Sri Renuka Yellammathalli Wines Vs the State of Ap

SRI RENUKA YE L LAMMATHALLI WINES, EXCISE LICENCE NO. KDP/32, SHOP A T MACHUPALLI VILLAGE, SIDH O UT MANDAL, Y.S.R KADAPA DI S TRICT, REPRESENTED BY ITS P ROPRIETOR, GAJJALA RAMAN J ANEYA REDDY, S/O G.VEERA R E DDY, AGED ABOUT 45 YEAR S . RESIDING AT D.NO. 9/8 SIVARAMAPALAGIRI VILLAGE, H/O S A VISETTYPALLI, MYDUKUR MA N DAL, Y.S.R KADAPA DISTRIC T .

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...PETITIONER

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AND

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THE STATE OF AP, REP. BY THE PRINCIPAL SECRETARY, REVENUE EXCIS E DEPARTMENT, SECRETARIAT, VELAGAPUDI, AMARAVATHI, GU N TUR DISTRICT

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THE COMMISSIO N ER OF PROHIBITION AND EXCISE, ANDHRA PRADESH, VIJAY A WADA.

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THE DISTRICT PROHIBITION AND EXCISE OFFI C ER, KADAPA, Y.S.R KADAPA DI S TRICT

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...RESPONDENT(S):

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Petition under Artic l e 226 of the Constitution of India pr a ying that in the circumstances stated in the affidavit filed therewith, the Hig h Court may be pleased to issue a writ, order or direction more particularly on e in the nature of Writ of Mandamus challenging the action of the respondents, m ore particularly respondent No.3, in issuing the impugned proceeding s Vide Rc.No. B1/88/2025, Dated 12- 0 8-2025, thereby directing the petiti o ner to pay the

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Retail Excise Tax until new licensee takes over the shop, as illegal, arbitrary, unwarranted, malafide and contrary to the provisions of G.O.Ms.No. 210, Revenue (Excise) Dept. dated 30-09-2024 and also in violation of Article 14 of the Constitution of India and consequently to set aside the same and further direct the respondents to accept the surrender of the shop M/s. Sri Renuka Yellammathalli Wines, Vide L.No. 32/2024-26 on the premises bearing D.No. 1/165, Machupalli Village, Sidhoutam Mandal, Y.S.R Kadapa District as per the provision 15(9) of G.O.Ms.No.210, Revenue (Excise), dated 30-09-2024 without insisting upon further payment of Retail Excise Tax and pass

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IA NO: 1 OF 2025

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondents forthwith not to insist upon the payment of Retail Excise Tax for the shop M/s. Sri Renuka Yellammathalli Wines, Vide L.No. 32/2024-26 on the premises bearing D.No. 1/165, Machupalli Village, Sidhoutam Mandal, Y.S.R Kadapa District and pass

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IA NO: 2 OF 2025

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order in lA.No.l of 2025 in W.P.No.23022 of 2025 dated 02.09.2025 and dismiss the Writ Petition and pass

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Counsel for the Petitioner:

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1.T DIWAKAR REDDY

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Counsel for the Respondent(S):

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1.GP FOR PROHIBITION EXCISE

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The Court made the following order:

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Challenging the proceedings in Rc.No.B1/88/2025 dated 12.08.2025 issued by respondent No.3, whereby the petitioner was directed to pay the Retail Excise Tax until a new licensee takes over the shop, the present Writ Petition has been filed.

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The case of the petitioner is that the Government of Andhra Pradesh issued a Notification inviting applications for grant of licences for the sale of Indian Made Foreign Liquor and Foreign Liquor through retail shops. The petitioner participated in the tender process, was allotted a shop and was granted Licence No.32/2024-26 in respect of the premises bearing D.No.1/165, Machupalli Village, Sidhoutam Mandal, Y.S.R. Kadapa District. Pursuant to the said license, the petitioner commenced business in the name and style of M/s Sri Renuka Yallammathalli Wines. It is the further case of the petitioner that, as the petitioner could not make out any profits out of the said business and was incurring continuous losses, submitted a representation dated 28.07.2025 to respondent No.3 with a request to accept the surrender of Excise Licence. In reply to the said representation, respondent No.3 issued the impugned proceedings stating that the petitioner's request for surrender of the licence would be processed as per rules, subject to forfeiture of the Bank Guarantee and Retail Excise Tax already paid. It was further directed that the petitioner shall continue to remit the Retail Excise Tax in respect of A4 Shop G.No.KDP/32 until a new successful applicant is selected and takes over the

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shop. The proceedings further stated that there is no provision for refund of any amount already paid upon voluntary surrender and directed the petitioner to comply with all statutory provisions until the date of official acceptance of surrender and transfer of the shop to the next licensee, by placing reliance on Clauses 15(9) and 16(3) of G.O.Ms.No.210, Revenue (Excise), dated 30.09.2024. It was also stated that failure to comply with the said directions would attract action under the A.P. Excise (Grant of Licence of Selling by Shop and Conditions of Licence) Rules and other relevant provisions of law. Questioning the action of respondent No.3 in directing the petitioner to continue paying the Retail Excise Tax until a new successful applicant takes over the shop as illegal, arbitrary, and contrary to the provisions of G.O.Ms.No.210, dated 30.09.2024, the present Writ Petition has been filed.

