Back
SUPREME COURT OF INDIA
L. NAGESWARA RAO, S. RAVINDRA BHAT, JJ.
Assistant Excise Commissioner, Kottayam and Others – Appellants
Versus
Esthappan Cherian and Another – Respondents
Civil Appeal No. 5815 of 2009
Decided On : 06-09-2021
(A) Interpretation of Statute – Rule against Retrospectivity – A rule or law cannot be construed as retrospective unless it expresses a clear or manifest intention, to the contrary – In absence of express statutory authorization, delegated legislation in form of rules or regulations, cannot operate retrospectively – Retrospectivity cannot be presumed, unless there is clear intention in new rule or amendment. (Paras 14, 15 and 20)
(B) Excise and Customs – Cancellation of Country Liquor Licence – Direction for refund of security amount – Licensee was a successful bidder in an auction held by State of Kerala and had deposited a security amount, to ensure timely payment of amounts (kist) due in terms of contract entered into – Alleging that licensee did not remit kist due to State in a timely manner, a show-cause notice was issued and eventually license was cancelled – When State initiated recovery proceedings it did not give credit of amounts collected under head of department management fee as was required under pre-existing Rule 13 – Contracts entered into before amendment of Rule 13-as in this case-were not to be treated as those transactions for which amounts were nonadjustable – There is no indication that Rule 13 applied retrospectively – In these circumstances, amounts calculated by State as departmental management fees for period September 1993 to March 1994, when it actually was in charge of vend and carried out transactions, had to be adjusted – Amounts collected could not be again recovered as department management fees – Likewise, during same period, State was able to collect excise duty as well of ? 16 lakhs – Upon payment of 50% of amount within two months from today, respondent’s liabilities towards arrears of dues for liquor vend in issue which was cancelled by appellant State’s order dated 30-09-1993 shall stand discharged – State hereby directed to release respondent’s property attached and sought to be sold, towards satisfaction of above liability, upon receiving said balance 50% of amount within two months or latest within four weeks of receipt of amount – Respondent shall not be liable to pay any interest for upheld payment or for any other reason whatsoever, on principal amount, i.e. ? 40,51,288/- – State shall refrain from initiating any proceedings for its recovery towards arrears for said period contract was to be in operation, i.e. 1993-94 – Impugned judgment upheld.[Rule 10 of Chapter IV of Abkari (Disposal in Auction) Rules] (Paras 8, 13, 17, 21, 22 and 23)
Facts of the case:
State of Kerala, is aggrieved by judgement of Kerala High Court, which allowed respondent’s (Licensee) writ petition whereby he claimed for an order quashing a demand in respect of a certain amount towards balance sought to be recovered after a country liquor license was cancelled. Licensee preferred a writ petition for a declaration that cancellation of the licensee for sale of country liquor for period 01-04-1993 to 31-03-1994 was illegal and void and that its liability with respect to Group-II arrack shops for the year 1993–94 ended upon the cancellation taking place. It sought to limit its liability for the period April 1993 to 19th August 1994.
Findings of Court:
Respondent had succeeded before the High Court and was thus entitled to claim adjustment of the departmental management fees, for the period after its contract was terminated. The respondent was also entitled to claim relief under the Amnesty Scheme, which was denied to it despite having succeeded before the High Court. Eventually, when the Scheme was announced afresh in 2011, this Court permitted the respondent to deposit 50% of admitted amount15. Having regard to the overall circumstances, it would be in the fitness of things if the respondent is permitted to deposit the balance for which it is hereby granted two months to do so. This shall be considered as closure and discharge of this liability so far as payment of amounts under the contract cancelled on 13-09-1993, are concerned.
Result : Appeal dismissed.
JUDGMENT :
S. RAVINDRA BHAT, J.
1. The State of Kerala, is aggrieved by the judgment of the Kerala High Court, which allowed the respondent's (hereafter called “the licensee”) writ petition - whereby he claimed for an order quashing a demand in respect of a certain amount towards the balance sought to be recovered after a country liquor license was cancelled.
2. The licensee was the successful bidder for arrack shops in the state of Kerala for the year 1993-94; the bid amount it offered was Rs. 60 lakhs. A permit for import of 13,00,920 litres of rectified spirit was awarded. The excise duty payable for the designated quantity, monthly was Rs. 3,58,162/-. The licensee entered into an agreement with the State on 01-04-1993. Alleging that the licensee committed default in the payment of the bid amount, in not replenishing the security in a timely manner, the state issued a show cause notice on 23-07-1993 eliciting a response as to why action should not be taken. Later, alleging that the licensee failed to replenish the security amount, the license was cancelled by an order dated 19-08-1993, of the state. The licensed shops were put up for re-auction on seven different dates. However, the reauction was unsuccessful as there were no bidders. As a consequence, the shops were managed by the Department of Excise in terms of the Abkari Shops Departmental Management Rules, 1972 (hereafter “the Management Rules”). A sum of Rs. 14,94,570 was collected as departmental management fee and Rs. 16,50,971/- was collected as duty on rectified spirit for the period 13-09-1993 to 31-03-1994. The state argued that had the licensee continued operating the shop, it would have gained revenues to the tune of Rs. 1,09,87,989/-. It accordingly demanded dues, from the licensee.
3. The licensee preferred a writ petition for a declaration that the cancellation of the licensee for sale of country liquor for the period 01-04-1993 to 31-03-1994 was illegal and void and that its liability with respect to Group-II arrack shops for the year 1993-94 ended upon the cancellation taking place. It sought to limit its liability for the period April 1993 to 19th August 1994. The petition was dismissed by the single judge. Aggrieved with this, the licensee preferred an appeal to the Division Bench. The Division Bench by a short order-impugned in the present appeal-followed its previous decision and held that since the contracts were entered into before the amendment of Rule 13, the licensee was liable to pay only the actual loss suffered by the government, in realisation of rentals and excise duty. The court directed the government to issue fresh demands in accordance with the rules and agreements executed with the licensee covering only the actual loss.
4. It is argued on behalf of the state that there was no challenge to Rule 13 of the Management Rules, and as a result, the impugned order was not justified in holding that the licensee was liable only for a limited period. Pointing to the language of Rule 13, it is submitted that with effect from 23-12-1993 an amendment was made in terms of which the question of adjustment of any liability did not arise. Learned counsel contrasted this with the pre-existing or old Rule 13, which permitted credit of departmental management fee and other amounts realised during the currency of the term of management by the state, as against the overall liability of the previous licensee.
5. It was submitted by the state that the Division Bench fell into error in relying upon its previous judgment which had declared that licenses entered into prior to 23-12-1993 were not covered by the amendment. Urging that the decision of the state was based upon its policy not to give credit, learned counsel highlighted that this was premised on its understanding of the statute. Learned counsel also submitted that it is only where resale licensees had entered the picture that the department management fee collected from the date of confirmation of the resale
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
