Madhya Pradesh High Court
M/S Pernod Ricard India (P) Ltd Ab Road ... vs The State Of Madhya Pradesh on 15 March, 2021
Equivalent citations: AIRONLINE 2021 MP 297
Author: Gurpal Singh Ahluwalia
Bench: Gurpal Singh Ahluwalia
1 THE HIGH COURT OF MADHYA PRADESH
Writ Petition No.4857/2021
M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others
Gwalior, Dated:15/03/2021
Shri K.N. Gupta, Senior Advocate with Shri S. K. Shrivastava,
Counsel for the Petitioner.
Shri Deepak Khot, Government Advocate for the State.
Heard on the question of admission.
2. This petition under Article 226 of the Constitution of India has
been filed against the order dated 11-9-2020 passed by Board of
Revenue, Gwalior in case No. Appeal/939/2019/Gwalior/Aa.A, order
dated 26-7-2019 passed by Excise Commissioner, in case No.
REC/86/2016-17 and order dated 13-4-2016 passed by Deputy
Excise Commissioner (Flying Squad), Gwalior in case No.
Aab/Aas/2016/591, by which the penalty for excess transit loss under
Rule 16 read with Rule 19 of M.P. Foreign Liquor Rules, 1996 to the
tune of Rs.23,93,015/- has been imposed.
3. The necessary facts for disposal of the present petition in short
are that the petitioner is a company registered under the Companies
Act, 1956 and is a legal entity in the eyes of law. It is the case of the
petitioner, that the petitioner has a bottling unit at Gwalior, and
during the course of its usual business, the petitioner sent a
consignment vide export permit nos.755, 756 and 767 dated 23-6-
2015 to Patna. The liquor was being sent in Truck bearing
registration No. MP 07 HB 3842, however, it is alleged that the Truck
2 THE HIGH COURT OF MADHYA PRADESH
Writ Petition No.4857/2021
M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others
met with an accident in Arbal District of Bihar and the matter was
reported by the Driver to the police.
4. By the impugned order it has been held that 11127.06 proof
liter of liquor was not delivered at the destination and thus, there was
a transit loss.
5. A show-cause notice was issued to the petitioner on 10-3-2016.
It is submitted that the petitioner sent its reply to the Deputy Excise
Commissioner informing that since, the truck had met with an
accident, therefore, there was an excessive transit loss. Since, the loss
is not attributable to the petitioner, therefore, as per provision of Rule
19 of M.P. Foreign Liquor Rules, 1996 (In short "Rules, 1996"), the
petitioner is not liable to pay any penalty.
6. It is the case of the petitioner, that the Dy. Excise
Commissioner, without considering the reply submitted by the
petitioner, passed the order dated 13-4-2016, thereby imposed the
penalty of Rs.23,93,015/-. It is submitted that instead of considering
the reply, the Deputy Excise Commissioner, wrongly mentioned that
the reply was not received. This shows that how the respondents are
deciding the matters.
7. The petitioner filed an appeal before the Excise Commissioner, with elaborate grounds raised in the memo of appeal, however, the Excise Commissioner, also dismissed the appeal in a most 3 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others mechanical manner. It is further submitted that similarly, the appeal has been dismissed by the Board of Revenue, thereby affirming the orders of the Authorities below.
8. Challenging the orders passed by the Board of Revenue as well as M.P. Excise Commissioner, and Dy. Excise Commissioner, it is submitted by the Counsel for the petitioner, that since, the truck which was transporting the liquor, met with an accident in Distt.
Arbal, therefore, driver of the truck gave an information to the concerning police station on 3-7-2015. Similarly, an information was given to Product Superintendent, Arbal (Bihar) about the accident and sought permission to transport the remaining liquor by another truck. Accordingly, the Product Superintendent, Arbal, by its letter dated 10-7-2015 granted permission for further transportation of remaining liquor by another truck bearing registration No. MP 07 HB 3569. It is submitted that thus, it is clear that it was beyond the control of the petitioner, therefore, the petitioner is not liable to pay penalty as per the provisions of Rules, 1996.
