- 1 - NC: 2025:KHC:959 WP No. 11316 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 11316 OF 2023 (EXCISE) BETWEEN: M/S VEKATESHWARA ENTERPRISES A PARTNERSHIP FIRM - NARTAKI BAR AND RESTAURANT, CL-9 LICENSEE, REP.BY ITS MANAGING PARTNER, SHRI D. RAJAGOPAL, S/O LATE SHRI DASAPPA, R/AT NO.51, 1ST MAIN ROAD, SEHSHADRIPURAM, BANGALORE-560 020. …PETITIONER (BY SRI B N SHETTY, ADVOCATE) AND: 1. THE COMMISSIONER, O/O COMMISSIONER OF EXCISE, 2ND FLOOR, TTMC A BLOCK, BMTC COMPLEX, SHANTHI NAGAR, BANGALORE-560 027. 2. THE DEPUTY COMMISSIONER OF EXCISE, O/O DEPUTY COMMISSIONER OF EXCISE, BANGALORE URBAN DISTRICT (BU-6), BANGALORE - 560 026. …RESPONDENTS (BY SRI B MANJUNATH, AGA FOR R1 AND R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE IMPUGNED ORDER IN APPEAL NO.ECS/10/APP/2021 DTD 17.05.2023 ISSUED BY THE R1 AS PER ANNEXURE-A AS ILLEGAL AND UNENFORCEABLE IN LAW AND ETC. Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:959 WP No. 11316 of 2023 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE ORAL ORDER Heard the learned counsel appearing for the petitioner and the learned Government Advocate appearing for the respondents. 2. Petitioner is aggrieved by the order dated 17.05.2023 passed by respondent No.1 marked at Annexure-A. 3. In terms of the said order, the appeal preferred by the petitioner challenging the order at Annexure-F dated 15.01.2021 and communication at Annexure-G dated 04.02.2020 is dismissed. 4. Admittedly, the petitioner is a partnership firm. The firm was constituted on 26.08.2005. Initially, there were four partners. The 3rd partner S.R. Nagamani had 8% share in the partnership firm. The partnership - 3 - NC: 2025:KHC:959 WP No. 11316 of 2023 was reconstituted on 12.09.2019. S.R. Nagamani who had 8% share retired from partnership firm and her 8% were transferred to D. Rajgopal who was already a partner having 51% share when the partnership was constituted in the year 2005. 5. Admittedly, the petitioner firm had CL-9 licence issued under the Karnataka Excise Act, 1965. The change of the constitution of the firm was intimated to the respondents and accordingly, on 12.07.2020 the Deputy Commissioner of Excise has issued CL-9 licence in the name of partnership firm comprising three partners after the reconstitution and name of S.R. Nagamani was deleted from the licence. 6. This being the position, the Commissioner of Excise vide letter dated 24.02.2020 addressed to the Deputy Commissioner of Excise directed the Deputy Commissioner to impose twice the amount as the licence fee payable by the petitioner firm. Acting on the said order, vide intimation dated 15.01.2021 the Deputy - 4 - NC: 2025:KHC:959 WP No. 11316 of 2023 Commissioner of Excise directed the petitioner firm to pay twice the amount as the licence fee invoking Rule 17-B of Karnataka Excise (General Conditions of Licences) Rules, 1967. 7. Aggrieved by the said order, an appeal is preferred before the Appellate Authority. The Appellate Authority dismissed the appeal. Hence, the petitioner is before this Court. 8. Learned counsel for the petitioner would contend that in view of the law laid down by the Co- ordinate Bench of this Court in Shankar Wines, Wilson Garden, Bengaluru vs The Commissioner of Excise in Karnataka, and Another1 every change in the constitution of the partnership firm will not attract Rule 17-B to impose the double the licence fee as the transfer fee. It is his submission that as long as the share in the partnership firm is not divested in excess of 50%, for the purpose of Rule 17-B, partnership firm remains the same, 1 2017 SCC OnLine Kar 6942 - 5 - NC: 2025:KHC:959 WP No. 11316 of 2023 and additional licence fee cannot be imposed on the said partnership firm. 9. Learned counsel appearing for the respondents would contend that the change of composition firm amounts to the transfer of licence in favour of the newly constituted firm, as such, the order is rightly passed directing the petitioner firm to pay the additional fees. 10. This Court has considered the contentions raised at the bar and perused the records. Rule 17-B reads as follows:- "[17-B. Transfer of licence in other cases :- (1) Notwithstanding anything contained in Rule 2, licences issued.- (i) for Sale of Indian Liquor (other than arrack) or Foreign Liquor or both, in Form No. CL-1 (Wholesale licence) or CL-2 (retail shop licences) [CL-6A (Star Hotel Licence)] or CL-7 (Hotel and Boarding House Licences) [xxxxx] or CL-9 (Refreshment room (Bar) Licence under the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968; or (ii) for sale of Beer under the Karnataka Excise (Lease of Right of Retail Vend of Beer) Rules, 1976; - 6 - NC: 2025:KHC:959 WP No. 11316 of 2023 The Deputy Commissioner may on an application by the licensee and [subject to payment of transfer fee equivalent to twice the annual licence fee] specified in Rule 8 of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 or Rule 5 of the Karnataka Excise (Lease of Right of Retail Vend of Beer, Rules, 1976, as the case may be, and with the prior approval of the Excise Commissioner, transfer such licence in favour of any person named by such licence, if such person is eligible for grant of a licence under the Karnataka Excise Act, 1965 or the rules made thereunder. [x x x x x.] (2) Nothing in this rule shall apply to transfer of licence under Rule 17-A.]" 11. The Co-ordinate Bench of this Court in M/s. Shankar Wines supra has held and that in case 50% of the share of partnership firm is not divested, then the Rule 17-B cannot be applied to compel the partnership firm to pay additional fees. This being the position, this Court has to find out as to whether the retirement of S.R. Nagamani amounts to a transfer of the assets of the firm to attract Rule 17-B referred to supra. 12. As can be noticed from the reconstituted partnership firm S.R. Nagamani had 8% share in the partnership firm in the year 2001 when the partnership - 7 - NC: 2025:KHC:959 WP No. 11316 of 2023 firm was constituted. Later she divested her 8% share in favour of the Rajgopal who was also a partner with 51% share earlier. Thus, the reconstitution does not amount to transfer of licence so as to attract Rule 17-B of the aforementioned Rules. Under these circumstances, the impugned orders are unsustainable. 13. Accordingly, writ petition is allowed. 14. Impugned orders at Annexure-A dated 17.05.2023 passed by the Excise Commissioner, Bangalore and Annexure-G dated 04.02.2020 passed by the Commissioner of Excise are quashed. Sd/- (ANANT RAMANATH HEGDE) JUDGE CHS List No.: 1 Sl No.: 54