2026:HHC:10080

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

CWP No. 16382 of 2025

Judgment Reserved on: March 18 , 2026

Date of Decision: April 02 , 2026

M/s Tiloksons Brewery & Distillery, Kala Amb

District Sirmour, H.P. ...Petitioner

Versus

State of Himachal Pradesh & Ors. ...Respondents

Coram:

Ms. Justice Jyotsna Rewal Dua, Judge

1

Whether approved for reporting? Yes.

For the petitioner : Sh. Sunil Mohan Goel, Senior Advocate with

Mr. Paras Dhaulta, Advocate.

For the respondents : Mr. Y.P.S. Dhaulta & Mr. L.N. Sharma,

Additional Advocates General and Ms. Seema

Sharma, Deputy Advocate General for the

respondents/State.

Jyotsna Rewal Dua, Judge

Petitioner had been licensed to manufacture Indian Made

Foreign Spirit & Country Liquor in the Distillery at Mainthappal, Kala

Amb, District Sirmour, H.P. Petitioner held various licenses under

Himachal Pradesh Excise Act, 2011 in Forms D-2, L-11, L-1A,

1

Whether reporters of Local Papers may be allowed to see the judgment? Yes.

2026:HHC:10080

2

L-1C, L-13C, L-15 & L-16 for the year 2025-26. Its grievance is

against the order dated 02.06.2025 (Annexure P-11) passed by

Collector (Excise)-cum-Additional Commissioner State Taxes &

Excise, South Zone, Shimla – respondent No. 3, recommending to

Commissioner State Taxes & Excise-cum-Financial Commissioner

(Excise) Himachal Pradesh – respondent No. 2 cancellation of

petitioner’s licenses in Forms D-2 & L-11; and also against the order

dated 04.07.2025 passed by the Commissioner State Taxes &

Excise-cum-Financial Commissioner (Excise), H.P.-respondent No.

2 cancelling the petitioner’s licenses in Forms D-2 and L-11

(Annexure P-15).

2. Facts necessary for adjudication of the present writ

petition are as under:-

(i) Based upon an information, respondent No. 2 –

Commissioner State Taxes & Excise on 30.04.2025 constituted the

following team under the leadership of Additional Commissioner (IT,

EIU & Enforcement) for conducting a surprise inspection of

petitioner’s unit:-

“1) Sh. Himanshu Panwar, Dy. Commissioner Excise Sirmour.

2) Sh. Aman Sophat, ACSTE o/o JCSTE Central Zone Una.

3) Sh. Sachin, ACSTE Nalagarh-II.

4) Sh. Anurag Garg, ACSTE Bilaspur.

5) Sh. Kuldeep Singh, ACSTE Nalagarh-III.

2026:HHC:10080

3

6) Sh. Rupinder Singh, STEO, BBN Baddi.

7) Sh. Manoj Kumar, STEO o/o JCSTE Central Zone Una

8) Sh. Manoj Sacdeva, ASTEO, SZ, Parwanoo.”

Petitioner’s premises were inspected by the team on

04.05.2025. Inspection report (Annexure P-2) was submitted by

respondent No. 4 - the Deputy Commissioner State Taxes & Excise,

District Sirmour regarding surprise inspection of petitioner’s

premises on 04.05.2025 at about 2.00 a.m. conducted as per orders

of respondent No. 2 under the leadership of Sh. U.S. Rana,

Additional Commissioner State Taxes & Excise (Enforcement) HQ

Shimla by a team consisting of following officers:-

“1. Sh. Himanshu R. Panwar, DC, STE, Sirmour, HP.

