ATLURI BRAHMANANDAM Vs. TAHSILDAR GANNAVARAM TALUK KRISHNA DISTRICT

JUDGEMENT

(1.) The Division Bench which heard these writ petitions has framed the following questions for consideration by a Full Bench :

(2.) The petitioner in each of these cases is a successful bidder at an auction held in respect of a lease of an arrack shop. He draws arrack from the Government Distillery from time to time paying what is known as issue price and sells arrack in pursuance of a licence granted to him. Under R. 15 of the Andhra Pradesh Excise (Arrack Retail Vend Special Conditions of Licences) Rules, 1969 (referred to in this judgment as Vend Rules) which were made in exercise of the power conferred under Section 72 of the Excise Act, it is provided that no licensee shall purchase arrack less than the specified minimum guaranteed quantity in any month. If in any month, quantity less than the minimum guaranteed quantity fixed for that month is drawn, at the end of that month issue price to the extent of deficit purchase shall be deducted from the advance money paid by the licensee and the licensee shall be called upon to indemnify the amount so adjusted by the end of the succeeding month in which short drawn quantity had occurred. Though this rule provides only for adjustment at the end of each month, in the case of a purchase by the licensee of quantity less than the minimum guaranteed quantity, it was held in V. Narasimha Rao v. Superintendent of Excise, AIR 1974 Andh Pra 157 (FB) that Rule 15 fixes the liquidated damages in the case of a breach of the contract on the part of the licensee by not lifting the minimum guaranteed quantity, and this fixation is not only meant for the purpose of the remedy available under Rule 15, but is also meant for recovery of damages for the short lifted quota even after the expiry of the excise year. In each of these cases, the petitioner having failed to lift the minimum guaranteed quantity, the issue price for the unlifted quantity for the whole year was sought to be collected from him under the above rule. The issue price so demanded included not only the cost price of the arrack but also excise duty payable thereon. The petitioner resisted the demand contending that excise duty is not included in the price. It was urged that if it is included in the issue price, it would in effect amount to levy of excise duty on undrawn liquor and a rule which authorises such a levy would be ultra virus the provisions of the Act. A similar contention was raised in V. Narasimha Rao v. Superintendent of Excise, AIR 1974 Andh Pra 157 (FB) but was negatived and it was held that excise duty is a part of the issue price as mentioned in the rules and the Licensee is bound to pay it along with the cost of arrack. When these writ petitions were heard before the Division Bench it was sought to be argued that the decision of the Full Bench in V. Narasimha Rao v. Superintendent of Excise (supra) is contrary to certain decisions of the Supreme Court which will be presently referred to and has therefore to be reconsidered by a Fuller Bench. The learned Judges felt that there was an apparent contradiction in the reasoning of the Full Bench on this aspect of the matter, but sitting in a Division Bench they could not differ from the Full Bench. They therefore decided to refer this point to a Fuller Bench.

(3.) Section 2(10) of the Excise Act defines Excise Duty as duty of excise mentioned in Entry 51, List II of the Seventh Schedule to the Constitution. Entry 51, List II, Schedule Seven is in the following terms: