Rajasthan High Court - Jaipur
Inertia Industries vs State Of Rajasthan And Ors. on 3 July, 2001
JUDGMENT Bal1a, J.
1. This writ petition has been filed to challenge the amendments brought in Rule 69-B of the Rajasthan Excise Rules vide Notification dated 2.11.1999 and consequential raising of demand by the respondent vide Annx. 7 dated 19.11.99 as permit fees for bringing Indian Made beer in Rajasthan from State of Haryana.
2. The petitioner is a company incorporated under the Companies Act, 1956 having its registered office at Delhi and its brewery at Daruheda in the State of Haryana. In favour of ' he petitioner, the respondent State of Rajasthan has parted with its exclusive privilege of wholesale vend of Indian Made Foreign Liquor (IMFL) and beer for the Financial year 1998-99 ending on 31st March, 1999. The licence Annx. 1 dated 22.7.98 also contained the special conditions relating to the grant of licence in favour of manufacture of Indian Made Foreign liquor,/beer who are situated outside the State of Rajasthan.
3. These conditions included that the licensee shall pay the duties of excise leviable under Section 28 read with Rule 69 before import of IMFL/beer. Apart from that, licensee is also required to obtain a permit under special condition No.2 and to furnish details of the import made by him as required under the condition and make payment of the requisite fees for such permit alongwith application. On furnishing of such application alongwith payment of permit fees, the District Excise Officer,, if he has no objection thereto, and after, satisfying himself that all particulars required in Condition No.- 2 have been furnished and that the applicant has either paid the permit fees or executed a bond for the payment of the fees is required to issue a permit in four copies of which one to be delivered to the applicant, another shall be sent to the Excise Officer of the District from which the IMFL/beer is to be exported, third copy is to be sent to the concerned Inspector of the circle where the warehouse is situated and fourth is to be retained by the District Excise Officer. Such permit could be utilized within the time stipulated therein. With the other conditions, we are not presently concerned in the, present petition.
4. The petitioner has in the first, instance challenged the validity of imposition of import duty vide notifications dt. 31.7.97 and 9.7.98 issued Under Section 28 of the Rajasthan Excise Act, 1950, mainly on ground that no authority vests in the State to impose a duty on import of the potable liquor under the provisions of the Constitution or Under Section 28 of the Rajasthan Excise Act, because levy of import duty on potable liquor is beyond the legislative competence of the State legislature, the same could not have been even levied by the delegated authority while framing the rules or by issuing notification thereunder. That challenge in respect of notifications purported to have been issued under Section 28 of the Excise Act is subject matter of another writ petition No. 1694/99 in which an interim order has been issued on 19.8.99 in favour of the petitioner that 'State shall not charge the import duty from applicant as mentioned in Notification dated 9.7.9e until further orders, although there will be no restriction to charge the counter-vailing duty, if any, from the applicant'.
5. Thereafter, Rule 69-B of the Rajasthan Excise Rules, 1956 was amended vide Notification dated 2.11.99 (Annexur-e 6) and the petitioner was required to deposit Rs.1,36,500/- as permit fee for bringing in Excisable Articles as per Table under Rule 69-B before petitioner's application dated 3.11.98 could be granted for importing beer manufactured by it from outside State of Rajasthan to his bonded warehouse within the State of Rajasthan.
6. Aggrieved with the aforesaid amendment of Rule 69-6 (Ex.6)' and the communication dt. 19.11.99 (Ex.7) this petition has been filed with the following prayer.
"It is, therefore, most respectfully prayed that this writ petition may kindly be allowed and the Notification dated 2.11.99 and order dated 19.11.99 may be quashed and set aside"
7. It was contended by the petitioner that by amending Rule 69- B, the word "bringing" has been substituted by word "bringing" and word "export" has been substituted by word "sending" in the Rule 69B and for issuing a permit for. bringing Indian made beer within the State of Rajasthan from outside, a fee at the rate of Rs. 5 per bulk liter has been imposed, and a fee of Rs. 2 per bulk liter as permit fee for sending Indian Made Bear from the Rajasthan to any other, place in India was imposed. Prior to this, under the existing provisions of Rule 69--B alongwith its table, no permit fee for import of IMFL or Indian made beer into Rajasthan or for export of. IMFL and Indian made beer outside Rajasthan was imposed but a permit fee only for transporting Indian made beer within Rajasthan @ Rs. 4 per bulk liter was prescribed.
