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Pradeep Kumar v. State Of U.P. & Others - WRIT TAX No. 293 of 2002  RD-AH 11379 (6 July 2007)
Civil Misc. Writ Petition No171 of 2002
Sunder Lal and another
The Excise Commissioner, U.P. at Allahabad and others.
Civil Misc. Writ Petition Nos. 259, 293, 294, 296, 347, 2957 and 2997 of 2002
Hon'ble R.K.Agrawal, J.
Hon'ble Vikram Nath, J.
(Delivered by R.K.Agrawal,J)
In all these writ petitions the petitioners have challenged the vires of Rule 14 of the Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Country Liquor) Rules, 2001 (hereinafter referred to as the Rules) insofar as it relates to levy of excise duty on unlifted quantity of quota as ultra vires the U.P. Excise Act, 1910 and for quashing of the notice issued by the authorities demanding deposit of excise duty on the unlifted quantity of country liquor by the respective petitioners. Civil Misc. Writ Petition No. 171 of 2002 is being treated as the leading case and the facts giving rise to the said writ petition are as follows:
The petitioners had been granted licence under the provisions of the Rules for retail vend of country liquor shop in the district of Sant Ravi Das Nagar, Bhadohi for the Excise Year 2001-02. The petitioners could not lift the minimum guaranteed quantity of quota for the month of December, 2001. On 10th January, 2002 the petitioners received separate notices from the Collector demanding a sum of Rs. 1,62,000/- being the excise duty at the rate of Rs 60 per bulk litres on the monthly quota of 2700 bulk literes (in the case of petitioner no.1) and for Rs. 97,740/- in respect of petitioner no.2. The demand notice has been challenged on the ground that the excise duty or countervailing duty is leviable on the manufacture and it cannot be levied on liquor which the petitioner has failed to lift. Rule 14 of the Rules as also the demand notice are hit by Article 47 of the Constitution of India and the cancellation of the licence for non lifting and selling liquor is against the Directive Principles of the State Policy as enshrined in Chapter IV of the Constitution of India and the Preamble.
In the counter affidavit filed by Sahdeo Prasad Rawat, District Excise Officer, Sant Ravidas Nagar, Bhadohi on behalf of the respondents it has been stated that under the provisions of the Rules the licencees are required to lift minimum month-wise guaranteed quantity and in case of failure to do so the amount of security is to be adjusted towards the duty payable on the unlifted minimum guaranteed quantity which the licnecees are required to make good failing which the licence shall stand cancelled. It has also been stated that the licence having been taken by the petitioners with their eyes open they cannot now be permitted to say that they are not liable to pay the duty. Neither Rule 14 of the Rules nor the demand notice is in any way illegal or ultra vires.
In rejoinder it has been stated that the petitioners cannot be asked to abide by the Rules which are contrary to the statutory provisions and the Constitution. The excise duty is not payable on the unlifted quantity of liquor.
We have heard Sri Mukesh Prasad, Sri K.D.Misra and Shri L.K.Dwivedi learned counsel for the petitioners and Sri S.P.Kesarwani, learned standing counsel for the State-respondents.
Sri Mukesh Prasad, learned counsel submitted that under the Rules the excise duty payable on minimum guaranteed quota does not form part of the licence fee and, therefore cannot be demanded. He further submitted that the duty is leviable on the manufacture of country liquor payable at the time of issue by the distillery/brewery warehouse and not by the petitioners who are the retail sellers of the country liquor. He has relied upon a decision of the Apex Court in the case of Excise Commissioner, U.P. Allahabad and others vs. Ram Kumar and others (AIR 1976 SC 2237).
Sri K.D. Misra, learned counsel submitted that the licence granted to the petitioner is against the statutory provisions i.e. Sections 10 and 24 of the U.P. Excise Act. In the instant case no concluded contract has come into existence and in any event as the petitioner was not in a position to bargain with respect to the conditions laid down in the licence and, therefore, the contract is too stringent to be followed. The licence fee has been prescribed by an executive order and not by the Rules which is not permissible. He has relied upon various decisions on the point that the contract itself was invalid and contrary to law and no action can be taken for violation of any of the conditions mentioned therein. He has also relied upon a decision of the Apex Court in the case of Central Inland Water Transport Corporation Ltd. and another v. Brojo Nath Ganguly and another (AIR 1986 SC 1571) for the proposition that the terms of contract between a party, who is not in a position to bargain, cannot bind it.
