Himachal Pradesh High Court Quashes Distillery Licence Cancellation Over Lack Of Independent Application of Mind

The Himachal Pradesh High Court set aside the cancellation of distillery licences, holding that the decision was influenced by an unauthorised recommendation and lacked independent application of mind. It permitted fresh adjudication by the competent authority.

Justice Jyotsna Rewal Dua was dealing with a writ petition filed by a distillery licensee (Tiloksons Brewery & Distillery) challenging cancellation of its licences in Forms D-2 and L-11 under the Himachal Pradesh Excise Act, 2011.

The cancellation order dated July 4, 2025 was passed by the Commissioner of State Taxes & Excise following a recommendation made by the Collector (Excise) on June 2, 2025, based on an inquiry arising from a surprise inspection of the petitioner's premises.

The Court noted that:

“the Commissioner State Taxes & Excise appears to have been greatly swayed by the recommendations made by the Collector (Excise) on 02.06.2025 and further that there was no jurisdiction in the Collector (Excise) to have made the recommendations which he did. Since the parent licenses had been issued by the Commissioner State Taxes & Excise, jurisdiction to adjudicate upon allegations about petitioner having committed breach of terms & conditions of the licenses lay with the Commissioner"

The court further observed that parallel proceedings were initiated by both the Collector and the Commissioner on the same subject matter. The Commissioner kept his proceedings in abeyance, awaiting the Collector's decision and subsequently relied upon it.

On this, the court noted that the Collector had effectively acted as “judge in his own cause” by conducting the inquiry, relying on material gathered therein, and then supporting his own findings before the Commissioner.

Holding that the Commissioner's order was influenced by the Collector's recommendations, the court said it could not be regarded as having been passed independently.

On the challenge to the inspection, the court held that the inspection team was not constituted in accordance with the Excise Act and the applicable notification, noting the absence of required officers. However, it clarified that this defect alone would not vitiate the proceedings in the facts of the case, particularly as no specific prejudice was demonstrated.

In the result, the court quashed the cancellation order and directed the Commissioner to adjudicate the matter afresh, independently and without being influenced by the Collector's recommendations, after granting reasonable opportunity to the petitioner.

The court also directed that future inspection teams be constituted strictly in accordance with statutory requirements.