Case: State Of Madhya Pradesh &amp; Ors Vs. Tikam Das

force from any previous date. Therefore antedating the effect of the amendment of Rule IV is not obnoxious to the scheme nor ultra vires Section, 62.**Under the General Licence Conditions under Section 62;6. The focus must now turn on the disposal of the balance stocks with licensees held on the expiration of the period. Rule XXV regulates the disposal of such balance of intoxicants left with vendors after the expiration of their licenses; if they get new licenses on the expiry of the old in respect of the same premises, they are allowed to retain the balance of stock for the purposes of the new license(r. XXV (a) ). In the event of the fee or duty being enhanced or reduced, r. XXVI makes such change applicable to the balance of stock. It is useful to reproduce r. XXVI here:"XXVI. Procedure to be followed when duty is enhanced or reduced.If it is notified by the Collector that from any particular date the duty leviable on any intoxicants is to be enhanced, all licensed vendors in possession of such intoxicants shall, on the evening preceding that date, deposit their stock with such persons as the District Excise Officer may appoint for the purpose. Such stocks shall remain in deposit untill verified and the District Excise Officer may order that the difference of duty be levied on the balance of the stocks, and the licensee shall then pay such duty within thirty days of the date on which the enhanced rate of duty comes into force:(a)Provided that if such stock or part of such stock be destroyed, the difference of duty shall not be levied on the stock destroyed and(b) Provided also that if the balance of stock so deposited is transferred to another licensed vendor, the difference of duty shall be levied from the transferee before the transfer is completed.The above procedure regarding the deposit and verification of stock of intoxicants consequent on the enhancement of duty shall also apply when duty leviable on any intoxicants is reduced. Refund of the difference in duty consequent on the reduction in its rate may be sanctioned by the Excise Commissioner on receipt of an application from the licensee through the Collector of "the district."A fair reading of this rule yields only one result. The licensed vendor in possession of surplus intoxicants on the date preceding expiry of his license should ordinarily deposit such stock with the appointed Excise Officer.On verification of the actual quantity of such stock, the District Excise Officer may order that the difference of duty be levied on the balance of stocks, and the , licensee shall then pay such duty.... Of course the above procedure primarily visualizes enhancement of duty but is made applicable to reduction of duty when refund of duty shall be made by the State. Rule IV virtually extends this kind of dealing with balance of stocks when the subject matter is license fee as distinguished from duty. Moreover, licensees are bound by the general license conditions (vide condition No. 6 of the license) and the general licence conditions with which we are concerned are set out in Rr. XXV and XXVI already adverted to .7. In this background of the law, the short question is whether the respondent is liable to pay enhanced fee brought about by amendment of the rules on April 25, 1964.8. The first contention that has been raised by the respondent in support of the judgment of the High Court is that in any case subordinate legislation cannot be retrospective and the State Government cannot therefore make rules and give effect to them retroactively. We have already set out the provisions of Sections 62 and 63 bearing on the subject and have no doubt that, in the present case, the statute does authorise the State, as its delegate, to make retroactive rules. Therefore we negative the contention that the enhanced levy of license fee cannot operate as from April 1, 1964.9The second contention, which has found favour with the High Court is that the balance on hand on March 31, 1964 is covered by the license fee already paid and cannot therefore be subjected to the enhanced levy, on April 1, 1964. There is a measure of absurdity in the rule, if this be the construction. Indeed, the High Court itself notices that the words used to tax at a higher rate the balance of stocks would become redundant in R. XXVI. A fair reading of the rule giving full effect to the words used in R. XXVI of the Excise Rules and the explanation added to R. IV (of the Foreign Liquor Rules already extracted) leave us in no doubt that the balance of stocks envisioned by the rules and subjected to enhancement or reduction of duty is such surplus stock as is held immediately before the expiry of the previous license. So construed, in this case the quantity held over on March 31, 1964 becomes liable to enhancement of license fee on April 1, 1964 and that is precisely what the State has claimed.10. Indeed, commonsense suggests no alternative construction., For, otherwise, some persons who by accident have huge stocks left over will not have to pay the enhanced rate of license fee while others with virgin licenses for that year and begin with no stock-on-hand have to pay at a higher rate. Again, if only the respondent had surrendered his surplus stocks on 31-3-1964, as ordinarily he would have had to, had he not been permitted to retain that quantity in view of his getting a fresh license for the same premises, he would have had, to pay the enhanced rate for such leftover stock. Thus, both law and logic, correct construction and commonsense, coincide in the conclusion that the Eagle Cafe Bar owner (the respondent) had to pay the higher fee on the balance of stock as on April 1, 1964. The High Court erred in its interpretation of the rules as applicable to the present situation.