Case Note & Summary
The case involves a writ appeal filed by the Commissioner of Excise and Deputy Commissioner of Excise against an order of a learned Single Judge of the Karnataka High Court. The Single Judge had allowed a writ petition filed by M/s. Taniska Lodging and Boarding, a partnership firm holding a CL-7 licence under the Karnataka Excise (General Conditions of Licences) Rules, 1967. The firm was constituted by two partners: Smt. Sreemantevva W/o. Laxman Suryavanshi and her grandson Sagar. Upon the death of Smt. Sreemantevva, her legal heir Namratha was inducted as a partner. The excise authorities demanded a transfer fee of Rs.18,40,000/- for renewal of the licence under Rule 17B, treating the change in partnership as a transfer of the licence. The firm challenged this demand, and the Single Judge set aside the orders and directed refund. The appellants appealed. The Division Bench reversed the Single Judge's order, holding that the induction of a legal heir amounts to a transfer of the licence, as the licence is personal to the firm and any change in partners requires prior approval and payment of transfer fee under Rule 17B. The court allowed the appeal, set aside the impugned order, and dismissed the writ petition.
Headnote
A) Excise Law - Transfer of Licence - Rule 17B of Karnataka Excise (General Conditions of Licences) Rules, 1967 - Transfer Fee - The issue was whether the induction of a legal heir of a deceased partner into a partnership firm holding a CL-7 licence constitutes a transfer of the licence requiring payment of transfer fee. The court held that the change in partnership composition by admitting a legal heir amounts to a transfer of the licence, as the licence is granted to the firm and any change in partners results in a new entity requiring approval and payment of transfer fee. (Paras 1-10) B) Excise Law - Partnership and Licence - Rule 17B - The court reasoned that a licence under the Excise Act is personal and cannot be transferred without prior approval. The induction of a legal heir changes the constitution of the firm, effectively transferring the licence to a new entity. The demand for transfer fee was upheld. (Paras 4-8)
Issue of Consideration
Whether the induction of a legal heir of a deceased partner into a partnership firm holding a CL-7 licence amounts to a transfer of the licence under Rule 17B of the Karnataka Excise (General Conditions of Licences) Rules, 1967, requiring payment of transfer fee.
Final Decision
The appeal is allowed. The impugned order dated 16.06.2023 passed by the learned Single Judge in W.P. No.105971/2022 is set aside. Consequently, the writ petition filed by the respondents is dismissed.
Law Points
- Transfer of licence
- Transfer fee
- Partnership
- Legal heir
- CL-7 licence
- Rule 17B
- Karnataka Excise (General Conditions of Licences) Rules
- 1967
- Renewal of licence
- Excise Act
