TMI Blog2017 (3) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... to file the writ petition for appropriate relief before the Bench having roster to decide the vires. Thus, it is clear that writ petitioner never intended to challenge the vires of the Rules, which is apparent from the reasons, as noted above. We are thus of the considered opinion that the something which writ petitioner never intended or prayed for cannot be looked into in this appeal. Establishment charges - demand - Section 28A - Held that: - Section 28A being not in existence during the relevant period for which demand has been raised, it is not necessary for us to consider the effect and consequence of Section 28A in so far as the present case is concerned. However, taking into consideration the overall circumstances, as noted above, ends of justice will be served in giving liberty to the respondent to represent against the demand notice dated 23rd March, 1989 before the State. Appeal disposed off. - CIVIL APPEAL NO.921922 OF 2008 - - - Dated:- 28-2-2017 - Ranjan Gogoi and Ashok Bhushan, JJ. For The Appellant : Mr. Mishra Saurabh, Adv. For The Respondent : Mr. Jayant Kumar Mehta, Adv. JUDGMENT ASHOK BHUSHAN, J. 1. These appeals have been fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Constitution Bench. 6. A learned Single Judge allowed the writ petition and quashed the demand notice. Learned Single Judge although, opined that Rule 4(41) of the Rules 1995 appears to be ultra vires to the Madhya Pradesh Excise Act beyond the rule making power, however since no such prayer is made by the writ petitioner, no order in this behalf can be passed in the rules by Bench at Indore. 7. Learned Single Judge, however, held that decision of this Court in Lilasons (Supra) renders the demand notice Annexure P.2, as void. Learned Single Judge also held that the demand towards establishment charges is more than 150 per cent of the total income of the distilleries on the basis of which, the demand is arbitrary and unreasonable. 8. Aggrieved by the judgment of learned Single Judge, the State filed a Letter Patents Appeal before the Division Bench of the High Court, which was dismissed on 06.09.2005, as not maintainable. 9. Aggrieved by the judgment of learned Single Judge as well as the judgment of the Division Bench of the High Court, these appeals have been filed by the State of M.P. 10. We have heard Shri Ankit Kumar Lal, Learned Counsel appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of revenue to meet the establishment charges, the demand is unreasonable and arbitrary and exorbitant. Learned counsel has relied on Para 9 of the judgment of learned Single Judge where the demand has been held to be arbitrary and unreasonable. Learned Counsel further pointed out that from the demand notice, it is apparent that there was no revenue earned in the year 199697 whereas, expenditure in excess of 5 per cent have been claimed as ₹ 4,36,897/. 14. Learned counsel further contended that the State itself in subsequent years have changed its policy and instead of realising the demand in excess of 5 per cent of revenue, now a fix amount is charged from the licensee. He contended that there was no provision in the Act to realise such charges prior to insertion of Section 28A in the M. P. Excise Act, 1995 by M.P. Act No. 24 of 2000 which indicates that charges were not recoverable from the licensee. 15. We have heard the submissions of the learned counsel for the parties and perused the records. 16. The Trade of Liquor is in existence from the time immemorial. All civilized societies had soon realised the necessity to control and regulate such trade. In an earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Bench in Har Shankar and Others versus The Deputy Excise and Taxation Commissioner and Others, (1975) 1 SCC 737, referring to various earlier Constitution Benches of this Court laid down following in Para 45 47: 45. In Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, the decisions in Cooverjee's case (supra) and Kidwai's case(supra) were cited by a Constitution Bench as laying down the proposition that there was no inherent right in a citizen to sell liquor and that the control and restriction over the consumption of intoxicating liquors was necessary for the preservation of public health and morals and to raise revenue. 47. These unanimous decisions of five Constitution Benches uniformly emphasized after a careful consideration of the problem involved that the State has the power to prohibit trades which are injurious to the health and welfare of the public, that elimination and exclusion from business is inherent in the nature of liquor business, that no person has an absolute right to deal in liquor and that all forms of dealings in liquor have, from their inherent nature, been treated as a class by themselves by all civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory provisions governing the field. 