Bombay High Court
Soma Vine Village Pvtr. Ltd vs The State Of Maha. Thr. Prin. Sec. State ... on 13 March, 2025
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2025:BHC-AS:11949-DB WP 12840-22.DOC
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
PRAJAKTA
SAGAR
Digitally
signed by
PRAJAKTA
SAGAR
VARTAK
WRIT PETITION NO. 12840 OF 2022
VARTAK Date:
2025.03.13
21:40:27
+0530
Soma Vine Village Pvt. Ltd. )
A company incorporated under the )
Companies Act, 1956 having its registered office at)
Vine House, Plot No. 28, Saptashrungi Colony, )
Gangapur Road, Tal. Dist. Nashik -- 422005 ) ...Petitioner
Vs.
1. The State of Maharashtra, )
through its Principal Secretary, State Excise )
Mantralaya, Churchgate, Mumbai -- 400 020 )
And Through the Government Pleader )
PWD Building, High Court, (A.S.), )
Mumbai, Maharashtra -- 400 032 )
2. The Commissioner, State Excise, )
2nd floor, Old Custom House Fort, )
Near Horniman Circle, Mumbai -- 400 001 )
3. The Superintendent )
Office of the Supdt., State Excise, Nashik )
Opposite Police Parade Grounds, )
Sharanpur Road, Nashik -- 422002 ) ...Respondents
_________
Mr. Rafique Dada, Senior Advocate with Ms. Sweta Rajan and Ms.
Virangana Wadhawan i/b. Economic Laws Practice, for Petitioner.
Mr. M. M. Pabale, AGP for the State.
__________
CORAM:
G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
RESERVED ON: 11 MARCH 2025.
PRONOUNCED ON : 13 MARCH 2025.
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Judgment (Per G. S. Kulkarni, J.):-
1. This petition under Article 226 of the Constitution of India is filed
praying for the following substantive reliefs:-
"a) Declare the Product manufactured by the Petitioner is
correctly classifiable as Wine and not Cider;
b) issue a Writ of Certiorari or a writ, order or directions in
the nature of Certiorari or any other Writ, order or direction of
like nature, setting aside the Impugned Demand Notice bearing
No. BRL 112022/Supdt./2183 dated 17.08.2022;
c) issue a Writ of Prohibition, or a Writ in the nature of
Prohibition, or any other appropriate Writ, order or directions,
restraining the Respondents, their servants, agents and
subordinates, from directly or indirectly taking any kind of action
in furtherance of and/or implementation of the Impugned
Demand Notice bearing No. BRL 112022/Supdt./2183 dated
17.08.2022;
d) issue a Writ of Mandamus or a writ, order or direction, in
the nature of Mandamus or any other Writ, by directing (a) the
Respondent No. 3 to withdraw Impugned Demand Notice
bearing No. BRL 112022/Supdt./2183 dated 17.08.2022 (b) the
Respondent No. 3 to permit the petitioner to re-approve the
Petitioner's labels which was applied for vide letter dated
25.07.2022 and (c) the Respondent No. 3 to forthwith permit the
Petitioner to clear the goods manufactured by it under the
category of 'wine'."
2. The short issue which arises for consideration is whether the
impugned notice dated 17 August 2022 issued by the Superintendent of
State Excise, Nashik, demanding from the petitioner an amount of
Rs.25,95,958/- for a retrospective period i.e. for the year 2019 to August
2022, without issuing a show cause notice and adhering to the principles of
natural justice, can be sustained.
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3. Briefly the facts are:-
The petitioner under a license granted to it under the provisions of the
Maharashtra Prohibition Act, 1949, operates a winery. It is engaged in the
business of production, manufacture and sale of different kinds of wine. In
this context, in the year 2018, the petitioner entered into a contract
manufacturing arrangement with one Trillium Beverages Pvt. Ltd. ("Brand
Owner"), to manufacture Apple Cider/ Wine under the brand name
"Thirsty Fox" (for short, "the product"). The product is manufactured by
fermentation of apple juice wherein ethyl alcohol is generated in the
process.
4. Between the period 2018-19, the Maharashtra Excise Department,
considering the manufacturing process, manufacturing cost and Maximum
Retail Price ("MRP") of the products, approved the petitioner's product as
'fruit wine'. The labels with the nomenclature 'apple wine' and 'craft cider',
were also approved. In this regard, a letter dated 12 December 2018 was
addressed by the petitioner to the respondents seeking permission to
manufacture fruit wine as per Rule 11(4) of the Manufacture of Beer &
Wine Rules, 1996 a copy of which is annexed to the petition. Further, as
contended in this petition, the petitioner, by its letter dated 16 July 2019
addressed to the respondents, declared the manufacturing cost with MRP as
per the requirement under Rule 3 of the Maharashtra Potable Liquor
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(Fixation of Maximum Retail Prices) Rules, 1996, as also intimated of the
final approval letter dated 31 July 2019 under which the labels were
approved with the specified applicable excise duty as 100%. The petitioner
has also placed reliance on the letter dated 18 July 2019 addressed by the
Sub-Inspector to the Superintendent of Excise stating that the office has no
objection for sanctioning of the MRP submitted by the petitioner. The
petitioner has also contended that the petitioner has been paying duty at
100% and the department had no objection for a period of 3 years.
