized to purchase Beer from breweries both within and outside the State; (a) The conditions applicable to license L-1A (IMFL) shall apply to this license." 20. In the year 2011, the State Government made amendment in the Punjab Liquor License Rules, 1956, whereby, for the first time, L-1A category of Licence was notified. The relevant portion of the Rules as notified in 2011 is as under:- L-1A. A wholesale vend of Indian Made Foreign Liquor, Imported Foreign .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ence (Amendment) Rules, 2016 vide which notification No.G.S.R.19/P.A.1/1914/5.59/Amd.(127)/2016 dated 23.3.2016 has been issued assigning new terminology to licence L-1A which is in the following terms:- L-1A (IMFL) Whole sale vend of Indian Made Foreign Liquor (except Beer), Wine and Ready to Drink beverages to the L-1 licensee only, authorized to purchase liquor from distilleries, bottling plants and wineries (manufacturing units of IMFL, Wine and RTD) from both, within and outside the State. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tside the State. Fixed fee Collector with the prior approval of Excise Commissioner Collector. 22. The change/amendment which has been brought about by virtue of it, is that now L-1A licencee shall purchase the liquor from the breweries/distilleries whereas L-1 licencee is mandatorily required to purchase the liquor from L-1A licencee only. According to the procedure before the amendment, L-1 licencee was directly purchasing the liquor from the manufacturing company. This has caused grievance to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to sell the licences to the citizens for the said purpose by charging fees. The State is also empowered to impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. The extent of restrictions and limitations can extend to the State carrying on the trade or business itself to the exclusion and eliminat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cy matters in exercise of powers of judicial review is well settled by a catena of decisions. In T.N. Education Deptt., Ministerial and General Subordinate Services Assn. v. State of T.N., (1980) 3 SCC 97 the Supreme Court while noticing the jurisdictional limitation to analyse and to find fault with the policy held that the Court in exercise of its power of judicial review cannot sit in judgment over the policy matters except on limited grounds., namely, whether the policy is arbitrary, mala fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntially be a matter of economic policy where the Court would hesitate to intervene and strike down what the Government has done unless it appears to be plainly arbitrary, irrational or mala fide. It was fur ther observed that the Court must while adjudging the Constitutional validity of an executive decision relating to economic matter grant a certain measure of freedom or "play in the joint" to the executive. The Court cannot strike down a policy decision taken by the State Government .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and working of telecommunication system of the country pursuant to Government policy of privatization and telecommunication, observed that since parting of privilege exclusively vested with the Government it can be questioned only on the ground of bad faith, based on irrelevant or irrational consideration, noncompliance with prescribed procedure or violation of any constitutional or statutory provisions. 39. In State of Punjab and Ors. V. Ram Lubhaya Bagga and Others, (1998)4 SCC 117 It was hel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in a case of policy decision pertaining to economic matters, the Court should be very circumspect in conducting any enquiry and investigation and must be most reluctant to impugn the judgment of the experts who may have arrived at a conclusion. In Federation of the Railway Officers' Association and Others v. Union of India, (2003) 4 SCC 298, it was once again reiterated by the Supreme Court that unless policy or action is inconsistent with the Constitution and the laws, or arbitrary or irrat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ne the relative merits of different economic policies and cannot strike down a policy merely on the ground that another policy would have been fairer and better. Wisdom and advisability of economic policy are ordinarily not amenable to judicial review. It was further held that in matters relating to economic issues, the Government while taking the decision has right to 'trial and error' so long it is bona fide and within the limits of the authority. For testing the correctness of a polic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which can be culled out can be summarized as follows: (i) grant of licence for manufacture and sale of liquor is a matter of economic policy where the Court would be slow to interfere unless the policy is plainly arbitrary, irrational or malafide. (ii) The court must while adjudging the constitutional validity of an executive decision relating to economic matters grant certain measure of freedom or 'play in joint' to the executive. (iii) The court cannot strike down a policy merely becau .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

