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1985 Supreme(Pat) 197
HIGH COURT OF PATNA
S.S. Sandhawalia, B. P. Jha, JJ.
United Distillers (Pvt.) Ltd and 11 others - Petitioners
Versus
The State of Bihar and others - Respondents
Civil Writ Jurisdiction Case Nos. 3170, 4352 and 2773 of 1984 with Civil Writ Jurisdiction Case Nos.219, 473, 660, 663, 664, 665, 814, 1370 and 1385 of 1985
Decided on : 5.7.1985
Important Points
Subject
Taxation Law - Excise Duty
Act Referred
BIHAR EXCISE AMENDMENT AND VALIDATING ACT : S.3, S.2
Headnote
Exclusive Privilege Levy - Bihar and Orissa Excise Act, 1915 - Section 22 - Bihar Excise (Amendment and Validation) Act, 1981 - Section 3 - Interpretation - Prospective Application - Validity.
Fact of the Case:
The petitioners, United Distillers (Private) Limited, challenged the imposition of exclusive privilege duty on their licenses for the manufacture of spirit and denatured spirit under section 13 of the Bihar and Orissa Excise Act, 1915 (the Act). The duty was imposed by virtue of the Bihar Excise (Amendment and Validation) Act, 1981 (Bihar Act 17 of 1982), which amended section 22 of the Act and deemed all licenses granted under the Act to be exclusive privilege licenses.
Finding of the Court:
The Court held that the exclusive privilege duty could not be levied on the petitioners' licenses because: * Exclusive privilege, as defined in section 22 of the Act, requires a grant of a peculiar benefit to a person to the exclusion of others in a specified local area. It is distinct from ordinary licenses granted under sections 13, 14, 16, or 20 of the Act. * Section 3 of the Bihar Excise (Amendment and Validation) Act, 1981, which deemed all licenses granted under the Act to be exclusive privilege licenses, was intended to validate past levies of exclusive privilege duty that had been struck down by the courts. It was not intended to authorize the levy of exclusive privilege duty prospectively on all and various kinds of excise licenses granted under the Act. * The mandatory requirement of public notice under section 22 of the Act, which is a condition precedent to the grant of exclusive privilege, cannot be brushed aside by the deeming fiction in section 3 of the Bihar Excise (Amendment and Validation) Act, 1981.
Issues: 1. Whether the exclusive privilege duty could be levied on the petitioners' licenses for the manufacture of spirit and denatured spirit under section 13 of the Act? 2. Whether section 3 of the Bihar Excise (Amendment and Validation) Act, 1981, authorized the levy of exclusive privilege duty prospectively on all and various kinds of excise licenses granted under the Act?
Ratio Decidendi: 1. Exclusive privilege, as defined in section 22 of the Act, requires a grant of a peculiar benefit to a person to the exclusion of others in a specified local area. It is distinct from ordinary licenses granted under sections 13, 14, 16, or 20 of the Act. 2. Section 3 of the Bihar Excise (Amendment and Validation) Act, 1981, which deemed all licenses granted under the Act to be exclusive privilege licenses, was intended to validate past levies of exclusive privilege duty that had been struck down by the courts. It was not intended to authorize the levy of exclusive privilege duty prospectively on all and various kinds of excise licenses granted under the Act. 3. The mandatory requirement of public notice under section 22 of the Act, which is a condition precedent to the grant of exclusive privilege, cannot be brushed aside by the deeming fiction in section 3 of the Bihar Excise (Amendment and Validation) Act, 1981.
Final Decision: The Court allowed the writ petitions and quashed the impugned notification imposing exclusive privilege duty on the petitioners' licenses, along with any consequential recoveries ordered thereunder.
For the petitioners: M/s K.D. Chatterjee, Balbhadra Pd. Singh, Ganga Pd. Bimal, A. B. S. Sinha, Sunil Kumar, Shivanand Pd. Sinha, Harendra Prasad, Binod Kumar, Jayanand and Sunil Kumar.