8. The petitioner does not have any grievance about the prescribing of transport fee chargeable under Rule 69-8. However, his grievance is that by amending Rule 69-B, not only the nomenclature of permit fee For import -and permit fee for export has been changed for permit fees for bringing' and 'permit fees for sending out' of State, but separate permit fees have also been levied for each type of permit as stated above. While contending that no change can be spelt out from the use of word "bringing" in place of 'import' and "sending" in place of 'export', the levy of permit fee for bringing in and sending out excisable article in question is invalid. Firstly because the Rajasthan Excise Act does not provide for imposition of bringing in and sending out permit fees, secondly the imposition is ultra vires the provision of Constitution of India because a fee can be imposed only in consideration of some service rendered by the State to the person from whom fee is charged. In other words, there has to be an element of quid pro quo to sustain the levy of a fee as distinguished from a tax. A fees can be charged only in lieu of some services rendered by the State to the petitioner. It was contended that no other service is being provided by the State except that the petitioner-is permitted to keep the goods in bonded warehouse for which the petitioner is paying a separate fees. As no additional service is rendered by the State for bringing its the excisable article in question within the Stale, no fee can be levied and as there is no element of quid pro quo, in charging the permit fee, it is nothing but levy of tax on import, which is not permissible under Entry 51 of the State List of the VII Schedule of the Constitution. The provisions have also been challenged on the anvil of violation of Article 301 and 304 of the constitution of India as it imposes much more heavier duty on excisable article brought within the State in comparison to like goods manufactured in the State. The levy of bringing fees is therefore discriminatory and violates Article 301 because it impedes free inter-course of business or trade in excisable articles as envisaged under Article 301 of the Constitution. The levy of fee @ Rs. 5 per bulk liter has also been challenged on the ground of being exhorbitantly excessive. Referring to his earlier petition No.1694/99, the petitioner has contended that the amendment made in Rules by the delegate authority is malafide. Realizing that no tax by way of import duty can be levied, the State Govt. has devised this method of charging the same amount of duty from the petitioner by way of permit fees which also it otherwise cannot recover by way of fees and therefore, Annexure-6 has been issued in colourable exercise of power by the State in amending Rule 69-8.
9. Learned Advocate General, on the other hand, has urged that right to trade in intoxicants is a monopoly and exclusive privilege of the State and the petitioners have no right at all to carry on business or trade in potable liquor, which the excisable articles in question are, it is open for the State to part with its privilege for a consideration.
10. The charging of fees for licences and permits for parting with such exclusive privilege by the State in favour of a person do not involve imposition of a fees for quid pro quo in the sense of rendering any service but such fees, whatever may be called, are considerations for parting with those rights by the State in favour, of the licensee and the question of imposition of fees as regulatory, compensatory or for services rendered is not really relevant.
11. It has been contended by the learned Advocate General that it cannot be disputed and denied that the Slate has power to prohibit trades which are illegal, or immoral, or injures to the health of the public and laws can be made for prohibiting intoxious ordangerous goods and Stale Govt. can also lake measures for regulaling such trade. Where regulatory measures are taken by providing for obtaining licences on payment of fees, such fees need not have necessary element of quid pro quo in the sense that there must be a direct service in lieu of consideration to the person paying the fees, Even if the-consideralion is to serve the public purpose, it is enough to sustain levy as fees.
12. We have given our anxious considerations to the rival contentions raised before us.
13. The position is now well settled and about which no contention has been raised before us that all right to deal in regard to intoxicants belong to the State exclusively and it is open to the Govt. to part with those rights for a consideration and primary object to vend liquor is to raise revenue. In fact there is no right to carry on business in intoxicants, but in only an activity extra commercium, which State may allow a person by transferring its exclusive privilege in one or, more facets for consideration on terms and conditions as a grant of licence by way of contract. The proposition also appears to be well settled that there being no fundamental right to trade in intoxicants, levy of fees or charging of consideration for parting with the exclusive privilege by the State in favour of a person does not invite application of Article 19(1)(9) or Article 301 of the Constitution. The principle also appears to be well settled as will be presently seen that any of such activity cannot under the circumstances be regarded as trade or business or commerce although usual forms and instruments are employed therein.
14. The principle that any activity, which any activity which any civilised society considers obnoxious or injurious to public interests and is considered illegitimate, cannot be considered an activity in which member of such society can have any inherent right to carry on such activities, though carried on in a form and with employing instruments which are usually employed for carrying on any trade or business is not a business in the sense understood under Article 19(1)(g) and Article 301 of the Constitution. Such extra commercium activities, if carried on, are out of ambit of Articles 19(1) and 301, is well settled.
15. In State of Bombay v. R.M.D. Chamarbaugwala (1) the issue had arisen in the context of Bombay Lotteries and Prize Competition Control and Tax Act, 1948 prohibiting gambling and regulating the lotteries. The contention raised was that the restriction imposed under the said Act contravened the fundamental right guaranteed under Article 19(1)(g) of the Constitution and it was contended that even if prize competition constituted gambling transaction, they were nevertheless trade or business activities. S.R. Das, CJ, after reviewing several Australian and American cases, spoke for the Court:
"We have no doubt that there are certain activities which can under no circumstances be regarded as trade or business or commerce although the usual forms and instruments are employed therein. To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words."
16. Referring to the controversy in the context of Articles 19(1)(9) and 301, the Court held:
"We find it difficult to persuade ourselves that gambling was ever-intended to form any part of this ancient country's trade, commerce or intercourse to be declared as free under Article 301 it is not our purpose nor is it necessary for us in deciding this case to attempt an exhaustive definition of the word "trade", "business", or "intercourse". We are, however, clearly of opinion that whatever else may or may not be regarded as falling within the meaning of these words, gambling cannot certainly be taken as one of them. We are convinced and satisfied that the real purpose of Articles 19(1)(g) and 301 could not possibly have been to guarantee or declare the freedom of gambling. Gambling activities from their very nature and in essence are extra commercium although the external farms, formalities and instruments of trade may be employed and they are not protected either by Article 19(1)(g) or Article 301 of our Constitution."
17. As we will presently notice, the Principle applies to carry on such activity in respect of potable liquors and other intoxicants.
