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SC upholds Punjab’s decision on liquor fee
S.S. Negi
Our Legal Correspondent

New Delhi, November 27
In an important ruling, having a bearing on liquor trade in the country, a five-judge Constitution Bench of the Supreme Court, in a split decision, has said liquor trade was not a fundamental right but a privilege granted by the state, while upholding the Punjab Government’s order of levying fee on its import.

“The permissive privilege to deal in liquor is not a right at all. The levy charged for parting with that privilege is neither a tax nor a fee. It is simply a levy for the act of granting permission or for the exercise of power to part with the privilege by the state,” the Bench headed by Chief Justice V.N. Khare, in a three-to-two majority decision, said.

Setting aside the Punjab and Haryana High Court’s order, quashing the state government’s notification of March 27, 1996, for imposing import fee on liquor, which was challenged by Ludhiana-based Devans Modern Breweries Ltd and some other manufacturers, the three judges, the Chief Justice, Mr Justice R C Lahoti and Mr Justice A.R. Lakshmanan, said “the High Court had decided the case on a total wrong assumption that the import fee levied is in the nature of duty, which cannot be imposed under the Excise Act.”

In fact, the import fee, levied by the Punjab Government, was the price for parting with the privilege given to the licence holder to import beer or liquor into the state, the court ruled that the state government was fully competent to impose such a fee under the law.

However, the other two judges, Mr Justice B.N. Agrawal and Mr Justice S.B. Sinha, disagreed with the majority’s view and held that the trade in liquor, like any other trade was a fundamental right within the meaning of Article 19(1) of the Constitution, subject to prohibition by an Act passed by the legislature. Both judges were of the view that the High Court was right in quashing the notification of the Punjab Government.

A similar issue was also raised against the Kerala Government’s 1992 order, imposing Rs 2 to Rs 5 per proof litre as import fee on Indian Made Foreign Liquor. Both matters were decided by the apex court in a common judgement.

In the majority judgement, the court further said the licensee given permission to trade in liquor, apart from paying the duty, “Is to comply with such conditions as the state government may impose while formulating the excise duty for a particular year.”

The court said it was more relevant in the case of Punjab as the excise policy was formulated in the state every year.

“The state is competent and entitled to impose excise duty or countervailing duty. Besides, there is no bar on it to charge any other fees on the account of consideration for the privilege provided to the licensee to trade in liquor, which the licensee did not otherwise have (on his own, like for any other trade),” the court said.

Since special permission under licence was required to trade in liquor, “the licensee is liable to comply with any other conditions imposed by the state government on him from time to time,” the court ruled.


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