9. Per contra, the Counsel for the State vehemently opposed the petition. It is submitted that it is incorrect to say on the part of the petitioner, that it had submitted its reply before the Dy. Excise Commissioner. On the contrary, it is mentioned in the memo of appeal, that only when the petitioner received the copy of order dated 4 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others 23-4-2016 passed by Dy. Excise Commissioner, it came to know that the order was already passed before even taking the reply from the appellant.
10. Heard the learned Counsel for the parties.
11. Rule 16 of M.P. Foreign Liquor Rules, 1996, reads as under :
6. Permissible limits of losses.- (1) An allowance shall be made for the actual loss of spirit by leakage, evaporation etc., and of bottled foreign liquor by breakage caused by loading, unloading, handling etc. in transit, at the rate mentioned hereinafter. The total quantity of bottled foreign liquor transported or exported shall be the basis for computation of permissible losses.
(2) Wastage allowances on the spirit transported to the premises of FL 9 or FL 9-A licensee shall be the same as given in sub-rule (4) of Rule 6 of the Distillery Rules, 1995.
(3) Maximum wastage allowance for all exports of bottled foreign liquor shall be 0.25% irrespective of distance.
(4) Maximum wastage allowance for all transports of bottled foreign liquor shall be 0.1% if the selling licensee and the purchasing licensee belong to the same district. It shall be 0.25% if they belong to different districts.
(5) If wastages/losses during the export or transport of bottled foreign liquor exceed the permissible limit prescribed in sub-rule (3) or (4), the prescribed duty on such excess wastage of bottled foreign liquor shall be recovered from the licensee.
12. Thus, it is clear that maximum wastage allowance for all transports of bottled foreign liquor has been fixed at 0.1% if the selling licensee and purchasing licensee belong to same District, and 5 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others it shall be 0.25% if the selling and purchasing licensee belong to different Districts.
13. In the present case, since, the bottled foreign liquor was being exported to District Patna from District Gwalior, therefore, the maximum permissible limit of wastage allowance was 0.25%.
14. Rule 19 of Rules, 1996 reads as under :
19. Penalties .- (1) Without prejudice to the provisions of the Act, or condition No. 4 of licence in Form FL 1, condition No. 7 of licence in Form FL 2, condition No. 4 of licence in Form FL 3, the Excise Commissioner or the Collector may impose a penalty not exceeding Rs.
50,000 for contravention of any of these rules or the provisions of the Act or any other rules made under the Act or the order issued by the Excise Commissioner. (2) On all deficiencies in excess of the limits allowed under sub-rule (2) of Rule 16 and sub-rule (1) of Rule 17, the FL 9 or FL 9-A licensee shall be liable to pay penalty at a rate not exceeding Rs. 25 per proof litre in case of spirit and Rs. 65 in case of foreign liquor excluding beer as may be imposed by the Excise Commissioner or any officer authorised by him :
Provided that if it be proved to the satisfaction of the Excise Commissioner or the authorised officer that such excess deficiency or loss was due to some unavoidable cause, he may waive the penalty impossible under this sub-rule.
(3) The Excise Commissioner or the Collector may suspend or cancel the licence under Section 31 of the Act upon a contravention of any of these rules or provisions of the Act, or any other rules made under the Act, or the orders issued by the Excise Commissioner.
15. From plain reading of Rule 19(2) of Rules, 1996, it is clear that if the licensee satisfies the Excise Commissioner or the authorized 6 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others officer that such excess deficiency or loss was due to some unavoidable cause, he may waive the penalty.
16. Thus, the pivotal question for consideration in the present case is that whether the petitioner, had made out a case pointing out "unavoidable circumstance" for the waiver of the penalty or not?
17. It is the case of the petitioner, that the foreign liquor was being transported from Gwalior to Patna by Truck No. MP 07 HB 3842, which met with an accident near Arbal (Bihar) and accordingly, the driver of the truck gave information to the police as well as to the Product Superintendent, Arbal (Bihar) and also sought permission to further transport the remaining liquor bottles by some other truck. It is the case of the petitioner, that by order dated 10-7-2015, the Product Superintendent, Arbal, granted permission for further transportation of remaining bottles by truck No. MP 07 HB 3569.
