Important Point
The State Government is not empowered to collect differential supervision charges with retrospective effect under Section 58-A of the Bombay Prohibition Act, 1949 (as supervision charges are paid in advance by Company so as to enable it to fix the price of goods).

Judgment

K. Venkataswami, J.-The short question that arises for our considera­tion in this appeal is whether the State Government is empowered to collect differential supervision charges with retrospective effect under Section 58-A of the Bombay Prohibition Act, 1949?

2. The facts leading to the filing of this appeal are as follows :-

The first appellant is a company registered under the provisions of the Companies Act, 1956. The second appellant is a share-holder and Director of the first appellant-company. The appellants, for the sake of convenience, will be referred to hereinafter as the ‘Company’. The Company is engaged in the manufacture of alcohol potable liquor, country liquor and alcohol based chemicals. As required under Section 58-A of the Act read with Condition No. 2 of the License issued to the Company in Form ‘I’, the Company used to pay in advance the supervi­sion charges towards the costs of the staff deputed for the purpose of supervising the operation of manufacture, storage and issue of spirit. The Inspector of Prohibition and Excise by a letter dated 19th July, 1979 informed the Company that the wages and dearness allowance of Government servants were increased retrospectively and on account of that the supervision charges payable by the Company comes to Rs. 1,54,379.79 for the period 1970 to 1979. However, pursuant to the said letter dated 19th July, 1979, no steps were taken by the respondents to collect the differential amount from the Company. While so, the Company on 7th April, 1983 received a Demand Notice dated 21st March, 1989 calling upon the Company to pay the differential amount of super­vision charges amounting to Rs. 99,702.10 immediately within 15 days from the date of the receipt of the said Demand Notice, failing which legal action to recover the amount as arrears of land revenue would be taken.

3. Aggrieved by the said demand of differential supervision charges retrospectively, the Company moved the High Court by filing a Writ Petition No. 1672/83 under Article 226 of the Constitution of India. The said Writ Petition was heard along with Writ Petition No. 940/82 and the main judgment was rendered in Writ Petition No. 940/82. A Division Bench of the Bombay High Court upheld the impugned demand of differential supervision charges retrospectively. The Company, ag­grieved by the judgment of the Bombay High Court dated 12.9.90. has preferred this appeal by special leave.

4. Learned counsel appearing for the appellants-Company submitted that the impugned judgment of the Division Bench runs counter to an earlier Division Bench judgment of the same High Court on the same point. It is stated that another Division Bench in M/s. J.E. Bilmoria & Sons v. The State of Maharashtra & Ors.4 has quashed similar demand of differ­ential supervision charges retrospectively. Therefore, the judgment under appeal, ignoring the earlier Division Bench judgment on the same point, cannot be sustained.

5. Learned counsel appearing for the respondents, placing reliance on the reasoning given in the judgment under appeal, supported the conclu­sions reached by the Division Bench.

6. Section 58-A of the Bombay Prohibition Act, 1949 enables the State­ment (sic) Government to levy and collect what is called supervision charges. It is common ground that this supervision charges are col­lected in advance at the beginning of every quarter. The question for consideration is whether this collection of supervision charges in advance can be revised as a consequence of revision of salaries to Government servants. While upholding such revision and collection of differential supervision charges retrospectively, the learned Judges in the judgment under appeal held that the liability to pay supervi­sion charges and the quantification of the same are two different concepts and, therefore, the liability was not imposed with retrospec­tive effect, but merely rates are revised with retrospective effect. The Division Bench for coming to the above c