A.K. Ganguly, C.J.@mdashM/s. Skol Breweries Ltd., the Petitioner, is a company registered under the Companies Act. This company has challenged the imposition of franchise fees as well as the amendment of the Board''s Excise Rules whereby Sub-Rule 4 of Rule 104 of the Board''s Excise Rules has been amended providing for levying of franchise fees.
2. The Petitioner company is a subsidiary of M/s. Shaw Wallace Breweries Ltd. (SWBL) and manufactures its own product. The Petitioner''s case is that it is not tied up with any manufacturing company which is outside the State for brewing and bottling beer for and on behalf of such manufacturing company.
3. The material facts of the case are that the East Coast Breweries and Distilleries Ltd. (hereinafter referred to as ''ECBDL'') became a sick unit of Industrial Development and Corporation of Orissa Ltd. (hereinafter referred to as ''IDCOL'') and as such the State Government floated a tender sometime in July, 1992 for handing over the unit of ECBDL. In May 1994 the State Government handed over the unit of ECBDL to Shaw Wallace and Company Ltd. (hereinafter referred to as ''SWCL''). The SWCL purchased the shares of ECBDL which were held by IDCOL. ECBDL had its brewery at Paradip. SWCL has different subsidiaries all over India and Shaw Wallace Breweries Ltd. (SWBL) is one of the subsidiaries of SWCL. A decision was taken that ECBDL at Paradip be amalgamated/merged with the Petitioner company, namely, Skol Breweries Ltd. which was owned by SWBL having 93.76% share of the Petitioner company.
4. An application for merger was submitted u/s 394 of the Companies Act before the Hon''ble Company Judge of this High Court and Hon''ble Company Judge by an order dated 21st February 2002 allowed the said application for amalgamation and directed that all properties, rights, powers and interest of the Transferor Company, that is ECBDL, as specified in the schedule, be transferred to and vested in the Transferee Company that is, Petitioner company. Pursuant to that order of the Company Court, the Registrar, Company issued an appropriate certificate on 1.5.2002. The ECBDL thus lost its existence as a company and the Petitioner company became the sole owner of its brewery at Paradip and it is known as Skol Breweries Ltd. (Unit; East Coast Breweries). After the amalgamation, the Petitioner made an application on 11.6.2002 for incorporation of its name in the existing licence for brewing and bottling, which was in the name of ECBDL. After the application was kept pending for sometime, the same was granted to the Petitioner on 8.2.2003. The said grant of licence, according to the Petitioner, will relate back to the date when the application was made for the grant.
5. SWCL is the owner and proprietor of two brands which are, namely, Haywards and Royal Challenge. The ECBDL, prior to its amalgamation, used to manufacturer beer on the basis of an agreement and understanding with SWCL in the trade name of Haywards and Royal Challenge. The Petitioner''s case is that, the said ECDBL has merged with the Petitioner company which is again a 100% subsidiary of SWBL, which is also a subsidiary of SWCL. The Petitioner company is using the brand names of Haywards and Royal Challenge which are owned by SWCL. The further case of the Petitioner is that the SWCL is not a company which manufactures beer but it is the owner of two brand names. SWBL, a subsidiary of SWCL carried on the business of marketing of beer and not of manufacturing beer. It is the further case of the Petitioner that the Petitioner company, i.e. Skol Breweries Ltd., has been given the permission by the Excise Authorities to use the brand name of Haywards and Royal Challenge under Rule 41A of Excise Rules on payment of fees.
