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Satya Bhusan Ray And Others v. State Of Orissa And Others
Factual and Procedural Background
The petitioners challenged the validity of the amended Rule 103(1) of the Orissa Excise Rules, 1965, as framed by the Board of Revenue, Orissa, and sought refund of excess fees collected illegally. Initially, the Board framed Rule 103(1) on August 14, 1965, fixing fees for licenses for retail vend of certain intoxicants by auction, subject to a reserved fee sanctioned by the Commissioner. By a notification dated January 28, 1966, the Board amended the rule to include retail sale ("off sale" or "vend") of foreign liquor under the auction system.
A sale notification fixed a minimum fee of Rs. 600 per annum for foreign liquor licenses, whereas under the original rules the license fee was fixed at Rs. 600 per annum. The Additional District Magistrate, Ganjam, scheduled an auction for February 4, 1966. Subsequently, a writ petition (Lakshmikanta Sahu v. Superintendent of Excise) challenged the amended rule's validity and sought a temporary injunction, which was dismissed on May 4, 1966, allowing the auction and collection of fees exceeding Rs. 600.
On April 10, 1967, the Supreme Court declared the amended Rule 103(1) invalid insofar as it required auction-based fees for retail sale of foreign liquor. Following this, the present writ petitions were filed seeking refund of the excess fees collected. The issues raised were addressed in a related judgment delivered by this Court and were grounded in settled Supreme Court precedents.
Legal Issues Presented
- Whether the amended Rule 103(1) of the Orissa Excise Rules, 1965, which provided for auction-based fees for retail sale ("off sale") of foreign liquor, was valid.
- Whether the petitioners are entitled to refund of the excess license fees collected in contravention of the rules.
- The extent of the High Court's power to order repayment of money collected without lawful authority.
- The applicability of limitation periods and conditions for refund of tax or fees collected by mistake of law.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Laxmikanta Sahu v. Superintendent of Excise, Berhampur (1968 SCD 14) | Invalidity of amended Rule 103(1) regarding auction-based fees for foreign liquor retail licenses. | Supreme Court’s declaration of invalidity formed the basis for refund claims in the present case. |
| Abdul Hassan v. State of Orissa (AIR 1969 Ori 180) | Clarification on enforcement of statutory and fundamental rights, and consequential relief including refund of unlawfully collected fees. | This Court relied on this judgment to allow refund of excess fees collected without lawful authority. |
| State Of Kerala v. Aluminium Industries Ltd., Kundara, Quilon (1965-16 STC 689, SC) | Principle that tax or fees collected by mistake of law should ordinarily be refunded by the State. | Supported the Court’s reasoning that refund is due where fees were collected without lawful authority. |
| State of Madhya Pradesh v. Bhailal Bhai (AIR 1964 SC 1006, 1010) | Reinforcement of the duty of the State to refund tax or fees collected by mistake of law, subject to limitation. | Applied to affirm the petitioners’ right to refund within the prescribed limitation period. |
| Gill and Co. v. Commercial Tax Officer (Civil Appeal No. 1580–1595 of 1967) | Legal principles regarding refund of tax and enforcement of statutory rights by courts. | Used to underpin the High Court’s authority to order repayment of illegally collected fees. |
Court's Reasoning and Analysis
The Court analyzed the validity of the amended Rule 103(1) in light of the Supreme Court’s ruling that declared the auction-based fee provision for foreign liquor retail licenses invalid. Recognizing that the fees collected in excess of Rs. 600 were without lawful authority, the Court invoked settled principles that the State must refund taxes or fees collected by mistake of law. The Court emphasized the High Court’s power to enforce statutory and fundamental rights by granting consequential relief, including refund of unlawfully collected money. The Court also considered the limitation period of three years for filing such claims, measured from when the mistake became known to the payers. Applying these principles and relevant precedents, the Court allowed the petitions and directed the refund of the excess fees collected.
Holding and Implications
Petitions Allowed.
