Holding

Rule 25A provides a legal right to a reduction of interest but is conditional on payment of the arrears by 31‑August‑2000 and filing an application by 15‑July‑2000; because these conditions were not fulfilled, the respondents could not claim the waiver and interest is chargeable for the period the licence amount remained unpaid.

Summary

The respondents, Ajith Kumar and another, were licencees under the Kerala Abkari Act for the period 1‑April‑1993 to 31‑March‑1994, after which their licence was cancelled and the shop was placed under department management. The department collected Rs 31,49,288 as abkari dues, which the respondents claimed should be adjusted against their liability, a claim upheld by a High Court judgment on 11‑August‑2000. The State issued G.O. No. 88/2000/TD introducing Rule 25A, which allowed a 75% reduction of interest on arrears provided the entire arrears were paid by 31‑August‑2000 and an application was filed by 15‑July‑2000. The respondents could not meet these conditions because the writ petition was pending, and the High Court later granted them an amnesty scheme with specific terms. The Supreme Court held that Rule 25A confers a right subject to its conditions precedent, which were not satisfied, and that interest may be charged only for the period when the licence amount remained unpaid; procedural requirements are directory, not mandatory. Consequently, the appeal was dismissed with costs.

Issues considered

Whether the respondents were entitled to the waiver of interest under Rule 25A of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, given the missed procedural deadlines.
Whether the High Court erred in granting the respondents relief despite the pendency of the writ petition and non‑compliance with the conditions of Rule 25A.
Whether interest can be levied on the amount that was to be adjusted against the respondents' liability.

Legislation cited

Abkari Act

Subjects

interest waiverRule 25AAbkari licenceprocedural compliancelex non cogit ad impossibiliastatutory interpretationexcise dutyadjustment of dues

Judgment

[2008] 6 S.C.R. 778

A EXCISE COMMISSIONER & ORS.
y -
v
AJITH KUMAR & ANR.
(Civil Appeal No. 2891 of 2008)
APRIL 22, 2008
B
[S.B. SINHA AND D.K. JAIN, JJ.] ~-

Kera/a Abkari Shops (Disposal in Auction) Rules, 1974
(as amended in 2000) - r.25A - Respondent, /icencee under
c the Abkari Act - Licence cancelled - Interest on defaulted
amount of revenue due in terms of the Rules - G 0. providing
for waiver of interest upto 75% on defaulted amount of revenue
due in terms of the Rules - Interpretation of - Application of
r. 25A - Held: If there was default on the part of Respondent as
a licencee, interest would be charged only for the period during
D
which licence amount was not paid.
.
Maxims - Lex non cogit ad impossibillia - Meaning of - ""
Stated.
Interpretation of Statutes - Procedural provision -
E Interpretation of - Held: Procedural provisions are normally
directory and not imperative - Substantial compliance of
procedural provisions ordinarily would subserve the purpose
and object for which the same has been made.

F First Respondent was a licencee under the Abkari
Act for the period 1-4-1993 to 31-3-1994. The licence was ~ ...
cancelled, whereupon, the shop in question came under
management of the Department in terms of the Kerala
Abkari Shops (Disposal in Auction) Rules, 1974. The
Department collected a total sum of Rs.31,49,288/-
G
towards Abkari dues. Dispute arose as to whether the said
amount should be adjusted from the total liability of First
Respondent. First Respondent filed writ petition which ...
was allowed by judgment dated 11-8-2000 whereby and

H 778
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 779
&ANR.

whereunder it was directed that the amount collected A
towards Abkari dues be adjusted towards liability due
from the Appellant.
Meanwhile G.O.(P)No.88/2000/TD dated 2-6-2000 was
issued which provided for waiver of interest upto 75% on
the defaulted amount of revenue due in terms of the said 8
Rules, wherefor Rule 25A was introduced. First
Respondent sought benefit of the said Government Order
which was denied to him on the premise that he had not
complied with the condttions precedent therefor.
Respondents filed writ petition before the High Court C
which was allowed. Hence the present appeal.
Dismissing the appeal, the Court
HELD: 1.1. Rule 25A, as inserted by reason of the
notification dated 3-6-2000, contains a non-obstante D .
clause providing for a legal entitlement to the li'Cencees.
Such exemption is hedged by two conditions precedent
as provided for in the provisos appended thereto, being:
(1) the taxes, duties shall be paid with reduced interest
on or before 31•08•2000; and (2) that the defaulter who E
opts for payment of arrears thereunder would make an
application to the Assistant Excise Commissioner in
writing on or before 15-07-2000. [Para 11] [785-D, E, F]
1.2. During the period 1-4-1993 and 31-3-1994,
Respondents paid a sum of Rs.41,16,841/-. A sum of F
Rs.31,49,288/- was also realized by the State during the
said period. Appellants evidently. did not adjust the said
amount of Rs.31,49,288/- from the total amount. It was
done only after the judgment of the High Court which was
pa~sed only on 11-8~2000. The said amount should have, G
in law, be.en adjusted as on 1-4-1994. As the matter was
pending adjudication before the High Court, Respondents
were unable to file any such application on or before 15-
7-2000 for waiver of interest or pay any amount on or
H
780 SUPREME COURT REPORTS [2008) 6 S.C.R.