6. The challenge in the writ petition is to the levy of franchisee fees '' Rs. 2/- per bulk liter from the Petitioner. The Petitioner company has obtained the licence from the Excise Authority for manufacturing beer and for obtaining the said licence the Petitioner company has been paying annual fee of Rs. 21 lakhs. The Petitioner''s case is that once the licence is granted to the Petitioner for manufacturing beer, there is no question of granting any further licence. The new franchisee fee, which has been imposed under Rule 104(4) of the Board Rule, according to the Petitioner, is wholly an illegal imposition and cannot be validly imposed on the Petitioner. The relevant notification under Rule 104(4) which has come by way of amendment on 16.9.2002 is set out below:
BOARD OF REVENUE: ORISSA: CUTTACK
No.LVIII-47/2002-7287/ Ex. Dt.16.9.2002
NOTIFICATION
In exercise of the powers conferred by Sub-section (7) of Section 90 of the Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act II of 1915), the Board of Revenue, Orissa, hereby direct that the Board''s Excise Rules, 1965, published in the Board of Revenue Notification No. 2769/Ex. Dt. 11.8.1965 and published in Orissa Extra-ordinary Gazette No. 1703 dated 15.11.1965, shall be amended as follows:
AMENDMENT
A new rule as Sub-rule (4) to Rule 104 under part-II of Chapter VIII of Board''s Excise Rules, 1965 shall be inserted in the following manner:
Sub-Rule (4):
persons/companies licensed to brew and bottle Beer in the State may be permitted by the Excise Commissioner to tie-up with any manufacturing Company from outside the State to brew and bottle Beer for and on behalf of such manufacturing Company, subject to the condition that a fee of Rs. 2/- (Rupees two) only per B.L. shall be payable by such person/company before removal of stout (bottled-Beer) from the Brewery to the Excise Warehouse in Bond, and such fee shall be termed as "Franchise Fee". The Excise Commissioner may, however, refuse to permit a tie-up with any manufacturing Company from outside the State for any valid reason.
This Amendment shall come into force from the date of issue of this Notification.
By orders of the Member,
Board of Revenue, Orissa.
Sd/-
Excise Commissioner, Orissa.
7. On behalf of the Petitioner, it is contended that power to grant permit or licence to the Petitioner''s company is provided under Sections 12, 13 and 38 of Bihar and Orissa Excise Act.
8. It has been urged that in so far as the requirement of Rule 104(4) of the Board''s Excise Rules is concerned, such rule provides that companies licensed to brew and bottle beer in the State may be given permission by the Excise Commissioner to tie up with any manufacturing company outside the State to brew and bottle beer for and on behalf of such manufacturing company subject to the condition that a fee of Rs. 2/- per bulk litre shall be payable by the company seeking such permission before removal of stout (bottled-beer) from the Brewery to the Excise Warehouse in Bond. The Excise Commissioner may however, refuse to permit a tie up with any manufacturing Company from outside the State for any valid reason.
9. Analyzing the said provision, it has been contended that the Petitioner has never made an application for any tie-up with any other beer manufacturing Company which is outside the State of Orissa. It has not asked for any such permission since it is not manufacturing beer on behalf of any beer manufacturing company outside the State. Petitioner is manufacturing beer on the basis of licence granted to it. It does not have any tie-up with any other Beer company outside the State. Neither SCWL nor SWBL is a Beer manufacturing company. Therefore, imposition of Franchise Fee in the circumstances of the case is not at all tenable in law.
10. Apart from the aforesaid contention, it has also been urged that imposition of Franchise Fee has been allegedly done by the Board of Revenue. u/s 90(7) of the Act, the Board has been given power to prescribe scale of fees for the grant of any licence, permit or pass, but the Board has no power to prescribe a new form of fee which has been imposed under the Act. It was contended that the Board in the exercise of its rule making power has no competence or jurisdiction to create a new form of licence or permit or fee which is not provided under the Act. It has been urged that Rule 104(4) has been framed clearly in excess of the power conferred under Sections 13 and 38 of the Act. It was urged that no tax can be imposed by any bye law or rule or regulation unless the statute under which the subordinate legislation is made specially authorizes such imposition. It has also been stated that Franchise fee is not a fee but it is a tax as it is clear from the affidavit filed by the State authorities that the same has been imposed to augment and increase the revenue. So, there is no quid pro quo in the matter of imposition of Franchise Fee and tax cannot be imposed by the Board when it is not authorized by law to do so.
