1. State appeals challenging High Court judgment on mid-year enhancement of excise licence fees during licence validity. (Para 1 , 2 )
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2000 Supreme(SC) 1977
SUPREME COURT OF INDIA
A.S.Anand, CJI., R.C.Lahoti : Shivaraj V.Patil, JJ.
Excise Superintendent., Warangal Distt., Warangal
Versus
Deluxe Bar, Kazipet, Warangal
Case No. : 5993 , 6068 of 1997
Date of Decision : 12/6/00
Enhanced licence fees tied to a defined 'Excise Year' cannot be collected mid-year as the licensee's right to operate for that period is crystallised upon payment of the annual fee. Fiscal provisions must be strictly construed without relying on unexpressed intendment.
Headnote:(A) State Excise Act - Section 29 - State Liquor Rules - Rules 24, 25 and 30(3) - Enhancement of licence fee - Annual character of licence fee - Whether enhanced licence fee can be collected during the middle of an excise year - The annual licence fee is charged for an Excise Year, defined as the period from 1st October to 30th September. Once the annual fee is enforced at the commencement of the Excise Year and paid or agreed to be paid, the right of the licensee to operate for that year crystallises and cannot be put in jeopardy during the subsistence of the concerned Excise Year (Para 4).
(B) Fiscal matters - Strict construction - In fiscal matters, provisions are required to be strictly construed, and there is no scope for looking to the unexpressed intendment (Para 5).
Facts of the case:
Holders of various liquor licences, including wholesale, retail, bar, and storage licences, were granted licences for a five-year block. During this period, the State Government enhanced the licence fees effective from 1st April, whereas the defined "Excise Year" runs from 1st October to 30th September. The State sought to collect the enhanced fees from 1st April to 30th September of the current excise year. The licensees challenged this demand, asserting that the enhancement could only apply from the start of the next excise year.
Findings of Court:
The court upheld the finding that the enhancement of the licence fee becomes effective only from the beginning of the next excise year (1st October). It held that the annual character of the fee protects the crystallised right of the licensee to operate for the duration of the current excise year.
Issues: Whether the government is entitled to collect enhanced licence fees during the middle of an excise year, notwithstanding a contractual agreement to pay enhanced fees levied from time to time.
Ratio Decidendi: Fiscal provisions must be strictly construed. Since the licence fee is designated as an annual fee tied to a specific Excise Year, the licensee's right to operate for that year is fixed once the fee is determined at the start of the year. Therefore, an enhancement order that is not retrospective in operation can only be applied from the commencement of the subsequent excise year.
Result: Appeals fail and are dismissed.
Legal Category Hierarchy
- administrative law
- practice and procedure
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statutory interpretation
-
strict construction
- fiscal statutes (Para 5)
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strict construction
Table of Contents
2. State argued licensees contractually bound to pay any enhanced licence fee levied from time to time during licence period. (Para 3 )
3. Annual licence fee is for an Excise Year; once paid, licensee's right for that year crystallizes and cannot be altered mid-year. (Para 4 , 5 )
4. In fiscal matters, provisions are strictly construed; enhanced licence fee applies only from start of next Excise Year. (Para 4 , 5 )
5. Appeals dismissed; enhanced licence fee effective from 1-10-1990; parties to bear own costs. (Para 6 , 7 )
6. Can an enhanced licence fee be collected from existing licensees during the middle of an Excise Year?
No, once the annual licence fee is enforced at the commencement of the Excise Year, the licensee's right for that year is crystallized and cannot be altered mid-year. (Para 4 , 5 )
7. Does a contractual clause to pay enhanced fees preclude a challenge to the timing of such enhancement?
No, the court held that the annual character of the fee and its crystallization at the start of the Excise Year prevail over such a general contractual clause. (Para 3 , 4 )
8. What is the rule of construction applicable to fiscal provisions regarding licence fees?
In fiscal matters, provisions are required to be strictly construed, and there is no scope for looking to an unexpressed intendment. (Para 5 )
(1) THIS order will dispose of the batch of appeals filed by the State impugning the judgment of the Division Bench of the High Court of Andhra Pradesh dated 6-3-1992.
(2) THE respondents are amongst holders of wholesale licence (FL 15), retail licence (FL 24), bar licence (FL 17), storage licence for godowns (FL 19) as well as distributors licence (FL 27). These licences have been issued to the respondents under the Andhra Pradesh Excise Act, 1968 (hereinafter referred to as "the Act"). During the currency of the block of 5 years for which the licence was valid, the State Government issued GOMs No. 160, Revenue (Ex. Ill) dated 3-3-1990 amending the Schedule to the Andhra Pradesh (Foreign and Indian Liquor) Rules, 1970 (hereinafter referred to as "the Rules") framed under the Act, whereby licence fee in respect of wholesale licence for the sale of all kinds of Indian liquor including those which were not consumed on the premises, bar licences, storage licences, club licences and retail licences were enhanced. The enhancement was directed to come into force w.e.f. 1-4-1990 in the GOMs itself. An Excise Year has been defined under the Act as a year commencing from 1st October and ending 30th September. In the GOMs, enhancement was not made retrospectively commencing with the current Excise Year. However, on demand being raised for enhanced licence fee for the period 1-4-1990 to 30-9-1990, GOMs No. 160 dated 3-3-1990 was put in issue by the respondents through several writ petitions. A Division Bench of the High Court upheld the contention of the respondents that the State Government could not collect increased licence fee during the middle of the Excise Year as also the contention that the enhancement was arbitrary. The Division Bench, however, rejecting the contention of the State held that the enhanced licence fee which was made effective from 1-4-1990 could only apply from the beginning of the next Excise Year i.e. 1-10-1990 irrespective of the fact that it was still within the block of 5 years. It is this finding, which has been put in issue by the State Government before us through this batch of appeals.
(3) THE argument of learned Senior Counsel for the appellant State raised before us, which was also canvassed before the High Court, is that in view of clause (;v) of the counterpart agreement which was required to be entered into under Section 29 of the Act read with Rule 30(3) of the Rules, the licensees had bound themselves to pay the licence fee, gallonage fee, excise duty and security deposit or any enhanced licence fee, gallonage fee, excise duty, security deposit and the like levied from time to time and therefore the licensees could not challenge the enhanced licence fee levied from time to time during the validity of their licence.
(4) WE are unable to agree. A perusal of Rules 24 and 25 of the Rules speak of the annual licence fee being charged from the licensees. This annual character of the licence fee has to be considered as licence fee for an Excise Year i.e. for a period of 12 months commencing from 1st October and ending 30th September of the following year. Once the annual licence fee is enforced at the commencement of the Excise Year and has either been paid by the licensee or agreed to be paid in six bimonthly instalments, the right of the licensee to operate that licence for that Excise Year gets crystallised and that right cannot be put in jeopardy during the subsistence of the Excise Year concerned. The rule-making authority was apparently conscious of these Rules and, therefore, while formulating GOMs No. 160, Revenue (Ex. Ill) dated 3-3-1990 categorically stipulated that: "The amendments hereby made shall come into force on and from the first of April, 1990." (emphasis ours) The Division Bench of the High Court while dealing with this aspect rightly observed:
"IT should also be noted that the amendment to the Schedule introduced by GOMs No. 160 dated 3-3-1990 is not retrospe
