Modern Hotel Jammu vs State of J&K & Ors.

These appeals involve identical questions of law and facts are being disposed of by this common order. In LPA (W) No. 213/99, the appellants

writ petitioners have called in question the order dated March 23, 1999 passed in OWPs No. 1007/91 and 491/90. In LPA (W) No. 426/99, the

appellants have challanged the order dated May 31, 1999 passed in OWP No. 288/91. In LPA (W) No. 386/99 order dated 30061999 passed

in OWP No. 158/99 has been challanged by the appellants, whereby all the writ petitions came to be dismissed.

2 The appellants, by means of their writ petitions challanged the vires of SRO408 of 1983 issued by the respondents, whereby fee for granting or

renewal of a bar licence has been levied at Rs. 25,000/ p.a. w.e.f. August 1, 1983. The appellants in the LPA No. 213/99 also sought to quash

the Order No. 135GRF dated 19061990 whereby the respondentState has directed the recovery of arrears of licence fee levied under SRO408

of 1983 and fixed instalments for the recovery together with interest. They further sought to quash notice dated 22081990 issued by the Excise

and Taxation Officer, City Excise. Range Jammu, demanding payment of the arrears of the licence fee together with interest for the period from

198485 upto 198889. The appellants in the LPA No. 426/99 besides seeking to quash the SRO408 of 1983, prayed before the Learned Single

Judge to quash the notices issued by the respondentExcise & Taxation Officer, City Excise. Range Jammu and the Collector of Recoveries under

Land Revenue Act 1996, for recovery of panel interest amounting to Rs. 63.900/. In LPA (W) No. 386/99 the additional ground taken is that the

appellant has already paid Rs. 31.276/ to the respondents which has not been remitted against the demand made.

3 The Learned Single Judge after hearing the learned counsel for the parties dismissed the writ petitions upholding the notice of Recovery. The

appellants have challanged the orders under Appeals on the ground that the SRO408 of 1983 issued by the RespondentState in exercise of its

power U/Ss 16 & 17 of the J&K Excise Act imposing a fee for grant or renewal of bar licence to the tune of Rs. 25.000/ per Annum was stayed

by the court in the writ petition No. 737 of 1983 titled ""Ram Mohan Singh Verma & Ors Vs. State of J&K & Ors"" and during the period of stay

of the operation of SRO408 of 1983 the respondents have not made any demand for payment of fee. The appellants have deposited the amount in

terms of the earlier SRO184 of 1980. Therefore, the respondents in law cannot raise such a demand and effect recovery. The appellants in the

LPA No. 426/ 9.9 have also pleaded that they deposited more but was due to the respondents as licence fee in accordance with SRO 184 of

1980. The notice issued by the respondents are, therefore, illegal and the appellants are not under obligation to pay the licence fee as demanded

under the impugned notifications as no demand at the proper time was made by the respondents.

4 We have heard the Learned counsel for the parties and perused the record.

5 The writ petition by means of which the vires of SRO408 of 1983 were questioned was dismissed as withdrawn, submitting before the court that

the writ petition be permitted to be withdrawn as the petitioners have entered into an agreement with the respondentState. The terms of the

agreement/settlement have been stated in the application seeking withdrawal and also reproduced in order of withdrawal passed by the court on

Feb. 14, 1990 which is reproduced hereunder.

i) ""The petitioners accept the right of the Government to impose licence fee on the liquor shops and bars in any manner that the Government may

consider appropriate;

ii) The petitioners agree to pay the licence fee as fixed by the Government vide notification SRO408 of 1983 dated 30071983 from out of their

running business of IMF. This payment shall be effective from 198384 alongwith penal interest of the arrears in 36 equal monthly instalments, the

first instalment starting from 1st of April, 1989;

iii) The petitioners also agree to pay the licence fee as fixed by the Government for the years 198990 and 199091 before 31st March, 1990; iv)

The petitioners also agree that in the event of their failure to pay arrears as mentioned above as per the aforesaid schedule, the Government has

right to close the shops of the petitioners and taken such appropriate steps or decisions to run these shops which it may deem fit.

6 Pursuant thereto and in terms of section 25A of the J&K Excise Act the respondents initiated action by issuing notice for recovery of amount.