11. Learned Counsel for the State on the other hand has urged that the writ petition is not maintainable inasmuch as it has been filed by Skol Breweries Ltd. and the Chief Executive Officer of the Skol Breweries Ltd. has affirmed affidavit. It has been stated that the deponent does not disclose that he has any authority either from Skol Breweries Ltd. or IDCOL, who was the original licence holder for affirming such affidavit. It has also been stated that the writ petition should fail in view of non-joinder of necessary parties inasmuch as neither the IDCOL nor SWCL has been made parties. It has also been stated that the Company namely, M/s. Skol Breweries Ltd. is not a citizen of India and as such no right accrued in favour of the Petitioner-Company under Part-III of the Constitution of India to file the writ application and no fundamental rights or statutory rights as alleged has been violated. No share-holder has come forward to file the writ petition nor any authorization from the Board of Directors has been filed. It has also been stated that neither the Registrar of Companies nor the Liquidator nor Central Government or State Government has been impleaded.
12. It has been stated that duties of excise are imposed on the following goods which are manufactured or produced in the State namely,
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and narcotics;
It is also urged that Bihar and Orissa Excise Act, 1915 is a Pre-Constitution Act and its provisions are protected. The franchise fee is an additional Excise duty payable to the State which is being collected from the customers and any refund will result in unjust enrichment of the Petitioner. It has been argued that the Hon''ble Supreme Court has repeatedly discouraged unjust enrichment. So the writ petition may be dismissed.
13. Learned Counsel for the State also stated that Section 4 of the Companies Act points out which is a subsidiary Company and which is a holding Company. It was stated that IDCOL is the original holding Company which has not been impleaded. Various points have been raised about the amalgamation of the Companies and it has been stated that no scheme of re-organisation of other Companies from IDCOL to SWCL or from ECBDL has been filed except Annexure-1 which is an order dated 21.2.2002 of this Court. It has been stated that the judgment which is annexed as Annexure-1 to the writ petition is binding on the Petitioner-Company but does not bind the Central Government or the State Government. It is also stated that since the scheme is not a part of the judgment the same was violative of natural justice and the judgment is void and such a judgment can be disputed and set aside whenever it is sought to be relied upon. It is also submitted that Annexure-1 should not be relied upon in this case.
14. It has been further contended by the State that permission which has been given to the Petitioner under Rule 41A of Board''s Excise Rules, was always subject to payment of franchise fee. It was also said that the franchise fee is paid not by the Petitioner but by the consumers and the Petitioner is collecting franchise fee from the consumers by incorporating the same in the price list. Therefore, it cannot get back the same inasmuch as the same would amount to unjust enrichment. It was also stated that the franchise fee, which has been imposed by the Board in exercise of its power u/s 90(7) of the said Act has been validly imposed and Board is competent to impose such fee.
These are the rival contentions.
15. Before dealing with the contentions on merit, this Court proposes to deal with the objections about the maintainability of the writ petition. This Court finds that objection about maintainability has not been taken in the counter affidavit filed by the State. The question of maintainability raised in this case, being a question of fact, must be raised in the counter affidavit. That not having been done, this question cannot be gone into since it has been raised at the stage of argument. Apart from that the said objection has no substance. The objection that the writ petition is not maintainable as it has been affirmed by one, Shri Bhaskar Rath is also without any substance. Shri Bhaskar Rath is the Chief Executive of the holding company and the excise licence is in the name of the Chief Executive. In other words the licensee on behalf of the company is the Chief Executive. In other words the licensee on behalf of the company is the Chief Executive. The Chief Executive being the licensee can always file this writ petition challenging the imposition of franchise fee, which according to the Petitioner is not legally tenable. The objection that unless the share holders of the company come to file a petition, the company cannot maintain the writ petition is rather outdated in the context of filing of a writ petition. It has been held that interest of a company can always be represented by a responsible officer of a company. In the instant case, the Petitioner-company has been represented by Shri Bhaskar Rath, who is the Chief Executive of the holding company. Therefore, this objection, has no merit, even though the same has been raised at the time of argument.
16. In support of the contention that the writ petition is not maintainable, the learned Counsel relied on a decision of the Division Bench of this Court in the case of Brahmani Club v. State of Orissa and Ors. reported in 1972 (2) C.W.R. 1923. In that case the learned Division Bench held that a Club which is not registered under the Societies Registration Act, is to entitled to maintain a writ petition in its name. This Court fails to appreciate the relevance of the said decision with the facts of this case. In the instant case the Petitioner is a company registered under the Companies Act. Therefore, there is a substantial difference between companies registered under the Companies Act and an unregistered club. Therefore, respectfully accepting the principles in the case of Brahmani Club, this Court is of the opinion that those principles cannot be attracted to the case of a writ petition which has been filed on behalf of a registered company.
