The retrospective operation of a calculation policy, evidence of undue profit, and the legal foundation for demands based on audit reports are crucial legal principles established in this judgment.

JUDGMENT

1. The challenge in the present petition is to the demand notice dated 10th March, 2015 (Annexure-4) issued by the Odisha State Beverage Corporation Ltd. for the period from 29th December, 2008 to 27th January, 2009 basing upon the audit report in respect of Country Spirit Shops located at Panikoili, Chirgunia, Tamka, Sukinda, Bargadia and Chorda.

2. Learned counsel for the petitioner states that the issue involved in this case is covered by the ratio decided by this Court on 24th August, 2018 in W.P.(C) No. 5679 of 2015 and a batch of writ petitions. The relevant portion of the said order reads as follows:

'It appears from the submissions made at the bar and from the records that the method adopted by the authorities is firstly to determine the price at which various excisable products will be procured into the State of Odisha from the manufacturers/suppliers. Thereafter, they determine the rate at which such goods are to be sold to retailers (after including profit of margin therein for 'OSBCL') and thirdly they also indicate at what maximum retail price (MRP) that a retailer can sale the product. These three determinations are done by a committee formed by the State known as the Price Fixation Committee (PFC). It is the case of the 'OSBCL' that it has strictly complied with the guidelines issued by 'PFC' from time to time for the purpose of pricing both at the time of procurement, sale to the retailers as well as fixing the maximum price at which the retailers can sale the products to the consumer.

In the present case, after hearing the learned counsel for the respective parties, we W.P.(C) No. 7483 of 2015 2 are of the considered view that there appears to be some confusion at the end of the 'OSBCL' insofar as the manner for determining the 'maximum retail price'. From time to time the State policy has expanded the definition of maximum retail price 'to include retailers margin and all taxes & duties'. It is also a matter of fact that after the Accountant General Audit pointed out certain errors in the computation being made by the 'OSBCL', it is now following the revised method in terms of Annexure-B/1 extracted hereinabove. Now the only issue that remains for determination relates to the demands for a period which is prior to the period covered under the notification annexed as AnnexureB/1. The earlier MRP was fixed as per the policy relating to calculation of MRP prevailing during 2009- 2013 as is revealed from Annexure-A/1. The new calculation policy under Annexure-B/1 which was implemented with effect from 2015- 16, which does not have any retrospective operation. Therefore, the impugned demands for a prior period having been made relying on such new calculation policy, are clearly arbitrary and unreasonable thus inviting the mischief of Article-14 of the Constitution of India. Further, it is not disputed that

'OSBCL' has not suffered any loss. Moreover, we are of the considered view that there has been no undue enrichment by the petitioner inasmuch as there is no allegation of even a single retailer selling above the maximum retail price i.e. MRP. It may further be noted that the term maximum retail price as defined and as accepted is not necessarily the rate at which the products are always sold. It is verily possible that products are sold below the MRP and any assumption that the entire stock purchased by the retailers was sold at the maximum retail price would be an assumption which in our considered view may not be correct, without any evidence thereof being brought on record. The aforesaid facts have been noted by us to highlight the aspect that in 3 the case at hand, even though maximum retail price has been fixed, yet, it is the market conditions that determine whether a retailer can sale their products at the maximum retail price or offer a discount thereon.

Consequently the assumption on behalf of the corporation that the petitioner made an undue profit, in our considered view, is misplaced.

It would be