Vijay Vikram Singh vs State Of U.P.Thorugh Prin. Secy. ...
2018 Latest Caselaw 334 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

AFR
 
Judgment reserved on:27.04.2018 
 
  Judgment delivered on:03.05.2018
 
Court No. - 22
 

 
Case :- MISC. SINGLE No. - 6485 of 2007
 

 
Petitioner :- Vijay Vikram Singh
 
Respondent :- State Of U.P.Thorugh Prin. Secy. Excise U.P.Lko.And 4 Ors
 
Counsel for Petitioner :- Surendra Singh,Vishal Singh
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Rajan Roy,J.

Heard Shri Surendra Singh, learned counsel for the petitioner and learned Additional Chief Standing Counsel for the State.

The short question involved in this writ petition is as to the permissibility of recovery of ''licence fee' in addition to the ''basic licence fee' consequent to surrender of licence for country made liquor by the petitioner.

The contention of the learned counsel for the petitioner is that as a result of surrender of such licence all that can be forfeited/ recovered from the petitioner is the basic licence fee and security amount and not the fee payable by him in respect of the ''Monthly Minimum Guaranteed Quantity' (For short ''MMGQ') as once licence was surrendered then the said quantity was not lifted by the petitioner. Moreover, the licence can be resettled as an interim measure as also a regular measure for the remaining part of the excise year under Rule 20 of the Uttar Pradesh Excise (Settlement of Licences for Retail Sale of Country Liquor) Rules, 2002 (For short '' the Rules, 2002').

Learned counsel for the petitioner has relied upon a Single Judge Bench judgment of this Court reported in 2005 (3) AWC 2879; Smt. Indira Devi Vs. State of U.P. and Ors., a Division Bench judgment of this Court reported in [2012 (8) ADJ 1 (DB) (LB)]; Rakesh Singh Vs. State of U.P. and certain revisional orders passed by the State Government which support the case of the petitioner as aforesaid.

On the other hand learned Additional Chief Standing Counsel has submitted that the ''licence fee' in addition to the ''basic licence fee' is part of the consideration payable for the licence, therefore, the same is also recoverable from the petitioner. As regards the Single Judge Bench judgment in Smt. Indira Devi's case (supra) the learned Additional Chief Standing Counsel informed that the same had been set-aside by the Supreme Court in Special Appeal No. 2161 of 2007 and the matter had been remanded back whereupon the same was reconsidered and the petition has been dismissed vide judgment reported in 2013 (11) ADJ 382; Smt. Indira Devi Vs. State of U.P. and Ors. relying upon the Division Bench Judgment of this Court rendered in the case of Brij Kishore Jaiswal and Anr. Vs. State of U.P. and Ors. reported in 2011 (4) ADJ 558 (DB). As regards the judgment of the Division Bench in Rakesh Singh's case (supra) the learned Additional Chief Standing Counsel submits that the direction therein for refund of the security amount has been stayed by the Supreme Court in S.L.P. No. 32915(C) of 2012, which is still pending. The learned Additional Chief Standing Counsel has invited the attention of the Court to the Rules, 2002 in this regard to oppose the writ petition.

It is not in dispute that the petitioner was granted a licence for retail sale of country made liquor for year 2002-03 (01.04.2002 to 31.03.2003) in District Lalitpur. He paid the basic licence fee, security money etc. and operated a retail liquor shop. He surrendered his licence on 28.10.2002. He was liable to deposit licence fee in respect of MMGQ till 31.03.2003 to the tune of Rs. 19,92,600/- but failed to deposit Rs.2,97,778/-. Thereafter, recovery notices were issued to him for depositing of licence fee consequent to the surrender, which he did not comply. Consequently, a recovery certificate was issued on 14.06.2003 for realizing a sum of Rs. 2,97,778/-. In pursuance to which a citation of recovery was issued by the Revenue Authorities. Against the recovery certificate an appeal was filed by the petitioner under Section 11 of the United Provinces Excise Act, 1910 (hereinafter referred to as ''the Act, 1910') which was dismissed on 26.08.2005. The petitioner deposited Rs.59,556/- in terms of the interim order passed in Appeal on 08.08.2003. That against the appellate order the petitioner preferred a revision before the State Government which was dismissed on 05.07.2006. He, therefore, filed this writ petition in December, 2007, wherein an interim order was passed on 01.04.2010 that no coercive action shall be taken against the petitioner till the next date.

Having heard learned counsel for the parties and perused the records, the Court now proceeds to decide the issue involved in this case.

The provision for surrender of licence to sell by retail is contained in Section 36 of the Act, 1910 which reads as under:-

"36. Surrender of licence to sell by retail. - Any holder of a licence to sell by retail under this Act may surrender his licence on the expiration of one month's notice in writing given by him to the Collector of his intention to surrender the same and on payment of the fee payable for the licence for whole period for which it would have been current but for such surrender :

Provided that, if the Excise Commissioner is satisfied that there is sufficient reason for surrendering such a licence, he may remit to the holder thereof the sum so payable on surrender, or any portion thereof.

