SRI. VEERESH M V. THE COMMISSIONER OF EXCISE IN KARNATAKA

WP/4146/2024

AI Insights

The case revolves around a writ petition filed by Sri. Veeresh M., challenging the issuance of a CL-7 licence to Smt. Pavithra S. by the Excise Commissioner and the Deputy Commissioner of Excise. The petitioner objected to the licence on grounds related to the property and construction validity, and the 4th respondent's alleged disqualification due to non-filing of income tax returns. The court examined whether the 4th respondent's affidavit and subsequent filing of returns constituted compliance with Rule 4B of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968, which disqualifies applicants who have not filed their latest income tax returns. The court found in favor of the 4th respondent, leading to the dismissal of the petition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 696066 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-07-2024
• Assessment Year: misc
• Other Referred Cases: Bhanu Liquor Shop, Banuvalli Village, Harihar Taluk vs. State of Karnataka and others \\u2013 2000 (5) Kar.L.J. 512
• Laws Referred To: Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RADHA RAMASWAMY; G K BHAT; SUDHA
• Assessee Lawyers: MOHAN BHAT
• Keywords: Commercial purposes; Disqualification; Excise Commissioner; Income Tax Return; CL-7 licence; Building licence
• Section: 226; 227; 4B

Judgement Text

" - 1 - NC: 2024:KHC:29176 WP No. 4146 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE N S SANJAY GOWDA WRIT PETITION NO. 4146 OF 2024 (EXCISE) BETWEEN: SRI. VEERESH M. S/O SHIVAPPA, AGED ABOUT 44 YEARS, RESIDING AT MANDAGATTI VILLAGE, SHIMOGA TALUK AND DISTRICT-577 211. …PETITIONER (BY SRI. MOHAN MAHABALESHWAR BHAT, ADVOCATE) AND: 1. THE COMMISSIONER OF EXCISE IN KARNATAKA, TTMC II FLOOR, A BLOCK, BMTC COMPLEX, SHANTHI NAGAR, BENGALURU - 560 027. 2. THE DEPUTY COMMISSIONER, SHIMOGA DISTRICT, MINI VIDHANA SOUDHA, SHIMOGGA- 577 201. 3. THE DEPUTY COMMISSIONER OF EXCISE, MINI VIDHANA SOUDHA, SHIVAMOGGA - 577 201. Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:29176 WP No. 4146 of 2024 4. SMT. PAVITHRA S. W/O KIRAN KUMAR, NO. 120/1, CHANNEL BUND, SHARAVATHI NAGAR, SHIVAMOGGA - 577 211. …RESPONDENTS (BY SMT. RADHA RAMASWAMY, AGA FOR R-1 TO R-3, SRI. G.K.BHAT, SR. COUNSEL FOR SMT. SUDHA D., ADV. FOR C/R-4.) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT QUASHING THE IMPUGNED ORDER DTD 19.01.2024 PASSED BY THE R-1 IN NO. ES2023121478/SHIMOGA/2023-24 VIDE ANNEXURE-M AND CONSEQUENTLY THE ENDORSEMENT ALLEGED TO BE DTD 09.01.2024 IN NO. ES2023121478/CL-7/SHIMOGA/2023-24 VIDE ANNEXURE-Q ISSUED BY THE R-1 AND THE ORDER DTD 20.01.2024 IN NO. EXE/SMG(2)/CL-7/13/2023-24 PASSED BY THE R-2 VIDE ANNEXURE-N AND CONSEQUENT CL-7 LICENSE BEARING REGISTRATION NO. EXE/IML/SMG(2)/CL-7/13/2023- 24 ISSUED BY THE R-2 VIDE ANNEXURE-P RESPECTIVELY ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING – B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE N S SANJAY GOWDA - 3 - NC: 2024:KHC:29176 WP No. 4146 of 2024 ORAL ORDER (PER: HON'BLE MR JUSTICE N S SANJAY GOWDA) 1. The grant of CL-7 licence to respondent No.4 is challenged by the petitioner in this petition. 2. The 4th respondent filed an application seeking for grant of CL-7 licence and this was objected to by the petitioner, who contends, that he was the resident of Mandagadde in Shivamogga Taluk and is a social worker. 3. The objections, at the time of 4th respondent making an application, was regarding the character of the property that the 4th respondent had purchased and regarding the validity of constructions. The objections raised were regarding the constructions being completely different from building plans, thereby contravening the building licence. Allegations were also made regarding the grant of the general licence issued by the Gram Panchayath, apart from contending that there was no order of conversion for using the land for commercial purposes. - 4 - NC: 2024:KHC:29176 WP No. 4146 of 2024 4. These objections were considered by the Commissioner and an endorsement was issued on 09.01.2024 giving reasons as to why the objections raised by the petitioner were not acceptable. 5. After the objections were rejected by the endorsement dated 09.01.2024, the Commissioner proceeded to accord permission for issuance of a licence vide order dated 19.01.2024. On the basis of this order, the Deputy Commissioner of Excise issued CL-7 licence to the 4th respondent on 20.01.2024. 6. This writ petition is directed against the said action of granting of permission by the Excise Commissioner to the 4th respondent and the consequential issuance of the licence. 7. Sri Mohan Mahabaleshwar Bhat, learned counsel for the petitioner, argued that the application of the 4th respondent could not have been considered at all as she suffered from a disqualification even to make an application. - 5 - NC: 2024:KHC:29176 WP No. 4146 of 2024 8. He submitted that Rule 4B of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 (for brevity, referred to as “the Rules”) mandated that a person was disqualified from submitting an application, if he has not produced any document in proof of filing the latest income tax return before the Income Tax Department in respect of his income and despite the specific disqualification stipulated, the application of the 4th respondent was accepted, even though she had not filed her latest income tax returns to the Income Tax Department. 