# Prakash Chandra v. The State of U.P. & Ors - **Citation:** (2024) 3 ILRA 1790 - **Court:** High Court of Judicature at Allahabad - **Decided:** 2023-12-02 - **Case number:** Writ Tax No. 804 of 2022 - **Bench:** Ajay Bhanot - **Source:** https://unisonlegal.in/judgment/allahabad-high-court/prakash-chandra-v-the-state-of-u-p-ors-50940 - **Pages:** 4 ## Headnote U.P. Excise Act, 1910 - Section 7 - foreign liquor license - adulterated liquor recovered from employee in conscious possession - statement admitting liquor taken out from licensed shop and diluted for sale - licensee liable for actions and omissions of salesman - vicarious liability - sale of liquor not a fundamental right - violation of provisions of the Act, Rules and terms of license - principles of natural justice duly adhered to - no error of fact . Writ petition dismissed. (E-9) ## Text 1790 INDIAN LAW REPORTS ALLAHABAD SERIES shall be at liberty to approach any other forum for appropriate relief. ----------- (2024) 3 ILRA 1790 ORIGINAL JURISDICTION CIVIL SIDE DATED: ALLAHABAD 02.12.2023 BEFORE THE HON'BLE AJAY BHANOT, J. Writ Tax No. 804 of 2022 Prakash Chandra ...Petitioner Versus The State of U.P. & Ors. ...Respondents Counsel for the Petitioner: Sri Neeraj Sharma, Sri Abhishek Sharma, Ms. Manisha Sharma Counsel for the Respondent: C.S.C. U.P. Excise Act, 1910 - Section 7 - foreign liquor license - adulterated liquor recovered from employee in conscious possession - statement admitting liquor taken out from licensed shop and diluted for sale - licensee liable for actions and omissions of salesman - vicarious liability - sale of liquor not a fundamental right - violation of provisions of the Act, Rules and terms of license - principles of natural justice duly adhered to - no error of fact . Writ petition dismissed. (E-9) (Delivered by Hon'ble Ajay Bhanot, J.) Foreign liquor license of the petitioner was cancelled by order dated 22.06.2021. The said order of cancellation was carried in appeal and thereafter in revision with no better results. The petitioner is consequently aggrieved by the orders of appellate and revisioning authority dated 12.10.2021 and 13.04.2022 respectively. Shri Neeraj Sharma, learned counsel assisted by Shri Abhishek Sharma, learned counsel for the petitioner submits as follows: 1. The liquor was not found from the possession of the licensee and nor from the premises of the liquor shop. 2. The adulterated liquor was recovered from an employee of the petitioner. The petitioner cannot be vicariously responsible for the action of his employees. 3. No FIR was got lodged which shows that the applicant had not committed any offence. The shop was closed on the date of search and seizure. 4. The cancellation of license is in excess of the powers conferred under Rule 18 of the U.P. Excise Settlement of Licenses for Retail Sale of Foreign Liquor (Excluding Beer and Wine) Rules, 2001 (herein after referred to as 'the Rules'). As per Rules 18-ka, licenses can be cancelled only in case liquor bottles are found in the premises of the liquor shop. Shri Ravi Shanker Pandey, learned Additional Chief Standing Counsel contends that the licensee had breached the conditions of the license. There is no fundamental right to trade any liquor. The licensee had breached the terms of the license. The liquor was found in the conscious possession of the sales person who was admittedly employed by the petitioner. The said liquor was adulterated and could not be accounted for. The principles of natural justice were duly observed in the proceedings. Licensees are expected to adhere strictly to the terms of the license and observe relevant 3 All. Prakash Chandra Vs. The State of U.P. & Ors. 1791 precautions otherwise it may result in public harm. The petitioner was granted license for retail sale of foreign liquor on 15.04.2020. The license records the name of liquor salesman as Prakash Ranjan. A show cause notice was issued to the petitioner on 15.04.2021 asserting that the empty liquor bottles, bottle caps of liquor bottles, bottles with their seals broken open which did not contain the prescribed quantity of liquor and liquor bottles were recovered in a rest house adjacent to the licensed premises. After the recovery, the said Prakash Ranjan in his statement admitted that the aforesaid liquor consignment was obtained from the licensed shop and was being diluted with water for sale. The petitioner had violated provisions of the U.P. Excise Act, 1910 read with the Rules and was asked to show cause as to why his license be not cancelled. The petitioner responded to the show cause notice by denying his liability. The reply to the show cause notice asserted that the entire liquor stock was recovered from the salesman after the shop was closed. The petitioner cannot be held liable for the actions of his salesman. The reply of the petitioner do not find favour with the licensing authority, the appellate authority as well as the revising authority. The following findings of fact have been returned concurrently by the aforesaid authorities: 1. The liquor bottles, bottle caps(in the manner descried earlier in the show cause notice) were recovered from a room adjacent to the liquor shop. 2. The salesman who was in possession of the aforesaid liquor bottles and other items gave a statement admitting that he had taken liquor bottles out from the licensed shop and was diluting them for purposes of sale. 3. The authorities below have referenced various provisions of the U.P. Excise Act, 1910 read with the Rules to hold that the applicant is liable for the actions of his sales persons in view of provisions of Section 7 of the U.P. Excise Act, 1910. On this footing, the authorities concurrently found that the petitioner had contravened the provisions of the U.P. Excise Act, 1910 read with the Rules and that the authorities also found that the act of the petitioner not only caused loss to the revenue but could potentially cause public harm. The Court finds that the principles of natural justice were duly adhered to. No ground regarding violation of principles of natural justice was taken before the authorities below or has been canvassed before this Court. The order has been passed after due application of mind to the materials and evidences in the record. The question which now arises for consideration is whether the petitioner