Nafr High Court
Case Details
1 Digitally signed by RAMESH KUMAR VATTI Date: 2025.09.09 14:18:56 +0530 2025:CGHC:45355 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WP227 No. 399 of 2022 1 - State Of Chhattisgarh Through Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur Chahhattisgarh (Petitioner No. 1 was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner, Department Of Excise Chhattisgarh, Raipur Chhattisgarh. 3 - The Collector, District Raipur Chhattisgarh. Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Vilage Khapri, Post Kumhari, District Durg Chhattisgarh. 2 - The Board Of Revenue, Chhattisgarh, Bilaspur Chhattisgarh, Circuit Court, Raipur, District Raipur Chhattisgarh. --- Petitioners --- Respondents And WP227 No. 442 of 2022 1 - State Of Chhattisgarh Through - Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur (CG) (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department) 2 - The Commissioner Department Of Excise Chhattisgarh, Raipur 3 - The Collector, District Raipur, Chhattisgarh Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District : Durg, Chhattisgarh 2 - The Board Of Revenue, Chhattisgarh, Bilaspur (CG), Circuit Court, Raipur, District : Raipur, Chhattisgarh ---Petitioners And --- Respondents 2 WP227 No. 443 of 2022 1 - State Of Chhattisgarh Through - Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur (CG) (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner, Department Of Excise Chhattisgarh, Raipur Chhattisgarh. 3 - The Collector, District Raipur Chhattisgarh. Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District Durg Chhattisgarh. 2 - The Board Of Revenue, Chhattisgarh Bilaspur Chhattisgarh, Circuit Court, Raipur, District Raipur Chhattisgarh. ---Petitioners --- Respondents And WP227 No. 444 of 2022 1 - State Of Chhattisgarh Through- Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur, Chhattisgarh, (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner Department Of Excise, Chhattisgarh, Raipur, Chhattisgarh 3 - The Collector District Raipur, Chhattisgarh Versus 1 - M/s Chhattisgarh Distilleries Limited F.L. 9 Licensee, Village Khapri, Post Kumhari, District- Durg, Chhattisgarh 2 - The Board Of Revenue Chhattisgarh, Bilaspur, Chhattisgarh, Circuit Court, Raipur, District- Raipur, Chhattisgarh ---Petitioners And --- Respondents WP227 No. 445 of 2022 1 - State Of Chhattisgarh Through Secretary, Government Of Chhattisgarh, Department Of Excise , Mahanadi Bhawan, Atal Nagar, Naya Raipur , District Raipur Chhattisgarh. (Petitioner No. 01 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 01 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department), District : Raipur, Chhattisgarh 2 - The Commissioner Department Of Excise Chhattisgarh, Raipur Chhattisgarh. 3 3 - The Collector District Raipur Chattisgarh. Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee , Village Khapri, Post Kumhari , District Durg Chhattisgarh., District : Durg, Chhattisgarh 2 - The Board Of Revenue Chhattisgarh Bilaspur Chhattigarh, Circuit Court, Raipur, District Raipur Chhattisgarh. ---Petitioners And --- Respondents WP227 No. 446 of 2022 1 - State Of Chhattisgarh Through Secretary, Government Of Chhattisgarh, Department Of Excise , Mahanadi Bhawan, Atal Nagar, Naya Raipur , District Raipur Chhattisgarh. (Petitioner No. 01 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 01 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department), District : Raipur, Chhattisgarh 2 - The Commissioner Department Of Excise Chhattisgarh, Raipur Chhattisgarh. 3 - The Collector District Raipur Chhattisgarh. Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District : Durg, Chhattisgarh 2 - The Board Of Revenue Chhattisgarh Bilaspur Chhattigarh, Circuit Court, Raipur, District Raipur Chhattisgarh. ---Petitioners And --- Respondents WP227 No. 447 of 2022 1 - State Of Chhattisgarh Through Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur Chhattisgarh (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner, Department Of Excise, Raipur, Chhattisgharh. 3 - The Collector, District Raipur Chhattisgarh. Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District Durg Chhattisgarh. 