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The Commissioner of Excise Board of Revenue, Andhra Pradesh, Hyderabad and ors. Vs. B. Bhogeswara Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 433 and 464 of 1973
Judge
Reported inAIR1974AP92
ActsAndhra Pradesh Excise Act, 1968 - Sections 1 and 72; Andhra Pradesh Denatured Spirit and Denatured Spirituous Preparations Rules, 1971 - Rules 1, 12 and 23; Constitution of India - Article 14
AppellantThe Commissioner of Excise Board of Revenue, Andhra Pradesh, Hyderabad and ors.
RespondentB. Bhogeswara Rao and ors.
Appellant AdvocateGovt. Pleader, for Excise matters
Respondent AdvocateK.B. Krishna Murty, Adv.
Excerpt:
.....has to be determined in regard to denatured spirit .it may be that like rule 23 of the rectified spirit rules, there is no express rule in the denatured spirit rules fixing the quotas in view of certain considerations. 29. the construction which we have put on various provisions of the act and the rules in the light of the scheme of the act is the only proper construction which would enable the authorities to work out the scheme of the act smoothly and effectively. 5931 of 1972 on 14-3-1973 (andh pra). the learned judge noticed the provisions of the act as well as the rules made thereunder. the scheme of the act and the various provisions referred to above, in our judgment, clearly provide guidelines both for fixing the quota as well as the priority. after all the various requirements..........and denatured spirituous preparations rules, 1971' and the other 'the andhra pradesh rectified spirit rules 1971.'15. rule 2 (c) of the denatured spirit rules defines the term 'denatured spirit'. 16. rule 5 puts an embargo on the possession of denatured spirit etc. in excess of the quantities mentioned therein and without a licence or a permit.17. similarly rule 6 prohibits every person from transporting denatured spirit etc. in excess of quantities specified in rule 5 except under a transport permit.18. rule 9 then relates to sale of denatured spirit etc. and prohibits sale without a licence.19. we then come to rule 12 which specifically relates to licence for possession and use of denatured spirit in manufacture of french polish and varnish etc. such a licence is issued in form d......
Judgment:

Gopal Rao Ekbote, C.J.

1. 27 licensees belonging to three Districts having different quotas of denatured spirit allotted to them have joined in filing W.P. No. 4991 of 1972 out of which W.A. No. 443 of 1973 arises. They have sought the relief of issue of a writ of mandamus directing the respondents to renew D.S. XI licences for the year beginning from 1-10-1972 for denatured spirit without imposing any cut as per the direction of the Board of Revenue. These petitioners manufacture French Polish from the denatured spirit.

2. W.P. No. 4820 of 1972 has been filed by the petitioner to renew similarly its licence for the same year without any cut in its quota previously allotted for the same year for rectified spirit or in the alternative denatured spirit. W.A. No. 464 of 1973 arises out of that petition.

3. Both these writ petitions were resisted by the State Government amongst others on the ground that the overall equipment of the State for the year is 426 lakhs of denatured spirit , whereas the expected production was only 297 lakhs. In view of the shortage owing to different reasons of molasses and alcohol the State Government had to arrange the quotas in order of priorities as the denatured spirit is required for various purposes. Keeping in view the realities of the situation regarding production and bearing in mind the priority so allotted cut in the allotment of quotas was directed to be made ranging from 30% to 75%. Since manufacture of French Polish is of the lowest priority, it was given a cut of 75% in the previous allotment.

4. The learned Judge allowed the writ petitions and issued mandamus holding that there is no provision of law either in the A.P. Excise Act or the rules framed thereunder empowering the Government to regulate the supply and distribution of denatured spirit. The State Government therefore neither can refuse the renewal of licence nor refuse transport permits by cutting down the quantity of denatured spirit applied for by the petitioners.

5. In these appeals , the principal question is whether the State Government has power to fix reduced quota while renewing the licences regarding denatured spirit and then issue transport permits accordingly.