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Heard Sri T. Diwakar Reddy, learned counsel for the petitioner, and Sri Nagaraju Pullagura, learned Government Pleader for Excise, appearing for the respondents.

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Learned counsel for the petitioner, in elaboration to what has been stated in the affidavit filed in support of the Writ Petition, contended that due to continuous financial losses, the petitioner submitted a representation dated 28.07.2025 requesting respondent No.3-District Prohibition and Excise Officer, Kadapa, to accept the surrender of Excise Licence granted in his favour. He further submitted that, while the authorities proposing to forfeit the Bank Guarantee and the Retail Excise Tax already paid, they also insisted that the petitioner shall continue to pay the Retail Excise Tax until a new successful

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applicant is selected and takes over the shop by wrongly invoking Clause 16(3) of G.O.Ms.No.210. He further submitted that, if the impugned proceedings are allowed to subsist, the petitioner would suffer irreparable loss and hardship. This Court, by order dated 02.09.2025, suspended the operation of the impugned proceedings for a period of four weeks. Hence, prayed to pass orders treating the interim order as final order.

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On the other hand, learned Government Pleader for Prohibition and Excise while reiterating the contents of the counter affidavit of the District Prohibition and Excise Officer, YSR Kadapa, contended that G.O.Ms.No.210, dated 30.09.2024 and the Rules framed there under do not contain any provision exempting the outgoing licencee from payment of tax till the new licencee assumes charge. He further submitted that the petitioner had defaulted in payment of the Retail Excise Tax and that certain arrears were outstanding. He further submitted that if the interim order continues, it would cause irreparable financial loss to the Government and disturb the entire licensing and tax collection mechanism under the Excise policy. He further submitted that as per the request of the petitioner, respondent No.3 has cancelled the license vide Rc.No.B1/88/2025 dated 01.10.2025 under 31(1)(a) of A.P Excise Act, 1968 and also as per the provision 15(9) of G.O.Ms.No.210, dated 30.09.2024 and accordingly a report was submitted to the Commissioner of Prohibition and Excise, A.P., Mangalagiri explaining the facts and requested for re-notification of the shop on 04.10.2025 and the Commissioner has issued orders for re-notification of the shop vide in

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Cr.No.2906/2024/CPE/E3, dated 30.10.2025 and action is being taken for issuance of Gazette Notification on 03.11.2025. Accordingly, prayed to dismiss the Writ Petition.

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In reply, learned counsel for the petitioner, while reiterating the contents of the reply affidavit, contended that the petitioner’s case falls under Clause 15(9), as the petitioner has voluntarily surrendered the license in the middle of the license period and Rule 16(3) does not apply for the reason that he has neither defaulted in furnishing the Bank Guarantee nor paying the installments due. He further submitted that the petitioner has surrendered the license and handed over the shop, compelling the petitioner to pay retail excise tax till reallotment is unacceptable in the eyes of law as well as the Rules of the said G.O.Ms.No.210. He further submitted that respondent No.3 has categorically admitted that the petitioner’s licence was cancelled vide R.C.No.B1/88/2025, dated 01.10.2025 and once the license itself stands cancelled, the petitioner cannot be forced to pay any Retail Excise Tax thereafter. He further submitted that issuance of such impugned proceedings demanding the petitioner to pay tax till a new allottee takes over is nothing but harassment and abuse of power. Hence, prayed to set aside the impugned proceedings.

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Perused the material available on record and considered the submissions made by learned counsel for the parties.

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It is not in dispute that the petitioner had voluntarily sought surrender of the licence by submitting a representation dated 28.07.2025 on the ground of

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continuous financial losses. It is not in dispute that the licence granted in favour of the petitioner was subsequently cancelled by respondent No.3 vide proceedings Rc.No.B1/88/2025 dated 01.10.2025 under Section 31(1)(a) of the A.P. Excise Act, 1968, read with Clause 15(9) of G.O.Ms.No.210, Revenue (Excise), dated 30.09.2024. It is also not in dispute that respondent No.3 has already submitted proposals for re-notification of the shop and the Commissioner of Prohibition and Excise has approved the same.

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The main grievance of the petitioner is that respondent No.3, by the impugned proceedings, directed him to continue paying the Retail Excise Tax until a new licensee is selected and takes over the shop.

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The operative portion of impugned proceedings vide Rc.No.B1/88/2025 dated 12.08.2025 reads as follows:

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“Sri Gajjala Ramanjaneya Reddy licensee of M/s Sri Renuka Yallammathalli Wines has obtained the A4 shop with G.Sl.No.KDP/32 through tender process. You also said that you also paid the RET up to 6^th installment at present you has facing many financial losses and become economically unsustainable and unable to pay the RET. Therefore you has surrender the licence and requested to accept for surrender.

