Excise Department to Decide Liquor Contractors’ Refund Pleas Within 30 Days; 12% Interest if Delayed: Rajasthan High Court
Safiya Malik
The High Court of Judicature for Rajasthan, Single Bench of Justice Sameer Jain, held that the writ petitions filed by liquor contractors challenging the Excise Department’s non-refund of security deposits after expiry of their license period were premature, as no demand, recovery, or forfeiture order had yet been issued. Nonetheless, the Court observed that administrative inaction causing indefinite retention of legitimate dues cannot be permitted. It directed the Excise Commissioner to decide all refund representations within thirty days, clarifying that failure to do so would deem the claims valid and attract 12% annual interest, with no coercive measures pending such decision.
The batch of writ petitions involved multiple petitioners who had been the highest bidders for composite liquor shops for the excise year 2023–2024. The petitioners were issued licenses to operate liquor shops under the Rajasthan Excise Policy 2023–2024, valid until March 31, 2024. Following the imposition of the Model Code of Conduct during the general elections, the scheduled auctions for the 2024–2025 excise year could not be held, leading the Government to extend the licenses for three months from April 1 to June 30, 2024, through an order dated March 13, 2024.
The petitioners contended that they had completed their obligations under the extended license period and were entitled to refunds of security deposits and Advance Annual Guarantee (AAG) amounts. They challenged the Excise Commissioner’s circular dated August 28, 2024, and subsequent clarifications, alleging that these were arbitrary, beyond the scope of the enabling notification, and contrary to the order dated March 13, 2024. The petitioners argued that the Commissioner’s directions resulted in unwarranted calculations of shortfall and wrongful retention of funds.
The respondents argued that the petitions were premature as no demand or recovery orders had been issued. They contended that the petitioners had voluntarily consented to the extended period under the 2024–2025 Excise Policy and were, therefore, estopped from disputing its applicability. The State maintained that the Commissioner was competent to issue clarificatory instructions.
Justice Sameer Jain recorded that the controversy revolved around three principal issues: the validity of the extended license period from April to June 2024, the authority of the Excise Commissioner to issue the circular dated August 28, 2024, and the legality of withholding security deposits and AAG amounts. The Court noted that the petitions were filed under common questions of law and fact and, with the consent of counsel, treated Atar Singh’s case as the lead matter.
The Court stated that “the petitioners being the highest bidders for the composite liquor shops for the excise year 2023–2024 were granted licenses to operate till 31.03.2024, but due to substantial financial losses, they did not intend to seek renewal thereof.” However, because of the imposition of the Model Code of Conduct, their licenses were “compulsorily extended up to 30.06.2024 under modified terms and conditions.”
It was recorded that the notification dated March 13, 2024, and clarification dated March 19, 2024, governed the refund mechanism, which allowed quarterly adjustments. However, the Excise Commissioner’s circular of August 28, 2024, introduced a different interpretation, allegedly leading to the denial of refunds. The Court noted the petitioners’ reliance on the Supreme Court decision in Suresh Kumar Wadhwa v. State of Madhya Pradesh (2017) 16 SCC 757 and the coordinate bench judgement in Krishna Sharma v. State of Rajasthan (S.B. Civil Writ Petition No. 4606/2024), to argue that license extensions and unilateral conditions beyond the original agreement were impermissible.
The respondents contended that “no adverse financial or coercive action has been taken by the authorities,” and hence, the writ petitions were premature. The Court observed that the petitioners’ position differed from that in Krishna Sharma, since the present petitioners had “voluntarily continued under the same policy framework,” making their case distinct.
Justice Jain noted that “ubi jus ibi remedium — where there is a right, there is a remedy — and administrative inaction leading to indefinite retention of lawful dues cannot be countenanced.” He also held that the doctrine of ripeness applied, as no demand or forfeiture order had yet been issued, rendering the petitions premature. Nonetheless, the Court stated that administrative delay should not prejudice the petitioners’ lawful rights, invoking the principal actus curiae neminem gravabit — the act of the court shall prejudice no one.
The Court directed that, “in the event the petitioners file representations seeking refund of their amounts or ventilating any other grievances, the same shall be adjudicated by way of a speaking order, both on facts and on points of law, within a period of thirty days from the date of receipt of such representation.”
“The authority concerned, namely, the Excise Commissioner, shall consider such representations de novo, uninfluenced by any observations made by this Court, and pass an order in accordance with law.” The Court clarified that if no order was passed within the prescribed period, “it shall be deemed that the claim of the petitioners is found valid, and consequently, the amount sought for refund shall be released forthwith.”
“Retention of money beyond the period of thirty days from the date of filing such representation shall attract interest at 12% per annum on the amount lawfully due to the petitioners, till actual payment.” The Court directed that no coercive measures be taken against the petitioners until such adjudication was completed.
“The doctrine actus curiae neminem gravabit, meaning that the act of the court shall prejudice no one, further guides that administrative delay should not operate to the detriment of thepetitioners’ lawful rights. Hence, with the aforesaid observations and directions, the present batch of writ petitions stands disposed of.”
Advocates Representing the Parties:
For the Petitioners: Mr. R.B. Mathur, Senior Advocate, assisted by Ms. Falak Mathur, Mr. Manish Bhodiwal, Mr. Utsav, Mr. Aditya Sharma, and Mr. Amit Malani.
For the Respondents: Mr. Bharat Vyas, Additional Advocate General, assisted by Mr. Harshvardhan Katara.
Case Title: Atar Singh v. State of Rajasthan and Others
Neutral Citation: 2025: RJ-JP:39010
Case Number: S.B. Civil Writ Petition No. 11294/2025
Bench: Justice Sameer Jain
