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SUPREME COURT OF INDIA
A.N. RAY, C.J.I., K.K. MATHEW, Y.V. CHANDRACHUD, A. ALAGIRISWAMI AND A.C. GUPTA, JJ.
Har Shankar and others etc. etc., Appellants
Versus
The Deputy Excise and Taxation Commissioner and others etc., Respondents.
Civil Appeals Nos. 365, 366, 485, 1102, 1260 to 1263, 1385, 1537, 1548 to1551, 1553 to 1555, 1557 to 1560, 1566 to 1573, 1588, 1589 and 2205 of 1969, D/- 21-1-1975.
Advocates appeared
Mr. V. M. Tarkunde, Sr. Advocate (In C. As. Nos, 1566, 485 of 1969), Mr. A. K Sen, Sr. Advocate, (In C. As. Nos, 1559 and 1588 of 1969), Mr. Tirath Singh Munjral, Advocate (In all the appeals except C. As. Nos.1537, 1554, 1557 and 1558 of 1969), Mr. P. C. Bhartari and O. C. Mathur Advocates of M/s. J. B. Dadachandndji & Co., (In all the appeals), and Mr. B. P. Jha, Advocate (In all the appeals except C. As. Nos, 1566, 485,1559 and 1588 of 1969 with them), for Appellants (In C. As. Nos. 365, 366, l102, 1537, 1548-1551, 1553-1555, 1557-1560, 1566-1573, 1588 and 1589 of 1969):
M/s. S. K. Mehta, K. R. Nagaraja and M. Quamaruddin, Advocates, for Appellants (In C. As. Nos. 1260-1263 of 1969) :
M/s. K. B. Rohtagi and Tarachand Sharma Advocates, for Appellants (In C. A. No. 1385 of 1969):
M/s. Tirath Singh Munjral and H. K. Puri, Advocates for Appellants (In C. A. No. 2205 of 1969):
Mr. F. S. Nariman, Addl. Sol. Gen. of India (In C. A. No. 365 of 1969), Mr. V. C.Mahajan, Advocate (In C. A. No. l102 of 1969), Mr. H. S. Dhillon, Advocate (In C. As. Nos. 1260-1263 of 1969), Mr. K. S. Suri, Advocate (In C. A. No, 1385 of 1969), Mr. S. S. Jauhar, Advocate (In C.A. No, 1537 of 1969) Mr. S. K. Gambhir, Advocate (In C.As. Nos. 1548-1551 of 1969), Mr. N. S. Das. Behl, Advocate, (In C.As. Nos, 1553-1555 of 1969), Mr. Bishamber Lal, Advocate (In C. As. Nos.1557-1560 of 1969), Mr. Harbans Singh, Advocate (In C. As. Nos.1566-1573 of 1969) Mr.N.N. Goswami, Advocate, (In C. As. Nos, 1588-1589 of 1969), Mr. K. S. Chawla, Advocate (In C. A. No. 2205 of 1969), Mr. O. P. Sharma, Advocate (In all the matters) with him for Respondents (In C. As. Nos.366, 1260-1263, 1385, 1537, 1548-1551, 1553.-1555, 1557-1560, 1566-1567, 1573 and 2205 of 1969 and Respondents Nos. 1-3 (In C. As. Nos. 365, l102, 1568-1572, 1588 and 1589 of 1969).
M/s. O. P. Sharma for Mr. R. N. Sachthey, Advocate, for Respondents (In C. A. No. 485 of 1969).
-held, a tax, enforceable by law for collection of money by public authority is for public purposes and is not in return for a service rendered. A fee is in return for a special service rendered to individual by Govt. involving an element of ‘quid pro quo’. Excise duty is on production or manufacture of goods within the country
-held, these are neither tax nor fee but of nature of price of a privilege to the purchaser for which he has to pay in any trading or business transaction.
Judgment
CHANDRACHUD, J :- This is a group of appeals founded on certificates of fitness granted by the High Court of Punjab and Haryana under Articles 132 (1) and 133 (1) (a) and (c) of the Constitution. The appeals arise out of a common judgment dated November 18, 1968 rendered by the High Court in a batch of 152 writ petitions under Article 226 of the Constitution. Those petitions were filed by liquor contractors and hoteliers to challenge the demands made upon them by the Department of Excise and Revenue, Government of Punjab.
2. The appellants are mostly retail vendors of country liquor holding licenses for the sale of liquor in specified vends. Those licences were granted to them on acceptance of their bids in the auctions held by the Excise Department, Government of Punjab. The licence fees realised through bids made in the auctions are said to be in.the neighbourhood of Rs. 29 crores.
3. In Civil Appeals Nos. 485 and 2205 of 1969, the appellants held licences for the retail sale of foreign liquor for consumption on the premises of their respective establishments.
4. Civil Writ No. 2646 of 1968 out of which Civil Appeal No. 365 of 1971 arises, may be taken to be typical of the petitions filed by retail vendors of country liquor. For understanding the points in controversy it would be enough to refer to the facts of that petition.
5. Auctions for granting the right to sell country liquor for the year 1968-69 were initially held in various districts of Punjab on or about 8-3-1968 in pursuance of conditions of auction framed on February 19,1968. Those auctions became ineffective by reason of a judgment, D/- 12-3-1968 of a Division Bench of the High Court of Punjab and Haryana in Civil Writ No, 1376 of 1967 (Jage Ram v. State of Haryana) Following an earlier judgment in Bhajan Lal v. State of Punjab (Civil Writ No. 538 of 1966 decided on 6-2-1967) = (1967 Cur LJ 460) the High Court took the view that the licence fee realised through the medium of auctions was really in the nature of "still-head duty" and that the licensees could not be called upon by the Government to pay still-head duty on the liquor quota which, under the terms of auctions, they were bound to lift but which in fact was not lifted by them.
6. On March 21, 1968 a meeting of the State Excise Officers was held under the chairmanship of the Financial Commissioner to evolve a new formula for leasing the right to sell liquor so as to meet the judgment in Jage Ram s case. The new policy containing fresh terms and conditions of auction was announced on the 22nd and the impugned auctions in pursuance of that policy were held immediately thereafter.
7. On March 23, 1968 the first respondent - the Deputy Excise and Taxation Commissioner, Jullunder - held an auction for granting the right to sell country liquor at the Town Hall Vend and the Kailash Cinema Chowk Vend , Ludhiana. The appellants gave bids in the sum of Rs. 34,01,000 and Rs. 12,02,000 respectively for the two vends and those bids were duly accepted by the first respondent. The appellants were then granted licences in Form L, 14-A of the Punjab Liquor Licence Rules, 1956 (herein called " the Rules"). Form L, 14-A is prescribed under the Rules for the grant of licences for "retail vend of country spirit for consumption off the premises."
8. The conditions governing auctions were notified through announcements made at the time of auctions. Condition No. 1 provides that all licences for sale of country spirit, foreign liquor, Beer, etc. shall be granted subject to the provisions of the Punjab Excise Act, 1 of 1914,(hereinafter called "the Act") and the rules framed thereunder. By Condition 14 (i), licences for retail vend of country spirit are granted on the basis of "licence fee" fixed by auction. Condition 14 (ii) requires that the quota of country liquor fixed for each vend must be announced before the vend is put to auction. Under Condition 15 (i) the successful bidder has to deposit security equivalent to 1
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