1981 Supreme(SC) 313

SUPREME COURT OF INDIA
D.A DESAI, A.D. KOSHAL AND R.B. MISRA, JJ.
State of Punjab and others, Appellants
Versus
Ajudhia Nath and another, Respondents.
Civil Appeals Nos. 1665 and 1666 of 1970, D/- 7-5-1981.

Headnote:

Punjab Excise Act, 1914 – Sections 16,20,21,31,36 - Punjab Excise Rules - Rule 36 (23-A) - Public auction - Applications - Claiming relief - Quashing of Order - Licence started his liquor - Selling business in said seven villages on April, 1965 - By close of financial year 1965-66 however he was unable to lift minimum quota of country liquor and also failed to deposit still-head duty which became payable by him under condition above extracted - He made applications claiming relief in matter of payment of sums which had fallen due and such relief was granted to him in part by Excise & Taxation Commissioner Punjab on ground that sales of country liquor had been adversely affected by reason of movement of population in border areas of Punjab on account of the hostilities which broke out between India and Pakistan in the month of September, 1965 - Not satisfied with the relief so granted Ajudhianath filed two petitions under Article 226 of Constitution of India before High Court of Punjab and Haryana claiming inter alia that still-head duty was an excise duty which could be levied only on manufacture of goods and which he was not liable to pay by reason of admitted fact that he was not a manufacturer of liquor - A grouse was also made by him of fact that application claming relief had been decided without affording to him an opportunity of being heard - One of these petitions related to vends functioning in two villages of Ferozepur District while the other covered 5 vends located in 5 villages of Amritsar District - Petitions were allowed by a single order May, 1967passed by on sole ground that a similar petition had been allowed by 27th Mar., 1966 - Proceedings for recovery of short-fall in deposit of still-head duty by which had been initiated by State of Punjab and its concerned officers (appellants Nos. 1 to 4 in each of the appeals before us) were quashed and Excise and Taxation Commissioner Punjab (appellant No. 2 in both the appeals) was directed to dispose of "cases" of respondents "in accordance with law after hearing the petitioners - Adopted all reasons on which had based his order above mentioned – Whether a contracting party finds it prudent to abide by terms of contract - By such a test no contract could ever have a binding force - Whether it could at all be regarded as an excise duty - Held, Cancellation of licence under Section 36 of Punjab Excise Act, 1914 had to take place quasi-judicially after due service of notice on licencee to show cause why it should not be cancelled – Although merits of last mentioned proposition need not be examined by us as it rests on a sound footing yet Court find it difficult to uphold order that demand for a sum of on account of shortfall should also be quashed on account of non-compliance with rules of natural justice in cancelling licence in proceedings under Section 36 of Act – Court think that two liabilities were erroneously considered by High Court to be inextricably linked up - Court do not think that even if respondent ought to have been given a hearing before cancelling licence this would dispense with his liability to deposit amount of balance of licence fee or .invalidate the notice of demand for it - Under old Rule 36 (23-A) still-head duty which was admittedly in nature of excise-duty was payable by licencee even on quota not lifted by him - Rule and Condition founded on it were therefore struck down in case as being beyond scope of entry 51 of List II, the taxable event under impugned Rule being sale and not manufacture of liquor - Rule 36 was amended on March 31, 1967 in order to meet judgment in but High Court found in Jage Rams case that even under amended Rule still-head duty which was in nature of excise duty was payable on unlifted quota of liquor - Position obtaining under Rules as amended on March 22, 1968 which are relevant for our purposes is in principle different as the still-head duty is now only paise as against per litre which was in force under old Rules and excise duty as such is no longer payable on unlifted quota - Principle governing decisions in case and case cannot - Therefore, apply any longer - Appeals allowed