The Karnataka High Court has clarified that the statutory power to permit shifting of licensed premises under Rule 23 of the Karnataka Excise Licences (General Conditions) Rules, 1967 cannot be restricted by Government circulars unless such restrictions are expressly incorporated in the Act or the Rules. The Court held that the Tourism Promotion Scheme’s eligibility criteria do not permanently confine a CL-9 licence to its original location, and once permission to shift is granted under the statutory framework, it cannot be annulled absent statutory contravention.
Background & Facts
The Dispute
The writ appeal arises from a dispute over the shifting of a CL-9 licence (refreshment room/bar licence) from Petachamanahalli Village to Jodikrishnapura Village in Kolar District. The respondent, a CL-9 licensee, sought and obtained permission under Rule 23 to relocate the licensed premises. However, the State authorities withdrew the licence and cancelled the shifting permission, citing violation of the Tourism Promotion Scheme introduced by Government Circular dated 20.12.1995, which restricts CL-9 licences to recognised tourist destinations.
Key Facts
- The CL-9 licence was originally granted in 1998-1999 to Sri G. Yoginarayana Gowda for a premises in Petachamanahalli Village under the Tourism Promotion Scheme.
- The licence was transferred to respondent No.1 on 08.11.2010 in accordance with the Karnataka Excise Act, 1965 and Karnataka Excise Licences (General Conditions) Rules, 1967.
- On 02.02.2013, the Deputy Commissioner of Excise permitted shifting of the licensed premises to Jodikrishnapura Village under Rule 23 on payment of prescribed fee.
- A show cause notice dated 03.09.2013 was issued alleging violation of the Tourism Policy by shifting to a non-recognised tourist destination.
- By order dated 29.10.2013/07.11.2013, the Deputy Commissioner withdrew the licence and cancelled the shifting permission, holding it contrary to the Government Circular.
- Respondent No.1 challenged the withdrawal before the High Court in W.P. No. 51039/2013, which was dismissed on 04.06.2014, reserving liberty to avail statutory appeal.
- The statutory appeal before the Commissioner of Excise under Section 61(2) was dismissed by order dated 25.08.2014.
- Respondent No.1 then preferred Appeal No. 830/2014 before the Karnataka Appellate Tribunal, which by order dated 13.03.2018 restored the licence but cancelled the shifting permission, directing re-shifting to the original place or another recognised tourist destination.
- Aggrieved, respondent No.1 filed W.P. No. 27254/2018, which was allowed by the learned Single Judge on 18.03.2024, quashing the Tribunal’s order cancelling the shifting permission.
Procedural History
- 1998-1999: Original grant of CL-9 licence to Sri G. Yoginarayana Gowda.
- 08.11.2010: Transfer of licence to respondent No.1.
- 02.02.2013: Permission granted under Rule 23 to shift premises to Jodikrishnapura Village.
- 03.09.2013: Show cause notice issued.
- 29.10.2013/07.11.2013: Licence withdrawn and shifting permission cancelled.
- 04.06.2014: High Court dismissed W.P. No. 51039/2013, reserving statutory remedy.
- 25.08.2014: Commissioner of Excise dismissed statutory appeal.
- 13.03.2018: Karnataka Appellate Tribunal restored licence but cancelled shifting permission.
- 18.03.2024: Learned Single Judge allowed W.P. No. 27254/2018, quashing Tribunal’s order.
- 09.07.2025: Writ Appeal reserved for judgment.
- 21.07.2026: Judgment pronounced by Division Bench.
Relief Sought
The State sought to set aside the order dated 18.03.2024 in W.P. No. 27254/2018 and dismiss the writ petition with exemplary cost.
The Legal Issue
The central question was whether the statutory power to permit shifting of licensed premises under Rule 23 of the Karnataka Excise Licences (General Conditions) Rules, 1967 can be restricted by a Government circular governing the Tourism Promotion Scheme, or whether such restriction must be expressly incorporated in the Karnataka Excise Act, 1965 or the Rules.