18. The principle that for security of people and for maintenance of public health fees for regulating trade to be levied was accepted by Rajasthan High Court while considering the fees levied by municipality for regulating the trade in restaurants and pan-shops in the city of Udaipur in the case of Ramesh Chandra v. State and Ors. (2). It was stated by the Court.
"After all it is the Municipal Council who has to look after the well being of the residents of the localities comprised in the municipal area and it is the duty of the Municipal Council to see that such establishments like hotels, rest houses, lodging houses, restaurants etc. do not become dens of immoral acts or unlawful activities or become hazards to public health. The aforesaid duty cast upon the Municipal Council by the Act requires proper regulation of such establishments, registration thereof and issuing of licenses to them by the Municipal Council so as to ensure inspection and checking of such establishments from time to time by the Municipal authorities in public interest. Thus, there is a reasonable relationship between the levy of fee and the services rendered in the present case and in my view the charging of licence fee or registration fee by the Municipal Council, Udaipur for regulation and licensing of hotels, lodging houses, rest houses, restaurants etc. is perfectly justified and within the competence of the Municipal Council."
19. This principle was accepted by a Constitution Bench of the Supreme Court in Har Shankar v. Dy. E.& T. Commr. (3) qua the activities in relation to intoxicants. The Court while referring to Krishna Kumar Narula etc. v. The State of Jammu and Kashmir and Ors. (4), disagreed with it on the question of holding the activities of manufacture, storage, export, import, sale and possession to be an activity of business by distinguishing it a case from gambling. The Court said, after referring to Chamar-baugwala's (supra) case:
"This decision was also cited before the Court in Krishna Kumar's case but it, decision only lays that gambling is not business or trade. We are not concerned in this case with gambling". With great respect, the reasons mentioned by Das C.J. for holding, that there can be no fundamental right to do trade or business in an activity like gambling apply with equal force to the alleged right to trade in liquor and those reasons may not be brushed aside by restricting them to gambling operations."
20. In State of Orissa. v. Harinarayan (5), which arose under Bihar and Orissa Excise Act, wherein the Govt. had P- ejected the highest bid and such rejection was challenged on the ground that it violated Article 14 and 19(1)(9) of the Constitution, the Court said:
"If the Government is exclusive owner, of the privileges, the respondent could not rely on Article 14 and 19(1)(9), because, citizens cannot have any fundamental to trade or carry on business in the properties or rights belonging to Government, nor can there be any infringement of Article 14 if Government tries to get the best available price for its valuable rights."
21. In Har Shankar v. Dy. E.& T. Commr. (supra) a like question, as has been raised before us, had been raised and invited consideration by the Court. The case had arisen under, under the Punjab Excise Act. The pensioners had challenged the raising of licence fee through the medium of auction or the fixed fees on the vendors holding licences inter-alia on the ground that charging of licence fees whether through the medium of auction or fixed fees need bear quid pro quo to the services rendered to the licensees and as no element of quid pro quo existed the charging of licence fee or fixed fee demanded from the vendors of foreign liquor holding licences so challenged, is ultra vires. Rejecting the plea, the Court said:
"There is no fundamental right to do trade or business in intoxicants. The State, under, its regulatory powers, has the right to prohibit absolutely every form of activity in relation to intoxicants - its manufacture, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants."
22. Referring to the American Jurisprudence, Volume 30, the Court accepted the activities relating to dealing in intoxicants more particularly potable liquors to be extra commercium when it said:
"It is dated that while engaging in liquor traffic is not inherently lawful, nevertheless it is a privilege and not a right, subject to governmental control. This power of control is an incident of the society's right to self-protection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime."
23. With the aforesaid premise, the Court held:
"Since rights in regard to intoxicants belong to the State, it is open to the Government to part with those rights for a consideration."
24. Addressing itself to the question of examining the validity of fees on the touch stone of the principle of quid pro quo, the Court negatived it by holding that such licence fees under the Excise Act which is not an activity of business in strict sense but is privilege belonging to the State, which it sells for consideration, held:
"The amounts charged to the licensees in the instant case are, evidently, neither in the nature of a tax nor of excise (duty. But then, the 'licence fee' which the State. Government charged to the licensees through the medium o-f auctions or the 'fixed fee' which it charged to the vendors of foreign liquor holding licensees in Forms. L-3, 1-4 and L-5 need bear no quid pro quo to'the services rendered to the licensees. The word 'fee' is not used in the Act or the Rules in the technical sense of the expression. By 'licence fee' or 'fixed fee' is meant the price or consideration which the Government charges to the licensees for with parting privileges and granting them to the licensees. As the State can carry on a trade or business, such a charge is the normal incident of a trading or business transaction."
Thus, the Court held the licence fees or other fees chargeable under the Excise Act from the licensee as a part of consideration for parting with its privilege and not a tax or fee for services rendered.
