As the issue involved in all these writ petitions are the same, they are taken up together for consideration and disposed by this common judgment.
2. The petitioners in all these writ petitions are manufacturers of medicines who require rectified spirit in connection with manufacture of the said medicines. The rectified spirit is obtained by them from the Excise Department of the State and in this connection they are required to obtain licences under the Kerala Rectified Spirit Rules, 1972. As part of the licensing requirement, the petitioners are also required to post officers of the Excise Department for supervision of the bonded warehouses where the rectified spirit is stored. These officers are paid by the Government and the Government, in turn, recovers the cost of establishment charges in respect of these officers from the petitioners. The recovery of the cost of establishment charges is done in accordance with the Rules 16(4) of the Kerala Rectified Spirit Rules,1972. The said Rule reads as under:
“16. Bonded spirit store licence for possession and use of non-duty paid rectified spirit other than by distilleries: (1)xxxx (2)xxxx (3)xxxx [(4) All the transactions in the spirit store shall be conducted only in the Presence of an Excise officer not blow the rank of an Excise Inspector. Such Officer shall be assisted by a least two Excise Guards. The cost of establishment of such Officer and the Guards shall be payable by the licensee in advance in the first day of every month as per countersigned chalan to be obtained from such Officer. The rate at which the cost of establishment is to be paid by the licensee shall be fixed by the Commissioner from time to time and intimated to the licensee in writing. If the licensee fails to remit the cost on the first day of every month, interest at [18 percent] shall be charged and from the 20th day of the month, penal interest at 2 ½ percent shall be charged. If the licensee fails to remit the cost on the first day of the succeeding month he shall be served with a notice requiring him to remit the amount within a specified period and directing to show cause why the staff should not be withdrawn for the default in remitting the amount before the expiry of the said period. If the licensee fails to remit the cost of establishment within the time stipulated in the notice, the Assistant Excise Commissioner of the Division shall address the Board of Revenue and get sanction for the withdrawal of the staff. The licensee shall be liable to pay the arrears of differential cost of establishment if the rates of pay and allowances are revised by the Government retrospectively.
Explanation:- in this sub-rule 'cost of establishment' means average cost of pay and leave salary contribution.]”
It is pointed out that by an amendment dated 22.09.2014, the said Rule has been amended by substituting the explanation above to read as follows:
“2. Amendment of the Rules.-In the Kerala Rectified Spirit Rules, 1972-
(1) in rule 16, in sub-rule (4) for the explanation the following Explanation shall be substituted, namely:-
“Explanation:- In this sub-rule, cost of Establishment means actual cost of the staff appointed for the purpose of excise supervision, which includes pay, dearness allowance, uniform allowance and other compensatory allowances calculated at such rates as may be prescribed by the Commissioner from time to time”
3. In these writ petitions, the petitioners impugn the demand made on them, for arrears of cost of establishment charges, based on orders passed by the Commissioner of Excise. A perusal of the orders passed by the Excise Commissioner indicates that, while computing the cost of establishment charges as contemplated under Rule 16(4) of the Kerala Rectified Spirit Rules, 1972, he has also taken into account certain other charges which are not expressly mentioned in the explanation to Rules 16(4) of the said Rules. The petitioners therefore impugn the order passed by the Commissioner of Excise, as also the consequent demand notices issued to them, on the ground that the charges have been fixed in a manner that does not accord with Rule 16(4) of the said Rules. The contentions of the petitioner, while challenging the demand made on them, are basically three fold namely, (i) in fixing the cost of establishment charges, the Excise Commissioner has considered factors which are wholly alien to the fixation of cost of establishment charges under Rule 16(4) of the Kerala Rectified Spirit Rules. It is pointed out that the Commissioner has taken an average cost, in lieu of the actual cost pertaining to the staff appointed to the premises of the petitioner. It is pointed out that earlier decisions of this Court have taken a view that the Commissioner cannot resort to a fixation of cost of establishment by resorting to average costs and that he must confine to the actual cost that is incurred by the Government for the officers deployed to the petitioners premises; (ii) that the cost of establishment charges fixed by the Excise Commissioner includes other charges such as pension contribution, uniform allowance etc., while he ought to have confined the consideration only to the cost of pay and leave salary in accordance with the express provisions of Rule 16(4); and (iii) that while fixing the cost of establishment charges the Commissioner has relied on the provisions in the KSR which deal with the pay and allowances that are due to persons who have been deputed while in Government Service. The concept of deputation cannot be applied to the facts of the instant case since the payment of the officers, who were deployed to the petitioners premises, continued to be effected by the Government unlike in the case of deputation were the salary and other payments due to the deputed employee are made by the employer under whom the employee is working at the given point of time.
4. I have heard learned senior counsel Sri.Ramesh Babu, as also Sri. Babu Joseph Kuruvathazha, the learned counsel appearing on behalf of the petitioners in all the writ petitions as also the learned Senior Government Pleader Smt.Sunitha Vinod, appearing on behalf of the respondents in all these writ petitions.
5. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that the issues raised in all these writ petitions have already been considered by a learned Single Judge of this Court in W.P.(C). Nos.23356 of 2005 and connected cases, in the judgment dated 11.06.2012. It is pointed out that the appeal preferred by the State against the said judgment has since been withdrawn by the State Government, as evidenced by the judgment dated 08.01.2014 in W.A.No.1826 of 2013. Under the said circumstances, and taking into account the fact that the Rules themselves have been subsequently amended with effect from 24.09.2014, based on the earlier Division Bench judgments of this Court, I dispose these writ petitions in terms of the judgment of this Court in W.P.(C). No.23356 of 2005 and connected cases. A copy of the said judgment is appended to this judgment. Accordingly, following the aforementioned judgment of this Court, the writ petitions are allowed by quashing the following:
1. Exts.P4 and P5 orders in W.P.(C).N.19025 of 2011
2. Exts.P4 and P5 orders in W.P.(C).N.19027 of 2011
3. Exts.P14 order in W.P.(C).No.20583 of 2011
4. Exts.P8, P9, P10 & P11 chalans in W.P.(C).No.4855 of 2014 6. As a consequence of the quashing of these orders/demands, the Excise Commissioner is directed to pass fresh orders recomputing the amounts payable by the petitioners, based on the provisions under the Kerala Rectified Spirit Rules as interpreted by the judgments of this Court. The Excise Commissioner shall proceed to to do this within a period of two months from the date of receipt of a copy of this judgment. It is also made clear that if, as a result of the quashing of the orders/demands passed by the Excise Commissioner, any amounts fall due to the petitioners, by way of refund of amounts already paid based on the said orders, the same shall be either refunded to them or adjusted towards any future liabilities, that are fixed on them pursuant to the fresh determination as directed in this judgment.
With these directions, the writ petitions are allowed.
A.K.JAYASANKARAN NAMBIAR JUDGE mns/