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Section 42 in The Bihar Reorganisation Act, 2000
The Bihar Reorganisation Act, 2000
Section 46 in The Bihar Reorganisation Act, 2000
Mr. C vs The Advocate-General Of Madras on 6 May, 1957
M/S. Girnar Traders vs State Of Maharashtra & Ors on 27 August, 2007

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Patna High Court
Ashok Kumar vs The State Of Bihar & Ors on 13 September, 2012
Author: Shiva Kirti Singh

IN THE HIGH COURT OF JUDICATURE AT PATNA

Civil Writ Jurisdiction Case No.1117 of 2009 =================================================== Ashok Kumar son of Sri Raghunath Prasad, Balkishunganj, Patna City, P.S. Alamganj, District Patna- 800007

.... .... Petitioner/s

Versus

1. The State Of Bihar through the Principal Secretary, Department of Excise, Prohibition and Registration, Government of Bihar, Patna

2. The Member, Board of Revenue, Bihar, Patna

3. The Commissioner cum Secretary, Department of Excise, Prohibition and Registration Government of Bihar, Patna

4. The Collector cum District Magistrate, Bhojpur at Ara

5. The Collector cum District Magistrate, Rohtas at Sasaram

6. The Collector cum District Magistrate, Kaimur at Bhabhua

7. Assistant Commissioner Excise, Bhojpur and Buxar

8. Assistant Commissioner Excise, Rohtas and Kaimur

9. Commissioner Commercial Taxes, Government of Bihar, Patna .... .... Respondent/s

with

Civil Writ Jurisdiction Case No. 8946 of 2008 =================================================== M/s Bachhan Traders having its office at Balkishunganj, Patna City, P.S. Alamganj, District Patna- 800007 through its Proprietor Arun Kumar

.... .... Petitioner/s

Versus

1. The State Of Bihar through the Principal Secretary, Department of Excise, Prohibition and Registration, Government of Bihar, Patna

2. The Member, Board of Revenue, Bihar, Patna

3. The Commissioner cum Secretary, Department of Excise, Prohibition and Registration Government of Bihar, Patna

4. The Collector cum District Magistrate, Patna .... .... Respondent/s

=================================================== Appearance :

(In both Writ Petitions)

For the Petitioner/s : Mr. Y. V. Giri, Sr. Advocate Mr Pranav Kumar, Advocate

Mr Ashish Giri, Advocate

For the Respondent/s : Mr. D. K. Sinha, AAG II Mr Anant Kumar, AC to AAG II

Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 2/ 12

=================================================== CORAM: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH and

HONOURABLE MR. JUSTICE SHIVAJI PANDEY

ORAL JUDGMENT

(Per: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH) Date: 13-09-2012

Heard the parties.

2. Both the writ petitions have been heard together as they involve common issues and questions of law. They shall be governed by this common order. The facts relevant for deciding the controversy between the parties lie within a narrow compass. In both the writ petitions, prayer is to the effect that the respondents be directed to refund/ remit the licence fee deposited by the petitioner for renewal of excise licence in Form 27 for the period 2001- 02. In CWJC No.1117 of 2009 the prayer is as follows:- To issue an appropriate direction commanding the respondents to forthwith refund/ remit the licence fee deposited by the petitioner for renewal of his licence in Form 27 of the Bihar Excise Act, 1915 (hereinafter referred to as the 'Act') and the rules framed thereunder for the period 2001-02 in relation to the Districts constituting part of the Shahabad Zone viz. Bhojpur, Rohtas and Kaumur together with the security deposit amount of Rs.5 lakhs deposited in the form of National Saving Certificates for the Shahabad Zone for the tender period 1.4.1999 to 31.3.2002 in the following manner:

Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 3/ 12

(a) Bhojpur Rs.8,90,529.00 (approximately) (b) Rohtas Rs.15,21,881.00 (approximately) (c) Kaimur Rs.1,72,597.00 (approximately) Total Rs.25,85,007.00 (approximately) In CWJC No.8946 of 2008 the prayer is as follows:- i) To issue an appropriate writ/order/direction in the nature of Certiorari for setting aside the order dated 24.3.2008 passed by the respondent no.2, Member, Board of Revenue in Board Case No.51/ 2007 dismissing the application preferred on behalf of the petitioner for remission of licence fee and refund of security amount for the period 2000- 01 as contained in Annexure- 11. ii) To issue an appropriate direction commanding the respondents to forthwith refund/ remit the licence fee deposited by the petitioner for renewal of his licence in Form 27 of the Bihar Excise Act, 1915 (hereinafter referred to as the 'Act') and the rules framed thereunder for the period 2000- 01 in relation to the District of Patna pertaining to 174 days amounting to Rs.15,46,981 approximately together with the security deposit amount of Rs.5 lakhs deposited in the form of National Saving Certificates for the Patna Zone for the tender period 1.4.1999 to 31.3.2002 together with interest @ 12% per annum and cost of the present proceedings.