25. The same view was expressed by th.2 Supreme Court again in State of Orissa v. Narain Prasad (6). It was a case in which the respondents before the Supreme Court had entered into an agreement with the Govt. of Orissa undertaking to lift a particular quantity of liquor every month and also to remit the excise duty in two instalments on 5th and 15 of every month. The licensees committed default on both counts and when the amount of excise duty was sought to be recovered from then, the licensees raised the contention that the demand for payment of excise duty on unlifted quantity of arrack was not warranted by the Act. In that process, they challenged Rule 6-A(3) as ultravires the rule making power of the Govt. and outside the purview of the Act. The Court finding that excise duty is payable on manufacture of liquor and licensee is not a manufacturer, what he pays is not the excise duty but consideration for his securing the exclusive privilege for selling liquor. The Court after referring to its earlier decisions in Har Shankar v. Dy. Excise & Taxation Commr. (supra), Panna Lal v. State of Rajasthan (7), State of Andhra Pradesh v. Y. Prabhakara (8), State of Haryana v. Jage Ram (9), and Nashirwar v. State of M.P. (10), held:
They point out that the excise duty on manufacture of Production and not on sale. It was a case, they said, where the duty was being passed on to the licensee who in turn passed it on to the consumer. What all the licensee paid, they held, is nothing but consideration for the grant of licence and the mere fact that the total consideration fixed comprises several elements (including excise duty), it cannot be said that excise duty is levied upon the licensee.......... It, therefore, cannot be said that there is any levy of excise duty upon the licensee. The concept here is altogether different, it is a case where the consideration payable by the licensee for grant of licence is made up of monthly rental plus excise dirty besides the obligation to purchase the M.G.Q. The licensee pays the rental and excise duty as undertaken by him under, the agreement/contract executed by him and as required by conditions of the licence under the agreement/contract executed by him and as required by conditions of the licence under which he is doing business i.e. as and by way of consideration."
26. The Court further explained the meaning of expression "privilege" and said:
"In the context of excise enactments, the expression "Privilege" really means the licence or permit granted by the State. We may explain: the State is entitled to prohibit the trade in intoxicating liquors altogether; it can impose a total ban; no citizen can claim any fundamental right to manufacture or to trade in these liquors; it is, however, open to the State to lift the ban partially and allow the trade in liquor to be carried on in the manner prescribed; the State says that that a citizen can trade in liquor only under, a licence to be granted by it for the consideration specified in that behalf and that the trade therein can be carried on only in accordance with the regulatory provisions prescribed by it in that behalf, it is this grant of licence/permit, which is called or is described sometimes as grant of "privilege".
27. In Khoday Distilleries Ltd. v. State of Karnataka (11), the Court laid down following principles after reviewing large number of earlier decisions:
(i) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, (outside commerce). There cannot be business in crime. (ii) Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited.
(iii) Article. 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health, it, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. The Abate has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both because it is inherently a dangerous article of consumption and also because of the directive principle contained in Article 47, except when it is used and consumed for medicinal purposes.
(iv) For the same reason, the State can create a monopoly either in itself or in the agency created by it, for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19(6) or even otherwise.
(v) For the same reason, again, the State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. The restrictions and limitations on the trade or business in potable liquor can again be both under Article 19(6) or otherwise. The restrictions and limitations can extend to the State carrying on the trade or business itself to the exclusion of and elimination of others and/or to preserving to itself the right to sell licences to do trade or business in the same, to others.
(vi) When the State, permits trade or business in the potable liquor with or without limitation, the citizen has the Eight to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business.
(vii) The State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory.
28. Another shade of controversy arose in Sir Shadilal Distillery & Chemical Works v. State of U.P. (12). In the aforesaid case, the petitioners were manufacturing the foreign liquor and were doing bottling in their, plants. In addition to excise duty, the bottling fee was also levied. A contention was raised that bottling being part of manufacturing activity and excise duty having been levied, no bottling fee coufd be charged thereon. The Court negatived the contention Felling on its earlier decision in Khoday Distilleries Ltd. v. State of Karnataka (supra) for bottling is a distinct activity for which a licence is required under the provisions of the U.P. Excise Act and therefore bottling fee was permissible to be levied in addition to the excise duty. This decision recognises various activities in the course of carrying on the activity connected with intoxicants right from its manufacture to its supply or selling for which separate tax, fees or consideration could be charged depending on whether it is directly payable by the persons subject to charge as a tax or is paid by him as a consideration for securing licence to vend potable liquor.
29. In this connection, we may also recall the decision of the apex Court in Khoday Distilleries Ltd. v. State of Karnataka (supra) It is pertinent to notice that after the principles were enunciated by the Supreme Court concerning the nature of privilege, the State has having monopoly in the activities of intoxicants, the matter was sent for decision on other issues to the regular Bench, which came to be decided in Khoday Distilleries Ltd. v. State of Karnataka (supra). The Court considering the provisions of Andhra Pradesh Excise Act, providing different fees for different activities connected with the manufacture, supply and sale of liquor, held as under:
"Thus the State Government is authorised to levy fees for various kinds of permits or licences which may be required for activities connected with the manufacture, supply or sale of liquor. Labelling of liquor bottles with brand labels is an essential activity connected with the sale and distribution of different varieties of liquor manufactured in the State by different manufacturers or imported into or exported outside the State. Different varieties of liquor produced by various manufacturers are thus identified for purchase of sale. It is, therefore, permissible for the State Government under the Andhra Pradesh Excise Act, 1968 to levy fees for approval of different varieties of labels to be affixed to liquor bottles for the purpose of distribution and sale of liquor.
The Court held that the fee for approval of labels is an aspect of the right to sell or distribute liquor which right the State (Government has parted with for consideration. Fees for permitting labelling of bottles was thus upheld valid as consideration for parting with only that aspect of the privilege in its fullness.
