Madhya Pradesh High Court
The State Of Madhya Pradesh vs M/S Som Distillers And Breweries … on 4 August, 2026
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
1 WP-922-2014
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
WRIT PETITION No. 922 of 2014
THE STATE OF MADHYA PRADESH
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WITH
WRIT PETITION No. 923 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 924 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
2 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 925 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 926 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 927 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
3 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 928 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 929 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 930 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
4 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 931 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 932 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 933 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
5 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 934 of 2014
THE STATE OF MADHYA PRADESH
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 935 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 936 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
6 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 937 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 938 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 939 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
7 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 940 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 941 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 942 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
8 WP-922-2014
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 943 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
WRIT PETITION No. 944 of 2014
THE STATE OF MADHYA PRADESH AND OTHERS
Versus
M/S SOM DISTILLERS AND BREWERIES LIMITED RAJRA CHAK
AND M/S SOM DIST.PVT.LTD. SEHATGANJ RAISEN
Appearance:
Shri Shiraj Qureshi - Govt. Advocate for the State.
Shri Vinod Kumar Bhardwaj - Senior Advocate with Shri Anand
V.Bhardwaj - Advocate for the respondent.
Reserved on : 22.07.2026
Pronounced on : 04.08.2026
ORDER
Since all these writ petitions arise out of the same cause of action and
involve identical questions of fact and law, they are being decided by this
common order. For the sake of convenience, the facts are taken from W.P.
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
9 WP-922-2014
No. 922 of 2014.
The present writ petitions have been preferred by the State under
Article 226 of the Constitution of India calling in question the legality,
propriety and correctness of the orders dated 05.02.2013 passed by the Board
of Revenue, Gwalior, whereby the Board allowed the appeals preferred by
the respondent and set aside the orders passed by the Deputy Excise
Commissioner as affirmed by the Commissioner, Excise, imposing duty and
penalty on account of transit loss found in excess of the permissible limit
under Rule 19 of the M.P. Foreign Liquor Rules, 1996.
FACTS
3. The respondent is a licensed manufacturer of liquor carrying on
business under the name and style of M/s Som Distillery. In the month of
May, 2009, the respondent transported consignments of beer and foreign
liquor from its manufacturing unit to the Government Foreign Liquor
Warehouse at Jabalpur under the cover of 40 transit permits. Upon arrival of
the consignments at the Government Foreign Liquor Warehouse, Jabalpur,
the Officer-in-Charge conducted verification of the consignments covered by
the said transit permits. During such verification, a transit loss of 423.34 bulk
litres of beer and 45.61 proof litres of foreign liquor was detected, which was
found to be in excess of the permissible transit loss prescribed under the
applicable rules. The Officer-in-Charge accordingly recorded the excess
transit loss in the verification report prepared in this regard. Consequent upon
the verification report, the Deputy Excise Commissioner issued a show cause
notice to the respondent calling upon it to explain within seven days as to
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
10 WP-922-2014
why duty and penalty should not be imposed and recovered in respect of the
excess transit loss of beer and foreign liquor. Despite service of the show
cause notice, the respondent failed to submit any reply or representation
within the stipulated period. In the absence of any response from the
respondent, the Deputy Excise Commissioner proceeded ex parte and, by
order dated 18.04.2011, imposed a penalty of Rs.38,100/- being three times
the prevailing rate of excise duty leviable on the excess transit loss of beer
and a further penalty of Rs.82,106/- being three times the prevailing rate of
excise duty leviable on the excess transit loss of foreign liquor, aggregating
to Rs.1,20,206/-. Aggrieved by the order dated 18.04.2011, the respondent
preferred an appeal under Section 62(2)(c) of the Madhya Pradesh Excise
Act, 1915 before the Commissioner, Excise. Upon consideration of the
matter, the Commissioner, Excise, by order dated 06.12.2012, dismissed the
appeal and affirmed the order passed by the Deputy Excise Commissioner.
The appellate authority recorded a finding that the excess transit loss stood
established on the basis of the verification report, the correctness of which
had not been disputed by the respondent. Thereafter, the respondent preferred
Excise Appeal No. A-81-II/13 before the Board of Revenue. The Board of
Revenue, by a consolidated order dated 05.02.2013 disposing of 24 appeals,
allowed the respondent’s appeal and set aside the orders dated 18.04.2011
and 06.12.2012 primarily on the ground that procedural irregularities had
vitiated the proceedings culminating in the said orders. Being aggrieved by
the order dated 05.02.2013 passed by the Board of Revenue, whereby the
well-reasoned orders of the Deputy Excise Commissioner and the
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
11 WP-922-2014
Commissioner, Excise were set aside despite the undisputed verification
report establishing excess transit loss beyond the permissible limit, the
petitioner/State has preferred the present writ petitions challenging the
legality, propriety and correctness of the impugned order.