Explanation. - The words "holder of a licence" as used in this section includes a person whose tender or bid for a licence has been accepted, although he may not actually have received the licence."

On a bare reading of the said provision what comes out is that one month notice in writing is to be given by the holder of the licence to sell by retail to the Collector making known his intention to surrender the same and on expiry of the said period the licence would stand surrendered but subject to payment of the fee payable for the licence for the whole period for which it would have been current but for such surrender. Thus, the consequence of surrender is the liability to pay the fee payable for the whole period of the licence. The licence in question was granted for one year i.e. 01.04.2002 to 31.03.2003 which is also the excise year.

The proviso to Section 36 is revealing as it says that if Excise Commissioner is satisfied that there is sufficient reason for surrendering such a licence, he may remit to the holder thereof the sum so payable on surrender i.e. the licence fee referred hereinabove or any portion thereof, meaning thereby, in the normal course such licence fee has to be paid and if not paid it has to be recovered unless the Excise Commissioner orders the remittance of such fee or any part thereof under the proviso to Section 36.

Now, the term ''fee' used in Section 36 has not been defined in the Act, 1910.

Under Section 41(c) of the Act, 1910 the Excise Commissioner is empowered to make Rules prescribing the scale of fees or manner of fixing the fees payable for any licnece, permits or pass including any consideration for the grant of any exclusive or other privilege granted under Section 24 or Section 24-A or for storing of any intoxicant. The manner of fixing such fee is prescribed in Sub-section (2) of Section 41 of the Act, 2010.

Under Section 24-B(a) the State Government has an exclusive right or privilege of manufacture and sale of country liquor and foreign liquor.

Section 24-B(b) states that the amount described as licence fee in Clause (c) of Section 41 is in its essence the rental or consideration for the grant of such right of privilege by the State Government.

Under Clause (c) of the Section 24-B the Excise Commissioner as the head of the Excise Department of the State shall be deemed, while determination or realising such fee, to act for and on behalf of the State Government.

Now, the Excise Commissioner has framed Rules of 2002 in exercise of powers under Section 41 as referred hereinabove for determining consideration for and the manner of the grant of licence for exclusive privilege of retail sale of country liquor under Section 21, 24 and 30 of the Act, 1910 ''on fixed licence fee' in supercession of all previous Rules to the extent of their inconsistency.

As per Rule 7 of the Rules, 2002 whenever a new licence is proposed to be granted wide publicity is to be made by the Licensing Authority through daily newspapers having circulation in that area and a list of the retail shops of country liquor for which the Collector proposes to grant licence is required to be exhibited ''along with shopwise basic licence fee, annual minimum guaranteed quantity, licence fee, security amount etc.

The term ''Annual Minimum Guaranteed Quantity' (hereinafter referred to as ''AMGQ') has been defined in Rule 2(c) to mean the quantity of "strong" country liquor, as fixed by the Licensing Authority in accordance with the general or specific instructions issued by the Excise Commissioner and ''guaranteed by the licencee to be lifted by him for his retail shop during an excise year for the purpose of retail sale. In the event of a licence being granted after the commencement of the excise year such AMGQ would be reduced proportionately.

The term ''basic licence fee' is defined in Rule 2(d) to mean ''part of consideration for the grant of licence' for the exclusive privilege of retail sale of country liquor under Section 24 of the Act payable by the person selected as licencee ''before the licence is granted to him, for the whole excise year or part thereof' on such rates as notified by the Excise Commissioner in consultation with the State Government from time to time.

The term ''licence fee' is defined in Rule 2(m) to mean ''the remaining part of consideration for grant of licence' for exclusive privilege of retail sale of country liquor under Section 24 of the Act, payable by the licensee ''in addition to the basic licence fee'. This sum shall be equal to the excise duty leviable on the AMGQ fixed for the shop.

Thus, it is evident that the ''fee' for the licence in question as referred in Section 36 of the Act, 1910 comprises of the ''basic licence fee' and a ''licence fee'. The ''licence fee' is the excise duty leviable on the AMGQ which the licensee guarantees to lift for his retail shop during an excise year for the purpose of retail sale. This is a guarantee given by the Licensee at the time of grant of licence and he is bound by it, it being a contractual obligation entered into by him with open eyes. This is in addition to the ''basic licence fee' and is remaining part of the consideration for the licence.

''MMGQ' is nothing but 1/12th part of the AMGQ and the ''monthly installment of licence fee' is nothing but 1/12th of the part of the ''licence fee' in addition to the ''basic licence fee' and is payable every month. This in nutsell is the ''fixed fee system' referred in the long title of the Rules, 2002 and Rule 3 thereof which was accepted by the petitioner while accepting the licence and is the fee referred in Section 36 of the Act, 1910.

Rules 12 and 14 are not attracted in the present case.

Rule 19 of the Rules, 2002 deals with surrender of licence and it reads as under:-

"19. Surrender of licence.- A licencee may surrender his licence after giving at least one month's notice in writing to the Licensing Authority under provisions of Section 36 of the Act. On receipt of such application the Licensing Authority will take steps for recovering all outstanding excise dues from his security deposit and refund the balance amount after obtaining orders of the Excise Commissioner. The Licensing Authority shall also proceed for resettlement of the shop without delay for the remaining period of the excise year."