umspect and must be most reluctant to impugn the judgment of experts who have arrived at a conclusion. (vi) Court cannot examine relative merits of different economic policy. In a democracy it is a prerogative of each elected Government to formulate its policy. Wisdom and advisability of economic policy are ordinarily not amenable to judicial review. (vii) In matters relating to economic issues, the Government has while taking a decision right to "trial and error" as long as both trial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to any policy framed for selling liquor on the ground of Article 14 was reiterated by the Full bench in the following words:- 42. Let us now examine the challenge to the new policy on the ground that same is discriminatory or arbitrary and violative of Article 14 of the Constitution of India. In order to deal with question of infringement of constitutional guarantee contained in Article 14 it would be expedient to notice case law on the subject. 43. In Cooverjee B. Bharucha (supra) the Constitu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te a monopoly. Properly speaking, there can be a monopoly only when a trade which could be carried on by all persons is entrusted by law to one or more persons to the exclusion of the general public. Such, however, is not the case with the business of liquor."44. Another Constitution Bench of the Supreme Court in Amar Chandra Chakraborty (supra) while considering the question whether Section 43 of the Bengal Excise Act under which a licence of a liquor contractor was withdrawn violated Arti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by itself and it cannot be treated on the same basis as other trades while considering Article 14. Principle applicable to trades which all persons carry on free from regulator y controls do not apply to trade or business in country liquor; this is so because of the impact of this trade on society due to its inherent nature." 45. In Harinarayan Jaiswal (supra) the Highest bidder in an auction held for granting the exclusive privilege for selling country liquor challenged the order rejecting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights." 46. In view of the Constitution Bench decision of Supreme Court in Cooverjee B. Bharucha (supra) and in Amar Chandra Chakraborty (supra) following principles emerge: (i) In liquor business, elimination and exclusion from b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted a class by itself and cannot be placed on same pedestal as other trades while considering the applicability of Article 14. (iii) Where the State Government frames a policy with the object to secure or ensure maximum revenue for parting with its privilege to deal in liquor, action of the State Government cannot be assailed on the ground that it infringes Article 14. 26. In the backdrop of the settled legal principles noticed hereinabove, the question of challenge to creation of licence L-1A c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ame unless it is shown to be discriminatory or arbitrary. The creation of category of license L-1A between the distilleries and L-1 licencee to augment the revenue and stop leakage thereof cannot be said to be arbitrary. Further, the Excise Policy for the year 2016-17 was formulated on 13.3.2016, though the notification in exercise of power under Section 59 of the Act was issued on 23.3.2016, the same having been issued before the enforcement date for Excise Policy 2016-17 to be effective, i.e. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it would be imperative to extract the relevant portion of Clause 2.14 as contained therein:- Clause 2.14 i) It is necessary for the applicant for this licence to have an authority/consent letter from the manufacturing unit. ii) Any manufacturing company cannot issue the authority/consent letter to more than one person/company/firm/organization. iii) The manufacturing company will give this consent letter to that person/company/firm/organization who is at Arms Length Distance from the manufacturi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

posed to have the security amount of this licence fixed at ₹ 25 lacs. 28. The grievance of the petitioners is relating to sub clause (ii) as noticed above whereby any manufacturing company has been authorized to issue the authority/consent letter to one person/company/firm/organization for the issuance of license L-1A by the competent authority. According to the petitioners, sub clause (ii) of Clause 2.14 of the Excise Policy for the year 2016-17 prescribes that the manufacturing company c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

