Writ Petition No.475 of 2013

5th February, 2014

Petitioner Counsel: Mr. GALILEO TELES
Respondent Counsel: Mr. PRAVIN PHALDESSAI

Cases Cited:
Oryx Fisheries Pvt. Ltd. Vs. Union of India and others, 2011 ALL SCR 727=(2010) 13 SCC 427 [Para 9,12]
Khem Chand Vs. Union of India, AIR 1958 SC 300 [Para 12]

JUDGMENT

JUDGMENT :- Heard Mr. Teles, learned Counsel appearing on behalf of the petitioner and Mr. Phaldessai, learned Additional Government Advocate appearing on behalf of the respondents.

2. Rule. Rule made returnable and heard forthwith.

3. By this petition, the petitioner has challenged the Orders dated 21/11/2012 and 02/08/2001 passed by the respondent no. 1 and respondent no. 2 respectively.

4. On 30/06/2001, the Officials of Excise Department conducted surprise inspection of the premises "Manik Wines" of the petitioner situated at Bicholim Municipal Market and took into custody liquor goods, which were allegedly not manufactured by the petitioner and suspecting that they were not genuine. When the panchanama was conducted, Shri Praveen Polle, who was acting as a shop caretaker was present and he signed as one of the panchas. Thereafter, a show cause notice dated 04/07/2001 was served on the petitioner. The said cause notice reads as under :

SHOW CAUSE NOTICE

Shri. Gokuldas J. Naik Kumbharjuvekar, resident of Housing Board Colony, Bicholim is the license holder for wholesale of IMFL bearing No. 169 and for retail sale of IMFL/CL in packed bottles bearing Licence No. 178 and is running his Liquor activities in the name and style as "Manik Wines" in the licensed premises bearing Shop No.16 situated in the Bicholim Market Complex (hereinafter referred to as "the licensee")

The inspection team of Excise Department carried out a surprise visit on 30/06/2001 at 1.10 p.m. at the licensed premises of the licensee situated at Shop No. 10, Bicholim Market complex, Bicholim - Goa and during the course of checking of the records maintained by the licensee and that of the said licensed premises noted the irregularities as under:

1. Full amount of transactions of liquor undertaken by the licensee was not maintained.

2. The Copies of licenses issued to the licensee were not hung in a conspicuous place within the licensed premises.

3. On taking the search of the licensed premises, the licensee had in his possession the following liquor goods which were not manufactured by the licensed manufacturer.

a) 05X48X180ml of Directors Special Whisky.

b) 11 x 750 ml of Old Monk XX Rum.

4. The licensee failed to produce the bills, transport permits justifying the bonafide purchases/possession of the liquor goods mentioned at (3) here in above, which were not found to be genuine thereby encouraging transaction of the duplicate liquor goods.

The licensee by his acts enumerated here above has violated the provisions of rules 101, 101-A and 103 and Section 8(2), 33 and 35 of Goa Excise Duty Act, 1964 and the Rules made thereunder.

Now therefore I, P. S. Reddy, Commissioner of Excise, in exercise of the powers conferred on me under sub-section (1) of Section 16 of Goa Excise Duty Act, 1964, hereby give a show cause, as to why action deemed fit should not be taken for encouraging the sale of liquor not lawfully manufactured and purchasing the duplicate liquor for evasion of excise duty and gross violation of condition of licences and the licences issued should not be cancelled. The licensee is hereby directed to submit his explanation within 48 hours from the date of receipt hereof failing which an action ex-parte will be taken. Further the licensee is hereby directed to appear before the undersigned in his chamber situated on the ground floor, Old High Court Building, Panaji-Goa on 9/7/2001 at 3.30 p.m. Pending the final disposal of the case, the licence bearing No. 169 and No. 178 issued to the licensee are hereby suspended with immediate effect."

5. By his reply dated 09/07/2001, to the above show cause notice, the petitioner, inter alia, contended that he had not committed any illegality or irregularity.

6. By Order dated 02/08/2001, the respondent no. 2 held the petitioner guilty for dealing in duplicate/spurious liquor on the strength of wholesale licence held by him and for having contravened the provisions of Rules 43, 101, 103 of the Goa Excise Duty Rules, 1964 (the Rules) and Sections 8(2), 7, 9 and 36 of the Goa Excise Duty Act, 1964 (the Act, for short). The respondent no. 2 imposed fine of Rs. 10,000/- (Rupees Ten Thousand only) each for alleged offences, under Section 38 of the Act and further imposed a penalty of Rs. 2,00,000/- (Rupees Two lacks only) for violating the conditions of licence and directed that fine and the penalty should be paid by the petitioner within a period of 7 (seven) days from the date of receipt of the order failing which action for recovery as envisaged under section 20 of the Act shall be initiated. The said order further directed that the licences both wholesale sale of IMFL and retail sale of IMFL and Country Liquor in packed bottles stood cancelled. The liquor goods attached were confiscated in favour of the Government and ordered to be destroyed.