The said notices have been challenged by the appellants including the vires of the SRO408 of 1983 on the ground that the appellants were neither

party to that agreement or the writ petition. Section 24A of J&K Excise Act for convenience is extracted below and reads thus:

24A. Notwithstanding anything contained in this Act, if any tax or other amount due under this Act is not paid by the licensee or other person,

from whom it is due within the time specified for the payment therefore or within a period of three months from the date of demand whichever is

earlier, the licensee or other person from whom the tax or other amount is due shall be liable to pay in addition to the tax or amount due, a sum

equal to 2% of such tax or amount for each month or part thereof after the period specified for its payment.

7 Where perusal of the aforesaid provisions of law makes abundantly clear that the respondents can recover the amount due under the Act not

paid by the Licensee, or any other person. It is admitted case by the parties that the appellants have not paid the Licence fee in terms of SRO408

of 1983. The above quoted provision of law authorities the respondents in case of default, to recover the unpaid amount due under the Act. The

plea of the learned counsel for the appellants that the State has no authority to enhance or impose the licence fee as has been done by issuance of

SRO408 of 1983 is not sustainable, in view of the law laid down by the Supreme Court in case titled Har Shankar Vs. Dy. E & T & Ors,

reported in 1975 S.C. 1121 holding that:

The distinction which the Constitution makes for legislative purposes between a 'tax' and a 'fee' and the characteristics of these two as also of

'excise duty' are well known. ""A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not a

payment for services rendered"". Per Latham, C.J. in Mathews Vs. Chickory Marketing Board, 60 CLR 263, 276. A fee is a charge for special

services rendered to individuals by some Governmental agency and such a charge has an element in it of a quid pro quo. Commr., H.R.E. Madras

Vs. Lakshmindra Thirtha Swamiar, 1954 SCR 1005, 1041 (AIR 1954 SC 282 at P. 295). Excise duty is primarily a duty on the production or

manufacture of goods produced or manufactured within the country. M/S Guruswamy & Co. Vs. State of Mysore, (1967) 1 SCR 548 (AIR 1967

SC 1512). The amounts charged to the licensees in the instant case are, evidently neither in the nature of a tax nor of excise duty. But then, the

Licence fee which the State Government charged to the licensees through the medium of auctions or the 'Fixed fee' which it charged to the vendors

of foreign liquor holding licensees in Forms L3, L4 and L5 need bear no quid pro quo to the services rendered to the licensees. The word 'fee' is

not used in Act or the Rules in the technical sense of the expression. By 'licence fee' or 'fixed fee' is meant the price or consideration which the

Government charges to the licencees for parting with its privileges and granting them to the licences. As the State can carry on a trade or business,

such a charge is the normal incident of a trading or business transaction"".

The alternative plea of the respondents is that since no demand was made during the period of stay of operation of SRO408 of 1983 by the

respondents and the appellants have paid the licence fee levied under SRO184 of 1980, therefore, the appellants are not under legal obligation to

pay .the demanded amount. The plea is to be 'simply rejected. While the stay was in operation, the respondents were restrained in law to treat the

SRO 148 in operation, therefore, no demand could be made by the respondents in derogation of the direction of the court which if raised would

have been contemptuous. It is settled principle of law that for an act of the court no litigant should suffer. The purpose of issuing interim direction is

to maintain balance between the litigants for purpose of public interest and the likelihood or the injury of the prejudice caused to the effected

persons. Such an interim arrangement is always subservient to the final out come of the litigation. The respondents should not suffer because of the

prohibitory direction of the court. In view of the law laid down by the Supreme Court in case title ""Gursharan Singh & Others Vs. New Delhi

Municipal Committee & Others"" reported in 1996 (2 SCC 459). This judgement has been reitrated in Para 17 by the Supreme Court in ""West

Bengal Essential Commodities Supply Corporation Vs. Swadesh Agro Farming and Storage Pvt. Ltd. & Anr. ""reported in JT 1999 (6) SC 599.

Para No. 17 whereof reads as:

In Gursharan Singh & Ors. VS. New Delhi Municipal Committee & Ors. JT 1996 (1) SC, 647, this court granted interim directions in favour of

the appellants to pay licence fee at the concessional rate. At the time of final disposal, it was found that the appellants were not entitled to the

concessional rate. Applying the maxim ""actus curiae neminem gravabit"", the respondents were ordered to be paid the balance amount together with

interest."" Mr. Shukla learned counsel for the respondents was directed to inform the court as to whether an amount of Rs. 31.276/has been

deposited by the appellant and should have been set off. He has not informed. The respondents shall look into this aspect in view of their stand

taken in their reply to paras No. 10 & 11 of the Writ Petition.

For the above said reasons these appeals having found without merit, are dismissed.