18. It is clear from the order dated 13-4-2016 passed by Dy. Excise Commissioner (Flying Squad), Gwalior, that the petitioner did not file its reply before the said authority. Even otherwise, in the memo of appeal, the petitioner has pleaded that only after going through the order dated 13-4-2016, it came to know that its reply did not reach the respondent no.3 in time. Further, the petitioner has not filed copy of any order-sheet of the respondent no.3, to show that the reply was filed by the petitioner in time.
7 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others
19. Thus, one thing is clear that it is not the case of the petitioner, that after the truck met with an accident on 2-7-2015, any information whatsoever in any manner, was ever given to the authorized officer at Gwalior. Further, in the information which was given to the police station Arbal by the Driver of the Truck, it was specifically mentioned that in the accident the truck was also damaged. Even otherwise, it is matter of common knowledge, that if a truck turns upside down, then it would suffer extensive damage. However, there is nothing on record, that the owner of the truck had ever claimed damages/compensation from the Insurance Company for the damage caused to the truck. Even it is not the case of the petitioner, that the liquor which was being sent was got insured and any compensation/damages were claimed from the Insurance Company.
Even the petitioner has not filed the copy of the bilty to show that the bottles of Foreign Liquor were got Insured or not? Further, under Section 17 of Carriage by Roads Act, 2007, the carrier is responsible for the loss, damage or non-delivery of consignment entrusted to it.
20. Section 17 of Carriage by Roads Act, 2007 reads as under :
17. General responsibility of common carrier.--
Save as otherwise provided in this Act, a common carrier shall be responsible for the loss, destruction, damage or deterioration in transit or non-delivery of any consignment entrusted to him for carriage, arising from any cause except the following, namely:--
(a) act of God;
8 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others
(b) act of war or public enemy;
(c) riots and civil commotion;
(d) arrest, restraint or seizure under legal process;
(e) order or restriction or prohibition imposed by the Central Government or a State Government or by an officer or authority subordinate to the Central Government or a State Government authorised by it in this behalf:
Provided that the common carrier shall not be relieved of its responsibility for the loss, destruction, damage, deterioration or non-delivery of the consignment if the common carrier could have avoided such loss, destruction, damage or deterioration or non-delivery had the common carrier exercised due deligence and care in the carriage of the consignment
21. However, there is nothing on record to suggest, that the petitioner had ever claimed any damages from the carrier/transporter, for the loss of foreign liquor in the so-called accident.
22. Further, from the documents filed by the petitioner, it appears that the so-called accident took place on 2-7-2015, and the Product Superintendent, Arbal, granted permission for further transportation on 10-7-2015, and the petitioner has not clarified that during this period of 8 days, where the intact bottles of foreign liquor were stored.
23. Further, the petitioner has not filed any document to show that when the remaining intact foreign liquor bottles were delivered at the destination and by which truck?
24. Thus, it is held that not only the petitioner, did not file its reply before the Dy. Excise Commissioner (Flying Squad), but has
9 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others also failed to satisfactorily prove, that the excess wastage was due to a road accident, which was an unavoidable circumstance for the petitioner, requiring waiver of penalty under Rule 19 of Rules, 1996.
25. It is well established principle of law, that trade in liquor is not fundamental right of the petitioner, but it is a privilege conferred by the Govt. The Supreme Court in the case of Khoday Distilleries Ltd. Vs. State of Karnataka reported in (1995) 1 SCC 574 has held as under :
60. We may now summarise the law on the subject as culled from the aforesaid decisions.
(a) The rights protected by Article 19(1) are not absolute but qualified. The qualifications are stated in clauses (2) to (6) of Article 19. The fundamental rights guaranteed in Article 19(1)(a) to (g) are, therefore, to be read along with the said qualifications. Even the rights guaranteed under the Constitutions of the other civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are made explicit by clauses (2) to (6) of Article 19 of our Constitution.
