Orissa High Court

Cuttack, July 24: State government’s efforts to increase its excise revenue collection received a setback today with Orissa High Court striking down the notification for holding e-auction to grant licences to retail Indian-made foreign liquor off shops.

A division bench of Justice Indrajit Mahanty and Justice B.N. Mohapatra set aside the state excise department’s April 5, 2013, notification on the ground that the e-auction procedure is “unreasonable” and “not sustainable under law”.

The court directed the state government to take a fresh look at it.

The state excise department had notified its excise policy for 2013-14 on March 23 and decided to hold e-auction for Indian-made foreign liquor (IMFL) off shops and country liquor shops in place of the existing renewal policy.

Over 80 odd IMFL off shop licensees had challenged the policy. They alleged that the excise policy was whimsical and arbitrary and the procedures laid down for e-auction were stringent and detrimental to their interest.

The state government had said that earlier the excise shops were being settled on renewal basis for years together. As a result, the same trader was continuing in the business for years. This procedure led to stagnation of revenue collection and was not acceptable to the government.

“In order to make the settlement of all excise shops by free and fair means and to obtain more revenue, the state government has decided to settle the same through e-auction,” state excise additional secretary Harekrushna Behera had stated in an affidavit.

While disposing of the batch of petitions today, the court upheld the excise policy for 2013-14 for e-auction, but directed the state government to reconsider the procedure laid down for implementing it.

“Till then, existing arrangements shall continue,” the court said. On May 17, the court had directed the government to maintain status quo in respect of granting licences for IMFL off shops in the state and allowed extension of another two months to the existing excise shops.

The court further specified a number of aspects for the state government to address while taking a fresh look at the procedure it had laid down for conducting e-auction.

One of the procedures asked registered bidders to have access to Internet connectivity for participating in the e-auction process and to sign the terms and conditions online.

The court said that the state government should allow participants in e-auction to take help of the Internet facility at the National Informatics Centres available in each district. The court made it clear that the state government should give opportunity of hearing before disqualifying a registered bidder.

The government will have to make provisions to bar bidders with doubtful solvency and criminal antecedents and also to reconsider the clause related to solvency of bidders.

The petitioners had pointed out that there was no monetary ceiling on solvency from 1968 to 2005. It was only in 2005 that three months’ consideration money was prescribed as solvency amount to take part in the settlement of a shop. But now, an up-to-date solvency certificate in respect of immovable property equal to not less than 12 times the combined monthly reserve price of the shop is expected from a bidder.