Writ Petition No. 48505 of 2018 · The High Court
Case Details
- 1 - NC: 2025:KHC:4510 WP No. 48505 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 48505 OF 2018 (EXCISE) BETWEEN: 1. K. RAMESH, MANAGING PARTNER, M/S LA CLASSIC HOTEL, NO.70 KACHANAYANAKANAHALLI HOBLI, HENNAGARA POST, ANEKAL TALUK, BENGALURU -562 106. 2. M/S LA CLASSIC HOTEL, A REGISTERED PARTNERSHIP FIRM REGISTERED UNDER THE INDIAN PARNERSHIP ACT 1932 PRESENTLY CARRYING BUSINESS AT NO.158 & 21/3 YEDAVANAHALLI, HOSUR ROAD, ATTIBELE HOBLI, ANEKAL TALUK BENGALURU-562106, REPTD. BY ITS MANAGING PARTNER RAMESH K. (BY SRI C CHANDRASHEKAR, ADV. FOR SRI B V MALLA REDDY, ADVOCATE) AND: 1. STATE OF KARNATAKA, BY ITS PRINCIPAL SECRETARY, FINANCE DEPARTMENT (EXCISE), VIDHANA SOUDHA BENGALURU-560001. 2. THE DEPUTY COMMISSIONER, BANGALORE URBAN DISTRICT, KANDAYA BHAVAN, K G ROAD, BENGALURU-560001.
Facts
Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA …PETITIONERS - 2 - NC: 2025:KHC:4510 WP No. 48505 of 2018 3. THE COMMISSIONER OF EXCISE, GOVT. OF KARNATAKA, 2ND FLOOR, BMTC TTMC BUILDING, A BLOCK SHANTHINAGAR, BENGALURU-560027. 4. THE DEPUTY COMMISSIONER OF EXCISE, BENGALURU URBAN DISTRICT (SOUTH), 2ND FLOOR, BMTC TTMC BUILDING, A BLOCK, SHANTHINAGAR, BENGALURU-560027. 5. THE INSPECTOR OF EXCISE, ANEKAL RANGE, ANEKAL, ANEKAL TALUK, PIN-562106. …RESPONDENTS
Legal Reasoning
this Court in Shankar Wines Vs Commissioner Of Excise in Karnataka reported in 2017 SCC OnLine Kar 6942, Rule 17-B does not apply in case, the shareholding pattern does not change in excess of 50%. 5. Learned Government Advocate on the other hand would contend that there is a change in the composition of the partnership firm on account of an outgoing partner and also on account of death of one of the partners. It is also his contention that under Rule 17-A, the person who wants to come on record as a legal representative of a deceased licencee or lessee has to move an application to the Deputy Commissioner. Such a procedure is not followed as such the petitioners are not entitled for any relief. - 6 - NC: 2025:KHC:4510 WP No. 48505 of 2018 6. This Court has considered the contentions raised at the bar and perused the records. 7. The admitted factual position is that there were 5 partners to the partnership firm under the name and style of LA Classic. Thereafter, on account of death of one of the partners and as one of the partner went out of the partnership firm, there was a change in the composition of partnership firm. The partnership firm continued with three partners. 5% share of the deceased partner and 5% share of the outgoing partner were acquired by one of the partners who had 75% share. Thus, his shareholding went upto 85%. Applying the law laid down by this Court in SHANKAR WINES case supra, this Court is of the view that there is no change in the composition of partnership firm under Rule 17-B of the Rules, 1967. The transfer fee is to be charged only when the share holding pattern changes beyond 50%. Such a situation has not arisen in the case on hand. 8. Sofar as the contention of the learned Government Advocate that the requirement of Rule 17-A not complied is concerned, it has to be noticed that in a situation where the - 7 - NC: 2025:KHC:4510 WP No. 48505 of 2018 legal representatives of the licensee or lessee seeks to come on record as the legal heir of the deceased licensee, then Rule 17- A has to be applied. 9. In this case, the licencee, is a partnership firm. Whereas the renewal of license is sought by he same firm. Merely because one of the partners has expired that does not mean that application under Section 17-A has to be filed to seek renewal of license which was issued in favour of the partnership firm. Said provision applies to an individual licencee. 10. It is also relevant to note that in terms of the impugned order or the endorsement, the respondents have not raised the objection under Rule 17-A. For the aforementioned