30. In the aforesaid context, it cannot be doubted that import of potable liquor, manufactured outside the State, is also a part of the activity connected with the manufacture, supply and sale of liquor, and it being one aspect of the total activity, it is permissible for State to provide for separate fees for-parting with the privilege of importing liquor, from outside State within State on the aforesaid principle.
31. The aforesaid review of some of the judgments, which have relevant bearing on the controversy raised in this case, reveals in unmistakable terms that -
(i) Right to carry on activity in manufacture, supply and sale of potable liquor is riot favoured in the context of social fibre of any civilised society as a legitimate trading activity because it is obnoxious and injurious to public health and contrary to public interest. Activities in respect of potable liquor is an extra commercium activity. Therefore, notwithstanding such activity is carried in form, formality or by employment of tools that are usually employed in carrying on trade will not bring it 'without the expression of term 'trade' or 'business' as used in Articles 19(0(9) and 301 of the Constitution.
(ii) The re is no fundamental right carry on trade or business in intoxicants particularly in potable liquors because it is res extra commercium.
(iii) To deal in intoxicants, other than industrial alcohol and medicinal and toilet preparations, is the exclusive privilege of the State. '
(iv) The State has a right to prohibit absolutely the citizens to trade into these intoxicants and that the wider right to prohibit absolutely would include the narrower right to permit dealing in intoxicants on such terms of general application as the State deems expedient.
(v) Since right to deal in intoxicants belong to the State, it is open to the Government to part with those rights for- considerations.
(vi) Fees for any licence/permit which the State Govt. requires for parting with its privilege by making provisions under the Act and the Rules are strictly speaking neither a tax nor a fee but is in the nature of the price of the privilege payable to the Govt. for parting with its privilege and which the purchaser agrees to pay like in any other trade, business or transaction voluntarily under any contract.
(vii) Import of liquor/excisable article, is an aspect of exclusive privilege of State to deal in liquor in all its manifestations of manufacture, supply or sale which right the State can with for consideration in form of a fee.
32. In the light of aforesaid principles, we may now look at the provisions of the Rajasthan Excise Act, Chapter III of the Rajasthan Excise Act deals with import, export and transport of excisable articles. Section 11 deals with aspect of import, and relevant for our purposes reads as under:
11. Import of excisable article.--No excisable article shall be imported unless:
(a) the State Government has given permission, either general or special, for its import;
(b) such conditions (if any) as the Slate Government impose, have been satisfied; and
(c) the duty (if any) imposed under Section 28 has been paid or a bond has been executed for the payment thereof.
33. A perusal of above provision shows that it envisages that (i) no excisable articles shall be imported unless the State Govt. has given permission, either general or special, for its import; (ii) such conditions, if any, as the State Govt. impose, have been satisfied, and the duty, if any, imposed under Section 28 has been paid or a bond has been executed for the payment thereof.
34. Section 12 envisages that no excisable article shall be exported or transported unless the duty any imposed under Section 28 has been paid or a bond has been executed for the Payment thereof and such conditions if any as the State Govt. may impose, have been satisfied. Section 13 empowers the State Govt. to prohibit the import, export and transport of any excisable article into or from the territories. Section 14 empowers the State Govt. to issue notification in regard to territories in the State or for any other local area comprised therein that no excisable article shall be imported, exported or transported except under a pass issued under the provisions of Section 15. Section 15 empowers the Excise Commissioner or a Excise Officer duly empowered in this behalf to grant passes subject to such restrictions as the State Govt. may impose in this behalf.
35. Thus, it is apparent that under the Excise Act, import, export and transport has been treated essential part of the activities connected with the exclusive privilege of the State to have monopoly on manufacture, supply-and sale of excisable articles and it is within the domain of the State Govt. to permit and regulate within the territories of the State the activities of import, export and transport of excisable articles within the State.
36. To give effect to these provisions, in Rajasthan Excise Rules, 1956 separate provisions have been made for each type of activities in respect of different type of excisable articles.
37. Chapter III of the Rules deals with import and export of Indian made foreign liquor and beer. Rule 19 provides methods by which foreign liquor or beer can be imported within the State of Rajasthan. It envisages that such import can be made either in the form of bond for payment of duty in Rajasthan for wholesale vend by manufactures to wholesale vendors; on payment of duty in Rajasthan, or on payment of duty in the state of export, at the rate leviable in Rajasthan, to be subsequently transferred to Rajasthan by book transfers. This is in the nature nature of countervailing duty. Rule 24 provides condition of import that a person holding a licence for sale of Indian made foreign liquor and foreign liquor or the Commandant of Regimental units of the Armed Forces of the Union of India stationed in Rajasthan may import Indian made Foreign Liquor, on prepayment of import duty in Rajasthan and under a permit issued under the next succeeding rule, from a distillery brewery or warehouse of the exporting State. Rule 25 prescribes procedure for securing permit for importing IMFL.
38. In this connection Rule 47 envisages licences for wholesale vend of Foreign Liquor and Beer Classified in two categories. Rule 69 deals with fees for sale of foreign liquor, Rule 69-A provides fee for licence of retail sale of country liquor under guarantee system. Rule 69-AA provides fee for licence of retail sale of country liquor under exclusive privilege system. These rules do not speak for any fees.
