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Pernod Ricard India (P) Ltd. vs. The State of Madhya Pradesh & Ors.

Not available · 2024 INSC 327Decided 19 Apr 2024
Not available
Justice Pamidighantam Sri Narasimha · Justice Aravind Kumar

Background

The appellant, a liquor sub-licensee, exceeded the permissible "wastage" limits for foreign liquor during the 2009-10 license year. At that time, the applicable penalty rule allowed up to four times the duty payable. In 2011, before any demand notice was issued, the rule was amended (substituted) to reduce the penalty to a maximum of one times the duty. The excise authorities nonetheless demanded, and the High Court's Division Bench upheld, the higher (old) penalty on the reasoning that the rule in force during the license year should govern.

Decision Breakdown

The Supreme Court held that when a rule is "substituted" (as opposed to merely repealed), the old rule ceases to exist and the new rule takes over from the date of substitution, unless the statute specifically preserves the old rule for past liabilities. Since the demand notice was issued only in November 2011, after the amendment, and the Madhya Pradesh General Clauses Act's rule-saving provision was found inapplicable in this regulatory context (given the amendment's purpose of proportionate deterrence), the Court held the substituted, lower penalty applied. It also rejected the argument that applying the reduced penalty was impermissible "retrospective" application, since applying a more lenient rule to a pending proceeding is not the same as penalizing someone more harshly after the fact.

Lesson Learnt

When a penalty rule is amended to reduce punishment before any demand or proceeding is actually initiated against a person, the more lenient, current rule generally applies, not the harsher rule that existed when the violation occurred.

Official source (sci.gov.in)View Judgment (PDF)

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