2. Sh. Sachin, AC, STE, Nalagarh-II.

3. Sh. Anurag Garg, AC, STE, Bilaspur.

4. Sh. Aman Sophat, AC, STE, CZ, Una.

5. Sh. Kuldeep Singh, AC, STE, Nalagarh-III.

6. Sh. Manoj Kumar, STEO, CZ, Una.

7. Sh. Rupender Singh, STEO, BBN.

8. Sh. Manoj Sacdeva, ASTEO, SZ, Parwanoo.”

The report inter alia mentions that the team reached the

licensed premises at about 2:00 a.m. on 04.05.2025 and found

unauthorized manufacturing of liquor with labels of different brands

namey ‘Royal Blue’ meant for sale in Uttrakhand; Labour force of

around 20 people working on bottling chain; Labels of country liquor

2026:HHC:10080

4

brand namely ‘Santra’ for sale in Uttrakhand, Artisian Dry Zin

blended and bottled by Plot No. 124 Rudrapur, Uttrakhand were

found; PP caps embossed with ‘Shivalik Beverages Pvt. Ltd.

Chandigarh Excise’ were also found; A truck was fund stationed in

the premises loaded with PET bottles. During inspection, the team

telephonically contacted State Taxes & Excise Officer (STEO)

Incharge and was directed to reach the premises. The STEO

reached the premises at about 4:20 a.m. and was associated during

inspection. The inspecting team found the licensee to have

contravened the provisions of Sections 39(1)(a), 39(2)(i) and

39(2)(iii) of the H.P. Excise Act, 2011 as also Punjab Distillery Rules

1932 by indulging in:-

‘1. Carrying out bottling operations after designated hours

in un-authorized manner;

2 Bottling of illegal brands without approval of the

designated authorities;

3. Illegal transportation, storage and possession of ENA

for manufacturing of liquor un-authorizedly;

4. Illegal storage of labels, PP caps and pet bottles; and

5. Operating the manufacturing facility without prior

permission of the STEO in charge.’

(ii) Another report regarding same inspection was prepared by

Sh. U.S. Rana, Additional Commissioner State Taxes & Excise

(Enforcement) HQ Shimla on 04.05.2025 (Annexure P-3). As per

2026:HHC:10080

5

this report, petitioner’s premises were inspected on 04.05.2025 at

about 02:00 a.m. by the team under the leadership of Additional

Commissioner State Taxes & Excise (Enforcement); During

inspection a Special Investigating Team of District Police Sirmour

also remained present; Sh. Himashu Panwar, Deputy Commissioner

State Taxes & Excise, District Sirmour was telephonically directed

to join the inspection, he joined after about half an hour. The

Additional Commissioner State Taxes & Excise (Enforcement) HQ

Shimla in his report found the petitioner running the unit in breach

of Sections 39(1)(a), 39(2)(i) and 39(2)(iii) of the Himachal Pradesh

Excise Act, 2011. The Officer also recorded statements of Sh. Ankit

Singh, STEO, Incharge of petitioner’s Distillery & Sh. Gaurav Walia,

representative of the Company.

(iii) Based on the report, FIR No. 67 of 2025 was lodged at the

instance of respondent No. 4 at Police Station Kala Amb, District

Sirmour under Sections 318(4), 331(4), 305 & 61(2) of the Bharatiya

Nyaya Sanhita (BNS), 2023 and Sections 39(1)(i) & 39(2)(i) of the

Himachal Pradesh Excise Act, 2011.

(iv) On 05.05.2025 respondent No. 2 directed respondent No.

3 (Annexure R-2/2) to ‘enquire into the matter keeping in view all the

relevant factors and specifically on the administrative side on the

functioning of plant as a whole. The report must be exhaustive w.r.t.

2026:HHC:10080

6

roles and responsibilities of all the officials associated with jthe

functioning of the plant in the district vis-à-vis regulatory measures

as per HP Excise act & relevant rules. The report must reach this

office within 01 day positively’.

(v) In furtherance to respondent No. 2’s direction, respondent

No. 3 furnished his inquiry report on 07.05.2025 (Annexure P-5).

