of U.P. & Ors Vs. Saraya Industries Ltd
 Insc 308 (12 May
Sinha & P.P. Naolekar
out of SLP (Civil) No. 11483 of 2005] W I T H CIVIL APPEAL NO. 2648 OF 2006
[Arising out of SLP (Civil) No.15463 of 2005] State of U.P. & Ors. Appellants
Versus Simbhauli Sugar Mills Ltd. Respondent.
APPEAL NOS. 2649 OF 2006 [Arising out of SLP (Civil) No.15345 of 2005] State of
U.P. & Ors. Appellants Versus M/s Kesar Enterprises Ltd. Respondent CIVIL
APPEAL NO. 2650 OF 2006 [Arising out of SLP (Civil) No.15339 of 2005] State of
U.P. & Ors. Appellants versus Radico Khaitan Ltd. Respondent.
APPEAL NO. 2669 OF 2006 [Arising out of SLP (Civil) No.15354 of 2005] State of
U.P. & Ors. Appellants versus M/s National Industrial Corpn. Ltd. & Anr.
Respondents CIVIL APPEAL NO. 2678 OF 2006 [Arising out of SLP (Civil) No.15341
of 2005] State of U.P. & Ors. Appellants Versus M/s McDowell & Co. Ltd.
& Anr. Respondents CIVIL APPEAL NOS. 2647 OF 2006 [Arising out of SLP
(Civil) No.13297 of 2005] State of U.P. & Ors. Appellants versus M/s DCM Shriram
Industries Ltd. Respondent.
APPEAL NOS. 2671 OF 2006 [Arising out of SLP (Civil) No.15245 of 2005] State of
U.P. & Ors. Appellants Versus M/s McDowell & Co. Ltd. & Anr. Respondent.
S.B. SINHA, J :
respondents herein are owners of distilleries. Right to manufacture various
categories of Indian Made Foreign Liquor within the meaning of the provisions
of the Uttar Pradesh Excise Act, 1910, as amended in 1950, (for short, 'the
Act) has been granted to them by the State of Uttar Pradesh. They have been
granted licence for manufacturing potable liquor. They indisputably have been
paying excise duty in terms of the provisions of the Act.
State of Uttar Pradesh on or about 03.02.2001 allegedly adopted a policy
decision for the excise year 2001-02 which commenced from 01.04.2001 to the
effect that the distilleries had to obtain and affix security holograms issued
by the department to prevent evasion of duty and smuggling of liquor. The
Excise Commissioner issued a circular on 21.02.2001 providing that every
distillery would receive holograms from his office, wherefor plants had been
established. Another circular letter was issued on 24.03.2001 directing that
holograms on bottles, pouches and canes would be affixed by the distilleries.
The excise duty was payable on the bottles, pouches and canes etc. on which
holograms had been affixed.
kinds of holograms had been provided for different sizes of bottles/pouches,
for different quantities and qualities of liquor. Procedures to be followed for
obtaining the said holograms, transporting etc. thereof by the distilleries
were also provided. It was provided that the distilleries would be entitled to
receive holograms from the incharge excise inspector on day- to-day basis and a
register was required to be maintained as regards the stock of the holograms
issued, the number of holograms wasted and the closing stock thereof. The
excise duty was to be deposited before issuance of bottles, pouches and canes
affixed with holograms. Furthermore, the excise duty was to be chargeable on
the wasted holograms, which would be destroyed under the orders of the Excise
policy of execution of indemnity bonds in the prescribed form in Form PD-16-A
was directed to be issued by circular letter dated 08.11.2001, whereby and whereunder,
the distilleries were made themselves responsible for indemnifying the State
for any loss of excise duty or such other payment awarded as compensation or
damages by any court of law or tribunal or Commissioner. The said circular
letter further provided that holograms which were returned to the excise
department as damaged or wasted and verified by the Authorized Committee would
not be exigible to any excise duty. However, if the wasted holograms were not
produced for verification, the same shall be presumed to have been misused as a
result whereof the distilleries would be liable to pay excise duty on the
quantity of liquor which could have been charged, if the holograms had not been
wasted and the distilleries were made liable to compensate the State for the
loss of duty on the quantity of liquor which could have been issued under the
missing security holograms.