A before 31-8-2000. In terms of the said judgment of High
Court, Appellants were directed to inform the respondent
as regards the outstanding liability. A fresh demand,
therefore, was to' be raised. The said order was not
complied with. The said order was unsuccessfully
s challenged before the Division Bench. SLP therefrom to
this Court also failed. [Para 14] [788-A-E]
1.3. If the benefit of the said notification could not be
availed of by the Respondents because of the pendency
of the writ petition, the High Court cannot be said to have
C committed any jurisdictional error in passing the
impugned judgment. [Para 15] [788-E, F]
1.4. Lex non cogit ad impossibillia is a well known
maxim which means that nobody can be asked to do a
thing which is impossible to be performed. [Para 16]
0
[788-F]
1.5. Rule 25A confers a right. How the said right is to
be exercised is a matter of procedure. The procedural
provisions are normally directory and not imperative. A
E substantial compliance of the procedural provisions
ordinarily would subserve the purpose and object for
which the same has been made. [Para 16] [788-G]
1.6. A sum becomes due only when it is definite and
only when a demand therefor is made. If no demand could
F legally be made from the Respondents for the entire sum
as they were entitled to adjustment of a sum of
Rs.31,49,288/-, one does not see how even in equity, the
appellants were entitled to ask for strict compliance of the
said GOMs. [Para 17] [789-A]
G
1.7. A party to the lis cannot take advantage of his
own wrong. If the State, in law, was liable to adjust the
said. amount of Rs.31,49,288/-, a valid demand could
have been raised only in respect of the balance sum.
H [Para 17] [789-BJ
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 781
& ANR. [S.B. SINHA, J.]
-r 1.8. If there was a default .on the part of tl)e A
Respondents as a licencee, interest would be charged.
only for the period during which licence amount was not
paid. Interest cannot be charged although no amount was
due. Some amount might be due but not the entire amount
on which interest is being claimed. [Para 18] [789-F] B
Solomon Antony and Ors. etc. v. State of Kera/a and Ors.
(2001) 3 sec ~94 - referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2891 of 2008. c
From the final Judgment and Order dated 17 .03.2006 of
the High Court of Kerala at Ernakulam in W.A. No. 153 of 2006.
G. Prakash for the Appellants.
L.N. Rao, A Raghunath for the Respondents. D
- -.JI/
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. Interpretation of G.O.(P) No.88/2000/TD dated 2.6.2000
E
providing for waiver of interest upto 75% on the defaulted amount
of revenue due in terms of the Kerala Abkari Shops (Disposal
in Auction) Rules, 1974 (the Rules) is the question involved
herein.
3. First respondent was a licencee under the Abkari Act F
,
-4 for the period 1.4.1993 to 31.3.1994. T~ey conducted business
for the period 1.4.1993 to 12~8.1993 only, as their licence was
cancelled by an order dated 13.8.1993. There was a dispute
between the parties in regard to the actual amount payable as
excise duty for the said period. According to Revenue, an G
amount of Rs.86,40,000/-was payable. Respondent, admittedly,
had paid an amount of Rs.40, 18,934/-.
-~
In terms of the ~ules, upon cancellation 'c)f the licence, the
shop in question came under the management of the
department. It, during the period 3t8.1993 ·to 31.3.1994 The H
782 SUPREME COURT REPORTS [2008] 6 S.C.R.