6. Now Section 2 (21) of the Act includes denatured spirit as well as rectified spirit within the definition of liquor. Any other intoxicating substance which the Government declares to be liquor is also included therein.

7. Section 2 (19) also defines the term 'intoxicant' to mean any liquor as defined in clause 21 or any intoxicating drug as defined in clause (20).

8. Before we look to the other provisions of the Act, it is well to remember that the preamble of the Act indicates that this Act relates to the production, manufacture, possession, transport, purchase and sale of intoxicating liquor and drugs , the levy of duties of excise and countervailing duties on alcoholic liquors etc.

9. Section 11 empowers the Government to prohibit the transport of an intoxicant from one area to any other area. It also prohibits the transport of intoxicant of any quantity exceeding the one prescribed either generally or for any particular area.

10. We then come to the most relevant provision for our purposes i.e., Section 12. It relates to the grant of permits for transport of intoxicants. The section firstly says that a general permit shall be issued only to persons licensed under the Act. The permit may specify the maximum quantity of intoxicant that may be transported at any one time. Such a permit for the transport of intoxicant may be either general for definite periods and kinds of intoxicants or special for specified occasions and particular consignments only. Every permit shall specify the things enumerated in sub-section (3). One of the requirements is to mention the quantity , strength and description of intoxicants for which the permit is issued.

11. We then proceed to Section 14. The Section empowers the Government to specify by notification the maximum quantity of any intoxicant which a person may have in his possession. Sub-section (2) enjoins that no person shall have in his possession any intoxicant in excess of the quantity so specified, except under the authority and in accordance with the terms and conditions of a licence or a permit granted by the authority.

12. Section 15 then prohibits every person from selling or buying any intoxicant except under the authority and in accordance with the terms and conditions of a licence granted for that purpose.

13. This short survey of the preamble and the said provisions of the Act would indicate that the intention of the Legislature manifestly is to control and regulate the intoxicants right from the stage of production down to the stage of purchase and sale as well as their possession. The scheme of the Act is not meant merely for the collection of the excise duties and countervailing duties although the Act provides for such levies. The intoxicants being a rare commodity and capable of having deleterious and disastrous effects on the morals and health of the members of the society is clearly intended to be controlled and regulated which power includes as is seen the power to prohibit their transport from one area to another. Thus the intoxicants can neither be transported without permits nor they can be manufactured , nor they can be possessed, purchased or sold without obtaining necessary licences and transport permits in that behalf. Once this basic principle underlying the Act is borne in mind , then it will not be difficult for the Court to answer the question posed in this enquiry.

14. There are two sets of Rules made under Section 72 of the Act. One is 'the Andhra Pradesh denatured Spirit and denatured Spirituous Preparations Rules, 1971' and the other 'The Andhra Pradesh Rectified Spirit Rules 1971.'

15. Rule 2 (c) of the denatured Spirit Rules defines the term 'denatured Spirit'.

16. Rule 5 puts an embargo on the possession of denatured spirit etc. in excess of the quantities mentioned therein and without a licence or a permit.

17. Similarly Rule 6 prohibits every person from transporting denatured spirit etc. in excess of quantities specified in Rule 5 except under a transport permit.

18. Rule 9 then relates to sale of denatured spirit etc. and prohibits sale without a licence.

19. We then come to Rule 12 which specifically relates to licence for possession and use of denatured spirit in manufacture of French Polish and Varnish etc. Such a licence is issued in Form D. S. XI. The licensee can get his supplies from the distillery which is manufacturing denatured spirit or a wholesale licensee in Form D. S. VII or from source outside the State under an import permit.

20. Rule 16 prescribes the procedure for obtaining licence. It prescribes what is known as Sugar year and a licence is granted only for a year. It empowers the Excise Superintendent to make enquiries for verification of the details stated in the application and also such other enquiries as may be necessary. On being satisfied that conditions for the grant of the licence have been complied with the authority may grant the licence.