2 - The Board Of Revenue, Chahttisgarh, Bilaspur Chhattisgarh, Bilaspur Circuit Court, Raipur, District Raipur Chhattisgarh. ---Petitioners And --- Respondents 4 WP227 No. 448 of 2022 1 - State Of Chhattisgarh Through- Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District- Raipur, Chhattisgarh (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner Department Of Excise, Chhattisgarh, Raipur, Chhattisgarh 3 - The Collector District- Raipur, Chhattisgarh Versus 1 - M/s Chhattisgarh Distilleries Limited F.L. 9 Licensee, Village Khapri, Post Kumhari, District- Durg, Chhattisgarh 2 - The Board Of Revenue, Chhattisgarh Bilaspur, Chhattisgarh, Circuit Court, Raipur, District- Raipur, Chhattisgarh ---Petitioners And --- Respondents WP227 No. 449 of 2022 1 - State Of Chhattisgarh Through Secretary, Government Of Chhattisgarh Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur Chhattisgarh. (Petitioner No. 1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No. 1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 2 - The Commissioner, Department Of Excise Chhattisgarh, Raipur Chhattisgarh. 3 - The Collector, District Raipur Chhattisgarh. Versus 1 - M/s Chhattisgarh Ditilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District Durg Chhattisgarh. 2 - The Board Of Revenue, Chhattisgarh, Bilaspur Chhattisgarh, Circuit Court Raipur District Raipur Chhattisgarh. ---Petitioners --- Respondents And WP227 No. 451 of 2022 1 - State Of Chhattisgarh Through - Secretary, Government Of Chhattisgarh, Department Of Excise, Mahanadi Bhawan, Atal Nagar, Naya Raipur, District Raipur Chhattisgarh, (Petitioner No.1 Was Not A Party Before The Learned Revenue Board, But Has Been Impleaded As Petitioner No.1 Herein As It Is Necessary To Implead The State Government Through The Secretary Of Concerned Department). 5 2 - The Commissioner Department Of Excise Chhattisgarh, Raipur Chhattisgarh 3 - The Collector District Raipur Chhattisgarh Versus 1 - M/s Chhattisgarh Distilleries Limited FL 9 Licensee, Village Khapri, Post Kumhari, District Durg Chhattisgarh 2 - The Board Of Revenue, Chhattisgarh Bilaspur (CG), Circuit Court Raipur, District Raipur Chhattisgarh ---Petitioners For Petitioners/State For Respondents No. 1 : : --- Respondents
Legal Reasoning
Mr. Rajkumar Gupta, Addtitional Advocate General Mr. Manoj Paranjpe, Senior Advocate with Mr. Kabeer Kalwani, Advocate Hon'ble Shri Justice Rakesh Mohan Pandey Order on Board 04/09/2025 1. Since common issues of law and facts are involved in the above captioned petitions preferred by the State/petitioners, therefore, they
Decision
are being disposed of by this common order. 2. The petitioners/State have challenged the orders passed by the Board of Revenue, Chhattisgarh, Bilaspur (Circuit Court, Raipur), whereby and wherein the appeals preferred by respondent No. 1 have been allowed and the orders passed by the Collector Excise and the Commissioner, Department of Excise, Chhattisgarh, Raipur, have been set aside. 3. The facts of the case are as under:- The Chhattisgarh State Beverage Corporation (for short 'CSBC') was authorized by the State Government to procure foreign liquor for sale within the State of Chhattisgarh. The Chhattisgarh State Marketing Corporation Limited (for short 'CSMCL') was exclusively authorized for the retail sale of liquor. The Chhattisgarh State 6 Beverage Corporation used to purchase foreign liquor from the manufacturers / suppliers to sell it to CSMCL on retail counters. The CSBC used to store the purchased liquor in its warehouse / godown till the sale was made. Respondent No. 1, namely M/s Chhattisgarh Distilleries Limited, was granted FL-9 license as per Rule 8(i) of the Chhattisgarh Foreign Liquor Rules, 1996 (for short 'Rules 1996'), and was concerned with the bottling of country-made foreign liquor. An agreement was entered into between the Chhattisgarh Distilleries Limited and the Chhattisgarh State Beverage Corporation Limited for the sale of foreign liquor. On 12.04.2019; 23.07.2018; 01.11.2018; 29.10.2018; 06.07.2019; 11.06.2019; 23.10.2019; 24.10.2019; 08.10.2018 and 18.11.2019 (Annexure P-2 of each case), show cause notices were issued by the Collector Excise to respondent No. 1 to explain damages and breakages of liquor in different months. The details of the period, quantity of damage, and the amount of damage assessed are reproduced herein below in a chart:- Sl.No. WP(227) No. WP(227) No. 399/2022 1. 2. Show Cause Notice ; Number Dated and Alleged Damage in Liters 3039 dated 12.04.2019 156.19 Ltrs. Appeal Number before Board of Revenue and Dated Appeal Case No. A-14/R/E/14/ 2019 Dated 15.07.2021 Recoverable Amount Period Rs.46,860/- From 01.02.2019 to 28.02.2019 WP(227) No. 442/2022 -do- 4938 dated 23.07.2018 Rs.1,37,700/- From May to 2018 June 2018 459 Ltrs. 3. 4. 5. 6. 7. 8. 