9. He submitted that the Department had permitted the 4th respondent to file an application on the basis of an affidavit that she had filed indicating that due to some reasons, she could not file the returns, but would be filing the same shortly. He submitted that this concession granted to the 4th respondent to file an application, virtually amounted to qualifying a disqualified person and hence was illegal. He also submitted that the objections filed by the petitioner were not considered in the proper - 6 - NC: 2024:KHC:29176 WP No. 4146 of 2024 perspective and therefore, the grant of licence in favour of the 4th respondent was improper. 10. The Additional Government Advocate as well as the learned counsel appearing for the 4th respondent, however, supported the order of issuance of CL-7 licence in favour of the 4th respondent and contended that the objection regarding disqualification had not even been raised before the Authorities and hence, the petitioner cannot now be permitted to raise this objection for the first time. 11. It was also submitted by them that the production of latest income tax returns had not been done away with, but the affidavit of 4th respondent that she would be filing it shortly was accepted and as a matter of fact, she had filed her income tax returns (on 25.01.2024) as undertaken by her and therefore, there is no substance in the allegations made by the petitioner. 12. Sri G.K.Bhat, learned Senior Counsel appearing for the 4th respondent also put forth the contention that the - 7 - NC: 2024:KHC:29176 WP No. 4146 of 2024 requirement of filing income tax returns is non-est, in view of the judgment which had been rendered in the case Bhanu Liquor Shop, Banuvalli Village, Harihar Taluk vs. State of Karnataka and others – 2000 (5) Kar.L.J. 512. He submitted that in the said case, this Court while dealing with the requirement of producing the Sales Tax Clearance Certificate, had struck down the said Rule, but notwithstanding that, by way of amendment, the Rule requiring production of income tax clearance certificate had been inserted. 13. He submitted that the ratio laid down in the judgment rendered in Bhanu Liquor Shop case would nevertheless apply and therefore, the entire arguments of the learned counsel for the petitioner were unsustainable. 14. At the very outset, it is to be mentioned that the objection regarding disqualification of the 4th respondent in submitting the application had not been raised before the Authorities by the petitioner and strictly speaking the petitioner cannot be permitted to raise this objection after - 8 - NC: 2024:KHC:29176 WP No. 4146 of 2024 the licence has been issued in favour of the 4th respondent. However, having regard to the nature of the objections raised by the petitioner, in my view, it would be appropriate to consider the same on merits. 15. The facts involved in this writ petition are not in serious dispute that the 4th respondent had applied for a CL-7 licence, to which, the petitioner had raised objections, which were over-ruled and the Excise Commissioner granted permission for issuance of a CL-7 licence and consequently, a CL-7 licence had been issued to the 4th respondent. 16. The Rules framed under the provisions of the Excise Act relating to issuance of licence for sale of excisable articles are basically meant to ensure that the sale of intoxicants is regulated and in order to regulate the sale, certain safeguards are contemplated. 17. Rule 4B of the Rules has been inserted to disentitle disqualified persons from submitting an application. The said Rule contemplates that at the very outset, for the - 9 - NC: 2024:KHC:29176 WP No. 4146 of 2024 reasons mentioned in Rule 4B(1) of the Rules, a person should not even be permitted to submit an application. 18. A reading of the causes shown in Rule 4B1 of the Rules would clearly indicate that the reason for disqualifying a person from applying is fundamentally because that person, if attracts the causes mentioned, would be a person, who would engage in the business of selling intoxicants in a dangerous manner, which would be detrimental to the society. 19. It is no doubt true that sub-clause (ii) of Rule 4B(1) of the Rules does stipulate that a person would be 1 4-B. Disqualification.-(1) A person shall be disqualified from submitting an application for obtaining or renewal of licence under these rules if he.