39. Rule 69-8, relevant for our purpose, provides fees fees a permit for import into, export outside or transport within the State of Rajasthan of the excisable articles named therein. The scale of fees payable for different sorts of permit in respect of varied excisable articles is disclosed in Table as part of the Rules. It is this provision which is subject matter of examination in this case. Immediately before its amendment vide the impugned notification, rule read as under: -
"69-B Fees for certain permits:
The under mentioned fees are prescribed permit fees for import into, export outside or transport within the State of Rajasthan of the following Excisable Articles.
S.No. Name of Excisable Article Permit fees per bulk liter/kg Import into Bringing Export Outside Sending Transport within State Rs.
Rs.
Rs.
1.
Absolute alcohol Methylated Alcohol Denatured spirit and preparations thereof 3/-
3/-
3/-
2. Rectifies spirit Extra Natural alcohol, Malt Spirit, High banquet Spirit & Likewise Spirits/ alcohols.
3. Imported Liquor and beer 10/-
10/-
10/-
4. Indian Made Foreign Liquor 4/-
5. Indian Made Beer 4/-
6. Country Liquor 5/-
7. Bhang 5/-
40. From the perusal of aforesaid Rule 69-B read with provisions of Chapter 111 containing Sections 11 to 15 and the rules relating to the conditions for importing, exporting and transporting IMFL within the State makes it abundantly clear that import of any excisable article including IMFL and Indian made beer or 'foreign liquor or foreign beer have all been treated as different aspects of privilege relating to intoxicants vesting in State in its fullness. There is a specific provision in Chapter III for regulating import of any excisable article within the State, which is otherwise exclusive privilege of the State. To permit import within the State or not to permit at all or to import or export or transport the excisable articles within the State by itself or permit anybody else to carry on these activities by parting it in favour of the person applying for such permits is privilege of the State. The State Act also not only envisages issuing permits for import, export or transport but also for, charging fees for issuing permits for import, export or transport. When Rule 69-6 was incorporated for the first time, a consolidated fees was charged for all the three aspects of the exclusive privilege vesting in the State. However, vide Notification dated 31st March, 1997 Rule 69-B was substituted manifesting explicit division of three aspects independently viz. for import into, export outside and transport within State by providing separate permit fees wherever the State desired for parting with the exclusive privilege of that nature in column 4 & 5 respectively of the table under Rule 69-B.
41. It is apparent that immediately before the impugned notification dated 2.11.99 was issued, for Item No. 1 & item No. 3 permit fee was separately imposed for each of privileges viz., import into, export outside and transport within State of Rajasthan those excisable articles. This was in addition to any duty/fees payable on these items. Hem No.l related to absolute alcohol, Methylated Alcohol, Denatured spirit and preparations thereof and Item No.3 related to imported liquor and beer. In respect of foreign liquor and beer, for each of the three permits viz. for import, or for export or for transport a fee @ 10 rupees per bulk liter/kg, was payable separately. Thus, possibility and permissibility of levy of separate, fee for permit for import export and transport was envisaged, as per the policy of the State. The concept was not newly introduced vide the impugned amendment. Merely because IMFL and Indian made Beer, were subjected to separate fees for licensing permits for import or export or transport, which is within the authority of State, for the first time by the State, cannot inflict it with any vice of malafide. Hence, plea of colourable exercise of power due to pendency of writ petition by the Rule framing authority cannot be sustained. Undoubtedly, before amendment, the State Govt. had not thought it fit to charge separately any permit fee for import into and export outside Indian made foreign liquor and Indian rnade beer under Item No. 4 & 5 of Rule 69-8 and provided permit fee only for transport within the Slate of Rajasthan in the case of Indian made foreign liquor and Indian made beer. However, the fact of making a provision for the first time alone cannot affect the validity of such fees/charges which is otherwise permissible in law.
42. The two amendments brought about is Rule G9-B by the impugned notification dated 2.11.99 are to replace the the words 'import into' and 'export outside' by bringing in' and 'sending out' respectively. Substituting the words "bringing in" for import and "sending outside" for export respectively makes no difference in meaning which signifies in its ordinary sense nothing but "bringing in" or "sending out" . In the context of national territories word 'import' signifies bringing goods into a country from outside the territorial limits of that country. Likewise, the word 'export1 signifies sending out the goods by a country outside its territories. In the context of federal structure of our country, when laws are made by State Legislature in connection with any State territory, the expression 'import' signifies 'to bring in anything from outside the State' so also the word 'export' signifies the converse of import covering the meaning 'to take away' or 'carry off or 'to send any commodity' from one State to another.
43. The ordinary dictionary meaning of expression "Export" & "import" respectively as given in the Shorter Oxford English Dictionary Volume 1 conveys as under:
Export:
1. To take away, carry off, 2.
to send out (commodities) from one country to another.
Import: To bring in; to introduce from abroad; to bring in (goods or merchandise) from a foreign country in international commerce.
44. Same is the meaning assigned to expression "import into" and "export out of" by the Supreme Court while considering Article 286 of the Constitution of India in State of Travancore-Cochin and Ors. v. Shanmugha Vilas Cashew Nut Factory and Ors. (13):
"It is obvious that the words "import into" and "export out of" in this context do not refer to the article or commodity imported or exported. The reference to "the goods" and to "the territory of India" make it clear that the words "export out of" and "import into" mean the exportation out of the country and importation into the country respectively."