ARGUMENTS
4. Learned counsel appearing for the petitioner/State submitted that the
impugned order passed by the Board of Revenue is wholly illegal, arbitrary
and contrary to the statutory scheme contained in the Madhya Pradesh
Excise Act, 1915 and the M.P. Foreign Liquor Rules, 1996. It is contended
that the Board of Revenue has set aside the well-reasoned and concurrent
orders passed by the Deputy Excise Commissioner and the Commissioner,
Excise solely on alleged procedural grounds while completely ignoring the
mandatory provisions governing levy of duty and penalty on transit shortages
exceeding the permissible limit.
5. It is submitted that Rule 19 of the M.P. Foreign Liquor Rules, 1996,
read with Rule 16 thereof, creates a complete statutory mechanism regulating
transit of liquor and prescribing the consequences where shortages during
transit exceed the permissible limits. Once excess transit loss is established,
the competent Excise Authority is under a statutory obligation to levy duty
and impose penalty in accordance with Rule 19(2). The authorities below
merely enforced the statutory mandate and did not exercise any equitable or
discretionary jurisdiction. It is argued that the Board of Revenue committed a
manifest error in importing equitable considerations into a fiscal statute
where none are permissible. Reliance is placed upon the Constitution Bench
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
12 WP-922-2014
judgment of the Supreme Court in Commissioner of Customs v. Dilip Kumar
& Co., (2018) 9 SCC 1, wherein it has been held that fiscal statutes are
required to receive strict interpretation and statutory requirements cannot be
diluted on equitable considerations.
6. It is further contended that the finding recorded by the Board of
Revenue regarding violation of principles of natural justice is factually
incorrect and contrary to the record. A detailed show-cause notice was
admittedly served upon the respondent, granting seven days’ time to submit
its explanation against the proposed levy of duty and penalty. Despite service
of notice, the respondent consciously chose not to file any reply or
representation. Having voluntarily failed to avail the opportunity afforded
under law, the respondent cannot subsequently contend that it was denied a
reasonable opportunity of hearing. It is submitted that principles of natural
justice require only that a reasonable opportunity be afforded; they do not
compel participation by the noticee. In support of the said submission,
reliance has been placed upon State Bank of Patiala v. S.K. Sharma, (1996) 3
SCC 364, Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321 and Dharampal
Satyapal Ltd. v. Deputy Commissioner of Central Excise, (2015) 8 SCC 519,
wherein the Supreme Court has consistently held that proceedings are not
vitiated merely because of some alleged procedural irregularity unless actual
prejudice resulting in failure of justice is established.
7. Learned counsel further submitted that the respondent never
disputed the transportation of the consignments, the verification conducted at
the Government Foreign Liquor Warehouse, the quantity actually received,
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
11:41:27 AM
NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
13 WP-922-2014
or the shortages recorded therein. The verification report clearly established
that the transit loss exceeded the permissible limit prescribed under the
Rules. The Board of Revenue, however, presumed prejudice without any
material on record and without recording any finding that the verification
report was incorrect or unreliable. It is argued that where the factual position
remains undisputed, remanding or annulling the proceedings on technical
grounds serves no useful purpose. Reliance is placed upon Aligarh Muslim
University v. Mansoor Ali Khan, (2000) 7 SCC 529, wherein the Supreme
Court held that where grant of another opportunity would not alter the
ultimate conclusion, interference on technical grounds is unwarranted.
8. It is further submitted that the respondent cannot be permitted to
take advantage of its own default. Having deliberately failed to respond to
the show-cause notice despite due service, the respondent cannot
subsequently complain of denial of opportunity. The well-recognized
principle that no person can derive benefit from his own wrong squarely
applies to the facts of the present case. The Board of Revenue failed to
appreciate that the respondent itself had waived the opportunity made
available under law.
9. Learned counsel also submitted that the Commissioner of Excise
had recorded a categorical finding that the respondent had admitted the
occurrence of shortages during transit. Such admission constitutes
substantive evidence and dispenses with the necessity of further proof.