21. Rule 17 relates to renewal of licence and Rule 18 pertains to amendment to licence and Rule 19 concerns itself with the cancellation and suspension of licence.

22. Form D. S. XI of licence for possession and use of denatured spirit in manufacture of French Polish and Varnish etc. prescribed under Rule 12 specifically enjoins that the licence shall be subject to the conditions mentioned therein. Condition No. 4 which is every relevant reads :-

'The quantity of denatured spirit , methylated spirit, methyl alcohol possessed at any one time and that used and consumed under the licence shall not exceed 25 percent of the quantity allowed for the year' (Emphasis is ours)

23. Column No. 2 prescribed in condition No. 4 then mentions the quantity of the denatured spirit that may be used in a year or the period of currency of licence for manufacturing purposes.

24. Finally condition No. 5 expressly states that the licensee shall abide by the special terms and conditions , if any , which the commissioner may impose with regard to each such sanction.

25. The second set of rules relate to rectified spirit. It is pertinent to note that Rule 21 empowers the licensing authority to amend or alter the licence or may issue a new licence imposing further conditions.

26. Rule 23 authorises the Commissioner to impose such restrictions or to fix such quotas as might be necessary on the quantity of rectified spirit to be allotted to the licensees depending on the availability, the demand for rectified spirit and the need for equitable distribution of rectified spirit in different local areas and also depending upon the use for which it is intended.

27. What emerges from the provisions of the Act read along with the Rules is that the denatured spirit as well as the rectified spirit is a controlled and regulated commodity. The authority is empowered to fix quotas regarding rectified spirit in view of the considerations mentioned in Rule 23. Likewise quantity allowed for the year has to be determined in regard to denatured spirit . It may be that like Rule 23 of the Rectified Spirit Rules, there is no express rule in the Denatured Spirit Rules fixing the quotas in view of certain considerations. Nevertheless be necessary implication which arises from condition No. 4 incorporated in Form D. S. XI prescribed under Rule 12 of the Denatured Spirit Rules, the quantity allowed for the year must have to be determined and referred to in the licence: otherwise condition No. 4 would be ineffective. Thus Sections 13 to 15 both inclusive if read with the relevant Rules regarding both the said commodities , no one can be left in doubt that the quotas regarding both the commodities can be fixed in the licences.

28. We have already referred to the scheme of the Act. The meaning of Sections or Rules can be determined , not so much be reference to other individual provisions of the statute, as by the scheme of the Act regarded in general. The object or policy of any legislation often affords the answer to problems arising from ambiguities , if any, it contains. The provisions and the Rules are to be construed in the light of the intention of the legislature.

It is also a golden rule of construction, that there are certain objects which the legislature is presumed not to intend , and a construction which would lead to any of them is therefore to be avoided. It is always proper to construe any ambiguous provisions in the light of the mischief which the enactment is obviously designed to prevent, and in the light of the reasonableness of the consequences which follow from giving it a particular construction. It is the office of this Court to make such construction as will suppress the mischief and advance the remedy, and to suppress all evasions for the continuance of the mischief. To carry out effectually the object of a statute , it must be so construed as to defeat all attempts to do, or avoid doing in an indirect or circuitous manner that which it has prohibited or enjoined. We are therefore bound to construe the provisions of the Act and Rules in a manner which will facilitate the smooth working of the scheme of the legislation established by the Act and Rules thereunder.

29. The construction which we have put on various provisions of the Act and the Rules in the light of the scheme of the Act is the only proper construction which would enable the authorities to work out the scheme of the Act smoothly and effectively.

