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1995 Supreme(AP) 611
Andhra Pradesh High Court
Judges : S.PARVATHA RAO, V.RAJAGOPALA REDDY
H.L.Malhotra - Appellant
Versus
State OF A.P., represented by Revenue (Excise), Hyderabad and Ors. - Respondent
Decided On : 09-22-95
There can be no estoppel against a statute, and a statutory liability cannot be waived by a public authority.
Headnote:
EXCISE - INTEREST ON ARREARS - WAIVER - ESTOPPEL - LIABILITY OF PARTNERS - DISTRESS PROCEEDINGS - MODIFICATION OF NOTICE AMOUNT.
Fact of the Case:
The petitioner, a partner in a firm that held a liquor license, challenged the demand for interest on excise arrears by the Excise Department. The petitioner claimed that he was not liable for the interest as he was not the licensee and that the Commissioner of Excise had promised to waive the interest.
Finding of the Court:
The court held that the firm was the licensee and that the petitioner, as a partner, was liable to pay the excise arrears including interest thereon. The court also held that the Commissioner of Excise had no power to waive the interest and that the petitioner could not invoke the principle of promissory estoppel against a statutory liability. However, the court found that the demand notice issued by the Excise Department was incorrect as it included an amount towards principal that had already been paid. The court modified the notice amount to reflect only the amount due towards interest.
Issues: 1. Whether the petitioner was liable to pay interest on excise arrears as a partner in the firm that held the liquor license. 2. Whether the Commissioner of Excise had the power to waive the interest. 3. Whether the petitioner could invoke the principle of promissory estoppel against a statutory liability. 4. Whether the demand notice issued by the Excise Department was correct.
Ratio Decidendi: 1. The court held that the firm was the licensee and that the petitioner, as a partner, was liable to pay the excise arrears including interest thereon, as per the provisions of the Andhra Pradesh Excise Act, 1968. 2. The court held that the Commissioner of Excise had no power to waive the interest, as there was no provision in the Act or the Rules for such waiver. 3. The court held that the petitioner could not invoke the principle of promissory estoppel against a statutory liability, as it is well settled that there can be no estoppel against a statute. 4. The court held that the demand notice issued by the Excise Department was incorrect as it included an amount towards principal that had already been paid.
Final Decision: The court dismissed the writ petition, subject to the modification of the demand notice amount to reflect only the amount due towards interest.
( 1 ) THE petitioner filed the Writ Petition alleging that he and Respondents 5 and 6 constituted a firm in the name and style of deccan Wines and General Stores (Bonded Ware House), Secunderabad (hereinafter called the firm ) and has been carrying on the business of liquor. The petitioner being a resident of New delhi, the business was entrusted to Respondents 5 and 6. The business had to be closed down in the year 1976 on account of losses due to the malpractices committed by 5th respondent. The firm fell in arrears of Excise duty of Rs. 14,13,519-56. Respondents 5 and 6 paid an amount of Rs. 9,50,000/- out of the above total arrears on 29-3-1982. Since the remaining amount wasnot paid, the respondents 1 to 3 demanded the petitioner for payment of the same by the letter dt. 4-5-1982. It is alleged that the petitioner was not liable to pay any amounts to wards the above Excise arrears since in fact he was not the Licensee. The Licensee was 5th respondent and he was solely liable to pay the entire Excise arrears. However, respondents 1 to 3 unlawfully sought to collect the balance of Rs. 4,22,351-45 from the petitioner, along with interest of rs. 6,46,954/- on the total arrears of rs. 14,13,519-56. However, the petitioner paid the princip al amount of Rs. 4,22,351-45 by August, 1982. It is alleged that he made the said payment since the 2nd respondent, the Commissioner of Excise, promised to waive the interest in his letter dt. 28-7-1982, addressed to the petitioner. Though several dates have been fixed for hearing for the purpose of consideration of waiver of interest by the 2nd respondent, the 2nd respondent had not finally considered the waiver of interest nor has 2nd respondent communicated any further date of hearing after 9-3-83. It was, therefore, assumed by the petitioner that the interest has been waived by the 2nd respondent. Even otherwise the respondents were estopped from claiming the interest. Surprisingly the respondents 1 to 3 have now sought to recover the sum of Rs. 10,69,305-45 towards interest from the petitioner and towards excise arrears for the period 1971-72 to 1974-75, by issuing a demand notice dt. 24-11-987 through the 4th respondent, with distress warrant, to pay the said amount. The action of the respondents 1 to 4 isnow attacked as illegal and without jurisdiction. The petitioner filed the above writ petition seeking a Writ of Mandamus restraining the respondents 1 to 4 from collecting any amount either to wards principal or interest with regard to the Excise arrears of M/s Deccan Wine Corporation, Secunderabad.
( 2 ) IT is the contention of the learned counsel for the petitioner that the petitioner or the firm, or which he was a partner, was not the actual licensee and that the licensee was only the 5th respondent and the firm was carrying on the business on behalf of the 5th respondent. Hence the excise revenue due to the government has to be recovered only from the 5th respondent and the notice issued by respondents II to 3 to the petitioner for payment of the interest is illegal.
( 3 ) THE licence is not produced by the petitioner or the Commissioner of Excise. The petitioner has not placed any material on record 1o show that 5th respondent was the licensee. The commissioner of Excise has not filed the counter affidavit in the case. His Secretary filed the counter affidavit on behalf of respondents 1 to 4, making ambiguous statements regarding the identity of the licensee. We have, therefore, directed the commissioner of Excise to file an additional counter affidavit. Thereupon the commissioner has filed counter affidavits dt. 2-9-1995 and 7-9-1995. In the counter affidavit dt. 7-9-1995 the Commissioner of Excise has categorically stated that Board of Revenue (Excise), andhra Pradesh, Hyderabad, through its circular dt. 15-7-1971 accorded sanction under Rule-5 (2) of the Andhra pradesh Indian Liquor (Storage in Bond) rules, 1961 to M/s Deccan Wine and general Stores (
