Jharkhand High Court
M/S K.D. Liquor & Fertilizer (P) Limited vs The State Of Jharkhand Through The ... on 10 May, 2024
Author: Gautam Kumar Choudhary
Bench: Gautam Kumar Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 2476 of 2012
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M/s K.D. Liquor & Fertilizer (P) Limited, having its registered office at 503 N.P.
Centre, Dak Bunglow Road, Patna .... .... .... Petitioner
Versus
1. The State of Jharkhand through the Secretary to the State Government cum
Excise Commissioner, having its office at Project Bhawan, P.O. Dhurwa,
P.S. Jagannathpur, District Ranchi.
2. The Commissioner of Excise, Department of Excise & Prohibition,
Administrative Building, HEC Township, P.O. Dhurwa, P.S.-Jagannathpur,
District Ranchi
3. The Superintendent of Excise, Sahebganj
4. The Superintendent of Excise, Deoghar .... .... .... Respondents
CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY
For the Petitioner : Mr. Satyabir Bharti, Advocate
Mr. Prabhat Kumar Sinha
For the State : Mr. Shray Mishra, A.C. to A.G.
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Order No.16 / Dated : 10.05.2024
1. The instant Writ Petition has been filed for quashing the order dated
28.04.2012 as contained in Memo No.1/NITI- 40-2/2011-981 (Annexure-8) passed
by the Excise Commissioner, Jharkhand, Ranchi, whereby and whereunder in
relation to the period 2002-03 to 2004-05, the petitioner has been directed to deposit
penalty amounting to Rs.73,24,610/- by 02.05.2012 for non supply of country liquor
in terms of the minimum guarantee quota.
2. Petitioner is manufacturer and wholesaler and was awarded the wholesale
tender on for the period 2002-05. Notice inviting tender (Annexure-1) stipulates in
Clause 7, that the petitioner will be supplying liquor to the retailer on production of
pass and only for the quantity as mentioned in the said pass, on the payment having
been made on demand draft. In the event of non-supply of liquor to the retailer then
as per Clause 8 (d), the whole seller will be liable to pay the penalty.
3. It is submitted by referring to this provisions of NIT that there has not been
any complaint with regard to non-supply of liquor from any quarter or by any
retailer against the petitioner. There is no pass which has been brought on record to
show that petitioner had failed to honour the pass for supply of liquor, and the
penalty has been imposed six years after the term of wholesale contract expired in
2012 on the basis of audit report that during such period in District of Sahebganj and
Deoghar, the minimum guarantee quota was not maintained. It is also argued that
merely on the basis of audit objection, without issuance of any show cause notice
and in gross violation of the principles of natural justice penalty has been imposed.
4. It is argued by the learned AC to AG for the State that Paragraph 229 of
instruction issued by the Board of Revenue provides that a certain minimum amount
of spirit, as fixed by the Commissioner, should be kept at every warehouse. If the
stock falls short of prescribed minimum, the licensee shall, within a time fixed by
the Collector, make up the stock. If he fails to do so, the Collector may make up the
supply from any source he thinks fit. The excess cost of such supply including the
cost of transit, over the cost price of spirit issued from the warehouse, together with
a penalty that may extend to the amount of duty on the spirit demanded by the
Collector but not supplied, together with compensation for any loss that may fall on
Government in consequent of the deficiency may be recovered from the deposit of
the licensee.
5. It is further argued that the audit report was not the sole basis of demand
notice. It is submitted that as per Clause 7'k' of the Notice Inviting Tender, the
Board had the power to cancel the licence, forfeit the deposit and resettle it to some
other licensee in the event of not maintaining the minimum stock as agreed upon.
6. Learned AC to AG for the State has relied upon the following authorities,
1997 (1) SCC 156, 2002 (1) SCC 216.
7. The matter for consideration is if petitioner can be saddled with penalty or
an inference can be drawn that liquor was not supplied to the retailers only on the
audit report that the quota was not maintained?
8. Having considered the submissions of both the sides, it is apparent that
penalty has been imposed for not maintaining the stock for the period i.e. 1st April,
2002 to 31st March, 2005 of Rs.73,24,610/- by the petitioner's firm in the Districts
of Sahibganj and Deoghar. It is instructive to note that there was no complaint from
any quarter regarding non-maintenance of stock during this period, and it came first
to light in the audit's report of the Audit conducted by the Accountant General,
Jharkhand in the year 2006. As per Clause 7'K' of the NIT, the Collector had
authority to cancel and to make re-settlement to some other party in violation to
make stock. Record does not suggest that any such step under Clause 7 was taken.
9. Further, under Clause 229 of the instruction issued by Board of Revenue as
referred to in the reply to the rejoinder filed on behalf of the State, the Collector has
the power that in the event of the requisite stock to be maintained as fixed by the
Commissioner, the licensee was required to make up for the deficit stock within the
time fixed. If he failed to do so, the Collector could make up the supply from any
source he thinks fit. However, there is no material to show that at any point of time,
the licensee was asked to make up stock, or the Collector invoked the power under
Paragraph 229 of instruction of the Board of Revenue, to replenish the stock from
the other source. Although it has come in the Audit report that there was deficit in
the stock, but there is no material to show that State, suffered any loss on account of
said stock. Law has been settled by Hon'ble the Supreme Court in the judgment
reported in 2003 (11) SCC 465 at Paras 16, 17 & 18 wherein no opportunity of any
kind was offered by the respondents before the demand as regards the penal duty
was pressed against the respondents.
10. The penalty has been imposed solely on the basis of audit report of the
year 2005-06 wherein the stock register did not reflect the requisites minimum stock
to have been get as per the terms of the contract., This Court is of the view that mere
deficit in stock of liquor than as required under the minimum guarantee quota cannot
be the sole basis for imposing penalty after six years, unless there is some material
to show that deficit stock had resulted in non-supply to the retailers or it had in any
manner caused loss of revenue to the State or the Collector had invoked the
provision of Clause 7'K' of the NIT.
11. For the reasons discussed above this Court is of the view that penalty has
been imposed under clause 8(a) without meeting the requisite pre-conditions and
without any material to show that failure to maintain stock had resulted in any loss
to the State.
Under the circumstances, the impugned order is set aside and the
respondent No. 2 is directed to refund the penalty amount deposited as penalty with
simple interest @ 6% per annum, within three months of this order.
Writ petition is accordingly allowed. Interlocutory Application, if any, is
disposed of.
(Gautam Kumar Choudhary, J.)
Anit
