Case Note & Summary
The petitioner, holding a liquor license for a shop in Pune Municipal Corporation, was affected by the Supreme Court's order in State of Tamil Nadu v. K.Balu (2016) banning liquor shops within 500 metres of highways. Consequently, he applied to shift his license from the old premises to new premises. The Collector granted the shifting order on 14 August 2017, exempting privilege fees as per a government circular. However, the petitioner could not shift due to a restrictive condition in the new premises and applied for cancellation, which was allowed on 18 August 2017. Meanwhile, the Supreme Court on 11 July 2017 clarified that the ban does not apply to areas within municipal corporation limits, thereby protecting the petitioner's old premises. He then renewed his license at the old premises. Subsequently, the Superintendent of State Excise issued a demand notice for Rs.28,00,000 as transfer fee based on an audit objection, threatening suspension of the license. The petitioner challenged this notice in a writ petition under Article 226. The court noted that the shifting was not voluntary but compelled by the Supreme Court order; the petitioner never actually shifted; the shifting permission was cancelled; and the Supreme Court's clarification rendered the shifting unnecessary. Therefore, no transfer of license occurred, and privilege fees under Rule 4(b) of the Bombay Prohibition (Privileges Fees) Rules, 1954 were not attracted. The demand notice was held illegal and was quashed. The petition was allowed, and rule was made absolute with no order as to costs.
Headnote
A) Excise Law - Transfer of License - Privilege Fees - Bombay Prohibition (Privileges Fees) Rules, 1954, Rule 4(b) - Shifting of liquor license from old premises to new premises was necessitated by Supreme Court directions dated 15/12/2016; before actual shifting, the Supreme Court clarified on 11/07/2017 that the prohibition does not apply to premises within municipal corporation limits; the licensee cancelled the shifting and continued at old premises; no actual transfer of license occurred. Held, demand for privilege fees under Rule 4(b) was illegal and without jurisdiction. (Paras 16-18)
Issue of Consideration
Whether the demand notice for privilege fees in respect of transfer of liquor license from old premises to new premises is legal and justified when the shifting was necessitated by Supreme Court orders and later rendered unnecessary by a clarification
Final Decision
The writ petition was allowed. The demand notice dated 6th July 2018 was quashed. Rule made absolute. No order as to costs.
Law Points
- Transfer of license from one site to another attracts privilege fees under Rule 4(b) of the Bombay Prohibition (Privileges Fees) Rules
- 1954
- no fee is chargeable when shifting is due to Supreme Court directions
- the Superintendent of State Excise has no jurisdiction to demand fees as the licensing authority is the Collector
- demand notice issued without authority is illegal
- subsequent clarification by Supreme Court obviates need for shifting and hence no transfer fee arises
Case Details
2018 LawText (BOM) (09) 28
Writ Petition No. 7597 of 2018
D.B. Savant, V.R. Salokhe (for petitioner); Shruti D. Vyas (for respondents)
The State of Maharashtra & Ors.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging a demand notice for privilege fees in respect of transfer of liquor license.
Remedy Sought
Petitioner sought quashing of the demand notice dated 6th July 2018 issued by respondent No.4 for Rs.28,00,000.
Filing Reason
Respondent No.4 issued a demand notice calling upon petitioner to pay Rs.28,00,000 as transfer fee for shifting of license from old premises to new premises, failing which license would be suspended. The petitioner challenged the notice as illegal and without jurisdiction.
Previous Decisions
Initially, the Collector granted permission to shift on 14/8/2017 with exemption from fees; then cancelled on petitioner's application on 18/8/2017. The Supreme Court's orders dated 15/12/2016 and 11/7/2017 affected the matter.
Issues
Whether the demand notice dated 6th July 2018 for payment of privilege fees under Rule 4(b) of the Bombay Prohibition (Privileges Fees) Rules, 1954 was legal and valid
Whether the Superintendent of State Excise had jurisdiction to issue such notice
Whether the petitioner was liable to pay transfer fees when the shifting never materialised and the license was renewed at the old premises
Submissions/Arguments
Petitioner argued that the demand notice was without jurisdiction as the licensing authority is the Collector and the Superintendent had no power; that no transfer of license actually took place as the shifting was cancelled; that the shifting was necessitated by Supreme Court order and later Supreme Court clarified that the old premises were not affected, so no fee is payable.
Respondents argued that once shifting permission was granted, the petitioner could not conduct business at old premises; that the second application for shifting back attracted transfer fees under Rule 4(b); that the demand was justified as per audit objection.
Ratio Decidendi
When a liquor license is sought to be transferred from one site to another solely due to compulsion of a court order, and the licensee does not actually effect the transfer and the court subsequently clarifies that the original site is not affected, no privilege fees can be demanded under Rule 4(b) of the Bombay Prohibition (Privileges Fees) Rules, 1954 as no transfer of license takes place. The demand notice issued by an officer not authorized is illegal.
Judgment Excerpts
It can thus be seen that the petitioner on his own volition never intended to shift his license from one site to another site.
the question of charging any fees for transfer of license from one site to another does not arise at all.
the petitioner cannot be penalized only because he had already applied for shifting from old premises to new premises.
Procedural History
1. Petitioner held liquor license at old premises in Pune Municipal Corporation. 2. Supreme Court order dated 15/12/2016 directed no liquor shops within 500m of highways, affecting petitioner. 3. Government circular dated 7/6/2017 exempted privilege fees for shifting due to Supreme Court order. 4. Petitioner applied for shifting to new premises; Collector granted shifting order on 14/8/2017, exempting fees. 5. Petitioner could not shift due to condition in new premises; applied for cancellation on 18/8/2017; Collector cancelled shifting and directed petitioner to find new premises. 6. Supreme Court clarified on 11/7/2017 that prohibition does not apply to municipal corporation areas. 7. Commissioner of State Excise issued circular dated 4/9/2017 directing renewal of licenses in municipal areas. 8. Petitioner applied for and obtained renewal of license at old premises. 9. Respondent No.4 issued demand notice dated 6/7/2018 for Rs.28,00,000 as transfer fee, based on audit objection. 10. Petitioner filed Writ Petition No. 7597 of 2018 challenging the demand notice. 11. High Court issued notice, heard parties, and allowed the petition on 10/9/2018, quashing the demand notice.
Acts & Sections
- Bombay Foreign Liquor Rules, 1953: Rule 25
- Bombay Prohibition (Privileges Fees) Rules, 1954: Rule 4(b), Rule 4(d)
- Bombay Prohibition Act, 1949: Section 5, Section 10
- Constitution of India: Article 226