Despite the said admission and the undisputed verification report, the Board
of Revenue ignored the material evidence available on record and proceeded
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
14 WP-922-2014
to interfere with concurrent findings of fact recorded by both the authorities
below.
10. It is further contended that excise laws are fiscal and regulatory
statutes enacted for protection of public revenue. Trade in intoxicating liquor
is not a matter of fundamental right but merely a statutory privilege regulated
by licence conditions and statutory provisions. Consequently, strict
compliance with the conditions governing manufacture, transport and storage
of liquor is mandatory. Reliance is placed upon the decisions of the Supreme
Court in Khoday Distilleries Ltd. v. State of Karnataka, (1995) 1 SCC 574
and State of Punjab v. Devans Modern Breweries Ltd., (2004) 11 SCC 26 ,
wherein it has been held that the State possesses plenary regulatory powers
in respect of liquor trade and excise provisions must be enforced rigorously
in the larger public interest and for protection of State revenue.
11. It is also submitted that both the Deputy Excise Commissioner and
the Commissioner, Excise concurrently recorded findings that the excess
transit loss stood duly established, the verification report was reliable, Rule
19 was clearly attracted and the statutory penalty had been correctly
computed. The Board of Revenue has not recorded any finding that such
conclusions were perverse, unsupported by evidence or contrary to the
record. Without dislodging the concurrent findings on facts, the Board could
not have interfered merely on technical grounds. Reliance is placed upon
Union of India v. P. Gunasekaran, (2015) 2 SCC 610 , wherein the Supreme
Court held that supervisory or appellate authorities cannot interfere with
concurrent findings of fact unless the same are shown to be perverse or based
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
15 WP-922-2014
on no evidence.
12. Learned counsel further argued that even assuming, without
admitting, that there existed any procedural irregularity in the proceedings
before the Deputy Excise Commissioner, the proper course available to the
Board of Revenue was either to decide the matter on the basis of the material
already available on record or to remand the matter for fresh adjudication
after affording an opportunity to the respondent. Instead of adopting either of
the aforesaid legally permissible courses, the Board completely annulled the
statutory proceedings, thereby extinguishing the substantive liability created
under Rule 19 of the Rules, which is contrary to settled principles governing
appellate jurisdiction.
13. Lastly, it is submitted that the impugned order suffers from patent
jurisdictional infirmities inasmuch as the Board of Revenue ignored the
mandatory provisions of Rule 19, overlooked the admitted excess transit
shortages, failed to appreciate that the respondent had consciously waived
the opportunity of hearing, presumed prejudice without any supporting
evidence, disregarded concurrent findings recorded by the statutory
authorities, failed to consider the amended statutory provisions governing
levy of penalty and omitted to exercise its jurisdiction to remand the matter,
if considered necessary. It is, therefore, submitted that the impugned order is
contrary to law and warrants interference by this Court in exercise of its
powers under Articles 226 and 227 of the Constitution of India. Reliance in
this regard has been placed upon the decision of the Supreme Court in
Radhey Shyam v. Chhabi Nath, (2015) 5 SCC 423 , wherein it has been held
Signature Not Verified
Signed by: YOGENDRA
OJHA
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
16 WP-922-2014
that the High Court may exercise its supervisory jurisdiction where a tribunal
acts contrary to law or exceeds the jurisdiction vested in it. On the aforesaid
grounds, learned counsel for the petitioner prayed that the impugned
common order dated 05.02.2013 passed by the Board of Revenue be quashed
and set aside and the order dated 18.04.2011 passed by the Deputy Excise
Commissioner, as affirmed by the Commissioner, Excise vide order dated
06.12.2012, be restored.
1 4 . Per contra, learned counsel appearing for the respondents
vehemently opposed the writ petitions and submitted that the present
petitions, preferred by the State of Madhya Pradesh challenging the well-
reasoned order dated 05.02.2013 passed by the Board of Revenue, are wholly
misconceived, devoid of merit, and deserve to be dismissed in limine. It is
contended that the Board of Revenue, upon a proper appreciation of the
material available on record and the applicable statutory provisions, has
rightly set aside the arbitrary orders dated 06.12.2012 passed by the Excise
Commissioner and 18.04.2011 passed by the Deputy Excise Commissioner,
whereby heavy penalties had been illegally imposed upon the respondents on
account of an alleged transit loss.