7. Against the said Order dated 02/08/2001 passed by the respondent no. 2, the petitioner preferred an appeal to the respondent no. 1. The respondent no. 1 passed a cryptic order dated 29/08/2001, without examining the merits of the order and upheld the order dated 02/08/2001 passed by the respondent no. 2 though he reversed the imposed penalty of Rs. 2,00,000/- (Rupees Two lacks only) and in so far as the confiscated stock is concerned, he observed that since police case has been registered, it would be appropriate to verify the facts and take a final view in regard to the destruction of the confiscated stock lying in the licensed premises and it would not be proper to destroy the entire stock of liquor goods confiscated as there may be some genuine and good stock also lying in the premises. The respondent no. 1 directed the respondent no. 2 to look into the said aspect and decide about the destruction of the confiscated liquor. By application dated 03/01/2002, the petitioner applied for clarification of the said order and by order dated 08/03/2002, the respondent no. 1 rejected the said application. The petitioner, thus, filed Writ Petition No. 220/02 and by judgment and order dated 05/09/2012, the Division Bench of this Court of which I was one of the members, set aside the order dated 29/08/2001 passed by the respondent no. 1 and remanded the matter to respondent no. 1 to pass the order in accordance with law after giving opportunity to be heard to both the parties. Subsequently, by fresh order dated 21/11/2012, the respondent no. 1 set aside the portion of the order imposing penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) and instead, a fine of Rs. 40,000/- (Rupees Forty Thousand only) was imposed for violation of Sections 7, 8(2), 9 of the Act and Rule 103 of the Rules. The order of cancellation of the licences was also maintained. The said Orders dated 21/11/2012 of the respondent no. 1 and 02/08/2001 of the respondent no. 2 are impugned in the present petition.

8. An affidavit-in-reply came to be filed on behalf of the respondent no. 2. It was alleged that the petitioner failed to produce the bills of transport, permits justifying the bonafide purchases/possession of the liquor which was found to be not genuine and thereby encouraging the transaction of duplicate liquor goods. It was further alleged that the account regarding the full transaction of liquor undertaken by the petitioner was not maintained and the petitioner had in his possession the liquor goods which were not manufactured by licensed manufacturer. It was denied that the findings at Point (iv) a, b, c, d, and e of the order dated 02/08/2001 were not part of the show cause notice and the petitioner was not given reasonable opportunity to defend. It was alleged that the Counsel for the petitioner along with Shri Maruti Naik was present and were personally heard and even the plea for granting time to submit all the documents pertaining to the transaction was accepted and opportunity was given to the petitioner to produce all the relevant documents on or before 13/07/2001. It was further alleged that on 13/07/2001, the petitioner moved an application stating that he was not in a position to produce all relevant records since the part of the records were in his shop presently sealed by the Excise Authorities and that he would produce the same only after opening his shop.

9. Mr. Teles, learned Counsel appearing on behalf of the petitioner, pointed out that the respondent no. 2 held that the petitioner has contravened provisions of Rules 43, 101, 103 of the Rules and Sections 8(2), 7, 9 and 36 of the Act, though the show cause notice mentioned about violation of Rules 101, 101-A and 103 of the Rules and Sections 8(2), 33 and 35 of the Act. He submitted that the show cause notice did not make reference to Rule 43 of the Rules or to Sections 7, 9 and 36 of the Act. He further submitted that in the impugned Order dated 21/11/2012, the respondent no. 1 has imposed fine of Rs. 40,000/- (Rupees Forty Thousand only) for violation of Sections 7, 8(2) and Section 9 of the Act and Rule 103 of the Rules, though there was no show cause notice in respect of Sections 7 and 9 of the Act. According to him, therefore, the respondent no. 2 exceeded the show cause notice and imposed punishment for offences for which no notice was given to the petitioner. He relied upon the judgment of the Apex Court in the case of "Oryx Fisheries Pvt. Ltd. V/s. Union of India and others", [(2010) 13 SCC 427] : [2011 ALL SCR 727]. Learned Counsel appearing on behalf of the petitioner further submitted that there was absolutely no material on record to hold that the liquor was duplicate and that the material referred to in conclusions no. (iv) a, b, c, d, and e did not form part of the show cause notice issued to the petitioner due to which the petitioner was taken by surprise and had no reasonable opportunity to defend the said allegations. He submitted that there was no report prepared and submitted to the petitioner, with regard to the said observations. He further submitted that Section 36 of the Act which provides for presumption, is not applicable to the present case since the same applied only to prosecution before the learned J.M.F.C. He, therefore, submitted that both the impugned orders are not sustainable since there was no evidence on the basis of which the findings could have been arrived at and that the extraneous material which never formed part of show cause notice was relied upon due to which there was gross violation of natural justice. Learned Counsel urged that the petitioner has been acquitted by the learned J.M.F.C., Bicholim in Criminal Case No. 79/S/2002/A.

