[United Provinces Excise Act 1910] Cancellation Of License Can't Be Due To Suspicion, Must Be Based On Cogent Material: Allahabad High Court

The Allahabad High Court has held that the cancellation of license under Section 34(2) of the United Provinces Excise Act, 1910 cannot be based on suspicion. The Court held that without there being any cogent material or evidence such harsh penalty of cancellation of license must not be invoked.

Section 34(2) of the United Provinces Excise Act, 1910 provides for cancellation of any license granted under this Act or under any other law for the time being in force relating to excise revenue or under the Opium Act, 1878 of such licensee whose license, permit or pass has been cancelled under clause (a), (b) or (c) of sub-section (1),

The bench of Justice Saumitra Dayal Singh and Justice Donadi Ramesh held

“While suspicion may arise and may continue to exist in the minds of the Licensing Authority from the facts of an individual case, at the same time, suspicions and presumptions may never translate to findings, on their own. Unless cogent material and evidence exist, such suspicion may never result in penal or harsh consequences such as cancellation of another license.”

Petitioner's license for counter-liquor shop was cancelled under Section 34(2) of the Act without any allegations of violation of the license granted.

The Court observed that earlier cancellation of another liquor shop license of the petitioner was struck down by the High Court and matter was remanded to the Appellate Authority to record whether the QR codes and caps were tampered with. The Court further held that since the proceedings regarding cancellation of petitioner's license at Gehrukheda had not attained finality, the proceedings against the license at Majhenpurwa could not be cancelled.

While passing the aforesaid order, the High Court held that the jurisdiction to exercise power under Section 34(2) will only arise if another license of such licensee has already been cancelled under Section 34(1) sub-clauses (a),(b) or (c). The Court held that consequence provided in Section 34(2) is very harsh as it would lead to cancellation of license without any violation of license terms and extended to any license issued under "any other law", "relating to excise revenue" or under the "Opium Act, 1878"

However, it was also held that Section 34(2) of the Act is discretionary and not mandatory and it cannot be applied automatically resulting in cancellation of another excise license of a licensee.

“Being a power exercisable only in the interest of revenue against a licensee who has already suffered cancellation of one license u/s 34(1) of the Act; such a power would have to be exercised with extreme caution only in cases where upon facts proven in the earlier proceedings it appears to the licensing authority that continuance of another/other license/s of a licensee would be detrimental to the interest of revenue. It is this fact that would have to be proven in such proceeding initiated under Section 34(2) of the Act.”

The bench headed by Justice Singh observed that in the cancellation order, the authorities had merely stated that license for shop at Majhenpurwa was being cancelled as petitioner's license at Gehrukheda stood cancelled, however, no reasons were provided as to how that cancellation would affect the license for shop at Majhenpurwa.

The Court further held that in the case of shop at Gehrukheda it was found that there were tampered bottles, alum and urea were also recovered. However, no such samples were collected, or evidence was recorded before cancelling the license for the shop at Majhenpurwa.

Holding that license cannot be cancelled based on mere suspicion, the Court allowed the writ petition and set aside the order of cancellation of license for the shop at Majhenpurwa.

Case Title: Sandeep Singh v. State Of U.P. And 2 Others [WRIT TAX No. - 816 of 2021]

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