JONEY E.M. Vs. STATE OF KERALA

JUDGEMENT

(1.) The petitioner is an Abkari Contractor in respect of Group Nos. I, II and III of Kothamangalam Range for the sale of arrack during the year 1994-95. The substantial prayer in this writ petition is to declare the collection of Excise Duty at the rate of Rs. 25-73 per litre as unconstitutional. The petitioner also challenges the validity of the R.8(1) of the Abkari Shops (Disposal in Auction) Rules, 1974 (hereinafter referred to as 'Rules').

(2.) The validity of the R.8(1) of the Rule came up for consideration before the Full Bench of this court in W. A. No. 1300/93 and connected cases. The Full Bench in Ext. P 4 common judgment observed that the rate of duty or tax leviable on a particular item is essentially a matter of expediency and policy of the Government and so long as it is not violative of any fundamental or other constitutional right, the levy at a particular rate is not open to challenge. In order to come to this conclusion the Full Bench has relied on the latest decision of the Supreme Court in Assistant Excise Commissioner v. Issac Peter 1994 (4) SCC 104 = 1994 (1) KLT 698 . The Supreme Court has emphatically laid down in this decision that in case of contracts freely entered into with the State, there is no room for invoking the doctrine of fairness of reasonableness against one party to the contract namely the State, for the purpose of altering of adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts and the laws relating to contracts. There is no room for invoking the doctrine of unjust enrichment in such situation as observed by the Supreme Court in the case supra.

(3.) T. L. Viswanatha Iyer, J. speaking for the Full Bench observed: "Distinctions between rental and excise duty, though they may exist, do not affect the position that the amount termed excise duty also forms part of the consideration for the privileges conferred on the contractors under the abkari policy of this year". What the contractors are required to pay is the consideration payable to the State for being granted the aforesaid twin privileges and not excise duty on non imported rectified spirit. The Full Bench therefore held that the contractors are bound to pay the amount which in its measure is the excise duty payable on the designated quantum of rectified spirit under the terms of R.8 and as undertaken in the agreements executed by them. Therefore, it is settled that the contractors who offered their bids at the auctions with full knowledge of terms and conditions attached thereto cannot be permitted to wriggle out of the contractual obligations arising out of acceptance of their bids as observed by the Supreme Court in Har Shankar v. Deputy Excise and Taxation Commissioner 1975 (1) SCC 737 . This being the position, the contentions urged by the petitioner against the validity of the R.8(1) cannot be entertained.