10. On the other hand, Mr. Phaldessai, learned Additional Government Advocate, invited my attention to the show cause notice. He submitted that the notice clearly mentions as to why actions should not be taken for encouraging the sale of liquor not lawfully manufactured and for purchasing duplicate liquor for evasion of excise duty and gross violation of conditions of licence. He submitted that though Sections 7 and 9 of the Act have not been specifically mentioned in the show cause notice, however, the substance of allegations made in the notice clearly made out the said contraventions under Sections 7 and 9 of the Act. He further drew my attention to the reply to the show cause notice filed by the petitioner which clearly reveals that the bills were not produced and sign board was not admittedly hung in the conspicuous place in the premises. He pointed out from the said reply that the petitioner had fully understood that there was a charge of duplicate liquor being found in the premises. He, therefore, submitted that the petitioner cannot say that the charge was not understood by him. He further pointed out from the order that appropriate inquiry was conducted and the reply to the show cause notice filed by the petitioner was considered and even time for submitting all the documents was given to the petitioner. He, thus, urged that the principles of natural justice were fully complied with. According to learned Additional Government Advocate, the presumption under Section 36 of the Act is applicable to all offences. He submitted that an inquiry was conducted by the respondent no. 2. Therefore, according to him, there was prosecution, to which the said presumption was applicable. He pointed out from the licences produced by the petitioner himself that they were valid from 01/04/1998 to 31/03/1999. He submitted that the date of inspection was 30/07/2001 which means that from March, 1999 to July, 2001, the petitioner did not have valid licence. Mr. Phaldessai, submitted that adequate reasons have been given as to how the respondents came to know that the liquor was duplicate. He submitted that the matter before the learned J.M.F.C. in which the petitioner was acquitted pertained to "Arihant Distillery" and the offences were also different whereas the present case pertains to "Manik Wines". He therefore urged that there is absolutely no ground for interference with the impugned orders which are in accordance with law. He submitted that the petition is liable to be dismissed.

11. I have perused the entire material on record. I have also considered the submissions made by the learned Counsel appearing for the parties and also the judgment cited by the learned Counsel for the petitioner.

12. In the case of "Oryx Fisheries Pvt. Ltd.", [2011 ALL SCR 727] (supra), there is a reference to the observation of the Hon'ble Chief Justice, speaking for the unanimous Constitution Bench, made in the case of "Khem Chand V/s Union of India" (AIR 1958 SC 300) which is as under :

"(a) An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges leveled against him are and the allegations on which such charges are based."

13. There is no doubt that a person who is to be prosecuted must be reasonably informed of the charges against him so as to enable him to take his defence and prove his innocence. Let us see whether the above fundamental requirement has been fulfilled in the present case. Before proceeding further, it would be advantageous to know as to what the relevant provisions of law lay down.

(a) Section 7 of the Act provides as under :

"7. Manufacture of liquor.- (1) No excisable article shall be manufactured or produced, no liquor shall be bottled, no tree shall be tapped for toddy and no juice shall be drawn from any tree or from cashew fruit except under the authority of a licence issued under this Act.

(2) No person shall use, keep or have in his possession any material, still, utensil, implement, or apparatus for the purpose of manufacturing any excisable article and no distillery, brewery or pot still shall be constructed or worked, save under the authority of a licence issued under this Act in this behalf.

(3) A licence granted under this section shall extend to and include servants and other persons employed by the licensee and acting on his behalf."

(b) Section 8(2) of the Act provides as under:

"8. Possession of and transactions in liquor.-

(2) Every dealer or vendor of any excisable article or foreign liquor shall maintain a full account of his transactions in such article or foreign liquor in the prescribed form."

(c) Section 9 of the Act provides as under :

"9. Sale of excisable article or foreign liquor.- No excisable article or foreign liquor shall be sold except under the authority of a licence issued under this Act;

Provided that the Government may, by notification, direct that a licence for sale granted under any other law for the time being in force in the State may, subject to such conditions as may be specified in the notification be deemed to be a licence granted under this Act."

(d) Section 16(1) of the Act lays down as under :

"16. Power to cancel licences.- (1) A licence or permit granted under this Act may be cancelled by the Commissioner for good and sufficient reasons to be recorded in writing, after giving an opportunity to the person concerned for making any representation and after considering such representation.

