HC directs Reconsideration of L-10BB License Liquor Renewal Amid Policy Changes

Amrit Traders Vs State of Himachal Pradesh and Ors (High Court Himachal Pradesh)

Amrit Traders, the petitioner, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 16.04.2024 passed by the Financial Commissioner (Excise) of Himachal Pradesh. This order upheld an earlier decision dated 30.03.2024 by the Collector (Excise)-cum-Joint Commissioner (ST&E), Central Zone, Mandi, denying the renewal of the petitioner’s L-10BB license for the financial year 2024-25.

Key Facts

1. License Issuance and Renewals: Amrit Traders held an L-10BB license since 2021-22 to operate on The Mall Road, Manali. This license was initially issued on 07.08.2021 and was subsequently renewed for the years 2022-23 and 2023-24. The L-10BB license allowed the retail sale of beer, wine, cider, RTD beverages, and BIO brands in departmental stores.
2. Policy Changes and Clarifications: A policy for liquor licenses for the year 2023-24 was formulated by the state in February-March 2023. On 02.08.2021, it was clarified that if the gross annual turnover of a departmental store exceeded Rs. 2 crore, only one L-10BB license would be granted per store or branch. On 20.12.2023, this clarification was superseded, and it was directed that L-10BB licenses would be granted strictly per condition No. 10.8 of the Excise Policy for 2023-24, stating that L-10BB licenses could not operate from branches, only from the principal place of business.
3. Application for Amendment: Following the new policy, Amrit Traders applied for an amendment to its GST Registration Certificate to reflect the branch as the principal place of business. This amendment was approved on 09.04.2024.
4. Attempts to Renew License: The petitioner made multiple requests for the renewal of the L-10BB license, including applications to the Principal Secretary (Excise and Taxation) and the Deputy Commissioner, but received no response. Despite these efforts, on 23.03.2024, the Collector (Excise) issued a show-cause notice asking why the L-10BB license should not be canceled, citing the policy that the license could not operate from branches. The petitioner responded, explaining the application for amendment and the shift of business to the principal place of business, but this was not considered satisfactory.
5. Appeal and Dismissal: The petitioner’s appeal to the Financial Commissioner (Excise) was dismissed on 16.04.2024. The Commissioner concluded that the L-10BB license was only approved for the branch and not the principal place of business, thus it could not be renewed.

Arguments For the Petitioner (Amrit Traders):

1. Amendment of Business Location: The petitioner argued that although the license was initially granted for the branch, the business location had been amended to the principal place of business as per the updated GST Registration Certificate. They maintained that the renewal of the L-10BB license should be permitted as they had taken steps to comply with the new policy by shifting the business location.
2. Policy Compliance: The petitioner highlighted that the L-10BB license had been consistently renewed from 2021-2024 and argued that renewal should be granted subject to necessary formalities and fee deposits.
3. Legal Provisions and Policy Clauses: Reference was made to Clause 10.8(v) and 10.8(vi) of the Excise Policy for 2023-24, arguing that these did not preclude the renewal of licenses for those who had shifted their business to the principal place of business. The petitioner contended that Rule 19-A of The Himachal Pradesh Liquor License Rules, 1986, which prescribes conditions for L-10BB licenses, did not mention a requirement for a minimum distance between L-10BB and L-2 vends.

Arguments For the Respondent (State of Himachal Pradesh):

1. Policy Enforcement: The state argued that the policy decision to not permit L-10BB licenses to operate from branches was clear and no illegality was committed in rejecting the petitioner’s renewal request. The respondents pointed out that the amendment of the GST Registration Certificate was approved only after the license renewal request had been rejected.
2. Subsequent License Allotment: The state emphasized that following the rejection of the renewal request, an L-2 vend license had been allotted to another party within 50 meters of the petitioner’s principal place of business, making it impossible to renew the L-10BB license under the current policy.

Court’s Analysis and Decision

1. Clarification Impact: The court noted that the clarification dated 20.12.2023 explicitly stated that L-10BB licenses could only operate from the principal place of business and not branches. The court examined the changes in the GST Registration Certificate and found that these should be deemed effective from the date of application, which was before the license expiry.
2. Policy Adherence and Amendments: The court acknowledged that the petitioner had complied with the policy changes by shifting the business location and obtaining the necessary amendments to the GST Registration Certificate.It was noted that Rule 19 of the Himachal Pradesh Goods & Services Tax Rules, 2017 supports that amendments are effective from the date of occurrence.
3. Rejection of Renewal: The court questioned whether the refusal to renew the license was justified, given that the petitioner had followed the required steps to shift their business as per the new policy. It was noted that the license had been consistently renewed in previous years and the petitioner’s application for renewal complied with the updated requirements.
4. Conclusion: The court found that the petitioner’s application for license renewal was unjustly denied despite their compliance with policy changes. It concluded that the petitioner should not be penalized for the delay in the amendment of the GST Registration Certificate, as the application for the amendment was timely and aligned with the policy requirements.

Judgment