about 19.11.2001, the Excise Commissioner issued a clarification that in case
any loss is caused to the security holograms during transit, the distilleries
would be liable to compensate the Governor for loss of alleged duty on the
quantity of the liquor, which could have been issued under the lost security
Authorized Committee came to be appointed by the Excise Commissioner, which
visited the premises of the distillery of the respondents between 15.07.2001 to
20.07.2004. Before the said Committee all the wasted holograms were allegedly
not produced. A statement was prepared by the said Committee showing the number
of holograms found to have been wasted/damaged but the serial number could not
be read and categorized as missing holograms. The respondents were directed to
deposit the excise duty on the quantities mentioned in the said holograms.
writ petitions were filed by the respondents herein before the Allahabad High
Court questioning the legality of the said circular dated 03.02.2001 as also
the circulars dated 21.02.2001, 24.02.2001, 16.06.2001, 29.10.2001, 08.11.2001
and 19.11.2001 issued by the Excise Commissioner, inter alia, on the ground
that no presumption could be raised that wasted security holograms which could
be produced for verification before the Authorized Committee would be deemed to
have been misused. By reason of the impugned judgment, the said writ petitions
have been allowed.
State is, thus, before us.
High Court in passing the impugned judgment, inter alia, opined :
that the duty
cannot be charged on the basis of loss of holograms, as excise duty was payable
in terms of the notification issued under Section 29 of the Act; and
having been issued, excise duty demanded only on the basis of the circulars
issued by the Excise Commissioner on account of holograms, is bad in law.
Dwivedi, the learned Senior Counsel appearing on behalf of the Appellant,
submitted that by reason of the circular letters issued by the Excise
Commissioner only effect was given to the rules frame by the State dated
attention, in this connection, has been drawn to the indemnity bond as
prescribed in Form No. PD-16-A in terms whereof the distillers had undertaken
to pay such amount of damages in case of loss or misplacement of the holograms,
which would be equal to the amount of excise duty involved in such missing
holograms. Our attention, in this behalf, has also been drawn to a rule made on
23.01.2004, in terms whereof a similar provision had been inserted.
urged that the regulatory measures having been taken by the Excise Commissioner
so as to prevent evasion of payment of excise duty, no notification was
required to be issued nor any rule was required to be framed. The Act, whenever
any such notification is required to be issued, Mr. Dwivedi would contend,
provides for the same and, thus, notifications were not required to be issued..
H. Desai, the learned Senior Counsel appearing on behalf of the respondents, on
the other hand, submitted that the object sought to be achieved being levy of
additional excise duty, it was obligatory on the part of the State to issue an
appropriate notification in terms of Section 29 of the Act. It was submitted
that excise duty was payable on actual quantity of liquor manufactured and not
on notional quantity thereof. Furthermore a duty cannot be levied by
incorporating a condition in the licence. It was furthermore contended that the
power of the Excise Commissioner to issue direction being limited, and
imposition of duty is within the exclusive domain of the State, the same must
be effected by way of a notification and not by way of a circular.
we advert to the rival contentions of the parties, as noticed hereinbefore, we
may take note of certain provisions of the Act.
articles' has been defined in Section 3(22a) to mean :
liquor for human consumption; or
18 provides for establishment or licensing of distilleries and warehouses. A licence
therefor is to be issued on such condition as the State Government deems fit to
impose as regards the construction and working of a distillery or brewery or
19 provides for removal of intoxicants from distillery, etc.
power to levy duty on excisable articles is provided for under Section 28 of
the Act. Section 29 of the Act lays down the manner in which the duty is to be levied,
mandating that for the said purpose a notification should be issued in terms
whereof directions as enumerated in the clauses mentioned therein should be
made. Section 31 provides for the forms and conditions of licences on the terms
mentioned therein. In terms of Section 41 of the Act, the Excise Commissioner
may make rules.
the rules in terms of the said provisions providing for issuance of such
holograms have been made for the first time in 2004.
to or in furtherance of such rule making power, however, rules have been
framed. Indisputably, in terms of the said rules, manufacture, processing,
distribution, and payment of excise duty, transport etc. are regulated. Rule
715 provides for accounts to be kept by distillers. Rule 716 provides that such
accounts would be open to inspection at all times by the officer-in-charge and
all superior officers. Rule 719 empowers the Excise Commissioner to appoint
officer to the charge of distilleries, in the following terms :
Commissioner to appoint officer to the charge of distilleries.
