Case: Government of Andhra Pradesh Vs. Messrs Anabeshahi Wine and Distilleries Private Limited

This appeal on the basis of a certificate granted under Article 133(1)(c) of the Constitution of India has been filed by the Government of Andhra Pradesh against the judgment dated March 14, 1972 of the Andhra Pradesh High Court allowing Writ Petition No. 4312/71 filed by the respondent. The respondent obtained a distillery licence under the Andhra Pradesh Distillery Rules, 1970 (hereinafter referred to as the Rules) framed under the Andhra Pradesh Excise Act, 1968 (hereinafter referred to as the Act) and has been carrying on the business of manufacture and sale of wine and other allied products. The excise authorities posted one Inspector, on SubInspector and four Constables at the respondents factory premises and required the respondent to pay their salaries and allowances etc. in pursuance of Section 28 (2) of the Act. The respondent made representations to the excise authorities against the said demand and having failed to get any redress, filed the aforesaid writ petition challenging the demand on two grounds(1) By virtue of Entry 51 List 2 of the Seventh Schedule to the Constitution of India, no duty other than excise duty could be levied or collected under the Andhra Pradesh Excise Act. And since the impugned demand which was in the nature of establishment charges did not constitute excise duty, the respondent was not liable to pay the same(2) The said demand could not be justified even on the ground that it was a fee, as no services were rendered and there was no quid pro quo2. These contentions raised on behalf of the respondent found favour with the High Court which by the judgment appealed against allowed the respondents writ petition and directed the issue of a writ restraining the Excise Department from either demanding or collecting the aforesaid establishment charges of the supervisory staff posted at the factory premises of the respondent

Reasoning:
4. Having considered the respective submissions made by learned counsel for the parties, we find substance in the submission made by learned counsel for the appellant. It has not been disputed, and in our opinion rightly, by learned counsel for the respondent that the business which the respondent has been carrying could not have been carried on by it unless licence had been granted to it under the Act and the Rules6. The principles laid down in the aforementioned cases will, in our opinion, apply to the instant case also. The fact of the demand being with regard to establishment charges will make no difference. A predetermined amount equivalent to or even higher than the amount which is sought to be recovered by the appellant from the respondent calculated for the entire period of the licence could have been demand in a lump sum as price for parting with the privilege and it could not have been challenged by the respondent in view of the principle enunciated by this Court in the aforesaid case. Simply because the demand was spread over with a view to making it just and reasonable so as to represent the actual expenditure incurred by the government to maintain the requisite excise staff at the factory premises of the respondent as contemplated by the relevant provisions of the Act and the Rules, it would not become illegal and vulnerable