- (1.) WE have heard Shri Neeraj Sharma, learned counsel for the petitioners. Shri Jafar Naiyar assisted by Shri S.P. Kesarwani appears for the respondents. By these writ petitions, the petitioners -public limited companies have challenged the notification dated March 9, 2007 by the U.P. Excise (Establishment of Distillery) (7th Amendment) Rules, 2007 by which the rates of overtime fee to be paid to the staff of Excise Department of the State of U.P. stationed at the distillery run by the company; for excise inspector at the rate of rupees four per hour; for clerks at the rate of rupee one per hour and for excise constables at 0.25 paise per hour has been increased four times, and consequently demand has been raised for payment of the overtime fees for the extra hours for which the distillery on its own request has operated.
(2.) THE petitioners have challenged the impugned notification on the following grounds: (i) The amendment in the rates of overtime fees in rule 19 by the impugned notification is without statutory backing. (ii) Enhancement of overtime charge is without any basis and has no co -relation with the services rendered by the State Department of State Excise. (iii) It is against the law laid down by the hon'ble Supreme Court in the case of Bimal Chandra Banerjee v. State of Madhya Pradesh : [1971] 81 ITR 105 (SC) : AIR 1971 SC 517. (iv) Similar rule 17 of the J & K Distillery Rules, 1946 has been declared ultra vires to the Act by the hon'ble Supreme Court in the case of Gupta Modern Breweries v. State of Jammu and Kashmir : [2007] 8 RC 688 : [2007] 6 SCC 317 (Annexure No. 8 to the writ petition). (v) The amendment by the notification is contrary to the law laid down by the hon'ble Supreme Court in the case of Indian Mica and Micanite Industries Ltd. v. State of Bihar : AIR 1971 SC 1182 (Annexure No. 9 to the writ petition). (vi) Overtime charges under rule 12 can be levied only when the total annual establishment charges (salary and overtime charges) exceeds 10 per cent, of duty leviable on the issue made from the distilleries during the year. The petitioners have relied upon the judgment of the Supreme Court in Gupta Modern Breweries v. State of Jammu and Kashmir : [2007] 8 RC 688; : [2007] 6 SCC 317 in which the Supreme Court quashed the notification and directed for refund of fees for the reasons given in paragraph 34 as follows (page 700 of 8 RC): For the reasons aforestated we hold that. - - (a) Rule 17 has no statutory backing and it is in excess of the Act. (b) It is manifestly unjust and arbitrary. (c) Provision of rule 17 is clearly a tax and not a fee. (d) Imposition of tax or fee on the citizens for the services that the State renders to itself and not the taxpayers is clearly impermissible, arbitrary and unjustifiable.
(3.) THE principle on which the supervision charges or administrative charges have been imposed are laid down in Gupta Modern Breweries : [2007] 8 RC 688 following the judgment in Khoday Distilleries Ltd. v. State of Karnataka : [1995] 1 SCC 574 and Khoday Distilleries Ltd. v. State of Karnataka : [1996] 10 SCC 304.;