f'
A Department had collected a total sum of Rs.31,49,288/-towards
Abkari dues.
On the premise that the said amount should be adjusted
from the total liability of the first respondent, a dispute arose
between the parties herein as no credit was given in respect of
B the said amount of Rs.31,49,288/-. _,__
A writ petition was filed by the first respondent which was
allowed by a judgment and order dated 11.8.2000 whereby and
whereunder it was directed that the amount collected would be
c adjusted towards liability due from the appellant. The question,
however, which arose for consideration was as to whether till
the entire amount was adjusted, the first respondent was liable
to pay any interest thereupon or not.
By reason of the Government Order dated 2.6.2000, the
D State of Kerala granted time to the defaulters to deposit the
due amount of duty only with interest of 25%, wherefor Rule 25A
was introduced in the Rule.
'I- -
4. First respondent sought the benefit of the said
Government Order which was denied to him on the premise
E that he had not complied with the conditions precedent therefor.
5. By reason of an order dated 14.12.2001, the
representation of the respondents was rejected by the Excise
Commissioner.
J-
F They were directed to deposit an amount of Rs.83,26,344/
- with future interest at the rate of 18% per annum on sum of ~

Rs.41,16,841/- w.e.f. 8.12.2001. A Revenue Recovery Notice
was issued for recovery of the said sum from the respondents
on or about 4.4.2002.
G
Aggrieved by and dissatisfied therewith, the respondents
filed a writ petition before the High Court on 23.4.2002
questioning the validity of the said notice dated 4.4.2002. ...._.
6. By reason of a judgment and order dated 6.10.2005, a
H learned Single Judge allowed the s d writ petition, directing :
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 783
& ANR. [S.S. SINHA, J.]
-,. "In view of the above, the Original Petition is disposed of A
directing the 1st respondent to grant amnesty benefits to
the petitioners on the following terms and conditions :
(i) The Commissioner will work out the liability by
reducing 75% of the interest payable upto 31.03.1997
being waiver available under the amnesty scheme B
and demand balance amount with 25% interest
without charging further interest from 01.04.1997 to
31.8.2000.

(ii) Since petitioners have not made payment as on c
31.08.2000 on account of pendency of the Original
petition, petitioners will on this amount pay statutory
rate of interest upto the date of payment i.e. from
01.09.2000 to the actual date of payment.
(iii) Petitioners are granted time till 31.12.2005 to clear D
,.. ,.,,. the arrears with interest in two equal instalments,
first of which will be paid on or before 30.11.2005
and the balance on or before 31.12.2005.
(iv) If payments are not made as above the benefit of
amnesty scheme granted to the petitioners with
E
modifications as above will stand forfeited and the
respondents are free to proceed to recover the entire
arrears.
(v) The Commissioner will give a statement as above F
_, within two weeks from the date of production of a
4
copy of this judgment for petitioners to make
payments and settle liability."
7. An intra court appeal preferred thereagainst by the
appellant herein, marked as Writ Appeal No.153 of 2006, has G
been dismissed by a Division Bench of the said High Court
stating that no ground was made out for interference with the
. "'_..\
directions issued by the learned Single Judge.
8. Mr. G. Prakash, learned counsel appearing on behalf of
H
784 SUPREME COURT REPORTS [2008] 6 S.C.R.

A the appellant, in support of the appeal, inter alia would submit
that the High Court committed a serious error in passing the
impugned judgment insofar as it failed to take into consideration
that exemption from payment of interest could be directed only
in the event the entire amount was paid in terms the notification
B by 2.6.2000 and in view of the fact that the first respondent failed
to deposit the said amount by the said date, the impugned
judgment cannot be sustained.
9. Mr. Rao, learned senior counsel appearing on behalf of
the respondents, on the other hand, would support the judgment.
c
10. The sole question which, thus, arises for our
consideration in this appeal is the application of Rule 25A of
Kerala Abkari Shops (Disposal in Auction Rules) Amendment
Rules, 2000. It reads thus :
D "25A. Reduction of interest in certain cases - (i)
Notwithstanding anything contained in this rule or any other
rules made under the Abkari Act 1 of 1077 or in any
judgment, decree or order of any court, the persons who
are in arrears to pay rentals, taxes duties or other amount
E under this rules as on 31st day of March, 1997 shall be
entitled to a reduction of 75% of the amount of interest
accrued on such rentals, taxes, duties or other amounts
as the case may be.
Provided that the entire arrears of rental, taxes, duties or
F other amounts with the reduced interest shall be paid on
or before 31st day of August, 2000.
Provided further that the maximum interest payable after
allowing the reduction mentioned above shall be limited
to 100% of the principal amount of rentals, duties or other
G
amounts outstanding as arrears.
(ii) A defaulter who opts for payment of arrears under this
rule shall make an application to the Asst. Excise
Commissioner concerned in writing on or before 15th day
H of July, 2000.
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 785
,..,,, & ANR. [S.B. SINHA, J.]

