Suspension of Liquor Licence for Alleged Illegal Possession Can Be Revoked Upon Payment of Penalty; Himachal Pradesh High Court Quashes Prolonged Suspension
Isabella Mariam
The High Court of Himachal Pradesh Division Bench of Justice Vivek Singh Thakur and Justice Sushil Kukreja quashed the suspension of liquor licences imposed on a bottling company under the Himachal Pradesh Excise Act, 2011, directing the Excise Commissioner to fix a compounding fee and consider renewal. The Court held that under Section 66(2) of the Act, a licence suspended or cancelled for breach of conditions or non-payment of dues can be revoked once the prescribed penalty is paid. It found the prolonged suspension disproportionate, stating that such offences are compoundable and cannot amount to indefinite cancellation.
The petitioner, Mars Bottlers Una Private Limited, challenged the suspension of its excise licences, including Forms BHW-2, L-11, L-1A, L-1C, L-13C, L-15, and L-16, effective from March 16, 2024. The suspension order was issued under Sections 29(b), 29(c), and 30(1) of the Himachal Pradesh Excise Act, 2011, by the Financial Commissioner (Excise), directing compliance with Sections 30(2), 31, and 72 of the Act, which entail recovery of licence fees without compensation or refund.
The petitioner alleged that the inspection claimed to have occurred on March 16, 2024, was neither properly conducted nor supported by valid evidence, asserting contradictions between the inspection report and FIR No. 33 of 2024 registered by the Deputy Commissioner, State Taxes and Excise, Una. The petitioner argued that the alleged offences were compoundable under Chapter VIII of the Act and that the indefinite suspension amounted to de facto cancellation without due process. Counsel for the petitioner maintained that a fine could have been imposed instead of continuing the suspension indefinitely.
The State contended that the suspension was temporary and that no final cancellation proceedings had commenced. It further argued that the petitioner had admitted certain violations and failed to renew its licences after March 31, 2024. The State asserted that the licences were deemed cancelled due to non-renewal and expiry beyond one year. The inspection report alleged discrepancies in spirit and blended stock and found a truck with liquor brands not authorized for bottling in the plant premises. The vehicle’s custodian, identified as Krishan Kumar, allegedly failed to produce documentation, and the liquor was seized.
Subsequent to this, an FIR alleged that the truck was later found abandoned with part of the seized liquor missing. However, the petitioner disputed the entire narrative, asserting that Krishan Kumar was a contractor, not an employee, and that the story was inconsistent and unsupported by records. The petitioner submitted that minor stock variations were within permissible limits under the Punjab Distillery Rules, applicable in Himachal Pradesh, which allow set-offs in wastage calculations.
The Bench observed that “the story of missing truck, liquor and Krishan Kumar... is missing in the Inspection Report.” The Court recorded that while the report alleged the confiscated liquor was bottled in the petitioner’s plant, “in the FIR, lodged on 26.3.2024, it has been categorically stated that the seized liquor in the plant was not bottled in the bottling plant.” The judges noted that Krishan Kumar’s employment status was disputed and that the inspection team’s conduct in handing over custody of the seized vehicle to the same individual was questionable. The Court stated, “It amounts to handing over the custody of articles to the same person from whom those were recovered and confiscated.”
The Court further found that the FIR appeared to be an afterthought, observing that “FIR has been registered with consultation and is an afterthought to wrap the petitioner in a case alleging violation of provisions of the Act.” The Bench noted the absence of records showing Krishan Kumar as an employee, remarking that no departmental action was taken for the alleged non-disclosure of his employment.
Regarding the offences alleged under Sections 43 and 44 of the Act, the Court observed that “the offences were and are compoundable,” stating that suspension or cancellation of licence was discretionary. The Court recorded that “for the unbelievable story with respect to seizure and confiscation of liquor... the penalty imposed by the Commissioner is highly disproportionate.” The Bench also cited the Punjab Distillery Rules, noting permissible wastage allowances and observing that “variance found in physical checking was permissible to be set off... and, therefore, only on this count such a harsh decision... should not have been taken.”
Rejecting the State’s reliance on Har Shankar v. Dy. Excise and Taxation Commissioner (1975) 1 SCC 737, the Bench held that while there is no fundamental right to trade in intoxicants, “once licence is granted... the person running such business with valid licence cannot be deprived from his right to take appropriate recourse of law.” The Court found that the authorities’ actions amounted to indefinite suspension, which effectively operated as cancellation without formal procedure.
The Court rejected the argument that the licence stood automatically cancelled for non-renewal, pointing out that “licence fee for previous years had been accepted even after expiry dates and renewals granted subsequently.” It noted that “suspension cannot be perpetuated for indefinite time. There must be some limit for deciding further course of action.” The judges concluded that the petitioner could not have applied for renewal during the suspension period, stating, “During currency of suspension, petitioner could not have applied for renewal of licence... and under such circumstances there was no logic in filing application for grant of new licence.”
Allowing the petition, the Division Bench quashed both orders dated June 15, 2024, and December 9, 2024, holding them unsustainable. The Court directed that “the Commissioner, State Taxes and Excise is directed to determine appropriate compounding fee in consonance with the relevant provisions... within 15 days of passing of this order.” It further ordered that “thereafter, [the Commissioner] shall pass an appropriate order with respect to renewal of licence of the petitioner.”
Advocates Representing the Parties:
For the Petitioner: Mr. Desh Raj Thakur, Advocate.
For the Respondents: Mr. Anup Rattan, Advocate General, with Mr. Sushant Keprate, Additional Advocate General.
Case Title: Mars Bottlers Una Private Limited v. State of Himachal Pradesh and others
Neutral Citation: 2025: HHC:33213
Case Number: CWP No. 8561 of 2024
Bench: Justice Vivek Singh Thakur and Justice Sushil Kukreja