However, during course of argument it has been admitted that the security amount has already been refunded to the petitioner M/s Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 4/ 12

Bachhan Traders and now the claim is only for the licence fee as indicated in the prayer.

3. Both the petitioners were engaged in the business of manufacture and sell of country liquor and spiced country liquor.. Pursuant to a tender notice published in Bihar Gazette Extraordinary on 16.12.1998, they deposited the security amount of Rs.5 lakhs and as per tender they were issued licence in Form 27. The licence in favour of petitioner Ashok Kumar was for the Shahabad zone comprising of four districts Bhojpur, Rohtas, Kaimur and Buxar, for the period 1.4.1999 to 31.3.2002. Admittedly this petitioner has received back the licence fee from the District Magistrate of Buxar and hence his claim for licence fee is only in respect of remaining three districts. The petitioner M/s Bachhan Traders was granted licence for the same period for Patna zone comprising only of Patna district. He has admittedly received back the security amount on 27.3.2010 and hence his claim is only for return of unutilized licence fee.

4. Case of the petitioner Ashok Kumar is that he operated his licence for initial two years and for the last year i.e. for the year 2001- 02 also he was issued licence on his furnishing no dues or clearance certificate from the Commercial Taxes Department. The clearance or the no dues certificate was on the Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 5/ 12

basis of returns filed and deposit of admitted tax. After the licence was granted for the last year, on account of assessment orders dues of Commercial Taxes arose against the petitioner Ashok Kumar and this fact came to the notice of the licensing authority. In the case of M/s Bachhan Traders in the first year there was no problem but intimation regarding dues of Commercial Taxes arising due to assessment order in the second year itself led to suspension etc. and there was no renewal for the third year. Since the licence fee was required to be deposited in advance, the petitioners made the required deposit in advance on renewal of licence for the last year in the case of Ashok Kumar and for the second year in the other case. On coming to know of arrears of sales tax due to assessment orders, show cause notices were issued and licence of petitioner Ashok Kumar was cancelled on 21.9.2001 for the district of Bhojpur. That order has been annexed as Annexure- 14 in the first case. It is claimed that similar orders were passed against him in other districts of the zone also but their dates are not available on record.

5. So far as the case of M/s Bachhan Traders (CWJC No.8946 of 2008) is concerned, the petitioner was granted licence in Form 27 for Patna zone for the entire tender period 1.4.1999 to 31.3.2002 as is evident from Annexure- 4 to his writ petition. The Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 6/ 12

licence was utilized without any disturbance for the first year of grant but during the second year a system of monthly renewal was adopted by the Collector which was protested by the petitioner and the matter went to higher authorities. His licence remained ineffective due to dues of Commercial Taxes during the period 31.7.2000 till 31.1.2001when it was renewed by the Collector in obedience to order passed by the Excise Commissioner. On 30.10.2000, the warehouse cum bottling plant of the petitioner was sealed and taken under acquisition under Section 46 of the Act. On renewal of the licence on 3.1.2001, the plant etc. were released from acquisition on 4.1.2001 vide Annexure-7. The licence of the petitioner was again made inoperative after 13.3.2001 on account of order passed against him by the Board of Revenue in a revision case preferred by the Collector, Patna against the order of the Excise Commissioner. According to the petitioner, during the second year i.e. licence period 2000- 01 he was allowed to conduct his business for a total period of 191 days only and for 174 days he could not conduct any business on account of non- renewal or cancellation of licence or acquisition under Section 46 of the Act. It has been specifically alleged by the petitioner that the factors which did not permit him to operate and conduct the business of wholesale supply of country liquor were wholly attributable to the Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 7/ 12

respondent authorities and they created obstruction in the renewal of licence only on the grounds of alleged dues of sales tax. The petitioners prayer for remission and refund was ultimately rejected by the impugned order dated 24.3.2008 (Annexure- 11) passed by the Board of Revenue in Board case no.51/ 2007.

6. So far as petitioner M/s Bachhan Traders is concerned, the claim for refund or remission is only in respect of period during which his licence remained obstructed during the second year of the licence i.e. 2000- 01. According to him, the total days of obstruction were 174 days. He was not granted renewal for the third year. A perusal of the order passed by the Board of Revenue rejecting the prayer for remission or refund shows that the prayer was refused on the ground that petitioner had defaulted in paying dues of sales tax and, therefore, he had no right of renewal.