24. The Central Provinces Act 1915 (M.P. Excise Act 1915 hereinafter referred to as Act 1915) was enacted to consolidate and amend the laws relating to importexport, transport, manufacture, sale and possession of intoxicating liquor and drugs. Chapter IV of the Act deals with manufacture, possession and sale. Section 13 provides that no intoxicant shall be manufactured or collected except under the authority and subject to the terms and conditions of a licence granted in that behalf. Section 14 deals with establishment and licensing of distilleries and warehouses. Section 18 deals with the power to grant lease of right to manufacture, etc..Section 18 (1) is quoted below. 18.1. The State Government may lease to any person, on such conditions and for such period as it may think fi9t, 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 manufacturing or of supplying by wholesale, or of both, and selling by retail, any 1[omitted by Madhya Pradesh Act No. 19 of 1964] liquor or intoxicating drug within any specified area. 25. Chapter V d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in subsection (1) of specifically enumerated in subsection(2) shall be leviable on and recoverable from the licensee. 28. Section 62 is rule making power of the State. Sub section 2(1) (h), which is relevant for the present case is as follows: 62(1)(h). prescribing the authority by, the form in which, and terms and conditions on and subject to which any licence, permit or pass shall be granted, and by such rules, among other matters (i) fix the period for which any licence, permit or pass shall continue in force, (ii) prescribe the scale of fees or the manner of fixing the fees payable in respect of any such licence, permit or pass, (iii) prescribe the amount of security to be deposited by holders of any licence, permit or pass for the performance of the conditions of the same, (iv) prescribe the accounts to be maintained and the returns to be submitted by licenceholders, and (v) prohibit or regulate the partnership in, or the transfer of, licences; 29. In exercise of above power, the State has framed the rule, namely, Madhya Pradesh Distilleries Rules, 1995. Section 4(41) which is involved in the present case is as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our opinion, the question as to whether the said notification could have a retrospective effect or retroactive operation being a jurisdictional fact, should have been determined by the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India as it is well known that when an order of a statutory authority is questioned on the ground that the same suffers from lack of jurisdiction, alternative remedy may not be a bar. (See Whirlpool Corpn. v. Registrar of Trade Marks and Mumtaz Post Graduate Degree v. ViceChancellor.) 33. The ratio of the aforesaid judgment is contained in para 13. This Court has laid down that when an order of the statutory authority is questioned on the ground that the same suffers from the lack of jurisdiction alternative remedy was not a bar and Whether the notification dated 21.1.2006 could have a retrospective effect or retroactive operation being a jurisdiction affect, the High Court ought to have determined the question in exercise of its jurisdiction. 34. The present is not a case where the District Excise Officer who has issued the notice of demand lacks jurisdiction nor there was any issue of retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an omission or by oversight. The pleadings on the record disclose a reason for the above. In the counteraffidavit filed on behalf of the State to the Writ Petition brought on record as Annexure P. 3 in Para 2 following statement has been made by the State: The demand made by the respondent is proper and cannot be struck down. However, if the petitioner wish to challenge the vires of Rule 4(41), the same can be challenged only before the Constitutional Bench. 39. Learned Single Judge, while deciding the writ petition has also in Para 7 made the following observations: In view of the aforesaid legal position, the Rule 4(41) of the present Rules, 1995 also appeared to be ultra vires the M.P. Excise Act and beyond the rule making power of the State. However, since no such prayer is made by the petitioners in the petition and no order in this behalf can be passed under the Rules by this Bench at Indore. I leave this question here only. However, the ratio of the decisions in Lilasons and Kedia Distilleries (supra) renders the demand notice(Annexure P.2) as void. 40. Thus from the above, it is clear that under the Rules of the High Court, the Bench hearing the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her duty and hence a further tax or is it a further fee or consideration for transferring the right, is the pointed question. In Bimal Chandra Banerjee v. State of M.P., this Court had the occasion to examine some of the provisions of the Act inclusive of Sections 27 and 62(2) (h). Under the conditions of licence of the then appellants they were required to make compulsory payment of excise duty on the quantity of liquor which they failed to take delivery of, since those conditions prescribed the minimum quantity of liquor which they had to purchase from the Government. Releasing them from such obligation, this Court ruled as follows: (SCC p.471, para 12) Neither Section 25 nor Section 26 nor Section 27 nor Section 62(1) nor clauses (d) and (h) of Section 62(2) empower the rulemaking authority viz. the State Government to levy tax on excisable articles which have not been either