9. WP(227) No. 443/2022 WP(227) No. 444/2022 WP(227) No. 445/2022 WP(227) No. 446/2022 WP(227) No. 447/2022 WP(227) No. 448/2022 WP(227) No. 449/2022 7 -do- 7017 dated 01.11.2018 Rs. 15,026/- 50.08 Ltrs. -do- 6903 dated 29.10.2018 Rs. 15,755/- 52.51 Ltrs. -do- 5541 dated 06.07.2019 Rs.91,475/- 290.38 Ltrs. -do- 4808 dated 11.06.2019 Rs.59,020/- 187.36 Ltrs. -do- 7640 dated 23.10.2019 Rs.52,115/- 157.00 Ltrs. -do- 7741 dated 24.10.2019 Rs.56,565/- 173.94 Ltrs -do- 6316 dated 08.10.2018 Rs.40,784/- 135.94 Ltrs 10. WP(227) No. 451/2022 -do- 8352 dated 18.11.2019 Rs.40,390/- 124.04 Ltrs From 01.09.2018 to 30.09.2018 From 10.08.2018 to 31.08.2018 From 01.05.2019 to 31.05.2019 From 01.04.2019 to 30.04.2019 From 01.07.2019 to 31.07.2019 From 01.08.2019 to 31.08.2019 From 01.07.2018 to 09.08.2018 From 01.09.2019 to 30.09.2019 The respondents filed a detailed reply to the show cause notices wherein it was specifically stated that there were no details of the improper packaging or any kind of manufacturing defects. The orders were passed by the Collector Excise exercising the power under Rule 17 (2) of the Rules, 1996, on the basis of Clause 2.3 read with Clause 3.10 of the Agreement. The Collector Excise assessed the amount of 8 recovery in each case. Respondent No. 1 preferred appeals against those orders passed by the Collector Excise before the Excise Commissioner. The appeals preferred by respondent No. 1 before the Excise Commissioner were dismissed vide order dated 27.07.2019. Respondent No. 1 preferred appeals before the Board of Revenue, and those appeals were allowed vide order dated 15.07.2021, and against those orders, these writ petitions have been filed. 4. Mr. Rajkumar Gupta, learned Additional Advocate General appearing for the State/petitioners, would submit that the Board of Revenue committed an error of law while reversing the well-reasoned findings recorded by the Collector Excise and the Excise Commissioner. He would further submit that respondent No.1, according to the terms and conditions of the Agreement, was responsible for the risk and property in the stock lying with the purchaser, including any godown breakages. He would further submit that all the damages and breakages of stock supplied to the purchasers on account of defective and improper packaging or manufacturing defect would be the responsibility of the seller. He would contend that the Board of Revenue went wrong while holding that the breakage of bottles occurred during transportation or delivery. He would refer to Clauses 2.3 and 3.10 of the Agreement and would submit that respondent No. 1 was responsible to bear the loss till the resale is made by the purchaser to the third party. He would further submit that proper show notices were issued to respondent No. 1 and replies were filed. The authority concerned afforded sufficient opportunity to respondent No. 1, and thereafter, a decision was taken with regard to the recovery. He would argue that there was a written 9 agreement between the parties, and respondent No.1 cannot deviate from the terms and conditions of the agreement. He would also argue that the orders were passed by the Collector Excise in accordance with the provisions of Rule 17 of the Rules 1996. He would pray to quash the order dated 15.07.2021, passed by the Board of Revenue. 5. Mr. Manoj Paranjpe, learned Senior Advocate appearing for respondent No. 1, would argue that respondent No. 1 was granted FL- 9 license according to Rule 8(i) of the Rules 1996. Rule 8(i) speaks about the license for bottling of foreign liquor. He would contend that the proceedings were carried out against respondent No.1, treating it FL-10 licence holder, whereas the FL-10 licence deals with the delivery of liquor to the retail outlets. He would further submit that the Collector Excise passed orders while exercising the power under Rule 17(2) of the Rules, 1996, and according to the said Rule, the penalty can be imposed for contravention of the terms and conditions of the licence granted under licence FL-6, FL-10, and FL-10A. He would also contend that the show cause notices issued by the Collector Excise would make it clear that respondent No.1 was held liable to pay damages on account of breakages caused during the transportation of the liquor. He would further argue that the notices were issued according to the provisions of Rule 17(2) of the Rules, 1996, and, particularly, for contravention of the conditions of the FL-10 licence. He would also contend that respondent No.1 was a FL-9 license holder and any order could not have been passed against it according to the provisions of Rule 17(2) of the Rules, 1996. It is further argued that, according to Clause 2.3 of the Agreement, respondent No. 1 would be liable to bear the loss caused in the godown as per the provisions of 10 Clause 3.10. He would also submit that clause 3.10 states about damages and breakage supplied to the purchaser on account of defective or improper packing or on account of any manufacturing defect which shall be the liability of the seller. It is argued that the petitioners/State failed to prove any improper packaging or manufacturing defect or any kind of negligence which caused loss to the stock; therefore, the orders passed by the Collector Excise and affirmed by the Excise Commissioner were erroneous and rightly reversed by the Board of Revenue. He would pray that these writ petitions may be dismissed. 