Arguments Presented
For the Appellant (State)
The State contended that the CL-9 licence was granted under the Tourism Promotion Scheme, which restricts licences to recognised tourist destinations. It argued that the Government Circular dated 20.12.1995 forms part of the licence’s governing conditions, and shifting to a non-recognised destination violates the Scheme. The State asserted that Rule 23 must be read subject to the Scheme’s restrictions, and that the Deputy Commissioner’s permission to shift was contrary to the Scheme.
For the Respondent (Licensee)
The licensee’s counsel submitted that Rule 23 is a statutory provision enabling shifting of licensed premises on payment of prescribed fee. It was argued that neither the Karnataka Excise Act, 1965 nor the Rules, 1967 nor the conditions of the CL-9 licence prohibit shifting. The counsel contended that the Government Circular merely prescribes eligibility criteria for initial grant and does not impose a statutory embargo on subsequent relocation. Once permission was granted under Rule 23, it could not be annulled absent statutory contravention.
The Court's Analysis
The Court examined the statutory framework governing CL-9 licences under the Karnataka Excise Act, 1965 and the Karnataka Excise (Sale of Indian and Foreign Liquor) Rules, 1968. The Court noted that CL-9 is a licence for the sale of Indian liquor and/or foreign liquor to be consumed on the licensed premises, combined with meals and refreshments. The licence is granted under Rule 5 of the Rules, 1968, and its nature is determined by the activity permitted, not by the purpose of tourism.
The Court observed that Rule 23 of the Rules, 1967 specifically empowers the Deputy Commissioner to permit shifting of licensed premises, subject to restrictions in Rule 5. The expression ‘shop’ is defined to mean the licensed premises where liquor is sold, and the Rule contemplates alteration of the licensed premises with permission. The legislative intent is clear that the location specified in the licence is not immutable but capable of being altered with the competent authority’s permission.
The Court rejected the State’s contention that the Tourism Promotion Scheme permanently confines the licence to its original location. The Court held that the Scheme’s eligibility criteria furnish the basis for initial grant but do not statutorily restrict subsequent relocation. The statutory power under Rule 23 cannot be curtailed by a circular by implication unless such restriction is expressly incorporated in the Act, the Rules, or the conditions of the licence.
The Court examined Section 29 and Section 30 of the Karnataka Excise Act, 1965, which provide exhaustive grounds for suspension, cancellation, or withdrawal of licences. The Court held that a licence cannot be suspended, cancelled, or withdrawn on a ground dehors the statute, the Rules, or the conditions of the licence. Once the competent authority permitted shifting under Rule 23, and such permission is not shown to be contrary to any express statutory provision or condition of the licence, the order of the Tribunal cancelling the shifting permission was unsustainable.
"The statutory power conferred under Rule 23 cannot be curtailed by a circular by implication unless such restriction is incorporated under the Act, the Rules or the conditions of the licence. The Act itself provides a complete code regarding the suspension, cancellation and withdrawal of licences."
The Verdict
The writ appeal was dismissed. The Court upheld the order dated 18.03.2024 in W.P. No. 27254/2018, quashing the Tribunal’s order cancelling the shifting permission. The Court held that the statutory power under Rule 23 to permit shifting of licensed premises cannot be restricted by Government circulars unless such restriction is expressly incorporated in the Karnataka Excise Act, 1965 or the Rules. The shifting permission granted to respondent No.1 was valid, and no ground existed to annul it under the statutory framework.
What This Means For Similar Cases
Statutory Power Overrides Policy Circulars
- Rule 23 is a statutory empowerment to permit shifting of licensed premises and cannot be restricted by Government circulars unless expressly incorporated in the Act or Rules.
- Policy circulars governing initial eligibility do not statutorily restrict subsequent relocation of licensed premises.
Licence Conditions Are Paramount
- The conditions of the licence must expressly incorporate any restriction on shifting; otherwise, the statutory power under Rule 23 prevails.
- Authorities cannot annul a statutorily granted permission absent statutory contravention or breach of licence conditions.
Tourism Policy Cannot Circumvent Statutory Framework
- The Tourism Promotion Scheme’s eligibility criteria do not permanently confine a CL-9 licence to its original location.
- Once permission to shift is granted under Rule 23, it cannot be annulled unless shown to be contrary to the Act, the Rules, or the conditions of the licence.
