1. The State of Tamil Nadu, the original respondent, in exercise of the powers conferred by Section 54 of the Tamil Nadu Prohibition Act, 1937, sought to make an amendment to the Tamil Nadu Indian-made Foreign Spirits (Manufacture) Rules, 1981, (hereinafter referred as 'the Rules') vide a Notification dated 29.6.1990. In terms of the said amendment, it has to come into effect retrospectively with effect from 01.02.1988. Sub-rule (3) of Rule 15-A of the said Rules was substituted as under:

“(3)(a) An allowance of not more than three per cent per batch shall be allowed for loss in the entire process of distillation of rectified spirit, re-distillation of impure spirit and handling loss;

Provided that the spent feints flowing out of rectified basement shall be practically free from alcohol.

(b) If the loss in the entire process exceeds the norms prescribed in clause (a) of this sub-rule, the Commissioner shall levy a penalty of Rupees sixteen per proof liter on such excess loss.

(c) No allowance shall be given for further loss in the reprocess of purification of impure spirit by re-distillation or mixing it with the next batch of rectified spirit.”

2. The affected parties, being the private respondents before us, filed writ petitions assailing this notification, seeking a declaration that G.O.Ms.No.762, Home, Prohibition and Excise (III) Department, dated 29.6.1990, was unconstitutional and void, with a consequential relief being prayed for to quash the demand raised by the original third respondent (Excise Supervisory Officer).

3. The learned single Judge, in terms of a common impugned order passed in four writ petitions, has agreed with the plea of the original petitioners concluding that the amended provision, being in the nature of penal clause could not have retrospective effect on account of Article 20 of the Constitution of India. The second ground on which G.O.Ms.No.762, dated 29.6.1990 has been quashed is that the same has been passed without hearing the affected parties, while the third ground is that the impugned demand notices were issued without any basis, without any worksheet and without an iota of evidence.

4. The State Government has, thus, assailed the finding in the present appeals.

5. The first and foremost question which arises for consideration is the validity of the G.O.Ms.No.762, dated 29.6.1990, challenged on the basis of Article 20 of the Constitution of India. Article 20 reads as under:

20. Protection in respect of conviction for offences.

(1) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the Act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.

(2) No person shall be prosecuted and punished for the same offence more than once.

(3) No person accused of any offence shall be compelled to be a witness against himself.

6. Learned Advocate General has relied upon four judicial pronouncements to canvass his case before us that such retrospectivity is permissible, as it is in the nature of a fiscal demand and not arising from conviction of an affected party under criminal law. The judgments with the relevant passages relied upon are as under:

(i) Shiv Dutt Rai Fateh Chand and others v. Union of India and another [(1983) 3 SCC 529]:-

“25. The contention of the petitioners is that any act or omission which is considered to be a default under the Act for which penalty is leviable is an offence, that such act or, omission was not an offence and no penalty was payable under the law in force at the time when it was committed and hence they cannot be punished by the levy of penalty under a law which is given retrospective effect. They principally rely on Article 20 (1) in support of their case. Article 20 (1) is modelled on the basis of Section 9 (3) of Article 1 of the Constitution of the United States of America which