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2019 Supreme(Kar) 636
IN THE HIGH COURT OF KARNATAKA
S. Sujatha, J.
Bacardi India Pvt. Ltd. - Appellant
Vs.
State Of Karnataka - Respondent
Writ Petition No. 8706 of 2019, 8707 of 2019, 8708 of 2019, 8709 of 2019, 15748 of 2019
Decided On : 25-06-2019
S.S. Naganand, Adv., M. Jyothi, Adv.
Headnote:
Constitution of India,1950 - Article 265 - Karnataka Excise Act, 1956 - Section 71 - Rule 20(2),Karnataka Excise (Possession, Transport, Import and Export of Intoxicants) Rules, 1967 - Payment of export duty - Business of manufacturing and selling alcoholic beverages - Cases for reasons beyond control of petitioner destination State issues EVCs only after expiry from date of export- In such cases petitioner submits that EVCs to respondents belatedly after expiry of period - In this regard respondent passed an order impugned demanding excise duty on liquor exported from Karnataka on basis of EVCs submitted by petitioner to respondents after expiry - Attempts are made by respondent invoke bank guarantee furnished by petitioner to extent of demands –Held, Court has laid down principles while interpreting word "shall" and same is quoted hereunder - Court must have power to relieve against a drastic consequence all more so if it is satisfied that there was a formal or technical default in complying with its order- To illustrate if tenant while he has on way to court deposit rent for just preceding month as directed by an order - met with an accident on road and could not reach court before court hours were over should he be penalised by his defence being struck off- Even if court is satisfied that he was on way to court to make necessary deposit that he had requisite amount with him and that he started in time to reach court within prescribed court hours and yet by circumstances beyond his control he met with an accident would court be powerless to grant him relief This illustration would suffice to intendment of legislature that it never used word shall to make it so imperative as to render court powerless court while considering whether mere use of word shall would make provision imperative it would ascertain intendment of legislature and consequences flowing from its own construction of word shall- If use of word shall makes provision imperative inevitable consequence that flows from it is that court would be powerless to grant any relief even where justice of case so demands- If word shall is treated as mandatory net effect would be that even where default in complying with direction given by court is technical fortuitous unintended or on account of circumstances beyond control of defaulter yet court would not be able to grant any relief or assistance to such a person whether expression shall partakes character of may depends upon intent of legislation which requires to be achieved not only from phraseology of provision but considering its nature design and consequences- Applying this principle word shall used in rule requires to be read as may- Adopting such a construction has to be read- principle of rules would govern to achieve its object and intent particularly to make it workable – Petition disposed
JUDGMENT :
S. Sujatha, J.
Since these petitions involving similar and akin issues, they have been considered together and are taken up for final disposal by this common order.
2. The petitioner has sought for a declaration, to declare Rule 20(2) of the Karnataka Excise (Possession, Transport, Import and Export of Intoxicants) Rules, 1967 ('Rules' for short) issued under the Karnataka Excise Act, 1956 ('Act' for short) is ultra vires Section 71 of the Act, the same should be read as being directory and not mandatory in nature, inter alia, seeking a direction to respondent No.2, not to withhold the processing of petitioner's application for export permits further to expeditiously process the same. The Official Memorandum bearing No. EXE/BACARDI/01/EXPR/2018 19 dated 05.04.2019 is also challenged as being arbitrary and illegal.
3. The petitioner, a company registered under the Companies Act, 1956, is engaged in the business of manufacturing and selling alcoholic beverages from its distillery located in Nanjangud, Karnataka. The manufactured liquor is supplied within the State of Karnataka and exported to other States in India as well.
4. In cases where the petitioner intends to export liquor manufactured in Nanjangud, as per the provisions of the Excise Act and Rules thereunder, the petitioner applies for an export permit, furnishes a bank guarantee as prescribed and then exports the liquor. The petitioner applies for and follows up with the Excise Department in the destination State for issuance of Export Verification Certificates (EVCs) for the consignments exported. No sooner the EVCs are issued, the petitioner submits the same to the Karnataka Excise Department.
5. It is the contention of the petitioner that in some cases, for reasons beyond the control of the petitioner, the destination State issues EVCs only after the expiry of 60 days from the date of export. In such cases, the petitioner submits that EVCs to the respondents belatedly i.e., after expiry of the period of 60 days. In this regard, respondent No.2 passed an order impugned dated 11.02.2019 demanding Rs.76,06,281/- as excise duty on liquor exported from Karnataka on the basis of EVCs submitted by the petitioner to the respondents after the expiry of 60 days. Attempts are made by respondent No.2 to invoke the bank guarantee furnished by the petitioner to the extent of demands.
6. Learned Senior Counsel Sri. S.S. Naganand, representing the learned counsel for petitioner would submit that the liquors in question were exported out of Karnataka pursuant to the export permits issued by the respondents as evident from the EVCs and lorry receipts. Despite the same, respondent No.2 has passed the order impugned merely for the reason that EVCs were submitted after the expiry of 60 days. The literal interpretation of Rule 20(2) of the Rules would defeat the intention of the provision. The collection of excise duty on liquor duly exported outside the State on the garb of not furnishing the EVCs within the stipulated period of 60 days is wholly arbitrary and without authority of law, much against Article 265 of the Constitution of India. Learned Senior Counsel further submitted that alternative remedy is not an absolute bar for this Court, more particularly when the interpretation of Rule 20(2) of the Rules is sought for.
7. Learned Senior counsel placed reliance on the following judgments:-
(1) State of Kerala vs. Mc. Dowell & Co. Ltd.,1988 SCC(Ker) 381;
(2) Mc. Dowell and Co. Ltd., vs. Commissioner of Excise, (1998) 2 ALD 417;
(3) Rajasthan Trading Co. vs. the Registrar of Firms and Anr, (1975) AIR A.P. 232;
(4) B.C. Banerjee vs. State of Madhya Pradesh, (1970) 2 SCC 467;
(5) Sales Tax Officer vs. K.I. Abraham, (1967) AIR SC 1823;
(6) Ganesh Prasad Sah Kesari and another vs. Lakshmi Narayan Gupta, (1985) 3 SCC 53.
8. Learned Additional Government Advocate appearing for the respondents argued that on 02.03.2018, a team of Excise Officials after a detailed inspection of the Distillery unit