Excise Commissioner will appoint such officers of the Excise Department as he
may see fit to the charge of distilleries. The pay of such officers, will be
met by Government provided that when the annual establishment charges exceed
the sum of total of 10 per cent of the duty leviable on the issues made from the
distillery to districts in the State, plus 60 per cent, of the export duty
levied on the export of liquor during the year, this excess shall be realized
from the distillers." Instructions for maintaining forms and registers are
also provided in Rules 815 and 821, which read as under :
rules to be observed.-
prescribed registers and forms of accounts are not to be deviated from or added
to without the special orders of the Excise Commissioner. All fractions of
gallons and of degree of strength are to be shown to the nearest first point of
decimals. To preserve uniformity, the system of increasing the first figures of
decimals by one when the second is 5 or more should be adopted in proof
and erasures are forbidden; any necessary corrections must be clearly made and
must be initialed."
declaration of wash Form P.D.8.-
must thoroughly dissolve the saccharine materials used by them when they set up
the wash; and declare in Form P.D. 8 the kind and quantity of material used,
the actual saccharometric gravity corrected for temperature before fermentation
commenced and the total quantity for wash made." No controversy has been
raised on behalf of the appellant that in the event it be held, as has been
done by the High Court, that by reason of the said circular letters excise duty
sought to be levied, the same would be bad in law.
submission of Mr. Dwivedi, however, as noticed hereinbefore, was that it was
done with a view to obviate the difficulties faced by the distillers and for
the purpose of preventing evasion of payment of excise duty by way of
regulatory measure. The rule made by way of notification dated 19.03.2001 is
not applicable to the distillers. It is only applicable to wholesale shops. The
provisions of the said rules cannot be made applicable to the distillers, as
the rules for the wholesale shops and distillers stand on different footings.
in our opinion, is not correct in contending that the circular letters referred
to hereinbefore, were issued only with a view to obviate the difficulties faced
by the distillers for implementation of matters relating to issuance of
holograms, as provided for in the rules. Mr. Dwivedi was also not correct in
relying upon the indemnity bond purported to have been executed by the
appellant in terms whereof the licensees agreed to keep the State indemnified
for the loss of security of holograms, inasmuch as the indemnity bonds were
executed after the period in question, 2004 Rules to which our attention has
also been drawn are also indisputably not applicable.
attention has also been drawn to the licences granted in favour of the
distillers which allegedly contained clauses relating to payment of duty, in
case of damages or shortages of security holograms by the licensees in their
personal capacity. The icence, to which our attention has been drawn by the
appellant, was issued on or about 01.04.2004 i.e. after the coming into force
of the 2004 Rules.
State indisputably is entitled to take recourse to such measures as it may
think necessary, with a view to prevent evasion of payment of excise duty or
for the purpose of preventing adulteration etc. The State does not say that
prevention of adulteration was the purpose for which the said circular letters
were issued. We have noticed hereinbefore that during the period in question,
there did not exist any rules. No notification was also issued by the State.
The licence did not contain any clause relating to payment of excise duty
either by way of penalty or damages for loss and/or damage caused to the
security holograms. In the circular letter dated 03.02.2001, it was, inter alia,
revenue is of Excise duty. Therefore, the license fee should be so determined
that on the basis of consumption a substantial increase in Revenue is achieved
in the next year.
In order to
check the evasion of excise duty and smuggling of excise, a
serialized/holographic sticker is to be provided for use on the bottles of
liquor and the convenience issue of liquor after payment of due excise duty is
made." The said circular letter, therefore, did not provide for any penal
clause or a clause requiring the licensee to pay any damages. It merely
provides for the manner in which the purported evasion of excise duty was
sought to be prevented. By circular letter dated 21.02.2001, the distilleries
were advised to arrange application machine in every distillery for affixing
security holograms on bottles etc. It specified the price of such holograms. It,
however, provides that without affixing the security holograms and paying the
excise duty liquor for human consumption will not be issued. A letter was
issued by the Excise Commission where again emphasis has been laid on the
purpose for which the security holograms were to be affixed on bottles etc.
namely, to secure Government revenue or to impose restriction on the sale of
illegal liquor. By reason of circular letter dated 24.03.2001, a detailed
procedure has been laid down in regard to issuance of such holograms, relevant
clauses whereof are as under :
security holograms are to be affixed on bottles, pouches and canes at the level
of Distilleries/Breweries/Vintineries/foreign liquor bond (BWFL 2/2A/2B) which
shall be conclusive proof of the fact that liquor contained in it is
manufactured by a legally authorized unit as per standard norms. Accordingly a
safe and secure transportation, storage possession and custody is essential so
that unsocial elements and liquor smugglers may not illegally catch hold of
such holograms and the Government Revenue as well as the safety of public
health may be secured.