17. A challenge has been made to the order of amalgamation and merger of ECBDL with the Petitioner-company even though the said objection has not been stated in the affidavit filed by the State. From the order of the Company Judge in Company Case No. 43 of 2001 it appears that the scheme of merger of ECBDL with the Petitioner-company has been approved by the Company Court and on the basis of said order, Registrar of Companies, Orissa has issued a certificate which is the evidence of said amalgamation of ECBDL with the Petitioner-company and the said certificate has been given on 1st May, 2002. On the basis of the said certificate the Collector, Jagatsinghpur was informed and thereupon the Collector has issued licence in favour of the Petitioner-company. Therefore, the Excise authorities have acted upon the said amalgamation and merger and it is no longer open to the State counsel to question the same collaterally in this proceeding.
18. The objection of non-joinder of parties is also equally misconceived. Inasmuch as the Petitioner has not prayed for any relief as against the SWCL or SWBL or ECBDL or even IDCOL. Since no relief has been claimed against them, the objection raised for non-impleading them as parties to the proceeding is wholly without substance.
19. Now coming to the main case as to whether the Petitioner is coming within the purview of Rule 104(4) for payment of franchise fee, this Court finds that the case made out by the Petitioner in the writ petition has not been denied in the counter filed by the State. The Petitioner''s case is that it has been licensed to brew and bottle beer in the State of Orissa by the Excise Authorities and it is doing so and it has no tie up with any beer manufacturing company from outside the State to brew and bottle beer for and on behalf of such company. This case has been clearly made out in paragraph 17 of the writ petition. The Petitioner-company it has been averred, is a subsidiary of SWBL which is again a subsidiary of SWCL. There is no question of Petitioner''s tie up with those companies. Apart from that it has been averred that neither SWBL or SWCL is a beer manufacturing company. SWBL is a subsidiary marketing company of SWCL, which is certainly not a beer manufacturing company. The Petitioner-company is thus ultimately a subsidiary of SWCL. In support of the said contention the Petitioner referred to the Annual Report for the year 2001-2002 of SWCL and relying on those Annual Report the Petitioner has stated that SWCL is the actual owner of the Petitioner-company as well as SWBL and there is no question of a tie up between the Petitioner and its holding company. This fact has also been stated in paragraphs 20 and 22 of the petition.
20. The clear stand is that Petitioner is manufacturing its own product and has not tie up with any beer manufacturing company outside the State. The averments which have been made in the writ petition have been dealt with in paragraphs 16, 18 and 19 of the counter affidavit filed by the State. But the Petitioner''s averments have not at all been dealt with far less denied. In fact, in paragraph 19 of the counter affidavit it has been stated that the averments made in paragraph 21 to 26 of the writ petition are nothing but internal arrangement and affairs of the companies.
21. The next question is whether the Petitioner can utilize the brand name of its holding company. There is no bar in doing so under Rule 104(4) of the excise rules. The excise authorities permitted the Petitioner to do so by passing an order under Rule 41-A of Board''s Excise Rules. Rule 41-A runs as under:
41-A (1) No foreign liquor which has been manufactured within Orissa in the manner prescribed in Part III above or foreign liquor which has been manufactured out-side the State in India by licenced manufacturers and allowed to be imported into the State, shall be stored in any warehouse or sell-to-trade premises or in any retail or any other licensee''s premises for the purpose of sale unless and until the brand name under which and the label with which it is to be sold has been approved by the Excise Commissioner, Orissa and a permit has been granted by him authorizing sale under such brand name and with such label.
(2) The manufacturer shall, after the bottles are filled, corked and capsuled, affix on each bottle a label approved by the Excise commissioner on the strength of a permit issued by the Excise Commissioner for the purpose of affixing such label. The labels shall contain such particulars as may be prescribed by the Board from time to time.