The report gave in-depth analysis of surprise inspection of

petitioner’s premises on 04.05.2025 by a team under the leadership

of Sh. U.S. Rana, Additional Commissioner State Taxes & Excise

(Enforcement) HQ Shimla alongwith police personnel. As per the

report, respondent No. 3 in compliance to the directions issued to it

by respondent No. 2 to inquire into the matter, visited the premises

of the licensee on 06.05.2025 in presence of Additional

Superintendent of Police, District Sirmour alongwith other officials

including Sh. Himanshu Panwar, the Deputy Commissioner State

Taxes & Excise, Sirmour – respondent No. 4. Statements of Sh.

Himanshu Panwar as also Sh. Naval Chander, Assistant

Commissioner Excise, District Sirmour and Sh. Ankit Singh, STEO,

Incharge of petitioner’s Brewery and Distillery were also recorded.

The Inquiry Officer i.e. Collector (Excise)-cum-Addl.

Commissioner State Taxes & Excise, SZ Shimla – respondent No.3

framed following points for determination:-

2026:HHC:10080

7

“(i) Whether, there was production of illegal liquor on the

day of inspection dated 04.05.2025?

(ii) Whether, the violation reported by the inspection team

on dated 04.05.2025, are accepted by the concerned

officer STEO Incharge of the plant?

(iii) Whether, the keys of revenue box/locks are in

possession of STEO Incharge of the plant on the day of

inspection dated 04.05.2025?

(iv) Whether, any alteration were detected by the inspection

team on dated 04.05.2025, with revenue box/revenue

locks?

(v) Whether, the CCTV Camera’s were functioning on the

day of inspection on dated 04.05.2025?

(vi) Whether, any inspection by the District Officers have

been conducted prior to the inspection dated

04.05.2025?

(vii) Whether, any complaints/Input with regard to the illegal

practices were received either to the District Officer or

to the STEO Incharge of the plant?

(viii) Whether, the STEO Incharge of the plant has

submitted/approved any casual leave/station leave

before leaving the station, Kala–Amb, as it was

reported that he was at Panchkula on the day of

inspection?”

The Inquiry Officer i.e. respondent No. 3 recorded his

findings & conclusions on all the points formulated above and

furnished the report to respondent No. 2 - the Commissioner State

Taxes & Excise-cum-Financial Commissioner (Excise) H.P. on

07.05.2025. On the basis of this report, the STEO concerned was

2026:HHC:10080

8

placed under suspension by respondent No. 2 on 13.05.2025. He is

statedly facing a departmental inquiry.

(vi) The Inquiry Officer-respondent No. 3-Collector (Excise)-

cum-Addl. Commissioner State Taxes & Excise, SZ, Shimla initiated

proceedings against the petitioner under Sections 29 and 43 of the

Himachal Pradesh Excise Act, 2011, Rule 9.93 of Punjab Distillery

Rules 1932, Rule 37(16) of the Himachal Pradesh Liquor Rules,

1986 and Condition No. 10.48 of the Excise Policy, 2025-26. Notice

was issued to the petitioner on 09.05.2025, though, according to the

petitioner, it did not receive this notice. A further similar notice was

affixed at petitioner’s premises on 19.05.2025. This was responded

to by the petitioner on 23.05.2025 inter alia seeking more time to

reply effectively citing petitioner having been summoned by the

police in connection with FIR No. 67 of 2025 registered on the same

issue at the instance of the respondents. Respondent No. 3 issued

another notice to the petitioner on 24.05.2025 calling for presence

of its authorized persons before the Authority on the given date.

Another notice followed on 26.05.2025 (Annexure P-7) directing the

petitioner/authorized person to remain present before the Authority

on 30.05.2025 alongwith detailed reply vis-à-vis violations fastened

upon him in the notice and to show cause as to why

penalty/cancellation/suspension of its licenses be not imposed for

2026:HHC:10080

9

contraventions mentioned in the notice. A copy of notice was also

endorsed to respondent No. 2 - the Commissioner State Taxes &

Excise-cum-Financial Commissioner (Excise) H.P.

It seems the same day i.e. 26.05.2025, respondent No. 2 –

the Commissioner State Taxes & Excise also initiated its own

proceedings and issued notice to the petitioner under Section 29(a),

29(b) & 29(c) of the H.P. Excise Act, 2011 in case No. 06/2025.