The supply of
security holograms shall be made only to such authorized representative of
Distillery/Breweries/Vintinery/license holders of Foreign liquor bond whose
signatures have been attested in the indent form by the officer incharge of the
Distillery/Brewery/Vintinery/license holder of foreign liquor bond and a photo
identity card jointly signed by the officer incharge of the Distillery / Brewery
/ Vintinery / license holder of foreign liquor bond and the incharge of the
indenting unit. Such an identity card had to be produced before the officer incharge
(hologram) Excise Headquarter Allahabad at the time of issue of security
The Distillery / Brevery / Vintinery
/ license holders of foreign liquor bond shall as per their requirement obtain
the security holograms from the officer incharge (Excise) of the concerned unit
and their daily receipt shortage, use, wastage etc. shall be recorded in the
prescribed register HG-6. The wasted security holograms during its use by the
concerned unit shall be kept safe in an envelop and the code number mentioned
on such hologram shall be recorded in the register and a fortnightly statement
of wastage of such holograms shall be made available through officer incharge
of the concerned unit to the officer incharge (holograms) headquarter at Allahabad.
The work of destroying the wasted
holograms by burning them shall be done on a quarterly basis, after
verification of wastage of such holograms by the officer incharge (Excise) of
the concerned unit and after the approval of the Excise Commissioner and in the
presence of Deputy Commissioner Excise of the charge, officer incharge (Excise)
of the unit an officer nominated by the Excise Commissioner and the Manager of
the concerned unit. A report to this effect shall be forwarded to the officer incharge
(Holograms) to headquarters.
After the receipt of the holograms
from the officer incharge (Excise) of the unit, the concerned unit shall be
responsible for the safety, storage, use etc. of such holograms and its daily
record shall be kept by the concerned unit in a register HG-6 and they shall be
totally responsible to compensate any loss in revenue as a consequence of such
wastage of holograms.
For any misuse of security holograms
or for not affixing the proper hologram as per classification of the liquor
resulting in any loss to the revenue the concerned unit shall be totally
responsible." A presumption can be raised only by law. 'Conclusive proof'
is also within the realm of Evidence Act.
by way of regulatory measures directions may be issued in regard to the
maintenance of register in such a manner in which the wasted holograms were to
be maintained; but by reason of an executive fiat, a unit cannot be made
responsible to compensate any loss to the revenue as a consequence of such
wastage of such holograms. Furthermore making the concerned unit totally
responsible for any misuse of security holograms or for not affixing the proper
hologram as per classification of the liquor must result in loss to the
notice the difference between the rules and the conditions of licence which
came to be imposed as regard issuance and use of security holograms and the
provisions contained in the impugned circular letters.
circular dated 19.03.2001 categorically provided for payment in advance of
have noticed hereinbefore that the contention of Mr. Dwivedi, that the circular
letters have been issued to the benefit of the respondent distilleries was
wholly incorrect. The said rules were not applicable at all and the question of
giving any relaxation from the rigours thereof did not and could not arise. The
distillers were asked to execute bonds. Such bonds had been executed in
November 2001, which is beyond the period in question. Only in terms of such
indemnity bonds, the concept of payment of damages and that too in the form of
liquidated damages, was evolved. The position came to be clarified only by the
rules framed by the State on 23.01.2004 wherein it was stated :
shall submit the Security Hologram/Holographic Shrink Sleeves in tact received
from the approved supplier with Hologram Removal pass to officer in charge of
the distillery. In case of shortage in Security Hologram/Holographic Shrink
Sleeves the licensee shall be liable to deposit the excise duty involved in the
missing Hologram/Holographic Shrink Sleeves." .
by reason of the circular letter, the concept of payment of damages measured in
terms of the excise duty had not been conceptualized.