igation to adopt transparent and fair method for making selections so that all the eligible persons/aspirants get a fair opportunity of competition. In other words, wherever issue of disposal of public property is concerned either by issuance of licence or otherwise, the State and its agencies/instrumentalities are required to adopt a rational method for its disposal and no attempt should be made to scuttle the claim of eligible applicants. This can be achieved either by holding public auction a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-firstserved policy has inherently dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the government files or the files of the agency/instrumentality of the State that a particular public property or asset is lik .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum, etc. it is the burden of the State to ensure that a nondiscriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. 96. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process. 30. Further, in Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd., (2007) 8 SCC 1, following its earlier decision in Union of India (UOI) and another vs. International Trading Co. and another, (2003) 5 SCC 437, the Apex Court observed as under:- 36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitut .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.N. [(2007) 2 SCC 1], Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. Level playing field is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of level playing field . We may clarify that this doctrine is, however, subject .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roduced after 1992 have brought in the concept of globalisation . Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of level playing field embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of equality should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ional Trading Co. [(2003) 5 SCC 437] the Division Bench of this Court speaking through Pasayat, J. had held: (SCC p. 445, paras 14-15) 14. It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional. 15. While the discretion to change the policy in exercise of the executive power, when not trammelled by an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualised than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of level playing field . 31. In Pawan Bhatia and others vs. state of Haryana and others, (2015) 4 RCR (Civil) 666, this court observed thus:- 26. The licences have been granted on the basis of first come first served basis. The principle of first come first served basis has been commented adversely in Centre for Public Interest Litigation and others v. Union of India and others, (2012)3 SCC 1. The Court examined inter-alia the following questions:- "(i) Whether the Government has the right .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter referred to as 'the Minister of Communications and Information Technology'), without consulting TRAI, with a view to favour some of the applicants?" 27. The Court answered the said questions when it held to the following effect:- "94. There is a fundamental flaw in the first-come-firstserved policy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or permission to use public property, the invocation of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and first in the queue at the cost of all others who may have a better claim. 95. This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be mad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process." 28. The issue of grant of state privileges by the process of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. The Court held:- "107. From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to distribution of largesse, grant of contracts or allotment of land, is to be tested on the touchstone of Article 14 of the Constitution. A law may not be struck .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e rational, informed with reasons and guided by public interest, etc. All these principles are inherent in the fundamental conception of Article 14. This is the mandate of Article 14 of the Constitution of India. xx xx xx 129. Hence, it is manifest that there is no constitutional mandate in favour of auction under Article 14. The Government has repeatedly deviated from the course of auction and this Court has repeatedly upheld such actions. The judiciary tests such deviations on the limited scop .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

discovery of natural resources. A concern would risk undertaking such exploration and incur heavy costs only if it was assured utilisation of the resource discovered: a prudent business venture would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the promise of exclusive access to the market for the sale .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matters. The methodology pertaining to disposal of natural resources is clearly an economic policy. It entails intricate economic choices and the Court lacks the necessary expertise to make them. As has been repeatedly said, it cannot, and shall not, be the endeavour of this Court to evaluate the efficacy of auction vis-à-vis other methods of disposal of natural resources. The C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. 32. In the present case, no doubt the Financial Commissioner in exercise of power conferred under Section 59(d) of the Act had amended the category of Licence L-1A by issuing notification dated 23.3.2016 in c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

leness, discrimination, non-transparency, favouritism or nepotism in the award of authority/consent letter to an applicant. Thus, sub clause (ii) to that extent would not satisfy the mandate of reasonableness as enshrined under Articles 14 and 19(1)(g) of the Constitution of India. 33. In all fairness, we proceed to deal with two ancillary points raised by learned Advocate General. Firstly, the locus standi of the petitioners and maintainability of the petitions was questioned on the ground that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een claimed in the writ petition that the petitioner is engaged in the business of liquor trade for the past so many years in the State of Punjab and the newly added/created L-1A licence would deprive the rights of the petitioner in carrying out the liquor trade in the State of Punjab. Another factor needs mention is that the petitioner had filed the writ petition on 19.3.2016 which was heard by motion bench on 22.3.2016 challenging the very creation of amended L-1A category in the Excise Policy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion. Further, on April 12, 2016, on the no objection of the learned Advocate General, Punjab, it was directed that allotment of licences L-1A shall be subject to the further orders to be passed by this Court in this writ petition. The order dated 12.4.2016 is reproduced for ready reference which reads thus:- Further submissions have been made by the learned Advocate General, Punjab. For remaining arguments, to come up on 26.4.2016. Learned counsel for the petitioner(s) made a prayer that the al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version