Petitioner was directed to remain present for hearing on 28.05.2025.

(vii) Facing two separate notices from two different Authorities

i.e. respondent No.3 – the Collector (Excise)-cum-Additional

Commissioner State Taxes & Excise, SZ, Shimla and respondent

No. 2 – the Commissioner State Taxes & Excise-cum-Financial

Commissioner (Excise) H.P. issued on the same date i.e.

26.05.2025 qua the same subject matter, petitioner sent an e-mail to

the Collector (Excise)-cum-Addl. Commissioner State Taxes &

Excise, SZ, Shimla on 30.05.2025 (Annexure P-9) informing him

about the proceedings on the same subject matter initiated by

respondent No. 2 with a request to review and withdraw the notice.

Further request was made to grant 15 days time for preparing

response in case notice was to be proceeded further.

In view of the matter pending before respondent No. 3 –

the Collector (Excise)-cum-Addl. Commissioner State Taxes &

2026:HHC:10080

10

Excise, SZ, Shimla, respondent No. 2 – the Commissioner State

Taxes & Excise-cum-Financial Commissioner (Excise) H.P. on

28.05.2025 (Annexure P-12) ordered to keep proceedings in case

No. 06/2025 in abeyance. The case was ordered to be listed on

04.06.2025.

Respondent No. 3 – the Collector (Excise)-cum-Addl.

Commissioner State Taxes & Excise, SZ, Shimla followed its notice

dated 26.05.2025 with another notice issued on 30.05.2025

(Annexure P-10) directing the petitioner/its representative to appear

before it on 02.06.2025. The notice also mentioned about similar

proceedings heaving been kept in abeyance by respondent No. 2.

(viii) Petitioner filed detailed response to the notice issued by

respondent No. 3 – the Collector (Excise)-cum-Addl. Commissioner

State Taxes & Excise, SZ, Shimla. The Collector (Excise)-cum-Addl.

Commissioner State Taxes & Excise, SZ, Shimla passed an order

on 02.06.2025 on the notice issued to the petitioner. While passing

the order the Collector (Excise)-cum-Addl. Commissioner State

Taxes & Excise, SZ, Shimla inter alia referred to the administrative

inquiry previously conducted by him in the matter and the inquiry

report furnished on 07.05.2025. Statements of Sh. Himanshu

Panwar, Deputy Commissioner, State Taxes & Excise, District

Sirmour, Sh. Naval Chander, Assistant Commissioner, State Taxes

2026:HHC:10080

11

& Excise, District Sirmour and Sh. Ankit Singh, State Taxes & Excise

Officer of petitioner’s Brewery & Distillery recorded during aforesaid

inquiry were also relied upon. Respondent No. 3 in his order issued

on 02.06.2025 (Annexure P-11) made recommendations to

respondent No. 2 for cancellation/suspension of petitioner’s parent

licenses D-2 & L-11.

(ix) On receipt of respondent No. 3’s recommendatory order

of 02.06.2025, respondent No. 2 resumed the proceedings kept in

abeyance. Petitioner was called upon to file its reply to the notice

dated 26.05.2025. Respondent No. 3 – the Collector (Excise)-cum-

Addl. Commissioner, State Taxes & Excise, SZ, Shimla filed

rejoinder to the reply filed by the petitioner before the Commissioner

State Taxes & Excise-cum-Financial Commissioner (Excise) H.P.

and prayed for taking stringent action against the petitioner.

Respondent No. 2 – the Commissioner State Taxes & Excise-cum-

Financial Commissioner (Excise) H.P. on 04.07.2025 passed the

order cancelling petitioner’s licenses in Forms D-2 & L-11. The

Authorities were directed to ensure compliance with all

consequential steps in the matter, more particularly of the provisions

of Sections 30(2), 31 & 71 of the Himachal Pradesh Excise Act,

2011.