(3) (a) The manufacturers licenced to manufacture foreign liquor within the State shall apply for approval of brands and labels and for issue of permit to use such brand name and label directly to the Excise Commissioner, Orissa. The manufacturers licenced to manufacture foreign liquor outside Orissa shall apply to Excise Commissioner, Orissa for approval of the brands and labels and for issue of permit through their respective Excise Authority of the State.
(b) Applications for approval for new brand name of foreign liquor mentioned at Sub-rule (1) and the labels corresponding to it shall be made to the Excise Commissioner, Orissa, at least two months prior to its sale or offer for sale; but the application renewal of approval of existing brand and label shall be made to the Excise Commissioner, Orissa, within the last working day of the month of February each year.
4. All applications for approval of brands and labels and renewals of such brands and labels and for issue of permit shall be accompanied by such fees as may be notified by the Board from time to time.
4.(a) If a manufacturer of any foreign liquor outside the State whose brands was marketed in the State prior to Regn. Of label rules came into force, cannot get their brands registered in the State of Orissa due to non-receipt of relevant documents from the concerned Excise Commissioner of the manufacturing unit within the particular date line, the unauthorized dealers of such manufacturing company of outside State may apply for registration of such brands with relevant documents by way of paying penalty '' 25% over the prescribed fee, if it is applied within 3 months from the date of expiry of the date line, 35% if it is over three months and below 6 months and 50% if it is exceeds 6 months.
5. (a) The Excise Commissioner, Orissa before approval of Brands and Labels and issue of permit, shall make such enquiries as deemed necessary and may also require samples of the liquor to be chemically examined before such approval to ensure that the liquor meets required standards.
(b) The correct and up-to-date record of all brands and labels which are approved or whose approval is renewed from time to time shall be maintained by the Excise Commissioner, Orissa.
(c) The list of Brands which are approved by the Excise Commissioner, Orissa up to 28th February every year shall be published by him within 31st March following and offered for sale at such price as may be fixed by the Excise Commissioner.
6. The Excise Commissioner, Orissa may refuse approval of brand and label if he is not satisfied.-
(a) in the case of foreign liquor bottled in India, that the bottler whose name is stated in the application holds a valid licence from the Government or any State or Union Territory in India to distil, compound, blend or bottle spirits or brew beer, and
(b) in the case of foreign liquor brought into India from any foreign country and bottled in India that the brand name under which or the label with which it is proposed to be sold is distinguishable from other brand names or labels which have already been approved or whose approval has already been applied for.
Provided that while refusing to approve a particular label or brand the Excise Commissioner, Orissa will state reasons to be recorded in writing and such refusal shall be made after giving the affected party a reasonable opportunity of being heard.
7. The permit which has been once issued shall remain valid until 31st of March next.
8. A permit already issued may be withdrawn at any time by the Excise Commissioner for reasons to be recorded in writing and after giving the affected party reasonable opportunity of being heard.
22. The Petitioner has been manufacturing beer in Orissa under the brand name of its holding Company on permission granted to it under Rule 41-A of payment of fees. An order dated 17.4.03 to that effect was passed which is as follows:
BOARD OF REVENUE: ORISSA: CUTTACK
APPROVAL OF FOREIGN LIQUOR LABELS UNDER RULE 41-A
OF BOARD''S EXCISE RULES, 1965.
Order No. LA-2/2003-3261/Niz., dated 17.4.2003
Whereas M/s. Skol Breweries Ltd. (Unit East Coast Breweries), Paradeep Dist. Jagatsinghpur having being authorized by M/s. Shaw Wallace Breweries Ltd., the brand owner in their letter dated 3.4.2003 have applied for approval of their Foreign Liquor/Beer Labels for the year, 2003-2004 and have deposited the required fee of Rs. 90,000/-(Rupees Ninety Thousand only) vide Challan No. 58 dated 25.2.2003).
In exercise of power vested under Rule 41-A of the Board''s Excise Rules, 1965, the Excise Commissioner, Orissa, hereby do approve the following Foreign Liquor/Beer Labels for the year 2003-2004 an authorizing the Company to ale the Foreign Liquor/Beer under the following approved labels provisionally pending receipt of agreement paper between Shaw Wallace Breweries Ltd. and M/s. Skol Breweries Ltd. In case no agreement papers received within 30 days, the label registration will stand cancelled automatically.