imported, exported, transported, manufactured, cultivated or collected under any licence granted under Section 13 or manufactured in any distillery established or any distillery or brewery licensed under the Act. The legislature has levied excise duty only on those articles which come within the scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The pay of all such officers shall be met by the Government; [the Government owns the responsibility] (ii) if the annual charges do not exceed 5 per cent of the duty leviable on the issue made from the brewery to districts within the State, nothing is realisable from the brewer; (iii) 5 per cent of the duty has been considered enough from which to reimburse the Government for the pay of such officers; and (iv) in case the annual charges exceed 5 per cent of the duty leviable then the excess shall be realised from the brewer, i.e., to reimburse the Government for the pay of all such officers. 9. The excise duty collected goes to the coffers of the State. The pay of officers has to come out from coffers of the State. Five per cent of the duty leviable is assessed to meet the pay of such officers, which the Government, but for the rule, is otherwise supposed to meet. This part of the rule is purely internal between the Government and its officers. The licensee is least concerned as to how the excise duty leviable would be appropriated. It is only in the case of a shortfall when the excess is sought to be realised from the brewer that he gets affected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases laid down the same proposition. 45. Judgment in Banerjee s case was delivered on 19th August, 1970. There has been amendment in Section 28 by Madhya Pradesh Act No.6 of 1995 by which provision specific provision requiring licensee to lift for sale, the minimum quantity of country spirit or Indianmade liquor, fixed for his shop and to pay the penalty at the prescribed rate on the quantity of liquor short lifted, has been brought in the statute book. The Scheme of M.P. Excise Act, 1915 having been amended by the aforesaid Act of 1995, the very basis of case of Banerjee is knocked down and cannot be relied on in view of changed statutory scheme. The judgment in Lilasons case was delivered on 21st April, 1992 that is before the above amendment in Section 28 by M.P. Act No.6 of 1995. In paragraph 9 of the judgment in Lilasons it was held that when there is a shortfall in the lifting of the enough quantities of beer, the demand is for additional excise duty which is not permissible. Sections 27 and 28 were also referred in Lilasons s case in paragraph 10. Paragraph 10 is as quoted below: 10. Now with regard to the suggested wide amplitude of Section 62( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eep, District Raisen. 11. In view of the aforesaid settled legal position, the condition empowering the State Government to recover the actual cost of supervisory staff posted at the premises of the respondent cannot be said to be in any way illegal or ultra vires as it constitutes the price or consideration which the Government charges to the licensee for parting with its privilege and granting licence. In this view of the matter, the impugned judgment and order passed by the High Court requires to be set aside. 48. Learned counsel for the appellants has also rightly placed reliance on judgment of this Court in Government of Andhra Pradesh vs. M/s. Anabeshahi Wine and Distilleries Pvt. Ltd., (1988) 2 SCC 25. In the above case, this Court held that the demand with regard to establishment charges was valid and legal. 49. In view of above, we fail to see as to how the judgment of this Court in Lilasons s case can be relied by the High Court for declaring the demand as void. 50. There is one more aspect of the matter which needs to be considered. The demand which has been claimed from the respondent pertains to 3 years . The details of the demand have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable. But a perusal of the writ petition indicates that no sufficient foundation was laid in the writ petition to enter into the issue as to whether the demand is arbitrary and unreasonable. From the details of the demand as noted above, it is further clear that in the demand for the year 199697 expenditure on salary was shown as ₹ 4,36,897/but no figure pertaining to the Revenue of the said year is mentioned, whether the distillery could function during the relevant period and without there being any Revenue how the expenditure on salary is fastened on respondent, is not explained. 53. Learned counsel for the respondent has further stated before us that the State of Madhya Pradesh has abandoned the Statutory Scheme as contained in Rule 4(41) and subsequently fixed amount of establishment charges included in the licence fee. Learned counsel for the State has, however, refuted the above submission of the learned counsel of the respondent. Learned counsel for the respondent has also referred to Section 28A, which has been substituted by Madhya Pradesh Act No.24 of 2000, which is to the following effect: Section 28A. Payment of supervision charges- The State Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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