2026:HHC:10080

12

(x) It is in the above background that petitioner has instituted

this writ petition seeking following substantive reliefs:-

“i) That this Hon’ble Court may kindly issue a writ of

certiorari quashing the order dated 04.07.2025

passed by Respondent No. 2 i.e. Commissioner of

State Taxes & Excise-cum-Financial Commissioner

Excise, Himachal Pradesh, Department of Excise &

Taxation, Himachal Pradesh whereby the licenses in

Form D-2 and L-11 issued in favour of the petitioner

have been ordered to be cancelled.

ii) That this Hon’ble Court may be pleased to issue writ

of certiorari quashing the impugned order dated

02.06.2025 (Annexure P-11) passed by Additional

Commissioner of State Taxes & Excise, South Zone,

Shimla recommending cancellation of licenses in form

D-2 and L-11 of the petitioner.

iii) That this Hon’ble Court may be pleased to declare

that the surprise inspection carried out by the

respondent department is in violation of the Himachal

Pradesh Excise Act, 2011 and Himachal Pradesh

Excise (Amendment) Act, 2024 and further may be

pleased to hold that under the leadership of Sh. Ujjal

Singh Rana, Additional Commissioner of State Taxes

& Excise, Gr-II (IT & Enforcement) Headquarter,

Shimla was neither competent nor was having

jurisdiction to carry out the surprise inspection.

iv) That this Hon’ble Court may be further pleased to

issue writ of mandamus directing the respondents to

permit the petitioner to run their manufacturing unit of

Indian Made Foreign Liquor and Country Liquor.”

2026:HHC:10080

13

3. Heard learned counsel for the parties & considered the

case file.

4. In order to maintain brevity, submissions advanced by the

learned counsel for the parties and the discussion thereupon has

been elaborated hereinafter.

4(i) The first submission of learned Senior Counsel for the

petitioner centers around the constitution of the Committee by the

respondents for inspecting the premises of the petitioner’s Brewery

& Distillery on 04.05.2025. According to the petitioner the Committee

so constituted, the team that inspected petitioner’s premises was not

in accordance with the mandate of the Himachal Pradesh Excise

Act, 2011 and the Notifications issued thereunder.

4(i)(a) Before proceeding further, it would be in place to first

quote the provisions of the Himachal Pradesh Excise Act, 2011

referred to by the learned counsel. The provisions read as under:-

“5. Financial Commissioner and Collector.-

(1) The State Government may, by notification, appoint an

Excise and Taxation Commissioner who shall exercise all

the powers of Financial Commissioner, and subject to the

control of the State Government, the general

superintendence and administration of all matters relating to

excise shall vest in him.

2026:HHC:10080

14

(2) The State Government may, by notification, appoint as

many Collectors as it may deem fit, to discharge in any

specified area the functions of the Collector under this Act

and the Collector shall, subject to the control of the Financial

Commissioner, control all other Excise Officers within his

jurisdiction.

(3) The jurisdiction of the Financial Commissioner shall

extend to the whole State and the jurisdiction of Collectors

shall extend to the areas of the State in which they are for

the time being employed.

6. Other classes of Excise Officers and their powers and

jurisdiction.-

(1) There shall be such other classes of Excise Officers

as the State Government may, by notification, declare and it

may appoint as many persons as it deems fit to be the

Excise Officers of these classes.

(2) The State Government may, by notification, invest in

any person, not being an Excise Officer, with powers to

perform all or any of the functions of an Excise Officer, under

this Act, and such person shall in the exercise of these

functions be deemed to be an Excise Officer.

(3) The State Government shall, by notification, declare

the powers to be exercised under this Act by the Excise

Officer of each class.

(4) The jurisdiction of the Excise Officers shall, unless the

State Government otherwise directs, extend to the districts in

which they are for the time being employed.

7. Persons appointed under this Act to be public

servants.- All persons appointed under this Act shall be

deemed to be public servants within the meaning of section

21 of the Indian Penal Code, 1860.

