State of U.P. Vs Prem Chopra (Supreme Court of India)
The dispute arose from recovery proceedings initiated against the licensee for unpaid excise dues under Section 36 of the U.P. Excise Act, 1910 read with the U.P. Excise (Settlement of Licenses for Retail Sale of Country Liquor) Rules, 2002. The licensee had obtained a country liquor retail licence for the year 2002-03 for an annual licence fee of Rs.29,52,000. Although the licence was surrendered in December 2002, the authorities maintained that the licensee remained liable to pay the licence fee due for the relevant period.
Read HC Judgment in this case: Allahabad HC Waives Penal Interest as Excise Dues Were Paid & Interim Protection Had Been Restored
After notices demanding the outstanding amount were issued, the licensee unsuccessfully challenged the demand before the Excise authorities. Thereafter, a writ petition was filed before the Allahabad High Court in 2003. On 01.08.2003, the High Court granted an interim order restraining recovery proceedings subject to deposit of Rs.2,75,000. The writ petition was later dismissed for non-prosecution on 21.12.2015. During 2017, the licensee deposited the remaining dues, and the writ petition was subsequently restored on 19.01.2018 along with the interim order.
The only issue considered by the High Court was whether penal interest amounting to Rs.10,08,210.51 could be recovered. The High Court observed that the petitioner had already deposited the admitted dues of Rs.6,43,563 and had remained under the protection of the interim order while contesting the proceedings. Holding that imposing penal interest merely because the petition had earlier been dismissed for non-prosecution was unjustified, particularly when that dismissal order had been recalled and the interim order restored, the High Court exempted the petitioner from payment of penal interest. It clarified that its order would not operate as a precedent.
