LexSTATE OF ANDHRA PRADESH versus Y. PRABHAKARA REDDY
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STATE OF ANDHRA PRADESH v. Y. PRABHAKARA REDDY MARCH 4, 1987. A [0. CHINNAPPA REDDY AND M.M. DUTT, JJ.] B Andhra Pradesh Excise Act, 1968: ss.2(10), 17, 21-23/Andhra ( Pradesh (Arrack, Retail Vend Special Conditions of Licences) Rules, \ 1969: ".7, II & 15/Andhra Pradesh (Lease of Right to Sell Liquor in Retail) Rules 1969: ".2(ix), 3, 16, 18 & 22/Andhra Pradesh Excise ... ,-··- (Amendment) Act, 1984--Minimum guaranteed quantity of a"ack C short drawn-Contractor whether entitled to deduct from issue price excise duty component-Issue price-Connotation of. -J. Section 17 of the Andbra Pradesh Excise Act 1968, as it stood at the relevant time, provided for the grant of lease for the manufacture or sale of an intoxicant. It also provided that a lease shall not take effect D until a licence under the Act was also issued. Section 23 provided that the sum accepted in consideration for the grant of any lease under s.17 was to be the excise duty payable in respect of that excisable article- Rule 3 of the Andbra Pradesh (Lease of Right to Sell Liquor in ;., Retail) Rules, 1969 prescribes that every lease of right to sell liquor in E retail shall be granted by auction. Rule 7 of the Andbra Pradesh (Arrack Retail Vend Special Conditions of Licences) Rules, 1969 re- quires the licences to purchase arrack from the distillery, warehouse or depot allotted by the Government and to pay 'issue price' as notified. Rule 15 provides for the purchase of a specified minimum guaranteed ~ quantity of arrack every month and for the adjustment of the issue F "" price in case of any short-fall in the purchase of the minimum + guaranteed quantity ofliquor. A question arose as to whether under the Excise-Law prevailing in the State, the Government was entitled to claim from the excise con- tractors, wbo failed to lift -the minimum guaranteed quantity of liquor, G the amount said to represent the excise duty component in the issue price of liquor relating to such unlifted quantity of liquor. A Full Bench of three Judges of the High Court in V. Narasimha Rao v. Superintendent of Excise, (AIR 1974 AP 157) held In favour of the Government_ It took the view that three items, namely, duty, cost H 513 • 514 SUPREME COURT REPORTS [1987] 2 s.c. R. A and sales tax constituted the issue price. Thi~ view, however, was over· ruled by the Full Bench of Five Judges of the same High Court In Atluri Brahmanandam v. Tahsildar of Gannavaram, (AIR 1977 AP 196) whe- rein it was held !hat the Government could not do so. It treated the excise duty as a severable element of issue price. That judgment was assailed in the appeals and petitions filed by the Government. B To nullify the effect of that judgment and to validate the demands raised by the Government the State Legislature enacted the Andbra Pradesh Excise (Amendment) Act X of 1984. The amended s.17 pro· vides for grant of lease or licence for exclusive privilege of manufacture, supply by wholesale or sale of any liquor or other intoxicants. The new C s.23 empower~ the competent officer to accept payment of a sum in consideration of the grant of lease or licence or both for the exclusive privilege in respect of the liquor or any other intoxicant under s.17. Section 4 of the Amending Act, provides for the validation of earlier demands made in respect of issue price of short drawn minimum guaranteed quantity of liquor. Demands raised pursuant to the Amend· D ing Act were upheld by the High Court by a later judgm~nt. The aggrieved excise contractors filed appeals to this court. Some of the contractors who bad originally succeeded because of the decision of Five Judges Bench and were again called upon to make good the deficit after the Amending Act was passed, having failed iu the High E Court filed special leave petitions to this Court. It was contended for the aggrieved contractors that what was sought to be recovered from them was excise duty on unlifted quantity of liquor which was not authorised by the provisions of the Act, as the excise duty being a part of the issue price it could onl:' :elate to liquor F drawn by them and not pertain to undrawn liquor, that without amend- ing ss.21 and 22 of the Excise Act the amendment of s.23 affected by the Legislature led nowhere towards achieving the result aimed at by the Legislature and that the Legislature could not validate the demands earlier made and struck down hy the Courts, merely b
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