15. Learned counsel submits that the entire foundation of the
impugned penalty proceedings rests upon an alleged transit loss beyond the
permissible limit in respect of twenty-four transport permits involving 74.10
Bulk Liters of beer and 72.95 Proof Liters of foreign liquor. However, the
departmental authorities failed to adhere to the mandatory procedural
safeguards governing such proceedings. The authorities neither supplied the
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
17 WP-922-2014
mouths of the broken bottles nor furnished copies of the Panchnama to the
representatives of the respondents. Even the signatures of the respondents’
representatives were not obtained on the Panchnama. It is argued that the
Excise Commissioner himself had issued specific circular instructions dated
14.03.2011 directing all field officers to strictly comply with the prescribed
procedure relating to preparation of Panchnama and preservation of broken
bottles. Despite such categorical directions, the departmental authorities
acted in complete disregard thereof and proceeded to impose the penalty
merely on assumptions and conjectures without furnishing the requisite
documentary evidence. Such a course of action, it is submitted, is wholly
arbitrary and contrary to the principles governing quasi-judicial proceedings.
16. It is further submitted that the departmental authorities committed
a serious error in computing the penalty by adopting the highest duty slab
instead of the duty actually applicable to the consignment in question. The
foreign liquor invoices available on record, duly authenticated by the Officer
In-charge of the Foreign Liquor Warehouse, unmistakably establish that the
consignment consisted of cheap range foreign liquor falling within the lowest
duty category prescribed under Paragraph 16.2 of the Gazette Notification
dated 15.01.2009. In spite of the said documentary evidence, the Excise
Commissioner arbitrarily calculated the penalty by applying the maximum
duty rate of Rs.600/- per proof liter in respect of 72.95 proof liters and
imposed a threefold penalty amounting to Rs.1,31,305/-. Similarly, a
threefold penalty was levied on 74.10 Bulk Liters at the rate of Rs.30/- per
Bulk Liter, resulting in an additional demand of Rs.6,669/-. It is submitted
Signature Not Verified
Signed by: YOGENDRA
OJHA
Signing time: 8/5/2026
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NEUTRAL CITATION NO. 2026:MPHC-GWL:22091
18 WP-922-2014
that such computation is patently illegal and contrary to the statutory scheme.
17. Learned counsel further contends that the petitioners have
repeatedly sought to characterize the impugned demand as one relating to
recovery of excise duty, whereas, in reality, the proceedings are penal in
nature. Reliance is placed upon the decision of this Court in Gwalior
Distillers Limited v. Collector (Excise) & Others, 2002 (4) MPHT 12,
wherein it has been authoritatively held that although the amount of excise
duty may be adopted merely as a measure for quantifying the loss allegedly
caused to the State, the liability itself remains penal in character.
Consequently, unless the statutory preconditions necessary for imposition of
penalty are strictly satisfied, no recovery can lawfully be sustained. It is
submitted that the Board of Revenue has correctly appreciated this legal
distinction while allowing the respondents’ appeals.
18. It is also argued that Rule 19 of the M.P. Foreign Liquor Rules,
1996 underwent substantial substitution by Notification dated 29.03.2011.
Under the unamended Rule, the competent authority was empowered to
impose a penalty extending up to three to four times the maximum excise
duty payable. However, by virtue of the substituted Rule, the quantum of
penalty was significantly reduced and restricted to an amount not exceeding
the duty payable. The proviso dealing with deficiencies caused by
unavoidable circumstances such as fire or accident substantially remained
unchanged. According to the respondents, the substituted provision manifests
the legislative intent to ensure proportionality between the nature of the
violation and the penalty imposed. In support of the aforesaid submission,
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learned counsel places strong reliance upon the judgment of the Hon’ble
Supreme Court in Pernod Ricard India Private Limited v. State of M.P. &
Others, reported in AIR 2024 SC 3143.
19. It is submitted that in the aforesaid judgment, the Hon’ble Supreme
Court has conclusively held that proceedings pending after the substitution of
Rule 19 are governed by the amended provision and not by the earlier Rule.
The Apex Court has further observed that the object of the amendment was
to maintain proportionality between the alleged violation and the penalty
imposed and the benefit of the substituted Rule extends retroactively to
pending proceedings. Such an interpretation, according to the Hon’ble
Supreme Court, prevents arbitrary discrimination amongst similarly situated
licensees, advances the mandate of Article 14 of the Constitution, and
effectuates the legislative intent underlying the amendment. It is, therefore,
submitted that the Board of Revenue rightly extended the benefit of the
amended Rule while granting relief to the respondents.
