1993 Supreme(AP) 572

Andhra Pradesh High Court
Judges : D.JAGANNADHA RAJU, V.SIVARAMAN NAIR
Rajdhani Bar, Restaurant - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 12-29-93

The State has the exclusive privilege of trade in liquor and can charge any price it wants for that privilege.

Headnote:

ENHANCEMENT OF LICENSE FEE - AMENDMENT OF RULES - VALIDITY - EXCISE ACT - RULES - INTERPRETATION - ARTICLE 14, 19(1)(G), 47 OF THE CONSTITUTION OF INDIA.

Fact of the Case:

The petitioners, dealers in Indian Made Foreign Liquor, challenged the amendment to the A.P. Foreign Liquor and Indian Liquor Rules, 1970, by issue of G.O-Ms. No. 948, Revenue (Excise-Ill), Department, dt. 30-9-1993, as arbitrary, unreasonable, discriminatory illegal, and devoid of jurisdiction. The petitioners held licenses issued under Rule 23 of the A.P. Foreign Liquor and Indian Liquor Rules, 1970, for a period of five years from 1-10-1992 to 30-9-1997. They had paid the license fee for the year 1992-93 as also for the next Excise year 1993-94 at the rates prescribed by the unamended Rules on or prior to 20th September, 1993 as required by the rules. They submitted that the grant of licenses for a period of five years on payment of the then existing license fee and acceptance of the license fee payable ten days prior to the commencement of the Excise year enable the petitioners to claim that their licenses shall be effective during the period of their validity. Counsel for some of the petitioners argued that issue of licenses for a period of five years and acceptance of the license fee for two Excise years evidence the promise on the part of the respondents to allow the petitioners to trade in liquor under the relevant licenses for the whole period of licenses and disable the respondents from interfering with the licenses in any manner. Counsel put the above submission on the basis of equitable or promissory estoppel. Some other counsel put their case on legitimate expectation. It is also submitted that the licenses having been issued way back in 1992 and the license fee having been received in terms of the unamended rules, any amendment in the terms of the licenses by amending the Rules will be bad as authorising a retrospective fiscal impost which is not authorised by the A.P. ANDHRA PRADESH EXCISE ACT, 1968, 1968. Yet another submission is that the amendments make inroads into the rights of the petitioners, which are guaranteed by Article 19 of the Constitution of India in an arbitrary and unreasonable manner. It is also stated that the professed purpose of introducing prohibition of consumption of intoxicating liquors will not be advanced in any manner either by the reduction in the period of licenses or enhancement of license fee, as sought to be effected by the impugned amendment. Counsel submits that the only purpose of the amendments was to increase the Revenue of the State by encouraging inebriation to a larger extent and at a cost far in excess of what was prevailing at the time of the amendment, and this motive invalidates the Government order amending the Rules.

Finding of the Court:

The court held that the enhancement of license fee was within the powers of the State and that the petitioners had no right to trade in liquor. The court also held that the amendment of the Rules was not retrospective and that it was not arbitrary or unreasonable. The court further held that the petitioners were not entitled to challenge the amendment on the ground of legitimate expectation. The court also held that the amendment did not violate Article 14, 19(1)(g), or 47 of the Constitution of India.

Issues: 1. Whether the enhancement of license fee was within the powers of the State? 2. Whether the petitioners had a right to trade in liquor? 3. Whether the amendment of the Rules was retrospective? 4. Whether the amendment was arbitrary or unreasonable? 5. Whether the petitioners were entitled to challenge the amendment on the ground of legitimate expectation? 6. Whether the amendment violated Article 14, 19(1)(g), or 47 of the Constitution of India?

Ratio Decidendi: 1. The enhancement of license fee was within the powers of the State, since the State had the exclusive privilege of trade in liquor and could charge any price it wanted for that privilege. 2. The petitioners had no right to trade in liquor, since that was an exclusive privilege of the State Government. 3. The amendment of the Rules was not retrospective, since it was introduced prior to the commencement of the Excise year for which the licenses were granted. 4. The amendment was not arbitrary or unreasonable, since the petitioners had not shown that the enhancement in license fee operated harshly or oppressively against them. 5. The petitioners were not entitled to challenge the amendment on the ground of legitimate expectation, since the amended rules were the product of a change of excise policy by the State. 6. The amendment did not violate Article 14, 19(1)(g), or 47 of the Constitution of India, since it was a reasonable measure to regulate the trade in liquor and to control the habit of inebriation.

Final Decision: The court dismissed the writ petitions.