legislative field in regard to levy of excise duty is covered by Entry 51, List
II of the Seventh Schedule of the Constitution of India. It may be true that
the resort to regulatory measures can be taken by the State, but the same must
be done in the manner laid down under the Act. A provision which confers powers
upon a statutory authority in terms whereof a penalty is to be imposed, damages
are to be paid for non payment of excise duty, in our opinin, must be done
through a valid subordinate legislation and not by way of issuance of a
Chandra Banerjee v. State of Madhya Pradesh etc. [(1970) 2 SCC 467], this Court
clearly laid down :
Section 25 nor Section 26 nor Section 27 nor Section 62(1) or clauses (d) and
(h) of Section 62(2) empower the rule-making authority viz. the State
Government to levy tax on excisable articles which have not been either
imported, exported, transported, manufactured, cultivated or collected under
any licence granted under Section 13 or manufactured in any distillery
established or any distillery or brewery licensed under the Act. The
Legislature has levied excise duty only on those articles which come within the
scope of Section 25. The rule-making authority has not been conferred with any
power to levy duty on any articles which do not fall within the scope of
it is not necessary to consider whether any such power can be conferred on that
authority. Quite clearly the State Government purported to levy duty on liquor
which the contractors failed to lift. In so doing it was attempting to exercise
a power which it did not possess." The said decision has been followed in
Excise Commissioner, U.P., Allahabad and Others v. Ram Kumar and Others [(1976)
3 SCC 540], wherein this Court stated the law in the following terms :
common question of law that arises for determination in all these appeals is
whether the condition incorporated in the licences of the respondents that they
would lift the fixed minimum quantity of liquor and sell the same at their
allotted shops and in case of their default or failure to do so, they would be
liable to pay compensation equal to the amount of the excise duty leviable on
the unlifted quantity is valid and enforceable.
point is no longer res integra. In Bimal Chandra Banerjee v. State of Madhya Pradesh1 this Court held that:
tax can be imposed by any bye-law or rule or regulation unless the statute
under which the subordinate legislation is made specially authorises the
imposition. In the present case, the Legislature has levied excise duty or
countervailing duty on the excisable articles which have been either imported,
exported, transported, manufactured, cultivated or collected under any licence
granted under Section 13, or manufactured in any distillery or brewery
established or licensed under the Act; and the State Government has not been
empowered to levy any duty on liquor which the contractors failed to lift.
the State Government was exercising a power which it did not possess and hence
the rule imposing the condition in the licences and the demand notices are
invalid." In State of U.P. and Others v. Modi Distillery and Others
[(1995] 5 SCC 753], this Court opined "Mr Sehgal submitted, in the
alternative, that if it was the ultimate beverage which alone was exigible, the
process of determining the wastage and levying excise duty thereon was only
regulatory and, therefore, permissible. We are here concerned with the demand
of the State for excise duty. The power of the State to demand excise duty is
limited in the manner aforementioned. The demand for excise duty is not a
regulatory measure. The power of the State to levy excise duty cannot be
expanded with reference to its power to regulate manufacture. We are not
required to and do not express any opinion in regard to the power of the State
to regulate the manufacture of alcoholic liquors for human consumption."
The ratio of the said decision has been reiterated in State of U.P. and Others
v. Vam Organic Chemicals Ltd. and Others [(2004) 1 SCC 225] In State of U.P.
and Others v. Delhi Cloth Mills and Another [(1991) 1 SCC 454], this Court held
is emphasised by Mr Agarwal that this provision is meant to discourage evasion
of duty. If any part of the lower export duty charged liquor is not in fact
exported it should be made to pay the higher excise duty as payable on home
consumed liquor. It does not impose any new duty. We are inclined to agree.
This rule does not authorise imposition of any new tax but only authorises
charging up excise duty on the excess wastage of liquor in course of export
which was charged at concessional rate. The old Rule 814 of the Rules was made
by B.O. No. 423/V-234-B, dated September 6, 1910
and No. 20/8 V-E 980-B, dated May 28, 1918
providing for allowance for loss in transit. It said:
allowance will be made for the actual loss in transit, by leakage, evaporation
or other unavoidable cause, of spirit transported or exported under bond. The
allowance is subject to the following maximum limits."
were prescribed differently for wooden casks and metal vessels, keeping in mind
the duration of transport.0 It was further observed :
we find that the minimum (sic maximum) limits of wastage in transit was
prescribed even under the old rule. This by implication enjoined that the
excess wastage would be taxed as if not wasted.