(iii) On receipt of the application the Asst. Excise A
Commissioner shall contact the revenue recovery authority
concerned in whose cases the amount has been
recommended for realization under the revenue recovery
act and shall calculate the quantum of the rentals, taxes,
..-...!.
duties and other amounts and interest payable under Rule B
as on the date of the application and the amount of interest
payable after allowing the reduction of interest under this
·provision. After getting the amount thus calculated being
remitted into the treasury the Asst. Excise Commissioner
shall withdraw the revenue recovery requisition from the c
revenue· authority. Asst. Excuse Commissioners are
authorized to get the money remitted in the treasure in this
behalf. In those .cases in which revenue recovery
proceedings have not been initiated by the Asst. Excise
· Commissioner concerned, on receipt of application from
.. -'(
the defaulters, the Asst. Commissioner shall quantify the
amount as said above and to get it remitted."
D

11. Rule 25A, as inserted by reason of the aforementioned
notification dated 3.6.2000, contains a non obstente clause
providing for a legal entitlement to the licencees. There cannot E
be any doubt whatsoever that such exemption is hedged by two
conditions precedent as provided for in the provisos appended
thereto, being : (1) the taxes, duties shall be paid with reduced
interest on or before 31st day of August, 2000; and (2) that the
defaulter who opts for payment of arrears thereunder would make F
.J
~ an application to the Assistant Excise Commissioner in writing
on or before 15th July, 2000.
12. Respondents herein admittedly filed a representation
before the appellants on or about 12.9.2001. The same was,
". however, done on the premise that their right to get the G
aforementioned amount of Rs.31,49,288/- adjusted was
determined only in O.P. No. 7894of1994. It appears that during
""~
the pendency of the said writ petition, a sum of Rs.1,00,000/-
was als·o deposited. What was, therefore, urged in the
aforementi~ned representation dated 12.9.2001 for grant of H·
786 SUPREME COURT REPORTS [2008] 6 S.C.R.

r
A proportionate deduction in the kist as also interest thereupon.
First Appellant, however, was of the opinion that the waiver
of interest as per the said scheme having already expired and
the respondents having not filed any application before the said
authority within the stipulated time, it was impermissible to grant
8 the benefit of the said Rule to the respondent, stating :

"The petitioners had already executed permanent
agreement as per Rule 5(15) of the Kerala Abkari Shops
(Disposal in Auction) Rules, 1974 and agreed to remit the
c duty on monthly designated quantum of rectified spirit 6400
litres per month @ 25. 73 per litr. Hence they are legally
bound to pay the duty on designated quantum of rectified
spirit. The above shops were placed under Department
Management due to the non payment of Kist in time and
D.M. arrangements made at the risk of the Original
D
purchasers. The petitioners prayer that D.M. amounts are 'fl- ...
to be accounted towards the arrears on the date of
remittance made by the D.M. agent itself cannot be
considered, since a decision in this regard is to be taken
by the Excise Commissioner.
E
As per the D.C.E. prepared after given credit the entire
remittance made by the defaulters and the D.M. agent as
stated by the petitioners including Rs.13, 71, 738/- remitted
before the Tahsildar, Thodupuzha on 7.12.2001 as directed
F by the Honourable High Court in O.P. Nos.10683 and
\.
29173/01 dated 8.11.2001 as such an amount of t
Rs.83,26,344/- with future interest @ 18% on
Rs.41, 16,841/- with effect from 8.12.2001. The petitioners
are legally bound to pay the amount due to Government
as stated above."
G
13. The total demand as against the respondents was
calculated as under: +.--.;
"DCB STATEMENT IN RESPECT OF A.S. GROUP NO.II/
93-94 ETTUMANOOR RANGE
H
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 787
& ANR. [S.B. SINHA, J.]