2026:HHC:10080

15

8. Power to enter and inspect.- Any Excise Officer, not

below such rank as the State Government may, by

notification specify,-

(a) enter and inspect, at any time by day or by night, any

place in which any licensed manufacturer carries on the

manufacture of or stores any liquor;

(b) enter and inspect, at any time, any place in which any

liquor is kept for sale by any person holding a license under

this Act;

(c) examine any accounts and registers, test, measure or

weigh any materials, stills, utensils, implements, apparatus

or testing instruments or liquor found in that place;

(d) seize any accounts, register, measure, weights or

testing instruments which he has reason to believe to be

false or incorrect; and

(e) seize any liquor which he has reasons to believe to be

unaccounted for in the accounts and registers maintained by

the licensee.

9. Power to investigate.-

(1) The State Government may, by notification, invest any

Excise Officer, with power to investigate any offence

punishable under this Act, committed within the limits of the

area in which the officer exercises jurisdiction.

(2) Every officer so empowered may within those limits

exercise the same powers in respect of such investigation as

an officer-in-charge of a police station may exercise in a

cognizable case under the provisions of Chapter XII of the

Code of Criminal Procedure, 1973.

10. Powers of Excise Officer to search, seize etc.-

(1) Whenever any Excise Officer not below such rank as

the State Government may, by notification, specify has

2026:HHC:10080

16

reason to believe that an offence punishable under this Act,

has been, is being, or is likely to be, committed by any

person, in any place, and that a search warrant cannot be

obtained without affording the offender an opportunity of

escape or of concealing evidence of the offence, he may, at

any time, by day or night, enter and search such place.

(2) Any Excise Officer specified in sub-section (1) may

seize anything found in such place which he has reason to

believe to be liable to confiscation under this Act, and may

detain and search and, if he thinks proper, arrest any person

found in such place whom he has reason to believe to be

guilty of such offence as aforesaid.”

Section 6 of the Himachal Pradesh Excise Act, 2011 was

amended as under by the Himachal Pradesh Excise (Amendment)

Act, 2024:-

“6. Other classes of Excise Officers and their powers and

jurisdiction. – (1) There shall be the following classes of

officers within their respective jurisdictions:-

(i) an officer not below the rank of Assistant State Taxes

and Excise Officer in the State Taxes and Excise

Department;

(ii) Executive Magistrate not below the rank of Tehsildar;

and

(iii) Police Officer not below the rank of Assistant Sub-

Inspector in the Police Department.

(2) The aforesaid Excise Officers shall exercise the

powers to enter, inspect, investigate, search and seize and

obtain information under sections 8, 9, 10, 12 and 54 of this

Act.

2026:HHC:10080

17

(3) The State Government shall, by notification appoint

Police Officer or Official, on secondment basis from the

Himachal Pradesh Police, for carrying out the purposes of

this Act.”

In exercise of powers conferred by Section 8 of the H.P.

Excise Act, following notification was issued by the State on

26.04.2025 (Annexure P-17):-

“GOVERNMENT OF HIMACHAL PRADESH

DEPARTMENT OF STATE TAXES & EXCISE

File No. EXN-F(1)-3/2024 Dated Shimla-171002, 26

th

April, 2025

In supersession of Notification No. EXN-F(4)-1/2009-

loose dated 22

nd

July, 2013 and in exercise of the powers

conferred by Section 8 of the Himachal Pradesh Excise Act,

2011, the Governor of Himachal Pradesh is pleased to notify

that the power under Section 8 of the ibid Act shall be

exercised by the Officers defined under Section 6(1)(ii) who

shall be accompanied by an Officer of the Department of

State Taxes & Excise not below the rank of Assistant State

Taxes & Excise Officer having jurisdiction and by a Police

Officer defined under Section 6(1)(iii) not below the rank of

Deputy Superintendent of Police having jurisdiction.