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]First of all we have to ascertain the scope and area of the rule-making powers, the limitations thereon and the retro-active operation of such rules, There is no doubt that unlike legislation made by a sovereign Legislature, subordinate legislation made by a delegate cannot have retrospective effect unless the rulemaking power in the concerned statute expressly or by necessary implication confers power in this behalf. Ourattention has been drawn to Sections 62 (g) and (h) and 63 in this connection by counsel for theState. The State-Government may make rules for the purpose of carrying out the provisions of the Act (S. 62). Such rules may regulate the amount of fee, the terms and conditions of licences and the scale of fees and the manner of fixing the fees payable in respect of such licenses (62(g) and (h)).This provision, by itself, does not expressly grant power to make retrospective rules. But Section 63 specifically states that all rules made and notifications issued under this Act shall be published in the Official Gazette, and shall have effect from the date of such publication or from such other date as may be specified in thatbehalf. Clearly the Legislature has empowered, its delegate, the State Government not merely to make the rules but to give effect to them from such date as may be specified by the delegate. This provision regarding subordinate legislation does contemplate not merely the power to make rules but to bring them into force from any previous date. Therefore antedating the effect of the amendment of Rule IV is not obnoxious to the scheme nor ultra vires Section,fair reading of this rule yields only one result. The licensed vendor in possession of surplus intoxicants on the date preceding expiry of his license should ordinarily deposit such stock with the appointed Excisehave already set out the provisions of Sections 62 and 63 bearing on the subject and have no doubt that, in the present case, the statute does authorise the State, as its delegate, to make retroactive rules. Therefore we negative the contention that the enhanced levy of license fee cannot operate as from April 1, 1964.There is a measure of absurdity in the rule, if this be the construction. Indeed, the High Court itself notices that the words used to tax at a higher rate the balance of stocks would become redundant in R. XXVI. A fair reading of the rule giving full effect to the words used in R. XXVI of the Excise Rules and the explanation added to R. IV (of the Foreign Liquor Rules already extracted) leave us in no doubt that the balance of stocks envisioned by the rules and subjected to enhancement or reduction of duty is such surplus stock as is held immediately before the expiry of the previous license. So construed, in this case the quantity held over on March 31, 1964 becomes liable to enhancement of license fee on April 1, 1964 and that is precisely what the State has claimed.10. Indeed, commonsense suggests no alternative construction., For, otherwise, some persons who by accident have huge stocks left over will not have to pay the enhanced rate of license fee while others with virgin licenses for that year and begin with no stock-on-hand have to pay at a higher rate. Again, if only the respondent had surrendered his surplus stocks on 31-3-1964, as ordinarily he would have had to, had he not been permitted to retain that quantity in view of his getting a fresh license for the same premises, he would have had, to pay the enhanced rate for such leftover stock. Thus, both law and logic, correct construction and commonsense, coincide in the conclusion that the Eagle Cafe Bar owner (the respondent) had to pay the higher fee on the balance of stock as on April 1, 1964. The High Court erred in its interpretation of the rules as applicable to the presentverification of the actual quantity of such stock, the District Excise Officer may order that the difference of duty be levied on the balance of stocks, and the , licensee shall then pay such duty.... Of course the above procedure primarily visualizes enhancement of duty but is made applicable to reduction of duty when refund of duty shall be made by the State. Rule IV virtually extends this kind of dealing with balance of stocks when the subject matter is license fee as distinguished from duty. Moreover, licensees are bound by the general license conditions (vide condition No. 6 of the license) and the general licence conditions with which we are concerned are set out in Rr. XXV and XXVI already adverted to .