The State Government's regulatory powers under the Karnataka Excise Act allowed it to acquire a monopoly to buy arrack from distillers and sell it to licensees at a higher price, and such actions were considered authorized under the Act.

( 1 ) THE petitioners in these eight cases were licensees who held licences under the Karnataka Excise Act to sell arrack in the different parts of the State during the relevant periods. They have filed these petitions for the issue of a writ in the nature of mandamus to the State of Karataka, the Excise Commissioner in Karnataka, and the Commissioner of Commercial taxes in Karnataka, directing them to refund the Education Cess and Sales fax recovered from them in respect of arrack sold to them from the Government Depots during the relevant period and for a declaration that State Government had no power to collect price in respect of arrack sold to them from the Government Depots in excess of 17 paise per litre. In so far as the claim of the petitioner to the refund of Education Cess is concerned, there is no contest on behalf of the respondents in view of the decision of this Court in Anjanappa v. State of Mysore, (1973) 2 Mys. L. J. 278, in which the levy of Education Cess was held to be unauthorised notwithstanding the Karnataka Education Cess (Validation of Levy) Act, 1969. The petitioners, ares therefore, entitled to succeed in so far as their first prayer is concerned.

( 2 ) AS regards the claim of the petitioners for the refund of Sales Tax paid by them, it has to be observed that in Cawasji v. State of Mysore, 21 STC 445, a similar claim has been negatived by a Division Bench of this Court the petitioners, cannot, therefore, request this Court to issue a direction to the respondents to refund the Sales Tax paid by them.

( 3 ) SRI S. Shivaswamy, learned Counsel for the petitioners, formulated his third contention as follows : Under Rule 31 (2) of the Karnataka Excise (Distillery and Warehouse) Rules, 1967, every distiller in the State is bound to supply the entire quantity of arrack manufactured by him to such government Depqt or Warehouse established by the Government and under sub-rule (3) of Rule 31 the distiller would be entitled to payment of such price as may be prescribed by the State Government for the arrack supplied by him to the State Government. In the instant cases under the notification issued by the State Government the distillers are paid 15 to 17 paise per litre of arrack manufactured by them. The licensees are required under the licences issued to them to purchase arrack from the Government depqt at a much higher price than what the Government pays to the distillers. The contention of Sri Shivaswamy is that in exercise of its regulatory powers in respect of intoxicating liquors conferred on the State govt. by Entry 8 of List II of the 7th Schedule of the Contitution, the State government cannot make a profit indirectly in the absence of any legislation enacted by the State Legislature in exercise of its power under Entry 51 of List II of the Seventh Schedule of the Constitution authorising the same. In support of his contention he relied upon a decision of the Supreme court in Brij Mohan Nayyar v. State of U. P. , CA. 867/64 dt. 20-3-67. The facts of the said case are entirely different from the facts of the present case. In the case before the Supreme Court, the question for consideration was whether when a distillery company had entered into a contract with a sugar mill tq purchase molasses with the, permission of the Government of Uttar pradesh, at Rs. 1-8-0 per maund. Out of the purchase price agreed to be paid, Rs. 1-3-3 per maund had to be paid to the Government of Uttar pradesh on account of 'export levy'. Accordingly Rs. 12,031-4-0 was paid to the Excise Commissioner of Uttar Pradesh. Owing to certain changed circumstances the allotment of molasses was cancelled subsequently. Thereafter the purchaser applied to the Excise Commissioner to refund the amount paid to him. When he refused tp refund the same, a suit was instituted. The Supreme Court found that in the circumstances of that case the decision of the Court turned upon the fact that the contract in question was only a contract of sale and

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