Allahabad High Court

Sandeep Singh vs State Of U.P. And 3 Others on 6 January, 2025

Author: Piyush Agrawal

Bench: Piyush Agrawal





HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


?Neutral Citation No. - 2025:AHC:1981
 
Court No. - 2
 

 
Case :- WRIT TAX No. - 818 of 2021
 

 
Petitioner :- Sandeep Singh
 
Respondent :- State Of U.P. And 3 Others
 
Counsel for Petitioner :- Chandra Shekher Singh,Ram Naresh Singh Gautam,Sr. Advocate
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Piyush Agrawal,J.

1. Heard Sri V.K. Singh, learned Senior Counsel assisted by Sri Mayank Pratap Singh, learned counsel for the petitioner and Sri B.K. Pandey, learned Additional Chief Standing Counsel for the State-respondents.

2. By means of instant writ petition, the petitioner has prayed as under:-

"I. To issue a writ, order or direction in the nature of certiorari quashing the order dated 28.05.2019 (Annexure No.8 to the writ petition) passed by the Collector/Licensing Authority, District- Fatehpur and order dated 12.03.2021 (Annexure No.16 to the writ petition) passed by the Additional Excise Commissioner (Administration), Prayagraj, U.P.

II. To issue a writ, order or direction in the nature of mandamus to command the respondent no.3, the Collector/Licensing Authority, District- Fatehpur to restore the licence of Country Liquor Shop, Gehrukheda, District- Fatehpur in faovur of the petitioner for the current Excise year, treating him to be a continuing licensee.

III. ...........

IV. ..........."

3. Learned Senior Counsel appearing for the petitioner submits that this is the third round of litigation. He further submits that the petitioner has been licensee of Country Liquor shop situated at Gehrukheda and Majhenpurwa both in District Fatehpur for the excise year 2018-19. On 23.03.2019, the country liquor shop of the petitioner situated at Gehrukheda was inspected by Excise Inspector in absence of the petitioner and report was prepared alleging therein that out of two brands packing, QR code in respect of one brand was unresponsive when scanned through the U.P. Excise mobile application. Pursuant to the said premise, an FIR was lodged and the license of the country liquor shop of the petitioner situated at Gehrukheda, District- Fatehpur was suspended and thereafter was cancelled on 28.05.2019. Against which, an appeal was filed, which was dismissed on 16.08.2019. Thereafter, the petitioner filed a Revision No.18/2019 was filed before the State Government and the matter was remanded back for deciding afresh vide order dated 19.02.2020 and on the matter being remand, vide order dated 17.06.2020, the same was again dismissed. Being aggrieved from the said order, the Writ Petition (Tax) No.277 of 2020 was filed, which was allowed vide order dated 19.01.2021 and the matter was remanded to the appellate authority for rehearing. Hence the present writ petition.

4. He further submits that in spite of the matter being remanded for deciding afresh, the impugned order has been passed without proper adjudication of the offence. He further submits that the alleged offence is compoundable as per provision of Section 74 of the United Province Excise Act, 1910 as well as the Government Order dated 13.06.2018, but without considering the material available on record, the impugned order has been passed and therefore, the order impugned is liable to be set aside.

5. In support of his submission, he has placed reliance upon judgment of this Court passed in the case of Ravendra Singh Vs. State of U.P. and 3 others (Writ Tax No. 607 of 2022), deiced on 22.07.2024.

6. Per contra, learned Additional Chief Standing Counsel supports the impugned orders by submitting that since at the time of inspection/survey being made, certain allegations were there in the report prepared thereof, the licence of the country liquor shop of the petitioner situated at Gehrukheda, District- Fatehpur was rightly suspended and thereafter cancelled.

7. After hearing the parties, the Court has perused the record.

8. The issue in hand is no longer res-integra such as in the case of Ravendra Singh (supra), the licence of the petitioner therein was directed to be restored/renewed/revived wherein the issue was at par with the issue raised in the present writ petition. The relevant paragraphs of the said judgment are being quoted here-in-under:-

