The Government cannot levy a compounding fee in excess of the amount authorized by law.

RAMANUJULU NAIDU, J.

( 1 ) THIS writ appeal is preferred against the order dated 18-4-1988 passed by Anjaneyulu, J. allowing W. P. No. 577 of 1988 filed by the respondents for issue of a writ of certiorari quashing the order of the Government of andhra Pradesh, the first appellant herein, made in G. O. Rt. No. 1571 revenue (E) Department dated 30-11-1987 in so far as it levied a compounding fee of Rs 54,00,000/- on the first respondent.

( 2 ) REFERENCE to the parties in the Writ Appeal is made as they are arrayed in the writ petition.

( 3 ) THE fust petitioner-first respondent is a Company in corporated under the Companies Act on 11-3-1977 and the second petitioner-second respondent is its Managing Director. The first petitioner set up a distillery at Kodurupadu near Hanuman Junction for the manufacture of rectified spirit from molasses. Production of rectified spirit was commenced in the year 1981, The distillery is capable of distilling 186 Metric Tonnes of molasses. The affairs of the first petitioner-Company, hereinafter referred to as the distillery were conducted smoothly till 1986 when there was a change in the management resulting in removal of some of its Directors including the Joint Managing Director of the Company. The Board of eleven Directors of the Company was divided into two groups. The smaller group consisting of three Directors assumed control of management of the affairs of the Company in May, 1986. Complaints were lodged with the Commissioner of Excise and other officials by the rival group of directors alleeing several violations committed bv the distillery during the course of its working between 1981 and 1986. The complaints were investigated into by the concerned authorities and on the basis of the findings recorded by the said authorities, the Commissioner of Excise by his letter dated 17-3-1987 called upon the distillery to show cause as to why D2 licence granted in favour of the distillery should not be cancelled under section 31 (a) of the Andhra Pradesh Excise Act, 1968, hereinafter referred to as the act . The distillery submitted its explanation on 1-4-1987 to the Commissioner of Excise and personal hearing was also given to the distiliery on 20-4-1987. It is unnecessary to extract the gist of the explanation offered by the distillery as the same was extracted in extenso by the learned single Judge in the order under appeal. The explanation offered by the distillery, it is enough to state, did not find acceptance with the commissioner of Excise who held that the distillery had contravened the provisions of Rules 35, 45 and 48 of the Andhra Pradesh Distillery Rules. For that reason, the Commissioner refused to renew the licence in favour of the distillery for the year 1987-88, as by then, the licence granted to it for the earlier year had expired.

( 4 ) AGAINST the order of the Commissioner of Excise, the distillery preferred a revision petition under Section 64 of the Excise Act on 13-5-1987 contending inter alia that the Commissioner of Excise was in error in rejecting the explanation offered by the distillery and in refusing to renew the licence for the year 1987-88. The Revision petition was heard by the government on 13-8-1987 and orders were reserved on the revision petition. While the disposal of the revision petition was receiving consideration by the Government, the distillery addressed a letter to the Honourable Minister for Excise on 4-11-1987 wherein it was pleaded inter alia as under:"we are anxious that final orders are passed in the revision petition, at the earliest. In this connection, we submit that we are willing to have the charges against us compounded if the Government is pleased to direct the renewal of the distillery licence in favour of the company". On receipt of the letter dated 4-11-1987, the Government felt that in the light of the offer made by the distillery, to have the offences committed by it, compounded, there was no need to go into the various explanations o

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