who is the liquor licensee can be made liable for the actions and omissions of his salesman. Section 7 of the U.P. Excise Act, 1910 which govern the fate of this argument is extracted herein below: "Section 7. Possession of intoxicant by wife, clerk or servant. -- When any [intoxicant] is in the possession of a person's wife, clerk or servant on 1792 INDIAN LAW REPORTS ALLAHABAD SERIES account of that person, it shall, for the purposes of this Act, be deemed to be in the possession of that person." The statutory provision clearly makes the licensee liable for the actions of his servant (in this case the salesman). This case is an instance of vicarious liability where the licensee becomes liable for the actions of his employees. The reasons for creating vicarious liability in the context of sale of liquor is not far to seek. Sale of liquor is not a fundamental right and is strictly regulated by the State. The licensee is strictly bound by the terms of the license. Sale of liquor in violation of regulations created by the State will result in public harm besides causing loss of revenue. Hence, it is the responsibility of the licensee to observe strict procedures and unbroken vigilance over the administration of his shop, the maintenance of the liquor stock therein, and ensure that no pilferage takes place. The licensee is required to observe due diligence in administration of his shop at all times. The licensee is responsible for the actions and omissions of his employees in regard to sale of liquour from the licensed shop made in contravention of the regulations of terms of license. In the facts of this case, no such due diligence exercised on part of the licensee was disclosed either before the authorities or in this Court. The licensee was lax in the running and administration of the shop which led to pilferage of liquor. In fact, where the pilferage and adulteration of liquor happens due to maladministration of the licensee or his collusion with his employees is not relevant if pilferage and adulteration of liquour is established. The employee from whose possession the liquor was recovered, clearly was in conscious possession of the same. He has admitted that he had taken out the liquor from shop and was diluting it for sale in the market. The violation of the license terms is established. In this wake, the authorities below committed no error of fact in concluding that the petitioner was liable for the acts of his employee whose name is duly recorded in the license and that there was violation of provisions of U.P. Excise Act, 1910 read with the Rules and the terms of the license. Another aspect which has been brought to the Court's notice is that the laboratory report records that it was not possible to check the potency of the liquor samples as they were heavily diluted. This affirms the case of the department rather than supporting the submission of the petitioner. The third submission that Section 7 of the U.P. Excise Act, 1910 was not referenced in the show cause notice which vitiates the proceedings will now be examined. The show cause notice in clear and specific terms describes the manner of the contravention of the provisions of U.P. Excise Act, 1910. Wrong recital or nonreference of a provision of law will not vitiate the show cause notice as long the contents disclose the contravention in no uncertain terms. The writ petition is dismissed. 3 All. Hemant Taneja Vs. State of U.P. & Ors. 1793 ---------- (2024) 3 ILRA 1793 ORIGINAL JURISDICTION CIVIL SIDE DATED: ALLAHABAD 21.11.2023 BEFORE THE HON'BLE AJAY BHANOT, J. Writ Tax No. 1031 of 2023 Hemant Taneja ...Petitioner Versus State of U.P. & Ors. ...Respondents Counsel for the Petitioner: Sri Praveen Kumar, Sri Damodar Singh Counsel for the Respondent: C.S.C. The Goods and Services Tax (GST) Act, 2017- Section 129(3) - detention, seizure and penalty - registered trader - trading of taxable goods - goods in transit - vehicle intercepted - e-Invoice and e-Way Bill generated prior to interception - documents available in digital mode - digital copies produced by driver - hard copies produced by representative at the time of inspection - physical verification of goods - authenticity of documents not disputed - requirement of signature dispensed with in case of digital invoice - statutory duty of revenue authorities to verify documents from portal - failure of revenue authorities to verify - no intent to evade tax - no irregularity in bills - no cause for detention, seizure or imposition of penalty - payment of penalty to secure release does not disentitle assessee from filing appeal - appeal under Section 107 maintainable - penalty imposed under Section 129(3) not justified - orders passed by Mobile Squad and appellate authority liable to be quashed - amount deposited liable to be refunded . Writ petition allowed. (E-9) Cases Cited: 1. Hindustan Steel & Cement v. Asstt. State Tax Officer, State GST Department, Kozhikode, 2022 (65) G.S.T.L. 133 (Ker.). 2. M/s Galaxy Enterprises v. State of U.P. and 2 others, Writ Tax No. 1412 of 2022. (Delivered by Hon'ble Hon'ble Ajay Bhanot, J.) 1. Heard Shri Praveen Kumar, learned counsel for the petitioner and Shri Rishi Kumar, learned Additional Chief Standing Counsel for the State. 2. The petitioner is aggrieved by the order dated 04.01.2023 whereby the Assistant Commissioner, Commercial Tax, Mobile Squad-VII, Ghaziabad in purported exercise of powers under Section 129 (3) of the GST Act has imposed a penalty of Rs.1,83,442/-. The order of the penalty was carried in appeal by the petitioner. 3. The appellate authority/Additional Commissioner, State Tax, Mobile Squad, Unit-7, Ghaziabad by the impugned order dated 09.05.2023 upheld the findings of the authority of first instance and confirmed the penalty so imposed upon the petitioner. 4. Being aggrieved by the order dated 09.05.2023 passed by the respondent No.3 / Additional Commissioner, State Tax, Mobile Squad, Unit-7, Ghaziabad and the order dated 04.01.2023, the petitioner has assailed the same in the writ petition. 5. The petitioner is a proprietor running under the name and style of 'M/s. J.S. Enterprises' in trading of taxable goods falling under Chapter-74 of the Goods and Service Tariff Act. 6. The petitioner is duly registered as a trader under the GST Act and has been issued a GST Identification Number i.e.