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Judgment
A.N. Venugopala Gowda, J.—Petitioner purchased stock of the value of Rs. 2,00,000/- from the 1st respondent - Corporation through the 2nd respondent on 06.02.2007 by submitting a challan vide Annexure-R4. The 2nd respondent issued the stock to the petitioner on receipt of the said challan, subject to realization and credit of the challan amount of Rs. 2,00,000/-, to the account of the 1st respondent. The amount having not been realized and credited to the account, 1st respondent on 20.03.2013 vide Annexure-D, demanded the payment of Rs. 2,00,000/-, interest of Rs. 2,93,655/- and penal interest of Rs. 50,000/-. The petitioner having remitted Rs. 2,00,000/- by demand draft on 20.03.2013 has filed this writ petition to quash Annexure-D to the extent of the demand made for payment of interest amount of Rs. 2,93,655/- and penal interest of Rs. 50,000/-. Respondents have filed statement of objections in justification of the demand made vide Annexure D.
Sri Venkatesh P. Dalawai, learned advocate for the petitioner contended that the respondents have no power or jurisdiction to levy interest and penal interest and that the impugned demand being arbitrary and illegal may be quashed.
Smt. Sumana Baliga M, learned advocate for the respondents on the other hand contended that as per the sales policy of the respondent - Corporation, the demand vide Annexure-D was made and that the petitioner remitted Rs. 2,00,000/- on 20.03.2013 i.e., after issue of demand notice and agreed to pay the interest amount within a week, but has filed this writ petition, which is not maintainable. She referred to the Liquor Sales Policy for 2007-08 vide Circular No. 134 dated 19.06.2007, as at Annexure-R1 and the amendment to the Liquor Sales Policy, vide Circular No. 182, dated 20.04.2010, as at Annexure-R2 and submitted that the respondents are justified in demanding the payment of interest and penal interest by the petitioner, who is a defaulter.
In view of the rival contentions and the record of the case, it is clear that the petitioner paid Rs. 2,00,000/- on 20.03.2013 towards the purchase made on 06.02.2007. Relevant clauses in sales policy vide Annexure-R1, reads as follows:
3.03. The Corporation is entitled to recover differences due to short billing, excess dispatches, price differences, short collection of TCS or any other reason, immediately after such instances are noticed by it. However, such balance amounts, if any, un-paid within a week from demand shall carry an interest of 18 percent per annum. The Corporation is entitled to adjust such amounts immediately out of any payment received or out of any other credit lying in favour of the buyer.
4.05. Dishonour or back reference of the demand draft/pay order/DT will lead to following action by HO/Depot Manager, whoever notices the default earlier:
(i) Supplies to the buyer will be stopped forthwith
(ii) The Excise Officer in-charge of the depot shall be requested in writing to seize all the stocks in the retailers'' shop and direct the return of the stock in the shop 10 KSBCL.
Further supplies to the retail licensee shall be resumed only with the prior permission of the MD who shall:-
(a) levy restoration charges of Rs. 50,000/-
(b) recover interest at 24% plus applicable taxes if any, on the value of stocks not recovered by excise department, but limited to the value of sales invoice covered by the impugned DD/DT.
(c) Buyer will ensure an interest free initial deposit with KSBCL of Rs. 1 lakh for the period of licence.
Clause 4.05 of Circular No. 134, dated 19.06.2007 was substituted by issue of Circular No. 182, dated 20.04.2010 vide Annexure-R2 and the same reads as follows:
Lifting the stocks for having transferred funds through Electronic Fund Transfer (EFT) and such funds not credited to KSBCL current a/cs with the banks or Dishonour or back reference of the demand draft/pay order/DT by the Occasional licensees will lead to following action by HO/Depot Manager, whoever notices the default earlier:
i) Supplies to the buyer will be stopped forthwith.
ii) The Excise Officer in-charge of the depot shall be requested in writing to seize all the stocks in the retailers'' shop and direct the retailers to return the stock/s in the shop to KSBCL.
Further supplies to the retail licensee shall be resumed only with the prior permission of the MD who shall:
a) Levy restoration charges of Rs. 50,000/-
b) Recover interest @ 24% plus applicable taxes if any, on the value of stocks not recovered by excise department, but limited to the value of sales invoice covered by the impugned DD/DT/EFT.
Even according to the respondents, the petitioner purchased the stock of the value of Rs. 2,00,000/- on 06.02.2007 by producing the challan, as at Annexure-R4. The said challan amount having not been realized and credited to the account of the 1st respondent, the demand vide Annexure-D was made. Clause 3.03, noticed supra makes it clear that the balance amount, if any, unpaid within a week from the demand shall carry an interest of 18% per annum. Indisputedly, the respondents have not demanded from the petitioner the payment of Rs. 2,00,000/-, earlier to the date of issuance of the communication as at Annexure-D. The petitioner has paid the amount on the day Annexure-D was served on him. As per the sales policy vide Annexure-R1, interest can be demanded, if the unpaid amount is not remitted within a week from the date of payment. In the circumstances noticed supra, demand for payment of Rs. 2,93,655/- being interest and penal interest of Rs. 50,000/- is not inconsonance with the sales policy vide Annexure-R1. For the lapse on the part of the respondents in not verifying the account and making the demand, the petitioner cannot be made liable to pay the interest and penal interest demanded vide Annexure-D.
In the result, writ petition is allowed and Annexure-D is quashed.
No costs.