- (i) has not paid the arrears of any excise dues in respect of liquor sold by him; (ii) has not produced a valid income-tax clearance certificate or has not produced any document in proof of filing the latest income-tax return before the Income-tax Department in respect of his income; (iii) is holding an office of profit under the State Government or Central Government; (iv) is a minor or an undischarged insolvent or is of unsound mind; (v) has been convicted of any cognisable and non-bailable offence under any Act, or any offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 and Medicinal and Toilets Preparation (Excise Duties) Act, 1955, or an offence under Section 481, 482, 483, 484, 485, 486, 487 or 489 of the Indian Penal Code, 1860. Explanation.- For the purposes of this rule, a company, firm or other body corporate shall be deemed to have incurred the disqualification if the person in charge of and responsible for the conduct of the business of such company, firm or other body corporate has incurred the disqualification. Provided that the authority which grants or renews the licence may in the interest of revenue and for any other reason to be recorded in writing relax the provisions of clause (1) and grant or renew the licence. (2) A person shall not be disqualified under (i) of sub-rule(1) if the produces a certificate from a competent Revenue Excise Officer to the effect that the arrears have been paid. - 10 - NC: 2024:KHC:29176 WP No. 4146 of 2024 disqualified in submitting the application if he has not produced the proof of filing of his/her latest income tax returns. This is obviously because the Rule intended to ensure that a person making an application is a person, who has declared his income as required under law and his financially solvency can also be determined. 20. It cannot be in dispute that if a person has not filed the income tax returns at all, then such a person would be disqualified, but, as in the instant case, the 4th respondent filed an affidavit stating that there were some difficulties in filing the returns and she was in the process of filing the returns and would be filing within a short time and gave an undertaking to that effect. In my view, the acceptance of the affidavit would be just and proper and would not amount to a contravention of Rule 4B(1)(ii) of the Rules. As a matter of fact, as undertaken by the 4th respondent, she has filed her income tax returns on 25.01.2024 and produced a xerox copy of the same before this Court. - 11 - NC: 2024:KHC:29176 WP No. 4146 of 2024 21. The Excise Authorities, whose principal concern is to ensure that a qualified person is required to make an application, were justified in accepting the undertaking of the 4th respondent that she would file the income tax returns shortly, since proof of filing of income tax returns was not a requirement, which would inherently disqualify an applicant. 22. In a case, such as this, where the 4th respondent undertakes to file the income tax returns and states on oath that she had some difficulties in filing the returns, the Authorities were justified in permitting her to make an application. 23. It may also be pertinent to note here that Rule 4A of the Rules provides for registration of application and the said Rule provides for the Excise Commissioner to return the application if it did not contain the prescribed particulars and there is a provision for the said applicant to re-submit the application within 15 days. - 12 - NC: 2024:KHC:29176 WP No. 4146 of 2024 24. It is, therefore, clear that merely because all the particulars are not mentioned, the application cannot be rejected in its entirety and an opportunity to make good the deficiencies is provided under Rule 4A of the Rules. This would, therefore, indicate that the Licencing Authority has a discretion to permit the applicants to make good the deficiencies and re-submit their applications. 25. In this case, the Authorities have deviated slightly from this procedure and have accepted the application of the 4th respondent, in which an affidavit was submitted by her stating that she would be filing the income tax returns shortly. 26. In my view, this procedure adopted by the Authorities is in consonance with principle lying behind Rule 4A of the Rules which permits rectification of defects/deficiencies at the time of making the applications. 27. I am therefore of the view that there is no substance in the arguments advanced by the learned counsel for the - 13 - NC: 2024:KHC:29176 WP No. 4146 of 2024 petitioner that the 4th respondent was disqualified from making the application itself. 28. As far as other objections raised by the petitioner are concerned, the Commissioner has considered each and every objection of the petitioner and has noticed that none of them justified the rejection of 4th respondent’s request. 29. The property in question belonged to the 4th respondent and the competent Authorities had granted her the licence to run the business and therefore the Excise Authorities were justified in acting upon said permission for considering the application of the 4th respondent for grant of CL-7 licence. 30. I am therefore of the view that there is no merit in the petition and the same is accordingly dismissed. 31. In view of the disposal of the petition, all pending interlocutory applications, if any, stand disposed of. Sd/- (N S SANJAY GOWDA) JUDGE PKS/RK List No.: 1 Sl No.: 63 "