M/S Spoonability LLP Vs the Commissioner of Excise

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NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17^TH DAY OF SEPTEMBER, 2025 BEFORE

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THE HON'BLE MR. JUSTICE RAVI V HOSMANI WRIT PETITION NO. 18219 OF 2022 (EXCISE)

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BETWEEN:

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M/S SPOONABILITY LLP SY NO.120/3, 123/1, 123/2 AND 123/3 GROUND FLOOR, HVP CREST, ITPL MAIN ROAD, OPPOSITE TO ZURI HOTEL RAJAPALYA HOODI VILLAGE MAHADEVAPURA POST, K R PURAM HOBLI, BENGALURU-560048 REPT. BY ITS PARTNER MR. CHANDRASHEKAR NAIDU KANUMURI S/O SUBBA RAMA NAIDU KANUMURI AGED ABOUT 72 YEARS,

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…PETITIONER

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(BY SRI. D.R. RAVISHANKAR, SR. COUNSEL FOR SRI. SARAVANA S., ADVOCATE)

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Digitally signed by PRASHANTH N V Location: HIGH COURT OF KARNATAKA

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AND:

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THE COMMISSIONER OF EXCISE GOVT. OF KARNATAKA 2^ND FLOOR, BMTC TTMC BUILDING 'A' BLOCK, SHANTHINAGAR BENGALURU -560027.

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DEPUTY COMMISSIONER OF EXCISE BENGALURU URBAN DISTRICT NO.16^TH CROSS ROAD, HOYSALA NAGAR INDIRANAGAR 2^ND STAGE, BANGALORE -560038

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NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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EXCISE INSPECTOR RANGE 31 WHITEFILED BENGALURU URBAN DISTRICT BANGALORE-560005

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…RESPONDENTS

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(BY SRI. BHOJEGOWDA T. KOLLER, AGA.)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ENDORSEMENT BEARING NO.EXE/VA31/BUD-5/MYBRE/SA.NA/06/2021-22, DTD 29.08.2022 VIDE ANNX-F, ISSUED BY THE R-3 AND ETC.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING - B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE RAVI V HOSMANI

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ORAL ORDER

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Challenging endorsement dated 29.8.2022 at Annexure-F

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issued by respondent no.3 and seeking for a writ of mandamus directing respondents to consider petitioner's application for renewal of Brewery Licence for Excise Year 2022-23, this writ petition is filed.

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Sri DR Ravishankar, learned Senior Counsel appearing for petitioner submitted that petitioner is a Limited Liability Partnership ('LLP', for short) originally consisting of two partners namely, Anushree Goyal and Ashita Bedi. Thereafter, two partners Vivek Kumar Singh and Rajni Verma were added.

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3 - NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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Later, on 13.12.2021 Sri Vivek Kumar Singh and Rajni Verma

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retired and two new persons i.e., Pranayathi Yallanki and Chandrasekhar Naidu Kanumari were inducted. But, when application for renewal of licence was filed on 30.6.2022, respondents issued petitioner with endorsement at Annexure-F stating that there was change in composition of partnership twice and demanded twice the Transfer Fee.

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It was submitted that in statement of objections filed justification offered was with reference to Rule 17B of Karnataka Excise Licenses (General Condition) Rules, 1967 (hereinafter referred to as 'General Condition Rules'). Relying upon decision of this Court in Mysore - Intercontinental Hotels Pvt. Ltd., v. The Commissioner of Excise, reported in 2017 SCC OnLine Kar 2778, it was submitted that while interpreting effect of Rule 17B, in case of a company, this Court had held mere change in Directorship or shareholding would not constitute transfer attracting Transfer Fee when licencee was a company. It was submitted, since licencee in question herein is a LLP which would be a separate entity as per Section 3 of Limited Liability Partnership Act, 2008 ('LLP Act', for short), unless change in composition of an LLP unless specifically

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4 - NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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stated to attract transfer fee under Excise Act or Rules, demand by respondents would be illegal. On said ground sought for allowing writ petition.

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Learned AGA appearing for respondents on other hand sought to oppose writ petition. Referring to statement of objections filed, it was submitted that originally partnership was consisting of two partners i.e., A nushree Goyal and Ashita Bedi and subsequently, Vivek Kumar Singh and Rajni Verma. Thereafter, on 13.12.2021, newly inducted partners retired and two others namely, Pranayathi Yallanki and Chandrasekhar Naidu Kanumari were inducted and thus, there was reconstitution of partnership attracting double licence fee under Rule 17B of General Condition Rules, therefore, endorsement was justified. It was further stated that in pursuance of interim order passed by this Court on 14.9.2022, petitioner had paid 25% of Licence Fee and respondents had renewed petitioner's licence for Excise Year 2022-23 and prayed for dismissal of writ petition.

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Heard learned counsel for parties and perused material on record.

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5 - NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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From above, petitioner's grievance against endorsement at Annexure-F is on ground that re-constitution of LLP would not attract Transfer Fee under Rule 3(c) of Karnataka Excise (Brewery) Rules, 1967 (hereinafter referred to as 'Brewery Rules') by placing reliance on ratio laid down in Mysore Intercontinental Hotels Pvt.Ltd., while respondents seek to justify demand in Annexure-F based on Rule 17B of General Condition Rules.

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At out set, it is seen that reference to Rule 17B of General Condition Rules by respondents would be totally misconceived as there is specific provision under Brewery Rules itself for transfer. Moreover, demand in Annexure-F is under Rule 3(c) of Brewery Rules and not under Rule 17B of General Condition Rules. Admittedly, original partners have continued in partnership. Section 3 of LLP Act specifically provides that LLP would be a separate entity than its partners, similar to a company incorporated under Companies Act.

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Admittedly, licencee in question is LLP, wherein despite addition of new partners, original partners have continued. Therefore, mere change in composition of partners, especially when original partners have continued, it would not

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NC: 2025:KHC:37217 WP No. 18219 of 2022

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HC-KAR

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attract Transfer Fee in view of ratio laid down in Mysore Intercontinental Hotels Pvt. Ltd. Hence, endorsement at Annexure-F would have no legs to stand.

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Accordingly, writ petition is allowed, impugned endorsement dated 29.8.2022 bearing No.EXE/VA-31/BUD5/MYBRE/SA.NA/06/2021-22 at Annexure-F stands quashed. Since petitioner has paid 25% of licence fee and obtained renewal of licence, petitioner would be at liberty to seek for adjustment of 25% licence fee paid at time of renewal of licence for subsequent Excise Year.

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Sd/(RAVI V HOSMANI) JUDGE

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ND List No.: 1 Sl No.: 29

M/S Spoonability LLP v. the Commissioner of Excise

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M/S Spoonability LLP v. the Commissioner of Excise

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