Excise Officers Deputed To Private Distilleries Are Not On Additional Duty | Kerala High Court Directs Full Pay Recovery From Licensees
Sanchayita Lahkar
The High Court of Kerala Division Bench of Justice Anil K. Narendran and Justice Muralee Krishna S. held that the cost of establishment recoverable by the State Government from private distilleries for deploying excise officials must be the full pay and allowances of the deputed officers. The Court set aside the judgments of the learned Single Judge in multiple writ petitions and dismissed the petitions filed by the private distilleries. The Court ruled that the judgments relied upon by the petitioners did not reflect the correct legal position.
The appeals originated from writ petitions filed by various private distilleries operating across Kerala, challenging the manner in which the Excise Department was recovering the cost of establishment for officials deputed to supervise liquor manufacturing and allied activities. The petitioners contended that the deployed officers were holding only additional charge and were thus entitled to receive only the charge allowance as provided under Rule 53(b) of Part I of the Kerala Service Rules (KSR).
These private distilleries, including Elite Distilleries, Cassanova Distilleries, Polsons Distillery, Seven Seas Distillery, Normandy Breweries and Distilleries, K.S. Distillery, Devicolam Distilleries, and Amrut Distilleries, had approached the High Court invoking Article 226 of the Constitution. They sought writs of mandamus directing the authorities to recompute the establishment cost in accordance with Rule 53(b) of Part I of the KSR and refund the excess amounts collected.
The learned Single Judge had accepted the plea, relying on an earlier decision dated 26.05.2009 in W.P.(C) No.10459 of 2008, marked as Ext.P1, and held that only charge allowance under Rule 53(b) was payable in such circumstances. Aggrieved, the State Government and Excise authorities filed the present batch of writ appeals.
The State contended that the power to depute excise officials and recover their full remuneration was conferred by multiple statutory instruments including the Abkari Act, Kerala Distillery and Warehouse Rules, 1968, Foreign Liquor (Storage in Bond) Rules, 1961, and Kerala Rectified Spirit Rules, 1972. The appellants also pointed to Condition No.18 of Form IVA of the Distillery Licence which mandates advance payment of actual cost including pay, dearness allowance, uniform allowance, and other compensatory allowances.
Further reliance was placed on Sections 14(d) and 14(e) of the Abkari Act, which empower the Excise Commissioner to prescribe the supervision mode and recover the full establishment cost from licensees. Similarly, Rule 14(1) of the Distillery Rules and Rule 9(b) of the Foreign Liquor (Storage in Bond) Rules define the ‘cost of establishment’ as inclusive of all salary components.
The respondents argued that since the officials were holding additional charge, they were entitled only to charge allowance under Rule 53(b) of Part I of the KSR. They referred to a 2012 judgment in W.P.(C) No.23356 of 2005, where similar relief was granted.
The Bench analysed the underlying statutory framework, which includes provisions in the Constitution (Schedule VII, List II, Entry 8 and Article 246(3)) asserting the State's exclusive legislative competence over intoxicating liquors. Sections 12 and 14 of the Abkari Act were particularly relevant, along with Rule 13 and 14 of the Distillery Rules which specify the staff composition and payment structure for excise supervision.
The Court also examined Rule 16 of the Kerala Rectified Spirit Rules and Rule 9(b) of the Foreign Liquor (Storage in Bond) Rules, both of which impose comprehensive obligations on licensees to pay the actual costs incurred in deputing excise staff. The Bench noted that these statutory mandates were further reinforced by licence conditions issued in Form IVA.
The Court recorded: “Nowhere in [Rule 13 of the Distillery Rules] it is stated that the officers so deputed are doing only a supervisory duty and they need not be present in the distillery during the manufacturing and the other activities in the distillery.”
The Bench further observed: “The officers so deputed by the Government cannot be said as doing additional duty so as to contend that they are entitled to only charge allowance.”
Addressing the issue of legal authority, the Court stated: “From the provisions referred to above, it is clear that the cost of establishment is to be decided by the Government and it is one of the license conditions for granting the privilege of manufacturing intoxicating liquor.”
On the issue of existing judicial precedent, the Court recorded: “It is without noticing these aspects, Ext.P1 judgment and the judgment in W.P.(C) No.23356 of 2005 were passed and hence we hold that Ext.P1 judgment dated 26.05.2009 in W.P.(C) No.10459 of 2008 and the judgment dated 11.06.2012 in WP(C) No.23356 of 2005 do not reflect the correct position of law.”
The Court cited Southern Pharmaceuticals and Chemicals, Trichur v. State of Kerala, observing: “There is a broad co-relationship between the fee collected and the cost of the establishment... The licensee undoubtedly receives a service in return.”
Quoting further from that case, the Court stated: “To claim the privilege [of manufacturing liquor] he must comply with the conditions prescribed. If one of the conditions is the payment of cost of establishment under Section 14(e)... the manufacturer of such preparations must necessarily bear the burden.”
The Division Bench concluded the matter by allowing the writ appeals, setting aside the impugned judgments passed by the learned Single Judge, and dismissing the writ petitions.
Advocates Representing the Parties
For the Petitioners: Vinitha B., Government Pleader
For the Respondents: Raju K. Mathews, Tom Thomas (Kakkuzhiyil), K.R. Paul
Case Title: State of Kerala & Others v. T.R. Vijayakumar & Connected Cases
Neutral Citation: 2025:KER:33869
Case Number: WA Nos. 808, 810, 815, 830, 831, 834, 837 and 838 of 2024
Bench: Justice Anil K. Narendran and Justice Muralee Krishna S.
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