xxx In Mohan Meakin Breweries Ltd. v. Excise & Taxation Commissioner, Chandigarh
6 the appellant company carried on the business of manufacture, storage and
sale of liquors. Between June 1967 and April 1969, it transported various
quantities of liquor from its distilleries in U.P. to its bonded warehouse at Chandigarh. On arrival, the consignments were
examined by the officer-in-charge of the warehouse, and a shortage was found,
exceeding the wastage allowance permissible under Rule 8 of the Punjab Bonded
Warehouse Rules, 1957. The Excise and Taxation Commissioner, exercising the
powers of the Financial Commissioner, issued a show cause notice and then
ordered the appellant to pay duty on the wastage in excess. The show cause
notice required the appellant to pay duty on excess wastage in course of import
of liquor from U.P. and the rules governing the appellant's licence provided
for a wastage allowance not exceeding 1 per cent of the actual loss in transit
by leakage or breakage of vessels or bottles containing liquor, and if the
wastage exceeded the prescribed limit the licensee should be liable to pay duty
at the prescribed rate as if the wastage in excess of the prescribed limit had
actually been removed from the warehouse, and it was also provided that the
Financial Commissioner could in his discretion on good cause being shown remit
the whole or a part of the duty leviable on such wastage, and these provisions
were challenged. This Court held that the impugned rules did not impose any new
duty or create any liability and that they were in essence and substance of a
regulatory character meant to guard against perpetration of fraud or deception
on the revenue. "They provide for and regulate the storage and
subsequently the removal of liquor from the bonded warehouse, on payment or
otherwise of the duty which is chargeable under the Fiscal Rules of 1937."
We agree with Mr Agarwal that the instant Rules 636 and 814 are also of
regulatory character and they are precautionary against perpetration of fraud
on the excise revenue of the exporting State. If out of the quantity of
military rum in a consignment, a part or portion is claimed to have been
wastage in transit and to that extent did not result in export, the State
would, in the absence of reasonable explanation, have reason to presume that
the same have been disposed of otherwise than by export and impose on it the
differential excise duty. A statute has to be construed in light of the
mischief it was designed to remedy. There is no dispute that excise duty is a
single point duty and may be levied at one of the points mentioned in Section
Government of Haryana v. Haryana Brewery Ltd. and Another [(2002) 4 SCC 547],
whereupon Mr. Dwivedi relied upon, this Court emphasized the need of a forum
where a reasonable explanation for loss of good could be raised. In this case,
such a forum was not available.
State of Bihar and Others v. Industrial
Corporation (P) Ltd. and Others [(2003) 11 SCC 465], this Court clearly held :
the present case, what we find is that before creating a demand of penal duty
or penalty, there was no adjudication by any authority as regards the breach
committed by the respondents. We also find that no opportunity of any kind was
offered to the respondents before the demand as regards the penal duty was
pressed against the respondents. The matter was not even examined as to what
was the reason for shortfall in the production of rectified spirit. The
Molasses Act does not provide for imposition of such penalty in the event of
shortfall of spirit. It must, therefore, necessarily be held that the
imposition of the impugned penalty being against the principles of natural
justice is illegal and void.
statutory authorities must act within the four corners of a statute. They could
take recourse to the proceeding for levy of penalty and the recovery thereof
from the respondents only in the event there existed any agreement or statutory
provision therefor. Such a power did not vest in the Commissioner of Excise or
the Superintendents of Excise who had issued the impugned demand notices."
It is, therefore, manifest that the duty has to be levied only in terms of the
provisions of the statute and not de' hors the same.
accepted by Mr. Dwivedi that legislation relating to excise duty is relatable
to Entry 51, List II of the Seventh Schedule of the Constitution of India. If
that be so, provision for imposition of such duty or evasion thereof must be
provided in terms of the law. By reason of an executive order, a presumption
cannot be raised. No penalty can be levied. The matter would have been
different, if the same was provided for, as has been sought to be done now, by
way of terms and conditions of licence or in terms of the rules.
reason of an executive instruction, the provisions of the law cannot be
effaced. A legislative policy, furthermore, must be laid down by the State.
matter relating to an excise policy must be framed by the State. It cannot be
done by the Excise Commissioner. A distinction must be borne in mind between
the concept of excise duty on production and manufacture of liquor and parting
with the exclusive privilege of the State. Imposition of a penalty would not
come within the purview of either of the two. When a price is fixed by the
State for parting with its exclusive privilege, the same must again be provided
in terms of the statute and the rules framed thereunder or by way of terms of licence.
parting with the case, however, we may observe that we have not gone into the
question as regard the applicability of the rules vis-`-vis the new conditions
imposed in the licence, in the instant case.
are, therefore, of the opinion that in absence of the requisite statutory
backing, the impugned levy by the State cannot be held to be justified in law.
We, therefore, do not find any merit in these appeals. They are dismissed
accordingly. No costs.