Arguments
(BY SRI B MANJUNATH, AGA FOR R1 TO R5) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE LETTER DATED 11.10.2018 AT ANNEX-K ISSUED BY R-3 TO R-4;QUASH THE MEMORANDUM DATED 16.10.2018 AT ANNEX-L ISSUED BY R-4 TO R-5;QUASH THE ENDORSEMENT DATED 20.10.2018 VIDE ANNEX-M ISSUED BY R-5 TO THE PETITIONERS AND ETC. THIS PETITION, COMING ON FOR HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE ORAL ORDER This petition is filed to quash the letter dated 11.10.2018 marked at Annexure-K issued by 3rd respondent-Commissioner of Excise to respondent No.4-the Deputy Commissioner of - 3 - NC: 2025:KHC:4510 WP No. 48505 of 2018 Excise. In addition, petitioners are also praying to quash the memorandum dated 16.10.2018 marked at Annexure-L issued by respondent No.4-Deputy Commissioner of Excise to 5th respondent-Inspector of Excise and further a prayer is made to quash the endorsement dated 20.10.2018 marked at Annexure-M issued by 5th respondent to the petitioners. 2. The admitted factual position is that the partnership firm by name LA Classic was possessing CL-7 license. The said CL-7 license which was issued in the year 2016 is marked at Annexure - D. The partnership LA Classic comprised of 5 Partners. The partnership was constituted on 25.11.2010. The shareholding patterns of the partners is as under: i. K Ramesh - 75% ii. K Prabhakar - 5% iii. K Keshava Reddy - 5% iv. K M Krishna Reddy - 5% v. R Shyla @ R Usha - 10% One of the Partners viz., K M Krishna Reddy died on 11.06.2017 and thereafter, one of the partners viz., K.Prabhakar retired from the partnership firm. As a result, the partnership firm was reconstituted. On account of reconstitution, the reconstituted partnership firm comprises 3 - 4 - NC: 2025:KHC:4510 WP No. 48505 of 2018 partners viz., K Ramesh having 85% share, R Shyla having 10% and K Keshava Reddy having 5% share. The said partnership firm applied for renewal of Licence. The Commissioner of Excise vide Annexure-K dated 11.10.2018 permitted the Deputy Commissioner of Excise to renew the licence subject to payment of transfer fee applicable under Rule 17-B of the Karnataka Excise (General Conditions of Licences) Rules, 1967 (Hereinafter referred to as the 'Rules, 1967' for short). Thereafter, in terms of letter dated 16.10.2018, the Deputy Commissioner of Excise issued an endorsement to the Managing Partner of the partnership firm - Sri K Ramesh to pay the transfer fees under Rule 17-B referred to above. Pursuant to the said letter, the endorsement dated 20.10.2018 marked at Annexure-M is issued by 5th respondent demanding transfer fee under Rule 17-B. 3. Learned counsel for the petitioners would contend that Rule 17-B does not apply to situation contemplated in the present petition. It is his submission that originally there were 5 Partners to the partnership firm which had a license and one of the partners who had 5% share retired and another partner who had 5% share died and 10% (5%+5%) share of the - 5 - NC: 2025:KHC:4510 WP No. 48505 of 2018 deceased partner and the outgoing partner was acquired by remaining one partner, namely K Ramesh who had 75% shareholding earlier, and same is now enhanced to 85%. Thus, he would contend that there is no change in the composition of the partnership firm, to attract Rule 17-B. 4. Learned counsel for the petitioners would also urge that in view of the law laid down by the co-ordinate bench of
Decision
reasons, the writ petition succeeds. 11. Hence the following: ORDER (i) The writ petition is allowed. (ii) The impugned orders are quashed. - 8 - NC: 2025:KHC:4510 WP No. 48505 of 2018 (iii) The respondent No.4 shall issue the license in favour of the partnership firm without insisting for transfer fee under Rule 17-B. (ANANT RAMANATH HEGDE) JUDGE Sd/- BRN List No.: 1 Sl No.: 26