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And Whereas as per the provisions of G.O.Ms.No.210:

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Provision 15(9): Upon surrender of licence during the licence period, the Bank Guarantee and Retail Excise Tax paid shall be forfeited to the Government.

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Provision 16(3): The licensee shall remain responsible for payment of Retail Excise Tax until a new licensee takes over the shop.

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Accordingly, you are hereby notified that:

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1. Your request for surrender of licence will be processed as per rules, subject to forfeiture of the Bank Guarantee and Retail Excise Tax already paid.

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2. You shall continue to remit the Retail Excise Tax for A4 shop G.No.KDP/32 until a new successful applicant is selected and takes over.

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3. There is no provision for refund of any amount already paid upon voluntary surrender.

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4. You are directed to maintain compliance with all statutory provisions until the date of official acceptance of surrender and transfer to the next licensee.

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Failure to comply with the above directions will attract action as per the A.P Excise (Grant of Licence of Selling by Shop and Conditions of License) Rules and other relevant provisions of law.”

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A plain reading of Clause 15(9) of G.O.Ms.No.210, Revenue (Excise), dated 30.09.2024, makes it clear that it deals with voluntary surrender of a licence during the licence period. Admittedly, the petitioner voluntarily sought surrender of the licence and pursuant to the same, respondent No.3 cancelled the licence vide proceedings dated 01.10.2025. Once the competent authority accepts the surrender by cancelling the licence, the relationship of licensor and licensee comes to an end from the date of such cancellation. As such, the petitioner cannot be treated as a continuing licensee so as to fix the liability to pay Retail Excise Tax for the period subsequent to cancellation of the licence.

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Learned Government Pleader placed reliance on Clause 16(3) of G.O.Ms.No.210, dated 30.09.2024 in support of the impugned proceedings. Clause 16(3) of G.O.Ms.No.210 is extracted herewith for quick reference.

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“16. Re-allotment in case of failure to submit Bank Guarantee or pay the installments due:-

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1) In case of failure to furnish the Bank Guarantee as required under Rule 15(3) within the time specified, the selection made for the concerned Shop shall be cancelled by the District Collector and the amounts already paid shall be forfeited to the Government. In such case, the Shop may be re-allotted to the reserve applicant selected under the provisions of Rule 11(8)(e), and if no one is available, action may be taken to re-notify the Shop or take action under Rule-17 with prior permission of the Commissioner of Prohibition and Excise.

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2) In case of failure to pay the installments due, the licence of the Shop shall be cancelled and the Shop shall be re-notified.

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3) The selected applicant shall continue to be responsible for the Retail Excise Tax of that Shop till the next successful applicant takes over.”

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A plain reading of Clause 16 makes it clear that the liability contemplated under Clause 16(3) arises only when the selected applicant has failed to furnish the Bank Guarantee within the prescribed time or has failed to pay the installments due. In the present case, it is not the case of the respondents that the petitioner failed to furnish the Bank Guarantee. The petitioner voluntarily surrendered the licence, which was subsequently

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cancelled by the competent authority. As such, the petitioner's case does not fall within the ambit of Clause 16 of G.O.Ms.No.210, and the reliance placed by the learned Government Pleader on Clause 16(3) is misconceived and cannot be sustained.

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Though the learned Government Pleader contended that the petitioner had defaulted in payment of the Retail Excise Tax and that certain arrears were outstanding, no such finding has been recorded in the impugned proceedings. Moreover, the respondents have not pointed out any specific statutory provision authorizing them to recover Retail Excise Tax from a person, whose licence has already been cancelled merely because a fresh licensee has not yet been selected. In the absence of any express statutory provision creating such liability after cancellation of the licence, the petitioner cannot be compelled to continue paying the Retail Excise Tax for the interregnum between cancellation of his licence and allotment of the shop to a new licensee.

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Insisting the petitioner to continue to pay/remit the Retail Excise Tax for A4 shop G.No.KDP/32 until a new successful applicant is selected and takes over under impugned proceedings dated 12.08.2025 is illegal and arbitrary. In view of the foregoing discussion and taking the submissions of both the learned counsel into consideration, this Court is inclined to pass the following order:

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“1) The impugned order dated 12.08.2025 issued by

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Respondent No. 2, insofar as it directs that ‘the petitioner shall continue to remit the Retail Excise Tax for A4 Shop G.No. KDP/32 until a new successful applicant is selected and takes over’ is hereby set aside.

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The respondent authorities are directed not to insist upon

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the petitioner for payment of Retail Excise Tax in respect of the A4 Shop for the period subsequent to cancellation of his licence vide proceedings Rc.No.B1/88/2025 dated 01.10.2025 on the ground that a new licensee has not yet taken over the shop.”

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