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Orissa High Court
G.K.MISRA,R.N.MISRA
Ajodhya Prasad Shaw - Appellant
Versus
State of Orissa - Respondent
O.J.C. Nos. 329 and 357 of 1970
Decided On : 05/15/1970
EXCISE - Auction of liquor shops - Settlement of fee by auction - Validity - Whether the State Government has the power to direct re-auctioning of liquor shops - Whether the process of auctioning is valid - Whether the licence fee fixed by auction is a tax - Whether the State Legislature has the competency to provide for the realization of a tax on the sale of liquor.
Fact of the Case:
The petitioner, Ajodhya Prasad Shaw, was the highest bidder for a group of 7 shops auctioned in one lot, for Rs. 34,000/- per month. The petitioner's bid was accepted and his name as the highest bidder was duly entered in the bid register maintained in Form G. L. 12. In token of acceptance of the same the petitioner as also the Collector of Mayurbhanj signed the bid register. Rs. 68,000/- representing two month's fees in advance for the licences as contemplated under Rule 103(2) of the Board's Excise Rules, 1965 were collected from the petitioner and a receipt for the said amount in the prescribed form G. L. 23 was issued to him. The intervenor in this writ application and petitioner in the connected matter who was the unsuccessful bidder carried an appeal against the aforesaid settlement. The Excise Commissioner in appeal Case No. 3 of 1970 by order dated 16-3-70 dismissed the appeal. A further move before the Board of Revenue was unsuccessful.
Finding of the Court:
1. The State Government has no authority to direct re-auctioning and the present finding is that the process of auctioning for the determination of the licence fee is not the valid process. 2. Rule 103 (1) of the Board's Excise Rules in so far as it directs that the fees for licence for the retail vend of excisable articles shall be fixed by auction is ultra vires the Act.
Issues: 1. Whether the petitioner is entitled to the issue of the licences for the seven shops? 2. Has the State Government any power to direct withholding of the issue of licences and the re-auction in question? 3. Is the petitioner entitled to the reliefs prayed for?
Ratio Decidendi: 1. The licence in question is a statutory one. 2. Article 299 (1) of the Constitution has no application to the present case, and the licence in question was a statutory act which did not require compliance with the constitutional form of agreement. 3. The State is bound by the provisions of the Bihar and Orissa, Excise Act, 1915. 4. The State Government has no residual power left in it in matters which are by statute vested in the Collector. 5. The State Government had no authority to direct re-auctioning. 6. The process of auctioning itself is questioned and the vires of the statutory Rule 103 in the matter of auction is also disputed. 7. The fee for the grant of an exclusive privilege under Section 22 may be determined by auction. 8. The licence fee fixed by auction is a tax and such a tax is not contemplated under Section 38 of the Act. 9. Rule 103 (1) of the Board's Rules which is the only provision for settling the fee by auction is not authorised by the Act and is, therefore, in excess of the rule-making power of the Board. 10. Legislative competence for the provision to realise excise duty so far as the State is concerned is to be found in Entry 51 of List II of the Seventh Schedule of the Constitution. 11. What is collected as a licence fee is not by any means an excise duty as contemplated under Entry 51 of List II of the Seventh Schedule of the Constitution.
Final Decision: In O. T. C. No. 329 of 1970: (1) The direction for re-auctioning as contained in the order dated 15-4-1970 is quashed. A writ of certiorari be issued quashing the direction for re-auction. (2) The petitioner is not entitled to any other relief as prayed for. In O. J. C. No. 357 of 1970: (1) Rule 103 (1) of the Board's Excise Rules in so far as it directs that the fees for licence for the retail vend of excisable articles shall be fixed by auction is ultra vires the Act. (2) The petitioner Raghunandan Saha is not entitled to any other relief as prayed for in his writ application. We direct that all the parties would bear their own costs of these proceedings.
Judgement
R. N. MISRA, J. :- These two applications under Articles 226 and 227 of the Constitution which involve common questions of fact and law. Parties are also common. In O. J. C. No. 329 of 1970 the petitioner is one Ajodhya Prasad Shaw who is opposite party No. 5 in O. J. C. No. 357 of 1970. The petitioner in 357 of 1970 on his own application has come to intervene in O. J. C. No. 329 of 1970. The other four opposite parties of the first case are also the first four opposite parties in the second case. In such background we propose to dispose of both the writ applications by one common judgment.
2. Ajodhya Prasad Shaw, the petitioner in O. J. C. No. 329 of 1970, filed the writ application on 6-4-70. According to him the Collector of Mayurbhanj issued a sale notice on 3-2-70 for the year 1970-71 in Form G. L. 10. The said notice contained, amongst others, 70 outstill shops to be auctioned, and the date of auction was 20-2-70 at Baripada in the district of Mayurbhanj. Sale was held on the appointed day by the Collector of Mayurbhanj (opposite party No. 3). The petitioner turned out to be the highest bidder for a group of 7 shops auctioned in one lot, for Rs. 34,000/- per month. The petitioner's bid was accepted and his name as the highest bidder was duly entered in the bid register maintained in Form G. L. 12. In token of acceptance of the same the petitioner as also the Collector of Mayurbhanj signed the bid register. Rs. 68,000/- representing two month's fees in advance for the licences as contemplated under Rule 103(2) of the Board's Excise Rules, 1965 were collected from the petitioner and a receipt for the said amount in the prescribed form G. L. 23 was issued to him. The intervenor in this writ application and petitioner in the connected matter who was the unsuccessful bidder carried an appeal against the aforesaid settlement. The Excise Commissioner in appeal Case No. 3 of 1970 by order dated 16-3-70 dismissed the appeal. A further move before the Board of Revenue was unsuccessful.
3. The petitioner awaited the receipt of the licences for the shops in question and made arrangements for the opening of the shops and carrying on of the business with effect from 1-4-70. It is alleged that he invested about Rs. 1,50,000/- for the purpose. As the licences were not issued though in the normal course they were already expected to be so issued, the petitioner called upon the Collector as also the Superintendent of Excise personally with a request that the licences may be issued at an early date. He also informed them that his arrangements for the opening of the shops with effect from 1-4-70 were complete. On 1-4-70, the petitioner approached the Superintendent of Excise to receive the monthly fee of Rs. 34,000/- for the month of April, 1970, but the said Superintendent did not pass the challan and consequently the petitioner could not make the deposit. At that point of time the petitioner came before this court on the allegation that the Collector was not acting in accordance with law and the petitioner understood that the State Government, opposite party No. 1 had issued instructions to the Collector not to issue the licences. The petitioner, therefore, wanted a writ of mandamus to be issued directing that the licences in question may be issued and to quash orders of the State Government asking the Collector not to issue the licences in question. Subsequently an application was made to amend the writ petition as in the meantime the Collector of Mayurbhanj had issued a notice for reauction. That order dated 15-4-70 was to the following effect :-
"Notice is hereby given for the information of all that the Government has been pleased to order for the reauction of the following outstill liquor shops with their branches. The reauction will be held on 1-5-70 at 9 A.M. in the chamber of the Collector, Mayurbhanj, Baripada.
The conditions of settlement will remain the same as in G. L. 10.
x x x x"
The petitioner asked for quashing the afo
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