20. Lastly, learned counsel submits that the entire proceedings stand
vitiated for violation of the principles of natural justice. The respondents
were never afforded an effective opportunity to participate in the
determination of the quantity of liquor allegedly destroyed, nor they were
granted a meaningful hearing before fastening the impugned liability. The
denial of a fair opportunity to contest the factual basis of the proposed
demand has caused serious prejudice and renders the orders dated 18.04.2011
and 06.12.2012 legally unsustainable. On the strength of the aforesaid
submissions, learned counsel contends that the Board of Revenue has
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correctly recorded findings of fact upon due appreciation of the material on
record. No jurisdictional error, perversity, or manifest illegality has been
demonstrated by the petitioners so as to warrant interference under Article
226 of the Constitution of India. Accordingly, it is prayed that the writ
petitions, being devoid of merit, be dismissed.
21. Heard counsel for the parties and perused the record.
DISCUSSION AND CONCLUSION
22. The principal grievance of the petitioner/State is that the Board of
Revenue erred in setting aside the orders passed by the Deputy Excise
Commissioner and the Commissioner, Excise, despite the verification report
recording transit loss beyond the permissible limit prescribed under Rule 19
of the M.P. Foreign Liquor Rules, 1996. According to the petitioner, once
excess transit loss stood established, levy of duty and penalty became a
statutory consequence and the Board was not justified in interfering merely
on procedural grounds.
23. It is well settled that even in fiscal and regulatory statutes, where
the consequences of adjudication are penal in nature, the authority exercising
quasi-judicial powers is under a legal obligation to adhere to the principles of
natural justice and to follow the procedure prescribed under law. Although
strict compliance with statutory provisions governing manufacture, transport
and storage of liquor is undoubtedly required, the same obligation equally
binds the departmental authorities while initiating and concluding
proceedings resulting in civil and penal consequences. The statutory
character of the proceedings cannot dispense with the minimum procedural
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safeguards which constitute an integral part of fair adjudication.
24. From the material available on record, it is evident that the
respondent consistently maintained before the appellate authority that the
mandatory procedure prescribed for verification of the alleged shortages had
not been followed. It was specifically contended that the Panchnama was
neither prepared in accordance with the prescribed procedure nor supplied to
the respondents. The representatives of the respondent unit were neither
associated with the preparation of the Panchnama nor their signatures were
obtained thereon. It was further asserted that the neck portions of the
allegedly broken bottles, with the caps remaining intact, were neither
preserved nor handed over to the respondent, despite the specific instructions
dated 21.07.2010 issued by the Excise Commissioner. The said instructions
mandated that, where excessive transit loss was detected at a Foreign Liquor
Warehouse, a Panchnama was to be prepared and the neck portions of the
broken bottles, with the caps remaining intact, were to be delivered to the
representative of the concerned unit. Notwithstanding repeated requests
made by the respondent unit, neither the Panchnama nor the neck portions of
the broken bottles were furnished to it. These objections were not merely
technical or procedural in nature; rather, they struck at the very root of the
proceedings, since the alleged shortage constituted the sole foundation for
fastening penal liability upon the respondents.
25. It is trite that where the quantum of penalty is linked to the amount
of duty payable, the determination of the applicable rate of duty assumes
foundational importance. An erroneous determination of duty necessarily
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vitiates the consequential computation of penalty. The authorities were under
a legal obligation to first ascertain the correct duty applicable to the
consignment on the basis of the relevant notification and the documentary
evidence before calculating the penalty. Failure to discharge this obligation
renders the impugned demand legally unsustainable.
26. The arbitrary application of the highest duty slab, despite the
existence of authenticated invoices demonstrating that the consignment fell
within the lowest duty category under Paragraph 16.2 of the Gazette
Notification dated 15.01.2009, amounts to a clear misapplication of the
statutory provisions and violates the principles of fairness governing quasi-
judicial adjudication. Such an error goes to the root of the matter and cannot
be treated as a mere irregularity in computation. Consequently, the finding
recorded by the Board of Revenue that the penalty had been calculated on an
incorrect and impermissible basis does not suffer from any legal infirmity
and constitutes an additional ground justifying interference with the orders
passed by the Deputy Excise Commissioner and affirmed by the Excise
Commissioner.
