Bhopal (Madhya Pradesh): Madhya Pradesh High Court, principal bench at Jabalpur, on Tuesday upheld the excise department’s action to cancel eight licences of Som Distilleries and Breweries Private Limited.
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The company faces allegations of tax evasion through the creation of fraudulent transport permits. The excise department had earlier revoked eight of the company’s licences, a move challenged by the firm in the High Court. Justice Vivek Agarwal passed the order.
Harpreet Ruprah, additional advocate general, said, "Delivering his verdict in the ongoing dispute between Som Distilleries and Breweries Private Limited and the government, the High Court affirmed that the action taken by the government was justified. The eight excise-related licences held by the company have been cancelled. The court observed that violation of regulations is impermissible."
Naman Nagrath, senior counsel for the petitioner, submitted that eight licences held by two entities, petitioner No.1 Som Distilleries Private Limited and petitioner No.2 Som Distilleries and Breweries Private Limited, had been placed under suspension based on a show cause notice dated Feb 26, 2024.
He argued that when the show cause notice was issued, the licences were valid until March 31, 2024, and therefore should have lapsed automatically after that date.
Naman Nagrath said that as the petitioner companies have not been prosecuted or punished for a criminal offence, the doctrine of alter ego would not apply. He said that a corporation incurs criminal liability when an offence is committed in relation to its business by a person or body of persons in control of its affairs. In such cases, it must be established that the degree of control is so intense that the corporation can be said to think and act through that person or body.
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As per the court order, when the managing director of a private limited company was convicted, the Excise Commissioner’s failure to mention his name in the show cause notice reflects on the intent of Excise Commissioner Abhijit Agrawal. Prima facie, it appears that he was not acting bona fide, as he omitted the managing director’s name.