IMPORTANT POINTS
1. The obligation to remit the excise duty is independent of the obligation to lift the minimum guaranteed quota every month and the duty is payable on or before the specified dates every month.
2. A person who enters into certain contractual obligations and works the entire contract, cannot be allowed to question the validity of those obligations or the validity of the Rules which constitute the terms of the contract and the extra-ordinary jurisdiction of the High Court under Article 226 of the Constitution cannot be employed in aid of such persons.

Headnote:Bihar and Orissa Excise Act, 1915-Sections 27, 28, 29-Orissa Excise Exclusive Privilege Rules, 1970-Rules 6 and 6A-Contracts with Government of Orissa-Undertaking to lift a particular quantity of liquor every month and to remit monthly excise duty in two equal instalments-Defaults-Licencees failed to lift minimum guaranteed quota-Failure to remit duty as stipulated-Recovery-Challenged-Licencees contending that said undertaking in contract is not enforceable in law-Whether petitioner could question validity of contractual obligations?-(No)-Extra-ordinary jurisdiction of High Court under Article 226 of the Constitution cannot be employed in aid of such persons-Obligation to remit excise duty is independent of the sale/purchase of liquor-It is payable on or before specified dates every month.
       Held : The amounts mentioned in Rules 6 and 6-A, as also the undertakings contained therein, together constitute the consideration for grant of privilege/licence, determined by auction, as contemplated by Section 29 of the Act. As explained hereinbefore, the obligation to remit the excise duty is independent of the sale/purchase of liquor; it is payable on or before the specified dates every month; it is an addition to the monthly instalment payable under Rule 6; its remittance is not tied up to the purchase of M.G.Q. except to the extent that the licencee has to pay the prescribed instalment of excise duty prior to the lifting of the liquor. It, therefore, cannot be said that there is any levy of excise duty upon the licencee. The concept here is altogether different. It is a case where the consideration payable by the licencee for grant of licence is made up of monthly rental plus excise duty besides the obligation to purchase the M.G.Q. The licencee pays the rental and excise duty as undertaken by him under the agreement/contract executed by him and as required by conditions of the licence under which he is doing business, i.e., as and by way of consideration. Indeed, the Rules could have provided that the entire amount provided under Rules 6 and 6-A should be paid in advance before the issuance of licence in which event it could not have been contended that it is not in consideration of grant of licence. Merely because, the Rules provide a concession and provide for collection of the said amounts in convenient instalments spread over the year, the nature and character of the payments cannot change. (Para 18)
       Further held that the writ petitioners, having entered into agreements voluntarily, containing the conditions aforesaid and having done the business under the licences obtained by them, cannot be allowed to either wriggle out of the agreements nor can they be allowed to challenge the validity of the Rules which constitute the terms of the contract. The High Court should not have exercised its extra-ordinary discretionary jurisdiction under Article 226 of the Constitution in aid of such licencees. (Para 21)

JUDGMENT

B.P. Jeevan Reddy, J.-Leave granted.

2. Having voluntarily entered into contracts with the Government of Orissa, undertaking to lift a particular quantity of liquor every month and also to remit the monthly excise duty in two equal instalments on the fifth and fifteenth of the month, the respondents - licencees committed default on both counts and when the amount of excise duty is sought to be recovered from them, they have turned round and are contending that the said undertaking in the contract is not enforceable in law. They invoked the extra-ordinary jurisdiction of the High Court under Article 226 of the Constitution for the purpose. The High court has upheld their contention. Hence, these appeals by the State of Orissa.

3. The grant of excise licences in the State of Orissa is governed by the Bihar and Orissa Excise Act, 1915 (the Act) and the rules made thereunder. Section 22 provides for grant of exclusive privilege of sale of country liquor, whether wholesale or retail. Section 27 empowers the State Government to impose excise duty or countervailing duty, as the case may be, at such rate as it may direct on any of the activities specified therein. It would be appropriate the set out sub-section (1) of Section 27 :

"27. Power to impose duty on import, export, transport and manufacture.- (1) An excise duty or countervailing duty, as the case may be, at such rate or rates as the State Government may direct, may be imposed, either generally or for any specified local area, on-

(a) any excisable article imported, or

(b) any excisable article exported, or

(d) any excisable article (other than tari) manufactured under any licence granted in respect of Cl. (a) of S. 13, or

(e) any hemp plant cultivated, or any portion of such plant collected, under any licence granted in respect of Cl. (b) or Cl. (c) of S. 13, or

(f) any excisable article manufactured in any distillery or brewery licensed, established, authorised or continued under this Act.

Explanation : Duty may be imposed on any article under this sub-section at different rates according to the places to which such article is to be removed for consumption, or according to the varying strengths and quality of such article."

Section 28 empowers the levy of excise duty/countervailing duty in any of the several ways provided therein. Section 28, insofar as is relevant, reads :

"28. Ways of levying such duty.-Subject to any rules made under S. 90, Cl. (12), any duty imposed under Section 27 may be levied in any of the following ways :

(i) .........

(ii) by payment upon issue for sale from a warehouse established, authorised or continued under this Act."

Section 29 is particularly relevant to the controversy herein. It reads :

"29. Payment for grant of exclusive privilege.- (1) Instead of or in addition to, any duty leviable under this Act, the State Government may accept payment of a sum in consideration of the grant of any exclusively privilege under Section 22.

(2) The sum payable under sub-section (1) shall be determined as follows:

(a) by auction or by calling tenders or otherwise as the State Government may, in the interest of excise revenue, by general or special order direct; and

(b) by such authority and subject to such control as may be specified in such order.

(3) The sum determined under sub-section (2) shall be final and shall be binding on the party making the offer by way of tender, bid or otherwise once such offer is accepted by the authority referred to in Cl. (b) of that sub-section."

4. A reading of Section 29 shows that the State Government may accept payment of a sum in consideration of the grant of any exclusive privilege under Section 22. This may be instead of or in addition to any duties leviable under the

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1996 Supreme(SC) 1382

Cases Referred (7)