IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.10.2008 C O R A M THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.No.6996 of 1998 Vorion Chemicals & Distilleries Ltd., Rep. by its Managing Director, Mr.M.Nandagopal, No.6, 6th Street, Rutland Gate, Chennai – 600 006. .. Petitioner -Vs- 1. The Government of Tamil Nadu, Secretary, Home Department, Fort St. George, Chennai – 600 009. 2. The Commissioner, Prohibition & Excise, Chepauk, Chennai – 600 005. .. Respondents Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records of the Secretary to Government, Prohibition & Excise (XIII)Department, relating to G.O.(2D)No.63 dated.22.10.1997 received by the petitioner on 1.4.98 quash the same for the relief as stated therein. For Petitioner : Mr.K.M.Vijayan, Senior Counsel for Mr.A.Sasidharan For Respondents : Mr.A.Arumugam Special Government Pleader O R D E R The writ petitioner is a public limited company dealing with the manufacture of industrial alcohol and other chemicals. 2. In the present writ petition, the writ petitioner is challenging the order dated 22.10.1997, issued by the State Government vide G.O.(2D) No.63, Prohibition & Excise (XIII) Department in rejecting the appeal filed by the petitioner company dated Nil (October 1995) and confirming the order of the second respondent Commissioner for Prohibition & Excise dated 21.09.1995. 3. Notice of motion was ordered in this writ petition and an interim stay was granted on 19.03.1999, with a condition that the petitioner should furnish 50% of the amount in demand by way of bank https://hcservices.ecourts.gov.in/hcservices/ guarantee. Considering the facts of the case it was directed to post for final disposal during September 1999. It is rather unfortunate that the matter has come up for hearing after a period of 9 years. 4. By the impugned order the second respondent had rejected the plea made by the petitioner company in terms of Rule 24 of the Tamil Nadu Distillery Rules, 1960 framed under Section 21 and 54 of the Tamil Nadu Prohibition Act, 1937. By the impugned order, the petitioner company was also directed to remit the duty amount of Rs.3,00,124/- being the excess wastage of 6821.388 proof litres of Rectified Spirit during the process of curing in the wooden vats in March 1974. 5. Rule 24 of the Tamil Nadu Distillery Rules, 1960 reads as follows: "24.Distiller to account for deficiency in stocks:- An account shall be taken of the distiller's stocks at such intervals not exceeding three months and in such manner, as the Commissioner may direct; and the distiller shall pay to the Government, duty at the tariff rate on all spirits which are not forthcoming and which could not be accounted for, to the satisfaction of the Commissioner in excess of an allowance of one per cent, which shall be made for wastage. Wastage for the purpose of collection of duty on the excess as aforesaid shall be calculated at the end of every twelve months from the date on which the licence comes into force. If the licence is granted for a period of less than twelve months, the wastage shall be calculated at the end of such period: Provided that if it is proved to the satisfaction of the Commissioner or of such officer as he may appoint, that any deficiency in excess of one per cent could not have been prevented by the exercise of proper care and precaution, the payment of duty at the above rate on such deficiency shall not be required." 6. By a communication dated 11.04.1973, issued by the second respondent, the petitioner company was permitted to use the stock of 29,573 liters of Rectified Spirit for curing in the two new wooden vats erected in their distillery subject to the condition that the loss of Rectified Spirit due to absorption by the wooden vats during the storage should be borne by them. That excise duty at the tariff be paid to the Government on the loss of Rectified Spirit during the process of storage over and above the allowance prescribed in the Tamil Nadu Distillery Rules, 1960. The details sought from them was furnished by the petitioner company. 7. However, subsequently when this issues was raised before the Public Accounts Committee constituted by the Tamil Nadu Legislative Assembly, an enquiry was conducted by the Board of Revenue and a report was submitted to the Government. This has resulted in the Government https://hcservices.ecourts.gov.in/hcservices/ issuing G.O.Ms.No.2392, Home Department, dated 22.09.1979. Persons who were responsible for not collecting the duty on Rectified Spirit at tariff rate was directed to be proceed with disciplinary action. It is also stated in the G.O. that the Board of Revenue was directed to initiate action against the petitioner company for recovery of the excess duty being the amount to be levied at the tariff rate of Rs.44/- per proof litre for the entire 6821.388 proof litres of rectified spirit stated to have been lost as it had exceeded the permissible limit in terms of Rule 24 of the Tamil Nadu Distillery Rules referred to above. 8. When this demand was made, the petitioner company filed a writ petition before this Court being W.P.No.1883 of 1983. The petitioner company contended before this Court that G.O.Ms.No.2392, Home Department, dated 22.09.1979, has no bearing and cannot be the basis for demanding any amount, besides a copy of the said G.O. was not furnished to them. It was contended by the State that the Government can pass orders in terms of the Act and the Rules and the same need not be communicated to the petitioner. This Court rejected the said contention. Since the duty demanded was based upon the said G.O, this Court directed that the petitioner be furnished with a copy of the G.O. 9. However this Court did not go into the competency of the State in issuing the said G.O. in its final order dated 28.08.1991. In fact in paragraph 8 of the said judgment, it was held that the demand has not been made by a Competent Authority in the manner known to law. 10. The second respondent issued a show cause notice dated 15.03.1995, asking the petitioner company that they should pay the due amount of Rs.3,00,124/- for in excess wastage of 6821.388 proof litres of Rectified Spirit which is stated to be lost during the process of curing wooden vats in March 1974. 