(b) 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.
(c) Potable liquor as a beverage is an intoxicating 10 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others 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.
(d) 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 State 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.
(e) 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.
(f) 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 11 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others 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.
(g) When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right 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.
(h) 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.
(i) The State can carry on trade or business in potable liquor notwithstanding that it is an intoxicating drink and Article 47 enjoins it to prohibit its consumption. When the State carries on such business, it does so to restrict and regulate production, supply and consumption of liquor which is also an aspect of reasonable restriction in the interest of general public. The State cannot on that account be said to be carrying on an illegitimate business.
(j) The mere fact that the State levies taxes or fees on the production, sale and income derived from potable liquor whether the production, sale or income is legitimate or illegitimate, does not make the State a party to the said activities. The power of the State to raise revenue by levying taxes and fees should not be confused with the power of the State to prohibit or regulate the trade or business in question. The State exercises its two different powers on such occasions. Hence the mere fact that the State levies taxes and fees on trade or business in liquor or income derived from it, does not make the right to carry on trade or business in liquor a fundamental right, or even a legal right when such trade or business is completely prohibited.
(k) The State cannot prohibit trade or business in medicinal and toilet preparations containing liquor or alcohol. The State can, however, under 12 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others Article 19(6) place reasonable restrictions on the right to trade or business in the same in the interests of general public.
(l) Likewise, the State cannot prohibit trade or business in industrial alcohol which is not used as a beverage but used legitimately for industrial purposes. The State, however, can place reasonable restrictions on the said trade or business in the interests of the general public under Article 19(6) of the Constitution.
(m) The restrictions placed on the trade or business in industrial alcohol or in medicinal and toilet preparations containing liquor or alcohol may also be for the purposes of preventing their abuse or diversion for use as or in beverage.
26. Thus, the petitioner is well aware of the provisions of Rule 16 and 19 of Rules, 1996 and therefore, it cannot violate the same and the provisions of Rules, 1996 are to be followed strictly.
27. Thus, having failed in notifying the authorized officer, Gwalior, regarding the accident at the earliest possible opportunity immediately after the accident, having failed in filing its reply to the show-cause notice issued by Dy. Excise Commissioner (Flying Squad), further in absence of any document to show that the petitioner had ever claimed compensation for damages suffered by it due to loss of foreign liquor either from the carrier or from the Insurance Company, as well as the petitioner has failed to clarify that where the intact foreign liquor bottles were stored for a period of 8 days after the so-called accident, and further the petitioner, has not filed the copy of bilty by which onward transportation of intact 13 THE HIGH COURT OF MADHYA PRADESH Writ Petition No.4857/2021 M/s Pernod Ricard India (P) Ltd. Vs. State of M.P. and others foreign liquor bottles was done by another truck, this Court is of the considered opinion, that the petitioner has failed to justify its stand that since, truck No. MP 07 HB 3842 had met with an accident on 2- 7-2015, therefore, there was an excessive wastage beyond the control of the petitioner due to unavoidable circumstances.
28. Further, this Court in exercise of power under Article 226 of the Constitution of India, cannot embark upon a factual enquiry, and even after considering the defence raised by the petitioner, this Court is of the considered opinion, that no illegality has been committed by the Authorities below by imposing the penalty as provided under Rule 19 of the Rules.
29. Accordingly, the order dated 11-9-2020 passed by Board of Revenue, Gwalior in case No. Appeal/939/2019/Gwalior/Aa.A, order dated 26-7-2019 passed by Excise Commissioner, in case No. REC/86/2016-17 and order dated 13-4-2016 passed by Deputy Excise Commissioner (Flying Squad), Gwalior in case No. Aab/Aas/2016/591 are hereby affirmed.
The petition fails and is hereby Dismissed.
(G.S. Ahluwalia) Judge Arun* ARUN KUMAR MISHRA 2021.03.17 18:03:30 +05'30'