Transport Rules Places Onus On Transporter To Pay For Excise Escort When Moving Alcohol Through The State: Gujarat High Court

The Gujarat High Court recently observed that the state transport rules places the onus not on the consignor or consingnee but on the transporter to apply for and pay fee for an excise escort when moving alcohol through the State.

Notably Rule 10 Gujarat Through Transport Rules requires that an excise escort be arranged by the transporter and that they submit an application with the relevant local excise authority at the entry point to Gujarat. The court passed the order while quashing an FIR filed in an accident involving a consignment of Royal Stag Whiskey which occurred in Vapi leading as well as allegations of regulatory violations under the Gujarat Prohibition Act and the Gujarat Through Transport Rules.

Justice Devan M. Desai in its order October 4 order observed that the rule is "very clear and unambiguous" and it is the "responsibility of the Transporter" to apply the excise escort and also has to pay for it to the concerned authority.

"The agreement also speaks that Transporter will be reimbursed for the escort charges on submission of actual original receipts. When the Transporter owes a duty to arrange for the excise escort, petitioners cannot be held liable for not having excise escort when the consignment first enters by road in the State of Gujarat," the court said. 

With respect to invocation of Section 77(B) Gujarat Prohibition Act in the matter which imposes penalties on license holders for wilful actions or omissions that violate the Act the court observed, “For invoking the said provision, prima facie, there has to be any willful act or omission which should surface from the allegations made in the complaint. When the FIR does not demonstrate any willful act or omission on the part of the petitioner, which is in contravention of any rule, regulation or order, it cannot be said that petitioners are the offenders under the offences mentioned in the FIR. If Rule-10 of Gujarat Through Transport Rules, 1966 is read with provisions of Section 77(B) of the Gujarat Prohibition Act, 1949, it is the Transporter, who is in willful default of not obtaining necessary excise escort while entering place where the consignment first entered by road in the State of Gujarat". 

Furthermore, when the Court asked the APP if the Transporter's statement had been recorded, they could not confirm it from the record. The court said that the record shows that the Transporter's statement was not recorded. It then said that since it's unclear whether the Transporter applied for the mandatory excise escort under Rule-10, the petitioners cannot be blamed.

Background

The petitioner no. 1 Pernod Ricard India Private Limited–a manufacturer and distributor of alcoholic beverages, sought for quashing of the FIR registered under Sections 279 (rash driving or riding on a public way), 427 (mischief causing damage) of IPC, Sections of Motor Vehicle Act, 1988, Section 77(B) (prohibits the possession, consumption, or sale of alcohol in the state) of Gujarat Prohibition Act, 1949 and Rule 10 of the Gujarat Through Transport Rules, 1966. Rule 10 mandates that no goods vehicle can operate as a through transport vehicle unless it is registered and authorized to do so by the state authorities, ensuring proper documentation and compliance with transport regulations.

The petitioner no. 1 entered into a contractual arrangement with Manshi Logistics on April 15, 2014 and instructed  it on February 18, 2016 for transporting 800 cases of Royal Stag Whiskey from their production facility in Nasik, Maharashtra, to National Sales Corporation in Nani Daman, a Union Territory near Gujarat. The transporter received an Escort Order and pass for exporting liquor from the Deputy Superintendent of State Excise, Nasik, and the petitioner also obtained a transit pass under the Gujarat VAT Act, 2003.

On February 23, 2016, the truck carrying liquor overturned in Vapi, Gujarat, and was damaged. On the allegation that the truck entered Gujarat without the required escort and without notifying the Excise Department, likely to avoid paying taxes the FIR was filed. 

The Counsel for the Petitioner No. 1 submitted that he had had no role in the offences listed in the FIR and was not involved in evading excise duty and provided a receipt from the Excise Inspector in Daman and pointed out that the transport agreement with Manshi Logistics required the transporter to arrange for the escort. He further referred to Rule-10 of the Gujarat Through Transport Rules stating it was the transporter's responsibility to arrange the escort and he should not be held liable for the transporter's mistake and that the charges in the FIR were vague. The Counsel also stated that Section 77(B) of the Gujarat Prohibition Act didn't apply, as there was no wilful violation by petitioner. Since the petitioner is in the alcohol business, they shouldn't be held responsible for the transporter's negligence.

The State's counsel argued that the Petitioner No. 1 is correctly named as a co-accused with the truck driver. He stated that the agreement between petitioner and the transporter is not relevant to the case, as authorities were unaware of it. The investigation is still ongoing, and it is too early to dismiss the complaint based on the transporter's failure to obtain an escort. 

Findings 

The high court referred to Supreme Court's decision in State of Haryana v. Bhajan Lal (1992), and thereafter said, "Thus, I am of the considered view that the allegations in the first information report / complaint if taken at its face value and accepted in their entirety, they do not constitute the offence alleged and the chances of an ultimate conviction after full-fledged trial are bleak and continuation of criminal prosecution against the applicants accused is merely an empty formality and wastage of precious time of the Court". 

It also noted that the court has the power to ensure justice and prevent misuse of its process, but at the same time, the Court must be careful to see that its decision in exercise of this power is based on sound principles.

It cannot stop a legitimate prosecution but can intervene if it comes to the conclusion that continuing the case would be an abuse of the Court's process or if the ends of justice requires it, it noted. 

Allowing the plea the high court quashed the FIR. 

Case Title: Pernod Ricard India Private Limited Through Rajendra Ramdas Deshmukh & Anr. v/s State of Gujarat & Anr.
LL Citation: 2024 LiveLaw (Guj) 175

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