"3. Learned counsel for the petitioner submits that the petitioner is a licensee of the country liquor shop. On 19.03.2018, a survey was conducted at the business premises of the petitioner. At the time of survey, certain discrepancies were found with regard to not showing of books of account, alleged 601 excess stock and 298 pouches, in which the QR codes pasted were not verifiable from the mobile app. Out of the said pouches, in some pouches, required percentage of alcohol was less after the same were tested by the alcohol meter. On the said premise, proceedings were initiated against the petitioner and vide order dated 22.03.2019, the petitioner's licence was suspended and on 28.05.2019, the licence of the petitioner was cancelled, against which the petitioner preferred an appeal, which was allowed vide order dated 24.01.2020 remanding the matter to the Collector/Licensing Authority to take afresh decision after giving due weightage to the two clinical examination reports dated 13.08.2019 and 12.09.2019, which were in favour of the petitioner, but in spite of the specific direction, again the impugned order dated 24.03.2020 cancelling the licence of the petitioner. Thereafter, the petitioner again preferred appeal, which has been dismissed vide impugned order dated 09.02.2021, against which the petitioner filed revision, which too has been dismissed vide impugned order dated 16.03.2022. Hence, this writ petition.

4. Learned counsel for the petitioner submits that the State Government has issued Government Order/circular dated 13.06.2018 specifically providing that in case any licensee is found guilty of offences punishable under section 60 of the U.P. Excise Act, 1910, the same may be compounded and the licensee may be exonerated after having adequate penalty/fine. He further submits that once the said circular has been issued, the authorities were duty-bound to pass an order as contemplated in the circular itself. He further submits that it was the first survey during the excise period, in which allegation has been levelled against the petitioner and therefore, instead of levying the penalty as contemplated in the Government Order dated 13.06.2018, cancelled the licence of the petitioner in an arbitrary and illegal manner. He further submits that the two clinical examination reports were in favour of the petitioner that since the excise year has cancelled, the QR code could not be verified from the issuing distillery as neither the details are available, nor the same is preserved and therefore, no adverse view can be drawn against the petitioner, but in spite of the findings recorded in favour of the petitioner, the impugned orders have been passed, which are bad in law.

5. Per contra, learned ACSC supports the impugned orders and submits that the petitioner is indulged in mal practice, which is evident from the survey where in spite of asking for the record, the same were not produced, excess stock were found for which no proper explanation was submitted, the QR codes could not be verifiable in the pouches which were found at the time of survey and on some pouches, the required quality of alcohol was not upto the standard and therefore, the proceedings were rightly initiated against the petitioner.

6. After hearing learned counsel for the parties, the Court has perused the records.

7. It is not in dispute that at the time of survey, certain discrepancies were found, i.e., books of account were not produced, excess pouches were found, in some of which QR codes could not be verified and required quality of alcohol in some pouches were less than the specified standard. The State Government has issued Government Order/circular dated 13.06.2018, under which penalty/fine has been fixed for 1st, 2nd and 3rd default, but instead of following the directions issued under the said Government Order in letters and spirit, the impugned orders have been passed.

8. It is not the case of the either side that survey dated 19.03.2018 was not the first survey for the licence year in question. Once it is not in dispute that it was the first survey in which alleged discrepancies as noted hereinabove were pointed out, the authorities were duty-bound to follow the directions contained in the Government Order dated 13.06.2018 and should have imposed penalty/fine as contemplated therein. For non-production of stock register on demand, a sum of Rs. 10,000/- can be imposed, for discrepancies in QR codes, a sum of Rs. 20,000/- can be imposed and if the required quality of alcohol was not upto the standard, a sum of Rs. 40,000/- can be imposed for default of first time as penalty, but instead of imposing the aforesaid penalties as mentioned in the Government Order dated 13.06.2018, the impugned orders have been passed.

9. The Apex Court as well as this Court, in a catena of judgements, have held that the Government Order/Circulars/Decisions are binding upon the authorities. Reference may be had to M/s Kichna Sugar Company Ltd. Nainital Vs. Commissioner of Sales Tax [1995 UPTC 1028], Paper Products Limited Vs. Commissioner of Central Excise [(2001) 247 ITR 128], Raghunatyh Laxminarain Spices Pvt. Ltd. Vs. State of U.P. & Others [2000 UPTC 554], M/s Sir Shadi Lal Enterprises Ltd. Shamli Vs. Union of India & Others [2003 UPTC 696], Union of India Vs. Arviva Industries (I) Ltd. [(2007) 209 ELT 5] and State of Kerala & Others Vs. Kurian Abraham (P) Ltd. & Another [(2008) 3 SCC 582].

