S. 34(2) U.P. Excise Act Is Discretionary; Second Liquor Licence Cannot Be Cancelled Mechanically: Allahabad High Court

On the issue of blacklisting, the Court emphasised that such orders carry serious civil consequences affecting a person’s business reputation and livelihood. Relying on Supreme Court precedents including Kulja Industries Limited v. Chief General Manager, Western Telecom Project, BSNL & Others (2014) 14 SCC 731 and Daffodills Pharmaceuticals Limited & Another v. State of U.P. & Another (2020) 18 SCC 550, the Court held that blacklisting cannot be imposed for an indefinite or unspecified period.

Justice Piyush Agrawal delivered the judgment while partly allowing a writ petition filed by an excise licence holder challenging cancellation of his country liquor retail licence and his indefinite blacklisting by the licensing authorities in Meerut district. “The record shows that the licence of the petitioner's shop at Maukhas, Meerut has been cancelled only by referring to section 34(2) of the Excise Act and Rule 21(3) of the Rules framed thereunder, but no reason has been assigned as contemplated by this Court in Sandeep Singh (supra). The authorities are bound to show that the discretion has been applied judicial only after recording a finding of fact independently, not just section and rules”, it noted.

“…this Court finds that neither in the show cause notice, nor in the order, any finding of facts has been mentioned to show as to how, permitting the petitioner to continue with Village – Maukhas, is detrimental to the interest of the Revenue. The record further shows that the petitioner has been blacklisted for indefinite period, which is against the settled principle of law laid down by the above referred judgement of the Apex Court”, it further noted.

Advocate Raj Kumar Singh appeared for the petitioner and Ravi Shankar Pandey, ACSC appeared for the respondents.

In the matter, the petitioner was granted licences to operate country liquor shops at Village Parikshitgarh and Village Maukhas, Meerut, which was renewed for the excise year 2020–21. However, during the COVID-19 lockdown, an FIR under sections 188, 169, 270 & 271 IPC, Section 3 of Epidemic Diseases Act and Sections 60 & 72 of U.P. Excise Act was lodged alleging that the petitioner was transporting 10 cartons of liquor on the back seat of white coloured Scorpio car. The said vehicle belonged to a Police constable of that area, but no proceedings, were initiated against the owner of the vehicle in question.

Subsequently, a show cause notice was issued regarding the Maukhas shop and the Licensing Authority cancelled that licence as well, forfeited the entire licence fee and security deposit, and blacklisted the petitioner without prescribing any time limit.

Before the Court, the petitioner clarified that he was not pressing for restoration of the licence but challenged the action taken under Section 34(2) of the U.P. Excise Act, contending that there was no violation concerning the Maukhas shop and that cancellation was mechanically based on cancellation of another licence.

The State opposed the petition on the ground of maintainability, submitting that the petitioner had an efficacious alternative remedy of revision under Section 11(2) of the U.P. Excise Act.

Rejecting the preliminary objection, while referring to several Supreme Court precedents, the Bench observed, “…the writ petition is maintainable if pure question of law raised and if investigation into the facts is unnecessary, then the High Court could entertain a writ petition in its discretion even though the alternative remedy was not availed of. In the case in hand, only pure question of law has been raised and no dispute of facts is involved and therefore, the writ petition is maintainable”.

The Court noted that authorities exercising powers under Section 34(2) must independently assess whether continuation of another licence would be detrimental to revenue interests.

“This Court in the case of Sandeep Singh (Licensee of Country Liquor) Vs. State of U.P. & 3 Others [Writ Tax No. 278/2020, decided on 21.01.2021 and Sandeep Singh Vs. State of U.P. & 2 Others [Writ Tax 816/2021], held that section 34(2) of the U.P. Excise Act is discretionary and not mandatory. For taking action against the petitioner, the authorities must apply their independent mind, wherein, it has been held that section 34(2) of the U.P. Excise Act is discretionary and not mandatory. Its application cannot be consequence of cancellation of another licence of licensee without offering any reason of doing so”, it noted.

“The record further shows that no action against the Police constable, who was the owner of the vehicle in question, has been initiated or brought on record at any stage. This itself shows the meritless intent of the respondents for initiating proceedings for cancellation of the licence of the petitioner for Village - Parikshitgarh, Meerut. On the said premise, the licence of the petitioner was cancelled with respect to Village – Maukhas. The said proceedings have been initiated without any finding as to how permitting the petitioner to continue with the second licence is detrimental to the interest of the Revenue”, the Bench further noted.

The Court also rejected the objection regarding delay in approaching the Court, observing that delay alone does not defeat writ jurisdiction, particularly where no third-party rights have intervened and the issue raised concerns legality of State action.

The Bench noted that since the excise year has expired, the petitioner cannot claim continuation of the licence, however, he may apply under any new policy, and if successful, the forfeited amount can be adjusted accordingly.

Cause Title: Vijay Kumar Sharma v. State of Uttar Pradesh & 4 Others [Neutral Citation: 2026:AHC:60105]

Appearances:

Petitioner: Raj Kumar Singh, Rajat Aren, Advocates.

Respondents: Ravi Shankar Pandey, ACSC.

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