IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID WEDNESDAY, THE 2ND NOVEMBER 2011 / 11TH KARTHIKA 1933 WP(C).No. 26031 of 2011(D) -------------------------- PETITIONERS: --------------- 1. HOTEL SOUPARNIKA INN (PVT) LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SATHYANATHAN, PUNNATHALA P.O., PUTHANATHANI, MALAPPURAM. 2. SALIS BEAJAR, DIRECTOR, M/S.SOUPARNIKA INN (PVT) LTD., PUNNATHALA P.O., PUTHANATHANI, MALAPPURAM. 3. D.RAJKUMAR, KOCHUVILAYIL, THEVALLY, KOLLAM. 4. JAMES M.JOSEPH, MANIMALA HOUSE, CHEVAYOOR P.O., KOZHIKODE. BY ADV. MR.A.SUDHI VASUDEVAN MS.K.PUSHPAVATHI RESPONDENTS: --------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY TAXES, SECRETARIAT, THIRUVANANTHAPURAM.4 2. THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXICSE, THIRUVANANTHAPURAM. 3. DEPUTY COMMISSIONER OF EXICSE, MALAPPURAM. GOVERNMENT PLEADER MS.P.MAYA THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 26031 of 2011(D) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: CLASSIFICATION CERTIFICATE DTD. 30.11.2009 ISSUED BY GOVERNMENT OF INDIA TO THE HOTEL. EXT.P2: FL-3 LICENCE ISSUED BY R2 TO THE COMPANY'S MANAGING DIRECTOR ON BEHALF OF THE COMPANY. EXT.P3: JOINT APPLICATION DTD. 12.5.2011 SUBMITTED BY THE PETITIONERS BEFORE R3. EXT.P4: PROCEEDINGS DTD. 5.9.2011 ISSUED BY R2. EXT.P5: JUDGMENT DTD. 10.8.2011 OF THIS COURT IN W.P.(C). NO.20178/2011. RESPONDENTS' EXHIBITS: NIL ..... // TRUE COPY // P.A TO JUDGE. HARUN-UL-RASHID, J. ------------------------ W.P.(C).No.26031 Of 2011 ---------------------- Dated this the 2nd day of November, 2011. J U D G M E N T The writ petition is filed seeking to quash Ext.P4 order of the 2nd respondent and for a direction directing the 2nd respondent to consider and dispose of the request made in Ext.P3 without insisting for the sales tax clearance certificate from the commercial tax department. 2. According to the petitioners, the insistence of production of sales tax clearance for considering Ext.P3 application is untenable, grossly illegal and opposed to Rule 19 of the Foreign Liquor Rules, that the 2nd proviso to Rule 19 of the Foreign Liquor Rules is the provision pertaining to the reconstitution of the Director Board of the Company, that 2nd proviso to Rule 19 only insist for a two star classification for the hotel for being eligible for reconstitution of the Director Board of the Company, that the hotel in question has three star classification and therefore, there is no justification on the part of the 2nd respondent in demanding sales tax clearance certificate from the Commercial Tax Department for considering Ext.P3 ::2:: W.P.(C).No.26031 Of 2011 application. The petitioner submits that such a clearance certificate is not contemplated either under the Abkari Act or under the Foreign Liquor Rules. The petitioner further submits that the view expressed in Ext.P4 that the sales tax arrears is an abkari revenue as defined in Section 3(1) of the Abkari Act would show that the abkari revenue is defined to mean revenue derived or derivable from any duty, fee, tax, fine or confiscation, imposed or order under the provisions of the Abkari Act or any other law for the time being in force relating to liquor or intoxicating drugs. The petitioner contend that therefore, it is clear that the revenue referred to in Section 3(1) of the Abkari Act is the revenue derived or derivable from any duty, fee tax, fine or confiscation, imposed under the provisions of the Abakri Act or under any other laws relating to liquor or intoxicating drugs and that neither the Abkari Act nor the Foreign Liquor Rules insist for production of sales tax clearance certificate for processing an application under Rule 19 of the Foreign Liquor Rules for sanction to reconstitute the Director Board of a Company and for the change of the name of the licensee holding FL-3 licence. It is also pointed out that it is not possible for the petitioner to produce ::3:: W.P.(C).No.26031 Of 2011 before the 2nd respondent the sales tax clearance certificate for the reason that assessment of sales tax for the year 2009-10 in respect of petitioners 3 & 4 is yet to be completed. 3. In the statement filed on behalf of the respondent it is pointed out that a reading of the Act, provisions and Rules would abundantly make it clear that FL-3 licence cannot be issued in favour of a person in whose name revenue arrears are pending towards the Government arising of sale of the liquor or intoxicating drugs or any other business run by the said person, as it will have adverse effect on the revenue of the State. It is further pointed out that it is for the department to make it sure that the applicants for an FL-3 licence have no arrears towards the Government and it was in the above background that the sales tax clearance certificate was called from the petitioners. 4. The learned counsel for the petitioner relied on Ext.P5 judgment of this Court dated 10.8.2011 in W.P.(C). No.20178/2011. In Ext.P5 case, the petitioners pointed out that clearance certificate from commercial tax department demanded as per Ext.P4 is unjustified and that such a certificate is not contemplated either in the Abkari Act or in the Foreign Liquor ::4:: W.P.(C).No.26031 Of 2011 Rules. The petitioners in Ext.P5 case also submitted that the petitioners are able to satisfy the respondents 1 & 2 by other means about the financial soundness as contemplated in Rule 13A(3) of the Foreign Liquor Rules. In the aforesaid circumstances, this Court directed the commissioner of excise to process Ext.P1 application on satisfaction of the financial soundness of the petitioner without insisting clearance certificate from commercial tax department and further directed to forward the same to the Government within three weeks from the date of receipt of a copy of the judgment and in that event, the Government shall consider the application and pass orders thereon within a period of three weeks thereafter. Accordingly, Ext.P4 order is quashed. Considering the contentions raised by the petitioner and the department, the writ petition is disposed of directing the 2nd respondent to consider and pass appropriate orders on Ext.P3 request in the light of Ext.P5 judgment, within a period of three weeks from the date of receipt of a copy of this judgment. HARUN-UL-RASHID, Judge. bkn/-