10. The Division Bench of this Court, in a bunch of petitions, leading being Civil Misc. Writ Petition No. 1683 of 2007 (M/s Super Fine Processors Pvt. Ltd. Vs. State of U.P. & Others), vide judgement & order dated 10.01.2013 has held that the Government Order/Circular are binding upon the authorities.

11. Further, the Division Bench of this Court in Chandok Textiles Enterprises Private Limited Vs. State of U.P. & Others [2016 (5) AWC 5424] has held as under:-

"12. In the case of the petitioner, this Court in its decision dated 15.01.2013 also held that the order of the State Government dated 07.10.2005 was binding upon the assessing authorities. We are, therefore, of the considered opinion that it was no longer open to the assessing authorities to take a different stand as given by the State Government, which has also been affirmed by this Court. The finding given by the State Government in its order dated 07.10.2005 and by the Division Bench of this Court dated 10.01.2013 in the case of Superfine Processors (Supra) and in the case of the petitioner dated 15.01.2013 involving identical facts and identical processing of the cloth are binding upon the assessing authority. The assessing authority could not have deviated from the binding precedents nor could it impose tax on dyes and chemicals by treating it as a deemed sale. We are of the opinion that judicial discipline should be enforced and the assessing authorities should not deviate from the decision of the State Government, which has been affirmed by this Court. The decision cited by the respondents in the case of M/s Aristo Printers (Supra) of a learned Single Judge is distinguishable. In that case, a specific finding has been given that the assessee of that case did not contend that the chemicals used by him in the process of the cloth were consumables and that it had not passed on to the customers. In view of that finding, the learned Single Judge held that the ink and chemicals used in the process had passed on to the customers and consequently, were exigible to tax. In the instant case, a specific case has been stated by the petitioners, namely, that the dyes and chemicals are consumed in the process of cloth and are not transferred to the customers, which finding still stands and the same has not been reversed by the assessing authority. The contention that tax on cotton fabric is now payable on account of the exemption being withdrawn has no relevance to the issue involved in the writ petition. The issue is one of the imposition of tax in the processing of dyeing, colouring, bleaching on the cloth. The State Government has clearly given a decision that dyes and chemicals used in the processing of the cloth loose their identity and are, therefore, consumables and is not a deemed sale, which finding is binding upon the assessing authority. The payment of additional excise duty is wholly irrelevant to the transactions made under theVAT Act. The charge under theVAT Actis on the turnover of sale and not on the manufacture. A transaction may or may not be a manufacture but it has to come within the definition of sale as provided under theVat Act. If the transaction does not satisfy the definition of sale, the question of subjecting it to tax underVat Actdoes not arise. Consequently, omission of additional excise duty as contended by the learned Special Counsel for the State has no relevance to the issue."

12. Perusal of the aforesaid decisions would make it clear that the Government Orders/Circulars/decisions of the State are binding upon the authorities and the authorities cannot take a different view.

13. It is not the case of the respondents that the circular/Government Order dated 13.06.2018 has been superseded/rescinded by the subsequent Government Order. Once the Government Order dated 13.06.2018 holds the field, the impugned orders cannot be sustained in the eyes of law.

14. In view of the aforesaid facts and circumstances of the case as well as the law laid down by the Apex Court as well as this Court, the impugned order dated 16.03.2022 passed by the respondent no. 1 in Revision No. 15 of 2021 as well as the impugned order dated 09.02.2021 passed by the respondent no. 2 in Appeal No. 34/2020 and the impugned order dated 24.03.2020 passed by the Collector/Licensing Authority are hereby quashed.

15. The writ petition succeeds and is accordingly allowed.

16. Let the licence of the petitioner in respect of shop at Dhata No. 2, District - Fatehpur be revived/renewed in the current excise year. Any amount lying in deposit may be adjusted against thelicense fee to be deposited for the current excise year. "

9. In the case in hand, the offence is compoundable under Section 74 of the United Province Excise Act, 1910 and Section 74 (1-A) of the United Province Excise Act, 1910 empowers the levy of penalty of Rs. 5,000/-.

10.This Court after considering the afore-quoted judgment wherein it has been held that the offence is compoundable under Section 74 of the United Province Excise Act, 1910, the impugned orders cannot be sustained in the eyes of law and the same are hereby quashed.

11. Accordingly, the writ petition is allowed.

12. Let the licence of country liquor shop of the petitioner situated at Gehrukheda, District- Fatehpur be revived/renewed in the current excise year. Any amount lying in deposit may be adjusted against the licence fee to be deposited for the current excise year.