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2024 Supreme(Online)(Kar) 45189
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF APRIL, 2024 BEFORE THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR WRIT PETITION NO. 28157 OF 2023 (EXCISE)
BETWEEN:
UNITED BREWERIES LIMITED, A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE ADDRESS AT LEVEL-4, UB TOWER, UB CITY, VITTALMALLYA ROAD, BANGALORE - 560 001, BY ITS AUTHORIZED SIGNATORY.
…PETITIONER (BY SRI. AJITH ANAND SHETTY, ADVOCATE)
AND:
1. STATE OF KARNATAKA, DEPARTMENT OF REVENUE, M.S. BUILDING, DR. AMBEDKAR VEEDHI, BANGALORE - 560 001, BY ITS PRINCIPAL SECRETARY.
Digitally signed by R HEMALATHA Location: HIGH 2. DEPARTMENT OF FINANCE, COURT OF KARNATAKA GOVERNMENT OF KARNATAKA, M.S. BUILDING, DR. AMBEDKAR VEEDHI, BANGALORE - 560 001, BY ITS PRINCIPAL SECRETARY. 3. DEPARTMENT OF EXCISE, 2ND FLOOR, T.T.M.C BUILDING, A BLOCK, BMTC BUS STAND, SHANTINAGAR, BANGALORE - 560 027, BY ITS COMMISSIONER.
4. THE DEPUTY COMMISSIONER (EXCISE), MYSORE RURAL DISTRICT, 81 AND S2, VINAYA MARGA, NEAR TEMPLE TREE APARTMENTS, SIDDHARTHA NAGAR, MYSURU.
KARNATAKA - 570 011.
5. SUPERINTENDENT OF EXCISE, UNITED BREWERIES LIMITED, TANDYA INDUSTRIAL AREA, NANJANAGUDU TALUK, MYSORE DISTRICT - 571 301.
…RESPONDENTS (BY SRI. REUBEN JACOB, ADDITIONAL ADVOCATE FOR SRI. S.R. KHAMROZ KHAN, AGA)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE IMPUGNED DEMAND NOTICE DATED 17. AUG 2023 BEARING REFERENCE NUMBER EXE/UB/AUDIT/01/2023-24 AND REMINDER NOTICES DATED 10.10.2023 AND 03.11.2023 BEARING NO. EXE/UB/AUDIT/01/2022-23 AND EXE /UB /AUDIT/06/2022-23 AS PER ANNEXURE-D, E AND F RESPECTIVELY AS BEING ULTRA VIRES OF RULE 3 AND SCHEDULE A TO THE KARNATAKA EXCISE (REGULATION OF YIELD PRODUCTION AND WASTAGE OF SPIRIT BEER WINE OR LIQUORS) RULES 1998 AND ETC., THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The demand notice dated 14.08.2023, and the reminder notices dated 10.10.2023 and 03.11.2023, issued by respondent No.5 calling upon the petitioner to pay Rs.93,18,13,325/- towards short production of beer, which is on contravention of Rule 4 of the Karnataka Excise (Regulation of Yield, Production and Wastage of Spirit, Beer, Wine or Liquors) Rules, 1998, are impugned in this petition.
2. Learned counsel on instructions submits that the relief sought for this petition may be confined to the demand made at Sl.No.8 in the impugned notices and reminders.
3. Heard learned counsel for the petitioner and Sri Reuben Jacob, learned Additional Advocate General for the State.
4. The issue as to whether penalty can be imposed for short production of beer for using malt which is the primary ingredient is less than the 'adjuncts' was examined by this Court in W.P.No.26796/2019 and the connected petition disposed of on 04.04.2024. This Court at paragraphs No.9 and 10 has held as follows:
"9. To impose a penalty, there must be a clear and specific provision or rule outlining the circumstances under which the penalty can be applied. Essentially, it emphasizes the importance of having established guidelines or rules to ensure that penalties are applied consistently and fairly, rather than at the discretion of the authority.
10. When regulations dictate that for every 1,000 kilograms of malt utilized, 6,500 liters of beer must be manufactured, the competent authority cannot exceed these rules , and levy penalties, by stating that the malt, which is the primary ingredient for brewing beer, is less in quantity compared to other ingredients, as this action would contradict the essence of the rules.
Accordingly, I pass the following:
ORDER i) The writ petitions are allowed.
ii) The impugned order dated 29.01.2021 passed by the 2nd respondent at Annexure-A in W.P.4346/2021 is hereby quashed.
iii) The impugned order dated 15.6.2019 passed by the 4th respondent at Annexure-Q in W.P.26796/2019 is hereby quashed."
5. Therefore, this petition stands disposed off in light of the order passed in the aforesaid petition. Accordingly, the Writ Petition is allowed in part.
6. The impugned demand notice dated 14.08.2023 and reminder notices dated 10.10.2023 and 03.11.2023 issued by respondent No.5 at Annexures-D, E and F insofar as it relates to the demand made in column No.8 of the Anneuxres to the said notices are hereby quashed.
Pending IA's if any does not survive for consideration.