27. The Board of Revenue has recorded a categorical finding that the
departmental authorities failed to comply with the mandatory procedural
safeguards governing verification of transit shortages. Such finding is
essentially a finding of fact based upon appreciation of the material available
on record. The petitioner has not been able to demonstrate that the said
finding is either perverse, unsupported by evidence or based upon an
erroneous application of law. In exercise of writ jurisdiction, this Court does
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not sit as an appellate court to reappreciate factual findings unless they suffer
from patent perversity or jurisdictional error. No such infirmity has been
established in the present case.
28. The contention of the petitioner that service of a show-cause notice
by itself amounted to complete compliance with the principles of natural
justice is equally devoid of merit. Opportunity of hearing is undoubtedly an
important facet of natural justice; however, such opportunity must be
meaningful and effective. Where the very material on which penal liability is
proposed to be imposed has not been prepared in accordance with the
prescribed procedure or has not been made available to the affected party,
mere issuance of a show-cause notice cannot cure the foundational
procedural defects. The Board of Revenue, therefore, rightly concluded that
the respondents had been prejudiced in effectively defending themselves
against the proposed action.
29. This Court also finds considerable force in the submission
advanced on behalf of the respondents regarding the nature of the
proceedings. Although the amount recoverable may be quantified with
reference to the applicable rate of excise duty, the proceedings are essentially
penal in character. Consequently, the statutory conditions precedent for
imposition of penalty are required to be strictly established. The burden
rested upon the departmental authorities to demonstrate scrupulous
compliance with the statutory procedure before imposing a substantial
financial liability upon the licensee. The record does not disclose such
compliance.
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30. Another significant aspect which cannot be overlooked is the
subsequent substitution of Rule 19 of the M.P. Foreign Liquor Rules, 1996
by Notification dated 29.03.2011. The amended provision substantially
altered the scheme relating to imposition of penalty by restricting the
quantum of penalty to the duty payable instead of the earlier multiple
thereof. The legislative amendment clearly reflects the intention to introduce
proportionality in the matter of levy of penalty. The Hon’ble Supreme Court
in Pernod Ricard India Private Limited v. State of M.P.(supra) has held the
Apex Court that penalty provisions must be applied in a fair, proportionate,
and purposive manner, and beneficial provisions reducing the rigour of
penalty are applicable to pending proceedings. The failure to consider this
binding precedent further renders the orders dated 18.04.2011 and
06.12.2012 legally untenable.
31. The grievance of the petitioner that the Board ought to have
remanded the matter instead of setting aside the proceedings also does not
merit acceptance. The Board of Revenue, after examining the entire record,
arrived at the conclusion that the proceedings themselves stood vitiated
owing to non-compliance with mandatory procedural requirements and
improper computation of penalty. Once such conclusion was reached, the
Board was fully competent to grant consequential relief. Merely because
another course was possible would not justify interference under Article 226
of the Constitution.
32. The argument that the respondents had admitted the shortages also
does not advance the case of the petitioner. Admission of physical shortage,
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by itself, does not dispense with the requirement of establishing that the
statutory procedure governing verification, quantification and determination
of liability was duly followed. Penal liability cannot rest solely upon an
alleged admission when the procedure adopted for determining such shortage
itself stands under serious doubt.
33. Equally, the contention that the Board interfered with concurrent
findings of fact cannot be accepted. Upon finding that the orders of the
subordinate authorities suffered from material procedural irregularities and
incorrect application of the statutory provisions, the Board was justified in
exercising its powers. The petitioner has failed to establish that the Board
exceeded its jurisdiction or acted contrary to any statutory prohibition.
34. The scope of judicial review under Article 226 is confined to
examining the decision-making process and not the correctness of every
factual conclusion. Unless the impugned order suffers from patent illegality,
manifest arbitrariness, jurisdictional error or perversity, interference is
unwarranted. The impugned order of the Board of Revenue discloses due
consideration of the rival submissions, appreciation of the evidence available
on record and application of the relevant statutory provisions. This Court
does not find any jurisdictional infirmity warranting exercise of its
extraordinary writ jurisdiction.
35. Accordingly, this Court is satisfied that the Board of Revenue
rightly interfered with the orders passed by the Deputy Excise Commissioner
and the Commissioner, Excise after finding that the penalty proceedings
suffered from serious procedural defects, the mandatory safeguards had not
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been complied with, the computation of penalty was inconsistent with the
applicable statutory provisions. The impugned orders dated 05.02.2013,
therefore, does not call for interference.
36. Consequently, the writ petitions fail and are hereby dismissed. The
orders dated 05.02.2013 passed by the Board of Revenue is affirmed.
(MILIND RAMESH PHADKE)
JUDGE
ojha
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