For the respondents: M/s. C. K. Sinha (G.P. 1), J.N. Pandey (G. P. II), Ramanand Kumar (S. C. II), Vijyanand Mishra (in C. W. J. C. No. 473/85), Prem Kumar Jha (in C. W. J. C. No.664/85), Satish Chandra Jha (in C. W. J. C. No. 4362/84 and 660/85), Harendra Nath Ojha (in C. W. J. C. No. 219/85), Sachchidanand Choudhary (in C. W. J. C. No. 665/85) and Ratan Kumar (in C. W. J. C. No. 663/85).
S. S. Sandhawalia, C. J.- What is the true import of the concept of exclusive privilege under section 22 of the Bihar and Orissa Excise Act, 1915? Whether Section 3 of the Bihar Excise (Amendment and Validation) Act, 1981 (Bihar Act 17 of 1982) validates the levy of exclusive privilege duty on all excise licensees not only retrospectively, but also warrants such a levy prospectively? This is the twin questions necessitating the hearing of this set of connected cases by the Division Bench.
2. The facts are not in serious dispute and may be noticed with relative brevity from C. W. J. C. No. 3170 of 1984 (United Distillers (Private) Limited vs. The State of Bihar and others). The petitioners company runs a distillery at Mirganj, in the district of Gopalganj, for the manufacture of spirit for chemical and industrial uses. It is averred that the denatured spirit manufactured by the petitioner is unfit for human consumption. Under section 13 of the Bihar and Orissa Excise Act; 1915 (hereinafter referred to as the' Act'), the petitioner is obliged to obtain a license for the manufacture of spirit falling within the definition of the term 'intoxicant' under section 2 (12)(a),which is issued by the Collector of the district in which the' distillery is situate and is issued in the prescribed form No. 28A. Similarly, the petitioner has also to obtain another licence for the manufacture of denatured spirit from the Collector of the district in the prescribed form No. 25. It is highlighted on behalf of the petitioner that in antithesis to the, ordinary licences, the Act has given special treatment for the grant of exclusive privilege of manufacturing, supplying or selling wholesale or retail any country liquor or intoxicating drug within a specified local area under section 22. The grantee of such exclusive privilege has also to obtain a licence consequent to such grant from the Collector or the Excise Commissioner. But it is pointed out that the grant of this exclusive privilege lies with the State Government and it is conferred and relates to specified local area and is granted after due public notice. By the Amending Act 17 of 1982, of its predecessor Ordinances, the respondent State extended the grant of exclusive privilege to the manufacturing, storing, using, possessing, etc. of denatured spirit as well. It is, however, the case that the licences held by the petitioner earlier were not treated and cannot become, the subject matter of grant of any exclusive privilege under the scheme of the Act. Detailed reference is then made to the appointment of Alcohal Committee by the Central Government and the consequent legislation in its wake, to which reference now seems unnecessary. Reference is then made to section 29 of the Act which authorises the State Government to accept a sum in consideration of the grant of any exclusive privilege under section 22 instead of or in addition to any duty leviable under the Act. A grievance is then made that in the purported exercise of the powers under sections 22 and 29 of the Act, the impugned notification (Annexure- Ii bas chosen to impose a liability of Rs. 2,000/- per month on the petitioner on account of the so-called exclusive privilege in respect of the years 1984 and 1985. This levy is sought to be challenged on a wide varieties of grounds, but primarily on the premise that any levy of exclusive privilege duty is not at all attracted in the case of the petitioner- with regard to, its licences for toe manufacture of spirit and denatured spirit, under section 13 of the Act.
3. In the counter-affidavit filed on behalf of the respondent State, the factual position is not put in serious dispute. The firm stand taken On its behalf is that by virtue of the Bihar Excise (Amendment and Validation) Ordinance, 1980, which ultimately became Act No. 17 of 1982, all licences granted shall be deemed to be exclusive privilege within the meaning of Section 22 of the Act. It is clamed that the licence g