6. I have heard learned counsel for the parties and perused the documents. 7. Rule 17 (2) of the Chhattisgarh Foreign Liquor Rules, 1996, reads as under:- “17. Storage, racking, reduction losses.- No wastage allowance on storage of bottled (2) foreign liquor stocked with [FL 6, FL 10 or FL 10-A] licensee is permitted. If during verification any deficiency is discovered, duty and bottle fee at the prescribed rate on the quantity found deficit shall be recoverable from the licensee in addition to any other penalty which may be imposed under Rule 19.” A bare reading of this provision would make it clear that this rule deals with the licence granted under FL-6, FL-10, or FL-10A. This rule further states that during the course of verification, if a deficiency is noticed, the penalty would be imposed according to Rule 19. Thus, from a bare reading of this rule, it is clear that the FL-9 licence does not come within the purview of Rule 17(2) of the Rules, 1996. 8. Notices were issued to respondent No. 1 in accordance with the provisions of Rule 17(2) of the Rules, 1996. Further, the Collector 11 Excise/petitioner No. 3 has placed reliance on Clauses 2.3 and 3.10 of the Agreement entered into between the parties. 9. Clauses 2.3 and 3.10 of the Agreement reproduced herein below:- “2.3 The Parties further agree that till the re-sale is made by the purchaser to the third parties in terms of the provisions of this agreement though the risk and property in the stock lies with the purchaser, any godown breakages on account of provisions specified in Clause 3.10, shall vest with the Seller. 3.10 All damages and breakage of the Stock supplied to the purchaser on account of defective and improper packing or on account of any manufacturing defect in the contents shall be to the account of the Seller.” 10. Clause 2.3 of the Agreement, in the first part, states that till the resale is made by the purchaser to the third party, the risk and property in the stock lies with the purchaser, and any godown breakages as per Clause 3.10 shall vest with the seller. The second part of this Clause clarifies that any loss or breakages in the godown would be the liability of the seller. Clause 3.10 further clarifies the fact that damages and breakages of stock supplied to the purchaser on account of defective or improper packing or on account of any manufacturing defect shall vest with the seller. A conjoint reading of both Clauses would make it clear that if there is damage and breakage of stock supplied to the purchaser on account of defective and improper packing or on account of any manufacturing defect, and the same is detected within the godown premises, the seller would be responsible for such a loss. 11. The notices issued by the Collector Excise/petitioner No. 3 specifically state that there were breakages while the liquor was being transported 12 from Raipur godown to somewhere else. Thus, the loss or damage was not caused in any godown, and further, there was no damage or loss on account of improper packing or a manufacturing defect. 12. The Collector Excise, placing reliance on Clauses 2.3 and 3.10 and exercising the power under Rule 17(2) of the Rules, 1996, assessed the amount of recovery, and the Excise Commissioner affirmed the findings recorded by the Collector Excise. 13. The Board of Revenue considered the show cause notices issued by the Collector Excise to respondent No.1, the mandate of Rule 17(2) of the Rules, 1996, and the license issued to respondent No.1, i.e., FL-9, and consequently, set aside the orders passed by the Collector Excise and Excise Commissioner. 14. In light of above stated discussion, the contents of the show cause notices issued to respondent No.1; the provisions of Rule 17(2) of the Rules, 1996; Clauses 2.3 and 3.10 of the Agreement entered into between the parties and the findings recorded by the Board of Revenue, I am of the considered opinion that the Board of Revenue has rightly allowed the appeals preferred by respondent No.1. 15. Consequently, these writ petitions fail and are hereby dismissed. No costs. Sd/- (Rakesh Mohan Pandey) Judge vatti