Sri L.K.Dwivedi, learned counsel appearing in Writ Petition No. 2957 of 2002 submitted that the impugned order dated 27th March, 2002 has been illegally passed asking the petitioner therein to deposit a sum of Rs. 33,000/- towards the duty for the short fall for lifting the minimum guaranteed quota.
In reply Sri S.P.Kesarwani, learned standing counsel submitted that the petitioners having applied and granted licence to run retail vend of country liquor shop under the Rules and after having worked for a considerable period of more than nine months (the licence have been granted only for a period of 12 months) cannot be permitted to turn round and challenge the validly of the Rules. He further submitted that the writ petition itself is not maintainable. He further submitted the under the Rules minimum guaranteed quota has been defined. The terms of licence also stipulates for lifting minimum guaranteed quota and in the event the minimum guaranteed quota has not been lifted the amount of security is to be first adjusted towards the duty payable on the minimum guaranteed quantity which the licnecees are liable to make good subsequently. He further submitted that none of the petitioners had surrendered their licence and during the subsistence of the licence they are liable to abide by its terms and conditions. In support of his various pleas he has relied upon the following decisions:
1. State of Orissa and others vs. Narain Prasad (1996) 5 SCC 740;
2. Har Shankar vs. Dy. Excise Commissioner (AIR 1975 SC 1121);
3. State of Punjab and another vs. M/s Dewans Modern Brewaries Ltd and another (JT 2003(10) SC 485);
4. State of U.P. vs. Sheopat Rai (1994) Supl 1 SCC 8
5. Solomon Antony and others vs. State of Kerala and others (JT 2001(3) SC 100) and
6. Civil Misc. Writ Petiton No. 2989 of 2002 (Gavendra Pal Singh and others vs. Commissioner, U.P. Excise, Allahabad and others) decided on 6th January, 2003.
In reply Sri Mukesh Prasad submitted that prior to Rules framed in the year 2001 the excise duty on unlifted quantity of liquor did form part of the consideration for parting privilege which is not presently applicable as no provision has been made in the Rules. He further submitted that the demand notice is, therefore, liable to be set aside.
We have given our anxious consideration to the various pleas raised by the learned counsel for the parties. We find that under Rule 14 of the Rules specific provisions have been made for minimum guaranteed quota fixed for the month and consequence of failure on the part of the licencee. The licences have been issued to the petitioners under the aforesaid provisions. The petitioners have admittedly taken out the licneces with their eyes wide open and they were aware of their rights and obligations. In the event of non lifting of minimum guaranteed quantity for the month, the petitioners were liable to pay the amount of duty on the short fall which was in the first instance to be recovered from the amount of security deposits by them. The amount adjusted from the security deposit was subsequently to be made good failing which the consequence of cancellation of their licence would entail.
In the cases of Bimal Chandra Banerjee vs. State of Madhya Pradesh (AIR 1971 SC 517) and Ram Kumar (supra) the Apex Court has held that such a condition incorporated in the licence is not valid and, therefore, not enforceable. Further we find that the Apex Court in the cases of Narain Prasad (supra) and Solomon Antony (supra) has held that the State is merely seeking to recover the consideration for the grant of exclusive privilege/licence as per the terms and conditions and as undertaken in the agreement. A Division Bench of this Court in the case of Gavendra Pal Singh (supra) has upheld the demand of excise duty on unlifted minimum guaranteed quota. We are in respectful agreement with the view taken by the Division Bench of this Court in the case of Gavendra Pal Singh (supra) and, therefore, do not find any merit in these writ petitions.
The plea raised by Sri K.D.Misra, learned counsel that the contract itself is void and unenforceable is devoid of any merit. The petitioners have worked under the said contract for a considerable long period of more than nine months and at this juncture they cannot be permitted to say that they are not bound by the contract.
So far as the question that the Rule 14 of the Rules is violative of Article 47 of the Constitution is concerned no serious arguments have been advanced by the learned counsel for the parties. However, we find that the same does not contravene the provisions of Article 47 of the Constitution.
It is not necessary to refer the various case laws cited at the Bar in view of the fact that the matter has already been decided earlier by a Division Bench of this Court in the case of Gavendra Pal Singh (supra) with which we are in respectful agreement.
In view of the foregoing discussions, we do not find any merit in these writ petitions which are dismissed with costs, for which we assess, a sum of Rs. 5000/- payable by each of the petitioners.
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