ORDER Dt: on 5 February, 2003
2. The facts are not much in dispute. As culled out from the affidavit and the counter-affidavit, in brief, the facts are as follows. The petitioner was granted a licence in Form IL 24 of the Rules on 30-3-1998 for the Excise Year 1998-99. With the said licence, he commenced business in the name and style of M/s. Sree Lakshmi Venkateswara Wines at premises No. 4/148, RTC Bus Stand, Rajampet, Cuddaph District. On 31-3-1998 another Form IL 24 licence was issued to him for the Excise Year 1998-99 with which he commenced the business in the name and style of M/s Balaji Wines. Be it noted for the licence given to the first concern, he paid an amount of Rs. 3,75,000/- and for the second licence he paid licence fee of Rs. 2,50,000/-as per slab system based on population of area. The said licences were renewed for the year 1999-2000 also. For the year 2000-2001, the licence for M/s. Sree Lakshmi Venkateswara Wines was renewed. However, the same was not renewed for M/s. Balaji Wines in view of the excise policy of the Government for the year 2000-2001 vide G.O. Ms. No. 165, Revenue (Excise-II) Department, dated 31-3-2001. The said policy does not permit grant of two licences to one person.
3. The petitioner, in view of the change in the excise policy, made an application on 15-4-2000 under Rule 38 of the Rules seeking permission of the Commissioner - third respondent herein-to transfer his licence to his brother-in-law Sri A. Amarendranath Reddy. Be it also noted, by the time he made an application, he had paid part of the licence fee of Rs. 1,65,000/- on 8-3-2000 for renewal of licence of M/s Balaji Wines for the year 2000-2001. The third respondent rejected the petitioner's application for transfer under Rule 38 of the Rules by proceedings dated 2-5-2000, which was communicated by the 1st respondent through his Proceedings Rc.No. B/2484/2000, dated 22-5-2000 to the petitioner.
4. In the meanwhile, the petitioner filed a Writ Petition being W.P.No. 12943 of 2000 questioning the action of the respondents in not renewing the licence of M/s Balaji Wines with effect from 1-4-2000 to 31-3-2001. The Writ Petition was admitted and interim orders were issued directing the authorities to renew the licence. In accordance with the said interim orders, the licence of M/s Balaji Wines was renewed on 8-9-2000 by the first respondent. It is now admitted that pursuant to another Governmental Order relaxing the rule, the petitioner transferred his licence to his brother-in-law and the shop was allowed to run under Form IL 24 licence. The petitioner's case is that as licence was not renewed from 1-4-2000 to 8-9-2000 he is entitled for refund of the proportionate licence fee from out of the licence fee of Rs. 1,65,000/- which he paid on 8-3-2000 along with the application for renewal of the said licence.
5. The Writ Petition is opposed by the respondents inter alia on the ground that in view of the change in the excise policy, the petitioner is not entitled for any refund and there is no provision for granting refund of the licence fee. Learned Assistant Government Pleader - Ms. Ramani - also submits that though licence was not renewed, the rules enable the licensee to run the shop till the rejection order is communicated and, therefore, the petitioner is not entitled for any refund.
6. The question for consideration as indicated at the outset requires a reference to Sections 20, 31 and 32 of the Act. Section 20 of the Act empowers the District Magistrate to close any shop where intoxicant is sold for a specified period and as per Sub-section (3) of Section 20 of the Act, a licensee is entitled to refund of such fee paid by him as is proportionate to the period during which the shop is required to be kept closed.
7. Section 31 of the Act empowers the licensing authority to cancel or suspend the licence irrespective of the period to which the licence or permit relates under certain circumstances. Under Sub-section (3) of Section 31 of the Act, the licensee shall not be entitled to any compensation for its cancellation or suspension nor to the refund of any fee paid or deposit made. Be it also noted, the excise licence is liable for cancellation or suspension when duty or fee is not paid or when the terms and conditions of licence are breached or when the licensee is convicted of any offence under the Act or of any cognizable or non-cognizable offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 or under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 or under the Trade and Merchandise Marks Act, 1958 or under Sections 481 to 489 of the Indian Penal Code, 1860 or of any offence punishable under Section 112 or Section 114 of the Customs Act, 1962, irrespective of the fact whether such conviction relates to the period earlier or subsequent to the grant of licence.
8. Section 32 of the Act deals with power of the authority to withdraw the licence. It is necessary to extract the provision:
Power to withdraw licence :--(1) Whenever the authority which granted any licence under this Act considers that such licence should be withdrawn for any cause other than those specified in Section 31, it may withdraw the licence on the expiration of not less than thirty day's notice in writing of its intention to do so. (2) When the licence is withdrawn under Sub-section(1) or Clause (e) of Sub-section (1) of Section 31 part of the licence fee proportionate to the unexpired portion of the term of the licence and the deposit made by the licensee in respect thereof shall be refunded to him after deducting the amount if any due from him to the Government.
9. Section 33 is also relevant, which reads as under:
Surrender of licence :--(1) Any holder of a licence granted under this Act to sell an excisable article may surrender his licence on the expiration of one month's notice in writing given by him to the Prohibition and Excise Superintendent of his intention to surrender the same but the licence fee proportionate to the unexpired portion of the term of the licence for which it would have been current but for such surrender shall not be refunded. (2) Sub-section (1) shall not apply in the case of any licence issued in respect of a lease granted under Section 17.