30. It is in this background that we must examine first the judgment of O. Chinappa Reddy, J., given in W. P. No. 5931 of 1972 on 14-3-1973 (Andh Pra). The learned Judge noticed the provisions of the Act as well as the Rules made thereunder. The learned Judge however , fixed his attention on the aspect of equitable or effective distribution of denatured spirit. He took the view that the Excise Superintendent is not at all concerned while granting licence with the question whether the stock of denatured spirit is available with the distillery. Nor is he concerned with fixing of the priorities . The attempt to regulate the distribution of denatured spirit by means of transport permits if nothing but a misuse of the Excise Act and the Rules. He further observed that 'It is difficult to comprehend how these rules justify the use of transport permits as a part of a scheme to control the distribution of the denatured spirit.'

31. With due respect to the learned Judge, we find it very difficult to share that view. First of all the preamble to the Act does not say that distribution of these commodities is the subject of control. On the other hand, the provisions of the Act relate to the production, manufacture, possession, transport, purchase and sale of intoxicants. And it is seen that the provisions of the Act and the Rules expressly control through the grant of licences and permits the said commodities at each of the said points. It is not correct to argue that the authority is concerned only with the grant of licence or a permit and it is for the licensee to get as much quantity as he desires from the distillery within the State or import from outside on permit. This is not warranted not only by the scheme of the Act but by the express provisions referred to above.

It must be remembered that violation of the provisions of the Act or the Rules or terms and conditions of licence is made penal apart from entailing the suspension or cancellation of licence or permit. The Act therefore cannot be said to be a mere revenue legislation. Essentially the provisions are intended to control and regulate the said commodities. Such a power to control and regulate takes within itself not only the power to fix quotas but also fix priorities as is done. In case of rectified spirit fixation of quota or priority is expressly provided in Rule 23 and in case of denatured spirit it is by necessary implication provided by conditions Nos. 4 and 5 of D.S. XI made under Rule 12 read along with the provisions of the Act and the Rules. The scheme of the Act and the provisions referred to above not only empower the authority to fix quotas and determine priority but in order to effectuate such a policy the authority can impose cuts in the supply of these commodities.

In other words from year to year the authority can determine the quotas while granting licences or renewing them keeping in view the total production of the commodities in a given year and the competitive requirements of the society. It may be that the alcohol from which these commodities are manufactured or the said commodities do not belong to the Government but that does not mean that the Government has no power to control and regulate scarce commodities such as we are concerned within the interests of social needs. The conception that the Government can control and regulate its own products and not products belonging to others is totally misconceived. Consequently such a control can be effectuated through both the devices of licences and transport permits.

32. The learned Judge against whose judgment the present appeals are filed virtually adopted the same line of approach as was adopted by Chinnappa Raddy, J. With due respect to the learned Judge , we find ourselves unable to accept that view. Such an approach is bound to defeat the very purpose of the Act and the Rules. The commodities would be freed from control at many points. That will amount to flying in the face of the express provisions of the Act and the Rules.

33. We are not impressed with the argument that the restrictions thus placed upon the freedom of trade in these commodities is violative of Art. 14 inasmuch as the provisions do not lay down any guidelines for fixing the quotas or determing the priorities. The scheme of the Act and the various provisions referred to above, in our judgment, clearly provide guidelines both for fixing the quota as well as the priority. After all the various requirements of the society for which these commodities are required are well known. There can be no difficulty in fixing their relative priority in view if their importance to the society. We do not think therefore that the provisions are bad in view of Art. 14 of the Constitution. We are also satisfied after examining the relevant date relating to the availability and their needs that the cuts imposed are not unreasonable and the priority fixed cannot be said to be based on no principle or is arbitrary or fanciful.

34. It was finally contended that no specific authority has been fixed to determine the quota. We find no strength in this contention. When it is found that such quota is to be determined and mentioned in the licence or permit, it follows that it is the authority which issues licence an permit that is empowered to fix the same both in the licence as well as the permit.

35. Since no other contention was raised , the result is that the appeals are allowed . The judgments of the learned Judge are set aside. The Writ Petitions are dismissed with costs. Advocate's fee Rs. 100/- in each case and in each Court.

36. Appeals allowed.


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