In using the above labels, the firm should ensure that the patent and Trade Marks laws are not infringed.
Sd/-Illegible.
Excise Commissioner, Orissa.
23. In several cases it has been held that corporate veil can always be lifted between the holding company and its subsidiary as was done in the case of
24. Therefore, in the admitted facts of the case there is no dispute that as a Subsidiary of SCWL, the Petitioner can use the labels of the holding Company without any tie up as contemplated under Rule 104(4) of the Board rules.
25. It has been urged by the learned Counsel for the Petitioner that the franchise fee is not exactly a fee, it is a tax. It is well settled that when there is no correlation between the fees charged and the service rendered the imposition is a tax and not a fee. In the counter affidavit, which has been used in this case by the State, it has been clearly stated that the franchise fee has been imposed by "The Member, Board of Revenue by virtue of such power conferred on him u/s 90 of the Act by way of making necessary amendment to the Rules to regulate the excise policy to be worked out so as to ensure the Government to earn the Excise revenue" (see para 3 at page 2 of the counter affidavit filed by the State). In paragraph 8 at page 6 of the counter affidavit it has been again stated that the Petitioner''s attempt to evade the franchise fee is nothing but an attempt made by the Petitioner "to evade import fee by unholy combination with the outside companies and to put the States to loose the revenue". Therefore, it is clear that the said franchise fee has been imposed to augment the revenue of the State.
26. It has been held in the case of
27. Section 13 of the said Act provides for taking of licence for manufacturing and bottling and sale of liquor. The Petitioner has got that licence.
28. "Board" has been defined u/s 2(2) of the Act which means the Board of Revenue. u/s 38 the Board has been given power to prescribe the forms and particulars for issuance of licence. Section 38(1) Clause (a) and Clause (b) are as follows:
38. Fees for, terms, conditions, and form of and duration of licences, permits and passes: (1) Every licence, permit or pass granted under this Act-
(a) shall be granted-
(i) on payment of such fees (if any) and
(ii) subject to such restrictions and on such conditions, and
(b) shall be in such form and contain such particulars, as the board may direct.
29. u/s 90 of the said Act, the Board has the power to make rules. In so far as the fees are concerned, the Board''s power to make Rules is provided under Sub-section (7) of Section 90, which is as follows:
90(7). For prescribing the scale of fees or the manner of fixing the fees payable in respect of any licence, permit or pass granted under this Act, or in respect of the storing of any intoxicant;
There is an Explanation to Section 90 which is relatable to Sub-section (7). The said Explanation is as follows:
Explanation - Fees may be prescribed under Clause (7) of this Section at different rates for different classes of licences, permits, passes or storage, and for different areas.
30. On a conjoint reading of Section 38 and Section 90(7) read with the Explanation, it is clear that the Board which is a delegated authority under the said Act, has the power to prescribe scale of fees or the manner of fixing of fees in respect of any licence, permit or pass and in exercise of that power the Board may fix different rates for different classes of licence, permits, passes etc. But even a conjoint reading of the said provisions does not show that the Board is empowered to prescribe a new fee which was not in existence in the past. Franchise fee was not in existence in the past. Board has no power to impose the same in exercise of its rule-making authority u/s 90(7) of the said Act. Admittedly the Board, being a delegated authority does not have the competence to create a new form of fee or permit which is not provided under the Acct. Sub-rule (4) of Rule 104 under which the franchise fee has been allegedly levied, has been framed by the Board in exercise of its power u/s 90(7) of the Act. This Court finds that Sub-section (7) of Section 90 does not authorize the Board to impose any new fee.
31. Reference in this connection has been made to the judgment of the Supreme Court in the case of
32. Following the said principles, we find that while acting under Sub-section (7) of Section 90 of the Act, the Board cannot impose a new fee which is in the nature of a tax, as has been discussed above, since it has not been authorized to do so under the Act.
33. Same principles have been reiterated by the Supreme Court in the case of Indian Express Newspapers (Bombay) Pvt. Ltd. Ors. v. Union of India and Ors. reported in AIR 1986 SC 515. In paragraph 73 at page 542 of the report the learned Judges, while dealing with the piece of subordinate legislation, held that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute. It has also been held that subordinate legislation must yield to plenary legislation and subordinate legislation must be framed in accordance with the plenary legislation. In the instant case, Rule 104(4) goes beyond the authority given to the Board u/s 90(7) of the Act and thus Rule 104(4) is ultra vires Section 90(7) of the Act.