10. Under Section 33 of the Act, a licensee is entitled to surrender his licence on expiration of one month's notice in writing given to the licensing authority, but he is not entitled for any refund of the licence fee for the unexpired portion of the term of the licence period. The same is not the case when the licensing authority withdraws the licence under Section 32 of the Act. Section 32 of the Act empowers the licensing authority to withdraw any licence for any cause other than those specified in Section 31 of the Act on expiration of thirty day's notice in writing showing his intention to do so. Therefore, as per the policy of IL 24 licence, though issued for one year, the licensee is entitled for an automatic renewal for subsequent years. The order of rejection, be it due to change of policy that a licensee cannot have two licences, in effect, amounts to withdrawing the licence of a licensee issued during previous year. The submission of the learned Assistant Government Pleader that there is no provision for refund of the licence fee in a matter of this nature cannot be accepted.
11. It is axiomatic that any arbitrariness either in the executive or legislative action is violative of Article 14 of the Constitution of India. Even while enforcing the law, be it an excise law or a right, which is a right res extra commercium, the principles of fairness have to inform State action. Every law, it is settled, requires to be interpreted to be in consonance with the Constitution of India especially the fundamental rights chapter. The Court should not prefer an interpretation, which renders the provision constitutionally invalid (see K.P. Varghese v. Income-Tax Officer, Ernakulam, .) If Section 32 of the Act is not held to be not applicable to a case where renewal of the existing licence is rejected on the ground that there is a change of policy, the same would result in unfairness and also results in the State unlawfully enriching itself with the licence fee or part of licence fee collected by the authorities. In a situation where a licensee is required to apply in advance for renewal by paying substantial licence fee in advance, the refusal to renew must be treated as withdrawal of licence because, as a rule, it is not denied before me, the existing licensee is entitled and has incohate right for renewal for the next year.
12. To what extent or in what proportion the petitioner is entitled for refund? A reference may be made to Sub-rules (1) and (2) of Rule 26-A of the Rules, which read as under:
26-A. (1)(a) An application for the renewal of the licence shall bear a Court fee stamp of the requisite value as per the provisions of the Indian Stamp Act, 1899 and shall be submitted to the authority competent to renew the licence, one month in advance of its expiry together with a challan in original in support of having paid the required licence fee: Provided that the Commissioner of Prohibition and Excise may, subject to such terms and conditions as he may deem fit to impose permit the licensee to submit application on such date as may be specified for renewal of licence before the expiry of the period of the licence and also to pay the licence fee in such manner as he deems fit; Provided further that the Commissioner of Prohibition and Excise for the special reasons to be recorded therein (subject to such terms and conditions as he deem fit to impose may consider to) entertain the application for renewal up to 30th April of every year with a rate of Rs. 100/- for each day of delay (and in accordance with the guidelines issued by the Government from time to time) after the expiry of the period of the licence. (b) Before issue of a licence the licensee shall execute a counter part agreement in (Form IL-17 or IL-17-A or IL-17-B or in Form IL-28) (other than licences under IL-24)/IL-28-A (Licences under IL-24) as the case may be on the stamp paper of requisite value as per the provisions of the Indian Stamp Act, 1899. (2) In case the application for renewal of licence is made as prescribed in Sub-rule (1) and if the licence is not duly renewed and returned before the licence expired, the licensee shall have the right to carry on business till its renewal is refused and the fact intimated. If the application is not made within time it shall not however be open to the licensee to continue the business on the expiry of the licence.
13. A plain reading of the above Sub-rule (1) would show that a licensee is required to apply for renewal of licence one month before expiry of the existing licence and pay the required licence fee. As per Sub-rule (2) when an application for renewal is made one month in advance of its expiry, licensee shall have a right to carry on business till its renewal is refused and the fact is intimated. It is on record that after the excise policy for the year 2000-2001 was announced in G.O. Ms. No. 165, dated 31-3-2001, the petitioner made an application only on 15-4-2000 requesting transfer of the licence of M/s Balaji Wines in the name of his brother-in-law. By that date, he had already paid the required fee (part fee) and applied for renewal. Therefore, it is reasonable to draw an inference that with effect from 1-4-2000 till the permission for transfer was refused by the third respondent by proceedings dated 2-5-2000, which was communicated to the petitioner by the 1st respondent by proceedings dated 22-5-2000, the petitioner was carrying on business. It is reasonable to draw inference that with effect from 22-5-2000 till 8-9-2000 when the licence was renewed as per the orders of this Court dated 19-7-2000 in W.P.M.P.No. 16481 of 2000 in Writ Petition No. 12943 of 2000, the petitioner was not carrying on business. Be it noted that as per Sub-rule (2) of Rule 26-A of the Rules, a licensee is entitled to carry on the business till the renewal is refused and the fact is intimated. Therefore, for the period from 22-5-2000 till 8-9-2000 the petitioner did not carry any business and as the non-renewal and/or withdrawal of licence is due to change of excise policy by the Government, which is not one of the causes mentioned in Section 31 of the Act, the petitioner is entitled for refund of licence fee paid or deposit made, if any.
14. Accordingly, for the above reasons, the Writ Petition is allowed declaring that the petitioner is entitled for refund of the proportionate licence fee from out of the part licence fee paid for the Excise Year 2000-2001, for the period from 22-5-2000 to 8-9-2000. It is needless to mention that the respondents shall be entitled to deduct any amount due from the petitioner to the Government. There shall be no order as to costs.
Naga Chengal Reddy vs Prohibition And Excise Superintendent
