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Judgment
The petitioner who is engaged in the manufacture of different types of liquor and allied products challenges the authority of the State Government to enhance the fee for approval of labels as has been sought to be done by inserting Rule 10-A of the Karnataka Excise (Bottling of Liquors) Rules, 1967 (in short ''the Rules'') as per Notification No. FD 15 PES 92, dated 29-5-1992 (Annexure-''E'').
The said Rule reads as under:
"10-A. Fee for approval of label.-(1) The licensee shall pay fee for approval or renewal of label of each brand of liquor at the following rates, namely:-
(i) Rs. 2,000/- in case of labels pertaining to the licensee of Karnataka State.
(ii) Rs. 5,000/- in case of labels pertaining to the licensee of outside Karnataka State.
(2) The labels approved or renewed shall remain in force only for a period upto the end of 30th June every year".
The validity of similar rules as introduced in the State of Andhra Pradesh has been upheld by the Supreme Court in M/s. Khoday Distilleries Limited v State of Karnataka and Others, AIR 1996 SC 911. In the said judgment it has been held that "The fee for approval of labels is an aspect of the right to sell or distribute liquor which right the State Government has parted with for consideration in the form of a fee. The increase in the fee from Rs. 100/- to Rs. 25,000/- may appear, at first glance, to be exhorbitant. But it constitutes an extremely small percentage of the total turn-over of various products to which these labels are affixed. The fee for approval cannot, therefore, be considered as exhorbitant or its imposition wholly arbitrary. It is not the case of the petitioners that their trade in liquor is seriously affected by the levy of this increased fee. In the case of Har Shanker and Others v Deputy Excise and Taxation Commissioner and Others, AIR 1975 SC 1121, this Court upheld the right of the State to prohibit absolutely all forms of activities in relation to intoxicants. It said that the wider right to prohibit absolutely would include the narrower right to permit dealing in intoxicants on such terms of general application as the State deems expedient. The Court said that the Government has the power to charge a price for parting with its rights. It also further observed that the licence fee which the State Government charged to the licensee through the medium of auctions or the fixed fee which was charged to the vendors of foreign liquor holding licences need bear no quid pro quo to the services rendered to the licences. The word ''fee'' in this context is not used in the technical sense of the expression. By ''licence fee'' or ''fixed fee'' is meant the price for consideration which the Government charges to the licensees for parting with its privileges and granting them to the licensees. As the State can carry on a trade, or business, such a charge is the normal incidence of a trading or business transaction. The contention, therefore, of the petitioners that there is no quid pro quo between the increased label fee and the services rendered also has no merit. It is based upon a misconception of the nature of the levy.
In the premises, we agree with the reasoning and conclusions arrived at by the Andhra Pradesh High Court. These special leave petitions are, therefore, dismissed with costs".
For the said reasons in my opinion it is not permissible for the petitioner to challenge the impugned Rule 10-A for want of quid pro quo. The writ petition is accordingly dismissed.