It, inter alia, speaks of steps to be taken by the Licensing Authority on receipt of an application/notice of surrender, ''for recovery of all outstanding excise dues' from its security deposit and refund the balance amount after obtaining orders of the Excise Commissioner. This provision is to be read with Section 36 of the Act, 1910. It also speaks of the requirement for the Licensing Authority to proceed for resettlement of the shop without delay for the remaining period of the excise year. Much mileage was sought to be drawn by the learned counsel for the petitioner on this provision to submit that there is no question of depositing the fee for the MMGQ, as, the Rule itself postulates the resettlement of the licence for the remaining period of the excise year, therefore, it takes care against loss of revenue to the State.

Rule 20 refers to interim settlement of shop i.e. after surrender, suspension or cancellation. This rule does not draw any distinction between surrender, cancellation or suspension as far as such settlement is concerned. Such settlement can be made for a period of 14 days at one stretch but not more than two times except with prior approval of the Excise Commissioner. Clause (b) of Rule 20 is important, which shall be dealt with hereinafter. Rule 21 of the Rules, 2002 deals with cancellation of licence.

In view of the scheme of the Act and Rules discussed hereinabove, it is evident that the fee payable by the licencee consequent to surrender of licence, as mentioned in Section 36 is the fee referred in Section 41(c) in respect of which the Excise Commissioner has the power to make Rules which have been made and they are the Rules, 2002, therefore, it is the ''basic fee' defined in Section 2(d) and ''licence fee' as defined in Rule 2(m), therefore, the term ''fee' used in Section 36 of the 1910 has to be read conjointly with provisions of the Rules discussed hereinabove and would accordingly mean as aforesaid.

To elucidate further AMGQ is guaranteed by the licensee to be lifted by him for his retail shop during an excise year for the purpose of retail sale. MMGQ is nothing but 1/12 quantity of AMGQ, and monthly installment of licence fee is nothing but 12th installment of the licence fee as defined in Rule 2(m). It is part of fee payable by the licencee in terms of Section 36 consequent to surrender of licence under the said provision. Rule 19 of the Rules, 2002 can also not be given any meaning contrary to the substantive provision contained in Section 36 of the Act as it is subservient to it, therefore, the ''outstanding excise dues' referred in Rule 19 have to be understood accordingly as including the ''basic fee' and ''licence fee'.

In view of the above, the petitioner is liable to pay the ''basic licence fee' and ''licence fee' in terms of Section 2(d) and 2(m) of the Rules, 2002 read with Section 36 of the Act, 1910 and Rule 19 of the Rules, 2002, which includes the monthly installment licence fee in respect of MMGQ which was part of AMGQ, which the petitioner had guaranteed to lift at the time of grant of licence and was also very well aware about the said facts in view of what has been stated hereinabove.

As regards the Rule 20(b) it provides that the amount of daily basic licence fee so realized during the interim settlement shall be adjusted against the amount of basic licence fee at the time of regular settlement of the shop, meaning thereby, this shall be adjusted against the subsequent regular settlement of the shop with the new licencee and shall not have any favourable bearing on the licensee who has surrendered his licence as has already been held by this Court in Smt. Indira Devi's case (supra), which was decided after remand by the Supreme Court. Although, this point has not been argued on behalf of the petitioner, nevertheless, as it was relevant, therefore, it has been considered.

As regards the contention of the learned counsel for the petitioner that there has to be some distinction between surrender and cancellation of licence and that cancellation is on the grounds mentioned in Section 34 of the Act, 1910 read with Rule 21 of the Rules, 2002 and it is a penal action, whereas, surrender of licence is not so, therefore, there has to be some distinction in the matter of forfeiture/ recovery of fee for the remaining period of the licence, though it appears to be attractive at first blush, but, in view of the expressed provision of law discussed hereinabove and the requirement of strict interpretation of a Taxing statute the same is not acceptable. The provisions of the Act and the Rules discussed hereinabove have not been challenged by the petitioner. Fixation of minimum guarantee quantity is part of the consideration for parting with the exclusive privilege of the State in Sale of liquor as has been held in the case of Basant lal and Ors. Vs. District Excise Officer, Allahabad and Ors. reported in 1986 UPTC 801 and in Civil Misc. Writ Petition No. 2989 of 2002 decided by Division Bench on 06.01.2003. Moreover, there is no fundamental right in res extra commercium which is a privilege granted by the State on its term as mentioned in the Act, 1910 and Rules made thereunder. As regards the consequence of surrender of licence and cancellation as far as the State is concerned, they are similar, as, they entail a going back by the licence on the contractual obligation accepted by hin. The view being taken herein is also supported by the principle of law elucidated by a Division Bench of this Court in Brij Kishore Jaiswal' case (supra) in respect of such licence. The revisional orders relied by the petitioner are contrary to law.

In view of the above, this Court does not find any error in the impugned orders of recovery. The writ petition accordingly fails and is dismissed.

 
Order Date :- 03.05.2018
 
R.K.P. 				         	     (Rajan Roy,J.)