The Court directed the opposite parties to determine and refund the amount of excess fees collected within one month from the date of receipt of the order. The petitioners were also awarded consolidated costs and hearing fees. This decision directly affects the parties by ensuring recovery of unlawfully collected fees but does not establish any new legal precedent beyond reaffirming the existing principles governing refund of taxes or fees collected without lawful authority.
Barman, C.J:— The petitioners challenge the validity of the amended R. 103(1) of the Orissa Excise Rules, 1965 framed by the Board of Revenue. Orissa and pray for refund of the excess fee illegally collected from the petitioners in circumstances hereinafter stated.
2. On August 14, 1965, the Board framed Rule 103(1) which provided as follows:
“The fees for licenses for the retail vend of country spirit, fermented Tari, Pachwai, Ganja and Bhang shall be fixed by auction subject to a reserved fee sanctioned in each case by the Commissioner”.
3. By a notification dated January 28, 1966, the Board amended the 1965 rules. The impugned amended Rule 103(1) reads as follows:
“The fee for licenses for the retail vend of country spirit, fermented Tari, Pachwai, Ganja and Bhang as well as for the retail sale (hereinafter referred to as “off sale” or “vend”) of foreign liquor shall be fixed by auction subject to a reserved fee sanctioned in each by the Commissioner”.
4. A sale notification was issued under Rule 103(1) of the Board's Excise Rules, 1965 as amended on January 28, 1965 by which the Board of Revenue, Orissa required that all license fees for retail “off” vend of foreign liquor shall be fixed by auction and that the minimum fee for such a license shall be Rs. 600/- per annum while under the provisions of the rules licensee had to pay a fixed license fee of Rs. 600/- per annum only.
5. The Additional District Magistrate, Ganjam issued a notification fixing February 4, 1966 for auction sale of foreign liquor off shops in the district for the year 1966–1967.
6. Thereupon a writ petition Lakshmikanta Sahu v. Superintendent of Excise, Berhampur (O.J.C No. 56 of 1966) was filed in this court challenging the validity of the amended Rule and praying for temporary injunction therein.
7. On May 4, 1966 the said writ application (O.J.C No. 56 of 1966) was dismissed by this Court and auction took place and money in excess of Rs. 600/- as fixed was collected. On April 10, 1967 the petitioner appealed to the Supreme Court who declared that the amended Rule 103(1) is Invalid in so far as it provides that a fee for license for retail sale (referred to as “off” sale or “off” vend) of foreign liquor shall be fixed by auction. (Laxmikanta Sahu v. Superintendent of Excise, Berhampur, 1968 SCD 14).
8. Thereafter the present writ petitions were filed on April 25, 1967, August 14, 1967 and January 2, 1968 respectively, all for refund of the fee in excess of Rs. 600/- illegally collected from the petitioners.
9. The points involved herein are fully covered by the judgment of this court delivered to-day in Abdul Hassan v. State of Orissa (O.J.C No. 219 of 1967: (AIR 1969 Ori 180) and allied O.J.Cs all heard together, on the basis of the settled position in law as laid down by the Supreme Court in State Of Kerala v. Aluminium Industries Ltd., Kundara, Quilon., 1965-16 STC 689 (SC); State of Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006, 1010 and Gill and Co. v. Commercial Tax Officer, Civil Appeal No. 1580–1595 of 1967 D/- 9-2-1968 (see 1968 SC (Notes) 80). It was held that the High Courts have the powers for the enforcement of statutory rights and fundamental rights, to give consequential relief by ordering repayment of money realised by the Government without the authority of law; where tax is levied by mistake of law then ordinarily it is the duty of the State, subject to any provision of the law relating to sales tax to refund the tax. If refund is not made, remedy through court is open subject to the same restrictions and also to the period of limitation namely three years from the date when the mistake had become known to the person who has made the payment by mistake.
10. In this view of the case, the petitions are allowed and the opposite parties are directed to determine the amount of excess fee collected and refund the same within one month from the date of receipt of order passed herein. The petitioners are also entitled to a consolidated set of costs. Hearing fee Rs. 100/-.
11. Acharya, J.:— I agree.
H.V.J/D.V.C
12. Petitions allowed.
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