ANUGRAHA DISTILLERIES PRIVATE LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioner have been issued a licence on 7-3-1998 for establishing a distillery with the capacity to manufacture 30,000 litres of rectified spirit per day and 1,50,000 cases of iml per annum. The production is not yet started. The petitioner is now been required to deposit Rs. 15 lakhs as licence for the year 1999-2000 for preliminary distillation and that rs. 18 lakhs for the secondary distillation. The licence is being composite, it is stated that the order of enhancement of fee is arbitrary and illegal. The action has been challenged on three grounds; firstly that the enhancement of fee from Rs. 7. 50 lakhs to Rs. 15 lakhs and from rs. 10 lakhs to Rs. 18 lakhs is an arbitrary exercise without any reasons and in view of the judgment of this court in M/s. Sapthagiri enterprises, sameerwadi, mudhol taluk, bijapur district and others v state of Karnataka and others, the levy has to be struck down; secondly, it is stated that since the petitioner has not started manufacturing, therefore, there is no justification to raise the fee under entry 51 of the list ii of the seventh schedule of the constitution; and thirdly, the amendment to the rules have not been made. Learned government advocate placed on record the notification dated 9-6-1999 since the rules in this regard have been amended and therefore his third contention no longer survives.

(2.) REGARDING the question of fee not being falling within entry 51 of list ii of the seventh schedule it may be observed that the said entry is in respect of duties of excise on the following goods manufactured or produced in the state and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in india. (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.

(3.) FEE for licence is not the duty of excise. In state of Uttar Pradesh and others v sheopat rai and others , it was observed that the term "licence fee" and the term "fixed fee" under the excise rules being the consideration that the government receives from a private party to part in letter's favour its exclusive privilege or right to vend foreign liquor in specified shops of any locality in Uttar Pradesh state under a contract. it is not 'fee' and cannot partake the character of either "regulatory fee" or "compensatory fee". [thus the licence fee or fixed fee realisable from a private party for granting the privilege or right to sell or vend foreign liquor to such party was considered to be the duty of excise].