Kist arrears 5075709 A
Duty on designated quantum 1646720
D.N. Fee 2
Cost of establishment 4000
Interest on kist 403352 B
Interest as quantum of Rectified spirit 125854
Interest on Kist of establishment 492
and penal interest

.
Principal Interest Total c
Total Demand as on 1.4.94 6726429 539700 7266129
Deducted D.M. and duty of
Rectified Spirit collected
during D.M. period (242910
+ 719372-3149288) 2609588 539700 3149288 D
Balance 4116841 Nil 3149288
Interest upto 12/94 555774 4672615
(9 months)
Remitted Rs.100000/- as E
per TR No.2066/94 dated
31.12. 94 at Tahsildr,
Thodupuzha 100000 100000
Interest from 1/95 to 1/01
F
(83 months) 455774 4572615

Total as on 11/01 4116841 5581241 9698082
Remitted Rs.1371739/- as
per Receipt No.21 Book
No.321 at Taluk Officer, G
Thodupusha
dated 7.12.2001 1371738 8326344

Assistant Excise Commissioner
Kottayam." H
788 SUPREME COURT REPORTS [2008] 6 S.C.R.

A 14. It is not in dispute that during the period 1.4.1993 and
31.3.1994, the respondents paid a sum of Rs.41,16,841/-. A
sum of Rs.31,49,288/- was also realized by the State during the
said period. Appellants, it would appear from he annexure
appended to the order of the Excise Commissioner dated
B 14 .12 .2001, evidently did not adjust the said amount of
Rs.31,49,288/- from the total amount. It was done only after the
judgment of the High Court. The said amount should have, in
law, been adjusted as on 1.4.1994.

As the matter was pending adjudication before the High
C Court, the respondents were unable to file any such application
on or before 15. 7 .2000 for waiver of interest or pay any amount
on or before 31.8.2000.
The judgment of the High Court was passed only on
11.8.2000. In terms of the said judgment, the appellant were
0
directed to inform the respondent as regards the outstanding
liability. A fresh demand, therefore, was to be raised. The said -..,.._ ~·
order was not complied with. The said order was unsuccessfully
challenged before the Division Bench. A SLP therefrom to this
Court also failed.
E
15. If the benefit of the said notification could not be availed
of by the respondents because of the pendency of the writ
petition, in our opinion, the High Court cannot be said to have
committed any jurisdictional error in passing the impugned
F judgment.
16. Lex non cogit ad impossibillia is a well known maxim
which means that nobody can be asked to do a thing which is
impossible to be performed.
G Rule 25A confers a right. How the said right is to be
exercised is a matter of procedure. The procedural provisions
are normally directory and not imperative. A substantial
compliance of the procedural provisions ordinarily would ~-.
subserve the purpose and object for which the same has been
made.
H
EXCISE COMMISSIONER & ORS. v. AJITH KUMAR 789
&ANR. [S.B. SINHA, J.]
17. A sum becomes due only when it is definite and only A
when a demand therefor is made. If no demand could legally be
made from the respondents for the entire sum as they were
entitled to adjustment of a sum of Rs.31,49,288/-, we do not
see how even in equity, the appellants were entitled to ask for
strict compliance of the said GOMs. B
A party to the lis, it is trite, cannot take advantage of his
own wrong. If the State, in law, was liable to adjust the said
amount of Rs.31,49,288/-, a valid demand could have been
raised only in respect of the balance sum. The High Court was
not concerned with the amount of interest as the sum was C
required to be calculated on the amount legally due and
recoverable and not on the amount specified in the notice.
18. Strong reliance has been placed on a judgment of this
Court in Solomon Antony and Ors. etc. v. State of Kera/a and
0
Ors. [(2001) 3 sec 694]. The said decision was rendered on
the fact of the case. Therein the question which arose for
consideration was as to whether the contractors were liable to
pay the duty on import in relation to the unlifted portion of the
designated quantum of rectified spirit as provided for in the
Rules. Responden_ts did not disclaim their liability. They, in fact ' E
contended that the entire liability for the period between 1.4.1993
and 31.3.1994 should be taken into consideration but then for
determining the actual liability the appellants were bound to give
credit to each and every pie which was realized during the said
period. The contention of the State, to our mind, is wholly unjust F
and unfair. If there was a default on the part of the respondents
as a licencee, interest would be charged only for the period
during which licence amount was not paid. Interest cannot be
charged although no amount was due. Some amount might be
due but not the entire amount on which interest is being claimed. '"'
19. For the reasons aforementioned, there is no merit in
'"A the. appeal. The appeal is dismissed with costs quantified at
Rs.10,000/-(Rupees ten thousand only),
B.B.B. Appeal dismissed. H