7. The main issue falling for determination in both the cases is whether failure to pay sales tax created a right in the respondents to effect forfeiture of advance licence fee and the security amount or not. According to learned counsel for the petitioners, the petitioners accepted non- renewal of their licence or its cancellation but their case is that forfeiture could be effected only under some statutory provisions or under contractual obligation. According to learned counsel for the petitioners, a Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 8/ 12

similar issue arose in almost identical situation in the case of M/s Bachhan Traders v. State of Bihar, 2007 (2) PLJR 543. In that case petitioner M/s Bachhan Traders had claimed for refund of security deposit and licence fee after cancellation of its licence for the Muzaffarpur zone. That licence was also issued pursuant to same tender notice and licence was cancelled on account of dues of sales tax coming to the knowledge of the authorities.

8. The Division Bench judgment in the case of M/s Bachhan Traders (supra) considered the submission whether there was any lawful sanction for forfeiture of money deposited as security deposit or licence fee in the context of stipulations in the licence as well as in the context of provisions in Section 42 of the Excise Act and came to a definite conclusion that there was no case made out for forfeiture of the deposited amount by way of security or licence fee because no terms of the licence under Form 27 were violated and the additional requirement as per tender notice could entitle the authorities to cancel the licence or not to renew the licence but it could not authorize them to effect forfeiture of money deposited unless it was a case of submission of farzi sales tax clearance certificate / no dues certificate. In that case as well as in the present cases the authorities have not made out any case of submission of farzi sales tax clearance certificate. Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 9/ 12

9. Learned counsel for the State has submitted that power for forfeiture is available with the authorities under Section 42 (4) of the Bihar Excise Act 1915 and hence even in a case where the order of cancellation of licence is not on the ground of submission of farzi sales tax clearance certificate/ no dues certificate, it is permissible to deny refund of any fee paid or deposit made in respect of a licence, permit or pass which has been cancelled or suspended under provisions of Section 42. According to him, the licence in the instance cases were cancelled or not renewed in exercise of power under Section 42 (1) (c) of the Excise Act.

10. A similar submission was advanced in the case of M/s Bachhan Traders (supra) and was rejected after discussion in paragraph 11 of the judgment. Section 42 (1) (c) contains one of the conditions i.e. any breach of the terms and conditions of the licence, for cancellation of licence under Section 42. It was found that terms of the licence in the statutory Form 27 do not justify cancellation of the licence in similar facts and circumstances. The Court found that the cancellation was on a ground other than those enumerated under Section 42.

11. We have also perused the terms and conditions of licence prescribed in Form 27 and we find that no terms of the Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 10/ 12

licence justify cancellation of the licence as has been done in the case of Ashok Kumar (CWJC No.1117 of 2009). So far as clause 24 of the actual licence contained in Annexure- 4 to CWJC No.1117 of 2009 is concerned, no doubt, it makes the terms and conditions of tender to be terms and conditions of licence also. Hence, clause 12 of the tender notice dated 16.12.1998 (Annexure 1) has to be treated as one of the conditions of the licence. As per clause 12 of the tender notice, commercial tax clearance certificate (Shodhan Praman Patra) is one of the requirements and in absence of the same, the tender will not merit any consideration. The same clause further stipulates that in case the prescribed certificate submitted with the tender is found to be forged (farzi) then also the tender shall not be taken into consideration and in case tender has been accepted even then on the ground of certificate being forged, the grant of licence may be cancelled and security deposit may also be forfeited.

12. The Division Bench in the case of M/s Bachhan Traders (supra) held that the aforesaid clause 12 of the tender notice does not sanction forfeiture of licence fee and for forfeiture of the security deposit the certificate submitted with the tender should have been found to be forged (farzi). We are in agreement with the aforesaid views of the Division Bench and hence, we also Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 11/ 12

come to the conclusion that there is no legal sanction for forfeiture of the security deposit or the licence fee in the present two cases. The decision of the concerned District Magistrates not to refund the licence fees for the year 2001- 02 deposited in advance by the petitioner Ashok Kumar cannot be sustained in law. We hold him entitled to refund of the licence fee deposited by him for that period as well as the security amount. The concerned District Magistrates may either refund to him the amounts of licence fee and the security deposit or adjust the amounts against government dues including sales tax, if any. If after adjustment any refundable amount remains payable the same should be paid to him within two months from today.

13. So far as the case of M/s Bachhan Traders is concerned, in this case the District Magistrate, Patna could not have refused the claim for remission in the licence fee for the period, claimed to be 174 days, during which the licence could not be operated either for want of renewal or on account of taking over of the manufacturing unit and warehouse under Section 46 of the Excise Act. We direct the District Magistrate, Patna to grant appropriate remission and make refund accordingly to the petitioner M/s Bachhan Traders. It will be, however, open to the District Magistrate, Patna to adjust the amounts against government dues Patna High Court CWJC No.1117 of 2009 dt.13-09-2012 12/ 12

including dues of the Sales Tax Department and if after such adjustment, any amount remains payable then the same should be paid within two months from today.

14. Both the writ petitions are allowed to the aforesaid extent. There shall be no order as to costs. (Shiva Kirti Singh, J)

(Shivaji Pandey, J)

AFR

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