(e) Section 36 of the Act envisages as under:

"36. Presumption as to commission of offence in certain cases.- In every prosecution for an offence punishable under this Act, it shall be presumed until the contrary is proved that the accused person has committed such offence in respect of any excisable article or foreign liquor, or any still, utensil, implement, or apparatus whatsoever for the manufacture of excisable articles or any such materials as are ordinarily used in the manufacture of excisable articles for the possession of which he is unable to account satisfactorily; and the holder of a licence or permit under this Act shall be punishable, as well as the actual offender, for any offence committed by any person in his employ and acting on his behalf as if he had himself committed the same, unless he establishes that all due and reasonable precaution were exercised by him to prevent the commission of such offence."

(f) Rule 103 of the Rules says as under :

"103. Sign-Board.- A sign-board shall be affixed to the front of every licensed premises for sale of liquor showing the nature and number of licence, stating clearly whether the premises are licensed to sell foreign or Indian made foreign liquor or country liquor. The licence shall be hung in a conspicuous place within the premises."

14. A perusal of the Show Cause Notice dated 4th July 2001 reveals that the full account of transaction of liquor undertaken by the petitioner was not maintained. Admittedly, though the petitioner undertook to produce the relevant documents regarding the accounts of transaction, he failed to produce the same before the respondent no. 2. In the reply dated 09/07/2001, the petitioner stated that the books relating to transaction of liquor had been handed over by him to his Chartered Accountant and were in his custody. The petitioner never produced the said books. Therefore, there is violation of Section 8(2) of the Act. Admittedly, no sign board was affixed to the front of the licensed premises showing the nature and number of licence etc. as required by Rule 103 of the Rules. As per the reply, the copies of the licences had been temporarily removed for changing the frame thereof. Therefore, there was violation of Rule 103 of the Rules as mentioned in the Show Cause Notice. It is further stated in the show cause notice that in the exercise of power conferred under sub-section (1) of Section 16 of the Act, show cause notice is given as to why action deemed fit should not be taken for encouraging the sale of liquor not lawfully manufactured and for purchasing the duplicate liquor for evasion of excise duty and gross violation of conditions of licenses and as to why the licences issued should not be cancelled. Though the provisions under which the above violations fall are not mentioned in the show cause notice, however, a plain reading of Sections 7 and 9 of the Act reveals that the said allegations are covered under these Sections. Therefore, the charges have been properly and clearly explained to the petitioner in the show cause notice, with regard to the violations under Sections 7, 9 and 8(2) of the Act and Rule 103 of the Rules and merely because some Sections have not been specifically named, the petitioner cannot claim that he has not been given proper and prior notice. The facts mentioned in conclusions no. (iv) a, b, c, d, and e prove the violations under sections 7 and 9 of the Act.

15. As has been rightly submitted by learned Additional Government Advocate, a bare perusal of the reply dated 09/07/2001 filed by the petitioner, in clear terms, reveals that the petitioner has understood all the charges that have been levelled against him, which are covered by Sections 7 and 9 of the Act. In the said reply, the petitioner has alleged that there is no basis for taking action against him for encouraging sale of liquor not lawfully manufactured and for purchasing duplicate liquor and for gross violation of conditions of licences. In the circumstances above, the contention of the learned Counsel for the petitioner that the impugned Order is in contravention of principles of natural justice and that the respondent no.1 could not have imposed punishment for violation of Sections 7 and 9 of the Act, bears no substance.

16. Appropriate reasons have been given which prove all the violations. There is a presumption under Section 36 of the Act in respect of all the offences under the Act and until the contrary is proved, it has to be presumed that the accused has committed the offence. Since penalty is provided for the violations which are alleged in the present case, the said violations are offences and therefore the present case should also be deemed to be a prosecution for the said violations. There is inquiry conducted by the respondent no. 2, before imposing the penalty. In my view, therefore, there is no substance in the contention of learned Counsel appearing on behalf of the petitioner that Section 36 is applicable only for prosecution before the learned J.M.F.C. In my view, the said presumption is also applicable to the prosecution before the respondent no. 2 herein. During inquiry, on the basis of various reasons, it was found that the seized whiskey and rum were not genuine and were duplicate. It was for the petitioner to prove the contrary which he failed to prove. On account of the said presumption also, the impugned orders cannot be termed as perverse or arbitrary. The Criminal Case in which the petitioner has been acquitted has nothing to do with the present case since the premises is different and even the offences are different.

17. Considering all the facts and circumstances, the impugned judgments and orders are in accordance with law and no interference is called for.

18. In the result, the petition is rejected. Rule is discharged.

Petition dismissed.