License Fee Can't Be Imposed Retrospectively: Allahabad HC Directs Refund Of Deposit For Authorities' Failure To Impose Penalty For Almost 20 Yrs

Recently, the Allahabad High Court directed the authorities to refund Rs. 26 lakhs once deposited by the petitioner pursuant to an interim by the High Court in another writ petition. The Court held that a license fee cannot be retrospectively charged from the licensee prior to the date of grant of license and any penalty that is sought to be imposed for want of license can only be imposed in due course following procedure of law.

The bench comprising Justice Anjani Kumar Mishra and Justice Jayant Banerji held

“It bears to reason that license fee cannot be imposed retrospectively but from the day of grant of license. Any penalty that may be sought to be imposed for want of license can be imposed in due course after following due procedure which the respondents have failed to do despite passage of so many years.”

Counsel for the petitioner submitted that when the imposition of mandi fees and cess under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 was challenged before the High Court, the Court had directed the petitioner to deposit Rs. 26 lakhs for interim protection from recovery. Another Rs. 26 lakhs were furnished as security.

It was submitted that under Section 22 of the U.P. Special Economic Zone Development Act, 2002, which came into effect from 7.9.2002 excluded the applicability of the Adhinyam, 1964 therefore, the amount sought to be charged from the petitioner, could not be charged. Eventually, the writ petition was dismissed, and the case was relegated to the revision authority.

The revision was decided in favour of the petitioner. It was held that 'Zafrani Zarda' did not fall within the category of specified agricultural produce as notified under the Adhiniyam, 1964. Further, it was directed that the amount deposited by the petitioner be adjusted against any mandi fee payable for the sale, purchase and storage of tobacco. The security bond was directed to be released to the petitioner.

Even though the petitioner submitted details of all purchases made for the relevant period, and complied with all legalities, Rs. 26 lakhs deposited pursuant to the interim order of the High Court were not released by the authorities.

Counsel for the petitioner submitted that even after 20 years no action was taken by the respondent authorities to release the amount or adjust in the amount as per the order of the revisional court.

Per contra, counsel for the respondent argued that the amount deposited by the petitioner would be adjusted against the dues.

The Court held that since 2010 no action had been taken by the respondent authorities despite an order by the revisional court to adjust the amount or refund it.

Holding that the authorities had failed to levy or deduct any penalty for want of license despite the passage of so many years, the Court held that the petitioner was entitled to a refund of Rs. 26 lakhs deposited with the authorities along with simple interest at the rate of 9%.

Case Title: Baba Global Limited v. Director Rajya Krishi Utpadan Mandi Parishad And Others [WRIT - C No. - 47105 of 2011]

Counsel for Petitioner: Nikhil Agrawal, Nishit Agrawal

Counsel for Respondent: S.C. Diwedi

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