STATE OF KARNATAKA AND ORS. versus V.S.NARAYANA SWAMY

Citation: [1991] 3 S.C.R. 700 · Decided: 21-08-1991 · Supreme Court of India · Bench: RANGANATH MISRA · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
STATE OF KARNATAKA AND ORS. 
v. 
V.S. NARAYANA SWAMY 
AUGUST 21, 1991 
[RANGANATH MISRA, CJ, M.H. KANIA AND 
KULDIP SINGH, JJ.] 
• 
Mysore Excise Act, 1965/Karnataka Excise (Sale of Indian & 
Foreign Liquors) Rules. 1968: Section 23(d)/Rule 8( I): Manufacture 
and sate of excisable articles-Imposition of licence fee thereof under the 
Act-Licence fee for the authorised shop-Imposition of under the 
Rules-The relevant rule-Whether supported by the Act and had the 
authority of law. 
The Respondent, a licencee under the Karnataka Excise Act for 
selling liquor at an approved shop, filed a Writ Petition before the High 
D 
Court challenging the vires of Section 23(d) of the Mysore Excise Act, 
1965 and Rule 8(1) of the Karnataka Excise (Sale of Indian and Foreign 
Liquors) Rules, 1968 as being beyond the legislative competence of the 
State, 
-4 
The High Court negatived the contention of the Respondent in 
* 
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respect of Section 23(d) of the Act but held that Rule 8(1) authorising 
the levy of licence fee for retail shop was without authority of law and 
directed refund of the levy collected for three years prior to the filing of 
the Writ Petition, 
Aggrieved by the High Court's decision, the appellant-State has 
F 
preferred the present appeal by special leave. 
Dismissing the appeal, this Court, 
HELD: The High Court rightly did not accept the challenge to 
Section 23(d) of the Mysore Excise Act, 1965. What is authorised under 
G Section 23(d) is imposition of a fee of licence in respect of manufacture 
or sale of any excisable articles. Rule 8(1) of the Karnataka Excise (Sale 
oflndian & Foreign Liquors) Rules, 1968 has obviously gone beyond the 
enabling provision in the section by requiring a Iicenct fee to be paid for 
the premises where the licensed shop is located. Such a fee would not 
have the support of Section 23(d). It is unnecessary to refer to prece-
H dents for support for this conclusion. It may be possible for the Legisla-
700 
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• 
• , 
STATE OF KARNATAKA v. NARAYANA SWAMY [MISRA, J.J 
701 
ture to make a stalvtory provision for 11 lieence fee of,Uie type contemp· A 
lated under the Rules but without authority of the statute a rule of this 
type should not have been made. [702E-F) 
CIVIL A'f>PEl.LATE JURISDICTION: Civil Appeal No. 1801 
of 1974. 
From the Judgment and Order dated 20.3.1974 of the Karnataka 
High Court in W.P. No. 1956 of 1971. 
R.N. Narasimhmurthy, Navin Singh and M. Veerappa for the 
Appellants. 
The Judgment of the Ccurt was delivered by 
RANGANATH MISRA, CJ. The appeal is by special leave. 
B. 
c 
Challenge is to the.Judgment 0f the Karnataka High Court declaring 
Rule 8(1) of the Karnataka Excise (Sale of Indian & Foreign Liquors) 
Rules, 1968 in so far as it relat~s to levy of licence fee for retail vending 
D 
of authorised Indian and foreign liquors and directing refund of such 
levy collected within three years prior to 2.8.1971 when the Writ Peti-
tion was filed. 
Respondent, an excise contractor, had taken in auction the 
exclusive· privilege to sell iiquors in retail at an approved shop pre-
E 
mises. He was issued the appropriate licence under tho provisions of 
the law on payment of licence fee in terms of Item 2 of Rule 8(1) of the 
aforesaid Rules. Respondent filed a writ petition before the Karnataka 
High Court challenging the vires of s. 23(d) of the Mysore Excise Act, 
1965 (hereafter 'Act' for short) and Rule 8(1) as being beyond the 
legislative competence of the State Legislature. The High Court did 
F 
npt accept the contention of the respondent in regard to s. 23 but held 
that Rule 8(1) authorising the levy of a licence fee for the retail off 
shop was without authority of law. 
Section 23(d), as far as relevant, provides: . 
G 
"23. Ways of levying such duties-
Subject to such Rules regulating the time, place and 
manner, as may be prescribed, excise duty and countervail-. 
ing duty under section 22 shall be levied in one or'more of 
the following ways, as may be prescribed, namely: 
H 
A 
B 
c 
D 
702 
SUPREME COURT REPORTS 
[1991] 3 S.C.R. 
(a) ....... . 
(aa) ....... . 
(b) ....... . 
(c) ....... . 
(d) by fees on licences in respect of manufacture or 
sale of any excisable articles.,; 
Rule 8 made under the rule making powers, under the Act, intu 
~.J 
alia, provides: 
~ 
"8. Fee to be paid-
( 1) The licence fee for the several kinds of licences shall be 
as follows, namely: 
1 ...... . 
2 ...... . 
3 ...... . 
The High Court rightly did n

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