45. In the context of Rajasthan Excise Act, we see no reason to deviate from the ordinary meaning of word 'import' which means to bring into the State of Rajasthan from outside State of Rajasthan and the expression 'export' to mean to send out the excisable article from the territory of Rajasthan to other States. In view of that, the use of alternative expression vide amendment for import and export does not signify any change in the scheme of Rule 69-B by substituting the two expressions and requiring permit fee to be paid before permit is to be issued for importing any excisable article within the State of Rajasthan or for sending out any article from the territory of Rajasthan to another place. It only conveys State's policy to charge consideration for parting with its exclusive privilege of import of potable liquor for a consideration by issuing permit to indulge into activity of trading in 1MFL or Indian Made beer, by importing these articles from outside on payment of permit fee for such import also. Charging of consideration cannot be considered an act of imposition of tax or charge of fees in stricto sensu.
46. We are of the opinion that this change of expression is not at all material. It was only to make it distinguishable from duties that may be leviable by way of tax or may have been imposed by way of tax. But as the rule is strictly confined to charging of fee as consideration for parting with its exclusive privilege issuing permits for import of IMFL and Indian made Beer. It is within the precincts of respondents to maintain its revenue by fixing consideration for parting with its exclusive privilege in any of its aspect, as price to be realised and it was for the person, desirous to secure that exclusive privilege of willing to accept the consideration for securing any part of the exclusive privilege from the State for dealing in intoxicants or an excisable article. There was no impediment of any sort in the authority of the State to charge whether consolidated or separate permit fees for import or for bringing excisable article into State or for exporting or sending any excisable article outside the State and for transporting excisable articles within the State. In effect, by amending Rule 69B the State Govt. has disclosed its policy for parting with its exclusive privilege of importing, exporting and transporting IMFL/Indian Made beer for separate considerations.
47. On its own showing, before the amendment, the petitioner has no dispute about its validity and perhaps it could not be, as we will presently see that the validity of Rule 69-B was made subject matter of litigation before this Court and the validity has been upheld by this Court. A Division Bench of this Court in Geeta Enterprises and Another v. The State of Rajasthan and Ors. (14) has held that provisions of Rule 69-B have been validly framed by the rule making authority of the State and are not ultra vires the provisions of the constitution, the Court held as under:-
"Our attention was also drawn to the provisions of Section 42(a), (b) and (c) of the Act. Section 42(1) of the Act authorises the Commissioner to make the rules regulating the manufacture, supply, storage or sale of any excisable article. Regulatory functions are covered by Entry 33 of List III of Schedule VII of the Constitution. Section 42(b) also authorises the Commissioner to make the Rules regulating the deposit of any excisable article in a ware-house and the removal thereof from any such warehouse or from any distillery pot-still or brewery and Section 42(c) empowers the Excise Commissioner to make the Rules prescribing the scale of fee or the manner of fixing the fees payable in respect of any licence, permit or pass or the storing of any excisable article. These powers are within the legislative competence of the State Govt. and, therefore, the provisions of Sections 41 and 42 of the Act are neither ultra vires to the Constitution nor they are against the provisions of Entry 84 of List I of Schedule VII of the Constitution. Rule 69-B of the Rules pertains to the fees for certain permits. We have already held that the prescription of fee for obtaining permits is also within the legislative competence of the State Govt. and, therefore, the provisions of Rule 69-B of the Rules are not ultra vires to the provisions of the Constitution."
48. It is true that Item No. 4 & 5 of the unamended table; Indian made foreign liquor and Indian made beer were not subjected to any permit fee but was subject to transport fee only but that would not denude the State from its authority at any time in future to impose permit fee for importing Indian made foreign liquor or Indian made beer from within the State of Rajasthan or to charge permit fee exporting those articles outside the State. By amending the table w.e.f. 2.11.99, the Stale Govt. has made its decision clear that henceforth it will be charging permit fee for import and export also on import of IMFL within the State of Rajasthan and for import of Indian made beer within the State of Rajasthan so also for export outside the State of Rajasthan of these two articles.
49. The fact that these charges correspond with the import duty levied under Notification issued under Section 28, is of little relevance so far as fixing the consideration for parting with the exclusive privilege of importing IMFL/Indian made beet in favour of the petition is concerned. The only constraint which would be taken into account is that while parting with the exclusive privilege in favour of any person for considera tion, there should not be any element of arbitrariness or unreasonableness in the manner of parting with the exclusive privilege so as not to violate Article 14 of the Constitution df India. Apart from that, on the principles discussed above, there being no fundamental right to carry on business in liquor to potable drinks, it does not invite application of Article 14 or 19(1)(g) of 301 of the Constitution insofar as levy of permit fee is concerned.