5. On such backdrop, on 25 July 2022, the petitioner had made an
application for re-approval of labels, as required by law owing to change in
the petitioner's name from Soma Vineyards & Resorts Pvt. Ltd. to Soma
Vine Village Pvt. Ltd. The said application is said to be pending and no
decision thereon has been taken. It is the petitioner's case that in these
circumstances, the petitioner was surprised to receive a demand notice
dated 17 August 2022 alleging that the product is 'cider' and chargeable to
excise duty at 175% of the manufacturing cost. Accordingly, differential
duty of Rs.25,95,958/- for the retrospective period from July 2019 to July
2022 was directed to be paid within 15 days, failing which interest at 2%
was proposed to be charged.
6. The petitioner raised an objection to the such demand notice by its
letter dated 30 August 2022 inter alia contending that such demand was
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not in accordance with law as also that no hearing was granted to the
petitioner before the impugned demand could be raised.
7. It is the petitioner's case that pursuant to issuance of the demand
notice, the department stalled the grant of necessary approvals for
continuing manufacture and clearances of the product from the winery. It
is contended that effectively, the petitioner is not being permitted to clear
manufactured stock, and the new labels to manufacture new stock are not
being approved. The relevant period for this is August-November 2022. It
is further contended that between September to October 2022, the
petitioner had approached the Excise Commissioner for intervention in the
matter and to allow clearance of labelled stock, however, no relief was
granted. In these circumstances, the present petition is filed praying for the
aforesaid reliefs.
8. The respondents have appeared. Reply affidavit of Shri. Ravindra
Vishwanathrao Ugale, Deputy Superintendent, State Excise, Nashik is
placed on record.
9. We have perused the reply affidavit. Primarily, the assertion is on the
issue of classification so as to justify the department's action that the
product as manufactured by the petitioner is 'cider' and not 'wine' and,
therefore, the duty which is leviable is 175%.
10. We have heard Mr. Rafique Dada, learned senior counsel for the
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petitioner and Mr. Pabale, learned AGP for the State. With the assistance
of learned counsel for the parties, we have perused the record of the Writ
Petition, including the affidavit in reply as filed on behalf of the State
Government.
11. As noted above, the limited issue which arises for consideration is
whether the respondents would be correct in levying a retrospective
demand of duty against the petitioners, without the petitioners being heard
inter alia on the issue of classification, as sought to be asserted against the
petitioner.
12. It appears that the petitioner was manufacturing wine, as according to
the petitioner, it was permitted to do so for which the labels were approved
by the respondents. There was no objection whatsoever when such
manufacture and sale of the product was undertaken for the relevant
period. However, it clearly appears that the department has formed an
opinion that the petitioner was not manufacturing wine and it was
manufacturing cider and therefore the classification is different from what
was permitted under the license. In other words, according to the
department, the product as manufactured and sold by the petitioner
attracted a duty of 175% and not 100%. However, in asserting such stand,
according to the petitioner, what has not been considered is that the stocks
at 100% duty were already sold as also there were unsold stocks. The
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petitioner has also contended that the demand is for retrospective period
with effect from the year 2019 to 2022 and which could not have been
raised without following the basic principles of natural justice.
13. We find substance in the contentions as urged on behalf of the
petitioner. In our opinion, admittedly, when a retrospective demand was
being made by the respondents, and that too after sales of its products
already being effected by the petitioner, it was incumbent on the
respondents to adhere to the principles of natural justice, i.e., by issuance of
a show cause notice to the petitioner so as to call upon the petitioner to
show cause against a retrospective demand being raised against the
petitioner. It is only after an appropriate procedure under a show cause
notice was to be followed and taken to its logical conclusion i.e. on an order
being passed in accordance with law on such show cause notice, only then,
a demand could have been raised.
14. Thus, there appears to be substance in the contention as urged on
behalf of the petitioner that the impugned demand as raised against the
petitioner, apart from being a sudden demand, for such reasons is not in
accordance with law. Furthermore, it appears that there was no prior
background of any cause of the nature as asserted by the respondents, of
which the petitioner was put to notice, before the manufacture was
undertaken, and/or of any prior communication / notice of the respondents
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that a duty of 175% could be levied. The consequence certainly was that
the petitioner manufactured the product and sold the same at 100% duty
and not at 175%. As on merits such issues are not adjudicated by the
Department, the impugned demand would be required to be faulted, and
an appropriate decision in accordance with law, would be required to be
taken.
15. In the aforesaid circumstances, we are of the opinion that it would be
in the interest of justice that the petition is disposed of by directing the
respondents to hear the petitioner and pass an appropriate order in
accordance with law. Hence, the following order:
ORDER
(i) The impugned demand notice dated 17 August, 2022 issued
by the Superintendent of State Excise, Nasik is quashed and set
aside.
(ii) The respondents are directed to issue a show cause notice to
the petitioner within a period of two weeks, from the date of copy of
this order is made available to the parties.
(iii) After a written reply to the show cause notice is received by the
respondents, which be filed within two weeks from the receipt of the
show cause notice, the Designated Officer shall grant a hearing to the
petitioner and pass a reasoned order.
13 March 2025
WP 12840-22.DOC
(iv) The petitioner's application dated 25 July, 2022 seeking
approval of its labels in respect of its products, the same be also taken
into consideration and an order on it be passed in accordance with
law, within a period of four weeks from the date of receipt of the
copy of this order.
(v) All contentions of the parties on the proceedings which would
now take place before the Designated Officer are expressly kept
open.
16. We clarify that in reaching to the aforesaid conclusion, we have not
delved on the merits of the respective contentions or on the issue of the
classification which is left to be decided by the Designated Officer in
accordance with law.
17. Writ Petition stands disposed of in the aforesaid terms. No costs.
(ADVAIT M. SETHNA, J.) (G. S. KULKARNI, J.)
13 March 2025