11. Pursuant to the show cause notice, the petitioner company filed a detailed reply dated 15.05.1995. Thereafter the second respondent passed the impugned order dated 21.09.1995, rejecting the explanation offered by the petitioner and reiterated that the company should pay the dues as demanded earlier. In that order in paragraph 14, it is stated that an appeal will lie to the Government against the said order. 12. Taking advantage of the said reference, the petitioner filed an appeal dated Nil (October, 1995) to the State Government. The State Government passed an Order in G.O.(2D). No.63, Prohibition & Excise (XIII) Department, dated 22.10.1997, rejecting the request of the petitioner company and confirmed the order of the second respondent. It is against the order of the State Government confirming the order of the second respondent, the present writ petition has been filed as noted already. 13. After Notice from this Court, the first respondent has filed a detailed counter affidavit dated 30.11.1999, justifying the levy of duty. https://hcservices.ecourts.gov.in/hcservices/ 14. Mr.K.M.Vijayan, learned senior counsel appearing for the petitioner submitted that under the Tamil Nadu Distillery Rules, the State Government is not the Appellate Authority. If a reference is made to Rule 32, where the sole Authority is only the Deputy Commissioner, Commissioner and no further appeal is provided. The petitioner was asked to file an appeal against the order of the second respondent by stating that an appeal will lie to the State Government against the order passed by the Commissioner and thereafter they filed an appeal. In any event, since the Government had not taken any different view then that of the second respondent, the issue relating to the competency of the State Government being an appellate authority need not be gone into in this writ petition. Therefore, the order of the second respondent in rejecting the request of the petitioner in exercising its discretion in terms of Rule 24 alone need be gone into. 15. The learned senior counsel submitted that the second respondent was carried away by the earlier G.O.Ms.No.2392, Home Department, dated 22.09.1979 and there is no independent application of mind. He also referred to the reply made by the then Commissioner to the Public Accounts Committee and then submitted that the same authority cannot have two different satisfaction. At the earlier time the company's application was accepted by the then Commissioner and the present Commissioner cannot take a different view and on facts he is bound by that decision. 16. This Court is unable to agree with the said contention. In fact pursuant to the order passed by this Court in W.P.No.1883 of 1983 dated 28.08.1991, the second respondent was directed to give opportunity to the petitioner. On that direction a show cause notice was issued to the petitioner company for which the petitioner company had also given its reply. The contention that the second respondent was influenced by the earlier Government Order is not borne out by records, though there is a reference to the previous proceedings in the impugned order. On the contrary in paragraph 10 of the order, the second respondent had stated categorically that he had examined the case carefully by perusing the entire records and the written explanation submitted by the Company. Thereafter, he had given detailed reasons for rejecting the plea made by the Company. In fact Rule 24 itself makes it clear that it is only when the Commissioner is satisfied about the explanation offered by the distiller, the question of any waiver of the due as provided under the Rules will arise. 17. In the present case, in the impugned order the second respondent Commissioner has given three reasons wish are as follows: (a) That the company had originally informed that the wooden vats are in a good condition and therefore there was no scope for any leakage. (b) That the consent given to make good the duty on loss by the company was obtained in force was not accepted by him. He had https://hcservices.ecourts.gov.in/hcservices/ stated that in the first explanation dated 11.03.1974, the company did not adduce any such plea and it was taken subsequently and (c) So long as the matter of carrying on trade in alcohol is concerned, it is not subject to any Fundamental Rights contained in Part III of the Constitution of India. It is only Governed by the Statutory Rules framed under the Tamil Nadu Prohibition Act, 1937. 18. Rule 24 clearly talks about the satisfaction of the Commissioner with reference to the loss. In the present case the Commissioner was not satisfied and he has given his reasons for not being satisfied with the offer of explanation given by the Company. When pursuant to the direction of this Court, the second respondent has undertaken the exercise of giving a show cause notice and also considered the explanation offered by the company, it is not open to this Court under Article 226 of the Constitution of India to interfere with the satisfaction arrived at by a statutory authority. There is no case made out for interfering with the impugned order. Hence the writ petition stands dismissed. However, there will be no order as to costs. If already the petitioner's company has furnished any Bank Guarantee and if it is kept alive, it is open to the State Government to encash the same. Even otherwise it can proceed against the company for realizing the amount of duty as demanded in the impugned order. Sd/- Asst. Registrar /True Copy/ Sub Asst. Registrar kk To 1. The Secretary to Government, Home Department, Fort St. George, Chennai – 600 009. 2. The Commissioner, Prohibition & Excise, Chepauk, Chennai – 600 005. + 1 cc to Mr.A.Sasidharan, Advocate, SR 57108 + 1 cc to Government Pleader, SR.57504 W.P.No.6996 of 1998 nm(co) em/3.11.08 https://hcservices.ecourts.gov.in/hcservices/