Himachal Pradesh High Court Quashes Indefinite Suspension of Mars Bottlers' Excise Licence

Court Directs State Excise Commissioner to Determine Compounding Fee and Consider Licence Renewal

In a significant judgment, the Himachal Pradesh High Court has quashed the indefinite suspension of excise licences issued to Mars Bottlers Una Private Limited. The court, comprising Justices Vivek Singh Thakur and Sushil Kukreja, directed the State Taxes and Excise Commissioner to determine an appropriate compounding fee within 15 days and consider the renewal of the company's licences.

The case arose when the Financial Commissioner (Excise) of Himachal Pradesh suspended Mars Bottlers' licences in June 2024, following allegations of violations under the Himachal Pradesh Excise Act, 2011. The suspension was based on an inspection that allegedly found discrepancies in stock and unaccounted liquor on the premises. Despite the company's representation and subsequent rejection of its plea, the suspension continued without a final decision on the licence's status.

The court found that the suspension amounted to a de facto cancellation of the licence without due process. It emphasized that the penalties imposed should be proportionate to the gravity of the offences and highlighted that violations under the Excise Act are compoundable. The judgment underscored that a licencee has legitimate rights to conduct business under a valid licence, and indefinite suspension without proper inquiry infringes these rights.

Furthermore, the court noted inconsistencies between the inspection report and the First Information Report (FIR) filed by the State Taxes and Excise Department, raising questions about the credibility of the allegations. The judgment also referenced permissible limits of wastage under the Punjab Distillery Rules, stating that minor variations in stock were within allowable limits and should not result in such severe penalties.

The court's decision provides a reprieve for Mars Bottlers, allowing them to potentially resume operations pending the determination of the compounding fee and renewal of their licences. This ruling reiterates the importance of proportionate penalties and adherence to due process in regulatory actions.

Bottom Line:

Suspension of excise licences cannot be perpetuated indefinitely. Violation of provisions under the Himachal Pradesh Excise Act, 2011, are compoundable, and penalties should be proportionate to the gravity of the offences - Legitimate rights and fundamental rights of a licencee to carry out business in intoxicants under a valid licence cannot be infringed without following the due process of law.

Statutory provision(s): Himachal Pradesh Excise Act, 2011 Sections 29(b), 29(c), 30(1), 31, 43(b), 43(d), 44(b), 66(2); Punjab Distillery Rules

Mars Bottlers Una Private Limited v. State of Himachal Pradesh, (Himachal Pradesh)(DB) : Law Finder Doc id # 2793997