RAMON DISTILLERIES LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The challenge raised in this writ petition filed under Article 226 of the Constitution of India is to Condition No.5 in the order dtd. 31/8/2009 issued by the Desk Officer, Home Department, Maharashtra State thereby requiring the petitioner to pay privilege fees on account of a tie-up agreement for manufacture of Indian Made Foreign Liquor.

(2.) The facts giving rise to the present proceedings are that the petitioner is a company registered under the Companies Act, 1956 which engages in the activity of manufacturing Indian Made Foreign Liquor. The petitioner entered into a tie-up agreement with M/s United Spirits Limited (for short, 'USL') a company also incorporated under the Companies Act, 1956. USL was engaged in the manufacture, marketing and sale of Indian Made Foreign Liquor under exclusive brands. As per the tie-up agreement dtd. 10/9/2008 it was agreed that Indian Made Foreign Liquor would be manufactured by the petitioner while its marketing and sale would be undertaken by USL. The monthly/quarterly production schedule was to be given by USL while the petitioner was to have full control of its factory where Indian Made Foreign Liquor was manufactured. USL had the right of quality control as well as rejection of any batch or product. At the same time the petitioner was free to engage itself in selling or providing similar goods to another party. Technical support was to be provided by USL. The petitioner was to receive sale proceeds for the Indian Made Foreign Liquor invoiced by it. It was clarified that nothing in the agreement would mean that either party was the agent or the representative of the other or that either party would have any right, title or interest in the trade-marks. Either party was entitled to terminate the agreement by giving three months notice in writing.

(3.) After such agreement was entered into, the petitioner forwarded the copy of the tie-up agreement to the Commissioner, State Excise. On 6/2/2009, the Commissioner enquired whether the petitioner was willing to pay the requisite fees and privilege fees for the activities. On 24/2/2009 the petitioner clarified that there was no restriction under the Maharashtra Distillation of Spirits and Manufacture of Potable Liquor Rules, 1966 to enter into such agreement. The same also did not amount to any transfer or subletting of the license. The approval was thus sought in the matter. On 31/8/2009 the State Government approved the tie-up agreement between the parties on certain terms and conditions. As per Condition No.5, the petitioner as a license holder was called upon to pay privilege fees equivalent to one time license fees. This communication was addressed to the Commissioner State Excise. The petitioner on 3/9/2009 paid an amount of Rs.22,14,300.00 towards one time license fees under protest. Being aggrieved by the Condition No.5 as contained in the order dtd. 31/8/2009 the petitioner has challenged the same herein.