34. In the case of
35. A reading of various provisions of the said Act makes it clear that the power of imposition of tax or duty on excise items vests in the State Government and not in the Board (see Section 27, 27-A and 28 of the Act). The Board is merely authorized u/s 90 to prescribe the scale of fees or the manner of fixing the fees but it cannot, in the garb of that power, impose a new fee, which is in the nature of a tax.
36. The same principles have also been followed in the case of
So, going by the aforesaid principles, this Court finds that in the instant case imposition of franchise fee, which is in the nature of a tax and which is totally new is not within the rule making power of the Board u/s 90(7) of the Act. Therefore, Sub-rule (4) of Rule 104 by which franchise fee is introduced is ultra vires the provision of Section 90(7) of the Act.
37. Learned Counsel for the State further argued that in the instant case franchise fee has been collected by the Petitioner from the customers and the Petitioner is not entitled to get it back inasmuch as the same would result in unjust enrichment. This argument cannot be accepted by this Court in view of the admitted facts of this case.
38. It is not in dispute that the entire beer manufactured by the Petitioner company is purchased by Orissa State Beverage Corporation Ltd. (OBSCL). The Petitioner does not sell it to the public. From Annexure 14 of the writ petition it appears that against such purchase payment is made by the said Corporation but the said Corporation has deducted Rs. 50 lakhs from the amount which is to be paid by the said Corporation to the Petitioner. The same amount has been deducted by the said Corporation towards franchise fee from the amount payable by the said Corporation to the Petitioner. In this case, in the further affidavit which has been filed by the State, on 13.7.2007 a cost card has been annexed. In the said cost card franchise fee has been shown as a component of the price and it has been stated that franchise fees of Rs. 15.60 per dozen of beer has not been provided in the budgeted cost card.
To the said affidavit the Petitioner has used a reply. In the said reply it has been stated that franchise fee was imposed by the amendment mentioned herein above on 16.9.2002 and after September, 2002 till August, 2006 the price of beer continued to Rs. 232.45 per case of 7.8 BL. Only in August, 2006 there was general increase in price by all beer sellers and the price was enhanced to Rs. 244.07 paise. Therefore, the price which was paid by OSBCL continued to be the same even before and after the imposition of franchise fee. Thus as a result of such imposition of franchise fee the price has not gone up, but the Petitioner has been paid less amount towards the price of beer. Therefore, it is wrong to assert that the Petitioner has sold the beer at a higher price by including the franchise fee collected from the customers.
39. This position here is just the reverse. OSBCL deducted Rs. 50 lakhs on account of franchise fee from the amount which is to be paid to the Petitioner by OSBCL towards the price of beer which it purchased from the Petitioner. This is also clear from the interim order dated 2.4.2003 granted by this Court in Misc. Case No. 2115 of 2003. Therefore, if today there is a direction upon the State/Excise Authority to refund the said amount of Rs. 50 lakhs to the Petitioner that would not be a case of unjust enrichment. There is also a prayer for refund with interest.
40. But in the facts and circumstances of the case, this Court while exercising its discretion does not feel inclined to pass an order directing the opposite parties to refund the said amount of Rs. 50 lakhs with interest to the Petitioner. Instead this Court directs that the said amount of Rs. 50 lakhs, without interest, be adjusted towards the payment of licence fee to be paid by the Petitioner to the State authority. Necessary adjustment be made between the State Excise authorities and OSBCL.
41. But this Court holds that the Excise Authority cannot impose the franchise fee on the Petitioner on and from the date on which the interim order was passed by this Court, i.e. from 2.4.2003. This Court holds that Sub-rule (4) of Rule 104 of Board''s Excise Rules is ultra vires Section 90(7) of the Act and the said sub-rule is declared invalid and not operative and not binding on the Petitioner.
42. The writ application is allowed to the extent indicated above. There shall be no order as to costs.
N. Prusty, J.
43. I agree.
