Judgment

OJHA, J. - This appeal on the basis of a certificate granted under Article 133(1)(c) of the Constitution of India has been filed by the Government of Andhra Pradesh against the judgment dated 14th March, 1972* of the Andhra Pradesh High Court allowing writ petition No. 4312/71 filed by the respondent. The respondent obtained a Distillery licence under the Andhra Pradesh Distillery Rules, 1970 (hereinafter referred to as the Rules) framed under the Andhra Pradesh Excise Act, 1968 (hereinafter referred to as the Act) and has been carrying on the business of manufacture and sale of wine and other allied products. The excise authorities posted one Inspector, one Sub-Inspector and four Constables at the respondents factory premises and required the respondent to pay their salaries and allowances etc. in pursuance of Section 28(2) of the Act. The respondent made representations to the excise authorities against the said demand and having failed to get any redress, filed the aforesaid writ petition challenging the demand on two grounds :-

* Reported in AIR 1972 Andh Pra 379.

1. By virtue of Entry 51 in List 2 of the Seventh Schedule to the Constitution of India, no duty other than excise duty could be levied or collected under the Andhra Pradesh Excise Act. And since the impugned demand which was in the nature of establishment charges did not constitute excise duty, the respondent was not liable to pay the same.

2. The said demand could not be justified even on the ground that it was a fee, as no services were rendered and there was no quid pro quo.

2. These contentions raised on behalf of the respondent found favour with the High Court which by the judgment appealed against allowed the respondents writ petition and directed the issue of a writ restraining the Excise Department from either demanding or collecting the aforesaid establishment charges of the supervisory staff posted at the factory premises of the respondent.

3. It has been urged by the learned counsel for the appellant that the High Court committed an error in appreciating the true nature of the demand. According to learned counsel for the appellant, the demand was in the nature of price for parting with the privilege to manufacture and sell wine and other allied products which privilege exclusively vested with the Government. Learned counsel for the respondent on the other hand supported the reasoning which commended to the High Court in allowing the writ petition.

4. Having considered the respective submissions made by learned counsel for the parties, we find substance in the submission made by learned counsel for the appellant. It has not been disputed, and in our opinion rightly, by learned counsel for the respondent that the business which the respondent has been carrying on could not have been carried on by it unless licence had been granted to it under the Act and the Rules. Section 17 of the Act as it stood at the relevant time contemplated grant for a fixed period at any place of a lease jointly or severally for the supply, manufacture or sale of any intoxicant subject to such conditions as the Government may deem fit to impose. Section 28 of the Act which deals with the forms and conditions of licence etc, reads as under :-

"28. Form and conditions of licence etc.:-

(1) Every permit issued or licence granted under this Act shall be issued or granted on payment of such fees, for such period, subject to such restrictions and conditions, and shall be in such form and shall contain such particulars, as may be prescribed.

(2) The conditions prescribed under subsection (1) may include provisions of accommodation by the licensee to excise officers at the licenced premises on the payment of rent or other charges for such accommodation at or near the licensed premises and the payment of the costs, charges and expenses (including the salaries and allowances of the excise officers) which the Government may incur in connection with the supervision to ensure compliance wit