50. It has been noticed in State of Bombay v. RMD Chamarbaugwala (supra) that the real purpose of Article 19(1)(g) and 301 could not have been to guarantee for declaring the freedom of gambling on principles that activities from their very nature and in essence area extra commercium although the external formalities and instruments of trade may be employed and they are not protected either by Article 19(1)(g) or 301 of the Constitution. The principles which govern the extra commercium activities of gambling equally apply to activities of dealing with intoxicants which too have been held to be extra commercium to which fundamental right about freedom of trade under Part III and Article 301 namely the free intercourse of trade throughout the territory is not reached. In this connection it may be recalled that in Khoday Distilleries Ltd. v. Stale of Karnataka (supra) a Constitution Bench of the Supreme Court categorically stated that potable liquor as a beverage is an intoxicant and depressing drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, Iherefore, no fundamental right to do trade or business in liquor. If right to trade itself does not exist, any fundamental right to do trade or business in liquor. If right to trade itself does not exist, any fundamental right about freedom of trade in respect of potable liquor also can not exist. The Court has further held with reference to Article 47 of the Constitution that intoxicating drinks and drugs are considered injuries to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health and, therefore, it, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include potable liquor, except for medicinal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. With these precincts, we do not see how it attracts any part of Article 19 as well as Article 301. Both provisions which are attached with freedom of trade throughout the country on principles of equality and choice. When there is no freedom of trading at all in favour of a person it cannot invite invocation of Article 19(1)(g), the freedom of trading as a fundamental right, and as also free inter-course of trade, commerce and business throughout the territory of India envisaged under Article 301. Hence, no occasion would arise for considering violation of Article 302 to 307.
51. It hardly needs any argument that permit fees are payable as and when permits are obtained and there is no question of retrospectivity in its operation. Any permit for import, export or transport within State of Rajasthan would be subject to conditions as prevalent on the date when such permit is issued and if on the date when permit is issued under the provisions of the Excise Act and the Rules framed thereunder, a fee is payable for getting permit for importing or bringing any excisable article within the state, the permit can be issued only subject to payment of such consideration for issue of permit.
52. Learned counsel for the respondents have placed reliance on a Division Bench decision of this Court in D.B. Civil Special Appeal No.996/2000 decided on 29th Jan., 2001. As the facts speak, it was a case in which the import duty was levied and collected in respect of goods which were never imported and, therefore, the Court directed that the State was bound to refund the import duty and fee as it is established that the goods have not been imported. In this connection, it may be relevant to notice that Sub-rule (3) of Rule 24 specifically envisage refund of import duly on goods not imported. It was not a case in which goods have been imported and the licensee had paid the import duty for availing the permit of import. Obviously, where goods have not been imported, the question of reimbursing themselves by passing on the burden to consumers by selling the commodities would not arise. Therefore, the question of applying the principles of unjust enrichment simply would not arise for consideration in such cases. In the present case, it is not in dispute that the petitioner has imported the goods in Rajasthan and thereafter the Licensee has transacted those goods in the State of Rajasthan. Thus, the burden of fees paid by him has been passed on to the considers as part of the price. Moreover, on the conclusion that we have reached, and facts of the case, question of refund do not arise in this, case at all.
53. Upshot of the aforesaid discussion is that -
(i) the activity of Manufacture, supply or sale of potable liquor which is excisable article is the exclusive privilege of the State in which no right much less fundamental right exits in any citizen to indulge in.
(ii) The State has necessary authority to raise its revenue, by Parting with its exclusive privilege in any of its aspects.
(iii) If it parts with and allows any person to trade in intoxicating the procedure for parting with such exclusive privilege is inhibited by provisions of Article 14 and for that limited purpose the principles of acting reasonably and fairly in giving out the state largess or conferring any benefit in favour of a person are inherent.
(iv) Otherwise, to permit a person to carry on an activity which is ex-commercium and not a part of right to trade therein, invites neither Article 19(1)(g) nor Article 301 which both are related to freedom of trade.
(v) It is competent for the State to charge consideration to the maximum extent it can extract from the prospective candidates willing to secure the privilege to deal in excisable article.
(vi) Apart from anything which is levied as tax on such dealer, all other amounts payable by way of licence fees or permit fees are, strictly speaking, neither tax nor fees but are part of consideration payable to the State for parting with its exclusive privilege in favour of the person paying for it.
(vii) Acceptance of consideration is a voluntary act of party as a term of contract for securing exclusive privilege from which he cannot resile after entering into a contract.
(viii) The import, the export and the transport are all different facets of the activity to supply and sale of any excisable article within the territory of the State, therefore, the State is competent to charge consideration cumulatively or separately for each of these of its exclusive privilege when it parts with it in favour of a person.
(ix) As no element of right to trade and compulsory extraction by way of tax or fees is involved in charging consideration in the form of permit fees; scaled or fixed, that does not invite application of Article 19(1)(g) or Article 301, and, therefore, the principle governing whether such permit fees chargeable under Section 69-b is authorised by law under Article 265 or within the legislative competence of the State under Entry 51, 52 or 56, really do not arise for consideration which was a facet, which it is respectfully stated, had not been considered by this Court in Geeta Enterprises's though deciding the case on the anvil that charging of permit fee is a regulating fee, the Court has upheld the validity of Rule 69-B.
(x) As consideration is paid as part of securing advantage under a contract, question of its being excessive also do not arise.
54. In view of the aforesaid, the conclusion is irresistible that the amendment made vide impugned notification dt.2.11.99 and consequential communication dated 11.11.99 requiring the petitioner to pay permit fees at the rate specified Under Rule 69-B for importing Indian made beer within the State of Rajas than is within the framework of law and within the authority of the State. It does not suffer from any invalidity. If the petitioner wants to avail the facility of importing IMFL/beer under the licence issued to it from outside Slate to within the State of Rajasthan, it must pay the consideration for it as provided under the rules in terms of the impugned communication.
55. Accordingly, we find on merit in this petition and the same is hereby dismissed with no orders as to costs.