Back
2007 Supreme(Ori) 745
2007 (Supp.-II) OLR — 927
THE CHIEF JUSTICE AND N. PRUSTY, J.
M/s. SKOL Breweries Ltd....Petitioner
Versus
State of Orissa and others...Opp.Parties
W.P.(C) No.2365 of 2003
(Date of Judgment : 28.9.2007)
For Petitioner:Dr. D. Pal, Senior Advocate, Mr. B. B. Ratho, Senior Advocate, M/s. Manoj Mishra, P. K. Das, A. K. Nayak, L. Mishra, B. B. Mohanty and P. K. Nanda
For Opp. Parties:Mr. J. M. Mohanty Government Advo¬cate
Headnote:1. BIHAR AND ORISSA EXCISE ACT, 1915 - Secs. 13, 38, 90(7) - Boards Excise Rules - Rule 104(4) - Levying of franchise fees by Board - Board being a delegated authority does not have the competence to create a new form of fee or permit which is not provided under the Act - Sub-rule (4) of Rule 104 under which the franchise fee has been allegedly levied, has been framed by the Board in exercise of its power under Sec. 90(7) of the Act - Section 90(7) does not authorize the Board to impose any new fee - While acting under Sub-section (7) of Section 90 of the Act, the Board cannot impose a new fee which is in the nature of a tax - Sub-rule (4) of Rule 104 by which franchise fee is introduced is ultra vires the provision of Section 90(7) of the Act - Sub-rule declared invalid and not operative and not binding on the petitioner.
(Paras - 19 to 41)
2. FEE - When there is no correlation between the fees charged and the service rendered the imposition is a tax and not a fee. (Para - 25)
3. BIHAR AND ORISSA EXCISE ACT, 1915 - Secs. 27, 27-A, 28, 90 - Power of imposition of tax or duty on excise items vests in the State Government and not in the Board - Board is merely authorized under Sec. 90 to prescribe the scale of fees or the manner of fixing the fees but it cannot in the garb of that power, impose a new fee, which is in the nature of a tax. (Para - 35)
JUDGMENT
A. K. GANGULY, C.J. : M/s. SKOL Breweries Ltd., the peti¬tioner, is a company registered under the Companies Act. This company has challenged the imposition of franchise fees as well as the amendment of the Board’s Excise Rules whereby Sub-Rule 4 of Rule 104 of the Board’s Excise Rules has been amended provid¬ing for levying of franchise fees.
2. The petitioner company is a subsidiary of M/s. Shaw Wallace Breweries Ltd. (SWBL) and manufactures its own product. The petitioner’s case is that it is not tied up with any manufac¬turing company which is outside the State for brewing and bot¬tling beer for and on behalf of such manufacturing company.
3. The material facts of the case are that the East Coast Breweries and Distilleries Ltd. (hereinafter referred to as ‘ECBDL’) became a sick unit of Industrial Development and Corpo¬ration of Orissa Ltd. (hereinafter referred to as ‘IDCOL’) and as such the State Government floated a tender sometime in July, 1992 for handing over the unit of ECBDL. In May 1994 the State Govern¬ment handed over the unit of ECBDL to Shaw Wallace and Company Ltd. (hereinafter referred to as ‘SWCL’). The SWCL purchased the shares of ECBDL which were held by IDCOL. ECBDL had its brewery at Paradip. SWCL has different subsidiaries all over India and Shaw Wallace Breweries Ltd. (SWBL) is one of the subsidiaries of SWCL. A decision was taken that ECBDL at Paradip be amalgamated/merged with the petitioner company, namely, SKOL Breweries Ltd. which was owned by SWBL having 93.76% share of the petitioner company.
4. An application for merger was submitted under Section 394 of the Companies Act before the Hon’ble Company Judge of this High Court and Hon’ble Company Judge by an order dated 21st February 2002 allowed the said application for amalgamation and directed that all properties, rights, powers and interest of the Transferor Company, that is ECBDL, as specified in the schedule, be transferred to and vested in the Transferee Company that is, petitioner company. Pursuant to that order of the Company Court, the Registrar, Company issued an appropriate certificate on 1.5.2002. The ECBDL thus lost its existence as a company and the petitioner company became the sole owner of its brewery at Para¬dip and it is known as SKOL Breweries Ltd. (Unit; East Coast Breweries). After the amalgamation, the petitioner made an appli¬cation on 11.6.2002 for incorporation of its name in the existing licence for brewing and bottling, which was in the name of ECBDL. After the application was kept pending for sometime, the same was granted to the petitioner on 8.2.2003. The said grant of licence, according to the petitioner, will relate back to the date when the application was made for the grant.
5. SWCL is the owner and proprietor of two brands which are, namely, Haywards and Royal Challenge. The ECBDL, prior to its amalgamation, used to manufacturer beer on the basis of an agreement and understanding with SWCL in the trade name of Hay¬wards and Royal Challenge. The petitioner’s case is that, the said ECDBL has merged with the petitioner company which is again a 100% subsidiary of SWBL, which is also a subsidiary of SWCL. The petitioner company is using the brand names of Haywards and Royal Challenge which are owned by SWCL. The further case of the petitioner is that the SWCL is not a company which manufactures beer but it is the owner of two brand names. SWBL, a subsidiary of SWCL carried on the business of marketing of beer and not of manufacturing beer. It is the further case of the petitioner that the petitioner company, i.e. SKOL Breweries Ltd., has been given the permission by the Excise Authorities to use the brand name of Haywards and Royal Challenge under Rule 41A of Excise Rules on payment of fees.
6. The challenge in the writ petition is to the levy of franchisee fees @ Rs.2/- per bulk liter from the petitioner. The petitioner company has obtained the licence from the Excise Au¬thority for manufacturing beer and