Sd/-

Principal Secretary (ST&E) to the

Government of Himachal Pradesh”

4(i)(b) Learned Senior Counsel for the petitioner submitted that

inspection under section 8 of the Excise Act is to be conducted in

accordance with the Notification dated 26.04.2025. Power under

Section 8 is to be exercised by the Officer defined under section

6(1)(ii) who is to be accompanied by:

2026:HHC:10080

18

(i) an Officer of the Department of State Taxes & Excise

not below the rank of Assistant State Taxes & Excise

Officer having jurisdiction; and

(ii) a Police Officer defined under Section 6(1)(iii) not

below the rank of Deputy Superintendent of Police

having jurisdiction.

According to learned Senior Counsel use of expression

‘shall be accompanied’ in the Notification suggests presence of

accompanying Officers is intended to form part of procedural

framework governing such inspection. It was highlighted that even

according to the respondents, inspection was carried out under

Section 8 of the Excise Act. But absence of Police Officer in the

inspection would vitiate the inspection as constitution of the team

was not in consonance with the Notification. Placing reliance upon

Nazir Ahmad vs. King Emperor

2

it was argued that principle laid

therein is being consistently followed till date that where a power

has been given to do a certain thing in a certain way, the thing must

be done in that way or not at all. Other methods of performance are

necessarily forbidden. It, therefore, has to be held that the team

constituted by the respondents, the team that carried out inspection

of petitioner’s premises on 04.05.2025 was not in consonance with

the mandatory provisions of the Himachal Pradesh Excise Act, 2011

2

AIR 1936 PC 253

2026:HHC:10080

19

as amended in the year 2024 and the Notification issued there

under. The entire edifice on the basis of which the impugned order

cancelling petitioner’s licenses has been issued, therefore, is bad in

the eyes of law.

4(i)(c) Learned Deputy General endeavoured to take a detour

from the pleaded defence and submitted that being a surprise

inspection, the same was covered by Section 10 and not Section 8

of the Excise Act, therefore, presence of police officer was not

essential during inspection.

4(i)(d) As per Section 8, any Excise Officer (of the rank specified

by the State Government by a Notification) can conduct inspection.

Section 10 also empowers the specified Excise Officer to conduct

inspection. As per amended Section 6, apart from Assistant State

Taxes & Excise Officer in the department [Section 6(i)], the

Executive Magistrate not below the rank of Tehsildar [Section 6(ii)]

and Police Officer not below the rank of Assistant Sub-Inspector

[Section 6(iii)] have been authorized & empowered to enter, inspect,

investigate, search, seize and obtain information under Sections 8,

9, 10, 12 and 54 of the Excise Act.

Further as per Notification dated 26.04.2025 power under

Section 6(1)(ii) of the Act shall be exercised by the Officers who

shall be accompanied by an Officer of the Department of State

2026:HHC:10080

20

Taxes & Excise not below the rank of Assistant State Taxes &

Excise Officer and a Police Officer under Section 6(1)(iii) not below

the rank of Deputy Superintendent of Police.

Literal reading of above provisions may lead to the

interpretation that though under Sections 8 & 10 of the Excise Act

any Excise Officer can inspect the premises and Executive

Magistrates not below the rank of Tehsildar [under Section 6(1)(ii)]

as also the Police Officer not below the rank of Assistant Sub-

Inspector [Section 6(1)(iii)] are also the Excise Officers, however the

Officer falling under Section 6(ii) i.e. Tehsildar (or higher in rank to

him) would not be able to exercise powers under Sections 8 & 10 by

himself. He will necessarily have to be accompanied by an Officer

not below the rank of Deputy Superintendent of Police & by

Assistant State Taxes & Excise Officer.

The above literal interpretation however suffers from

fallacy. It would mean AST&EO can independently inspect the

premises; an Assistant Sub-Inspector of Police can also inspect the

premises on his own but a Tehsildar can do so only in company of

AST&EO & a Deputy Superintendent of Police. This interpretation

would defeat the logic behind the amendment of Section 6 and also

the possible object intended to be achieved by the Notification

dated 26.04.2025 i.e. inclusivity of all wings during inspection in

2026:HHC:10080

21

order to accord some protection to the license holder, to safeguard

his interests.

Harmonious interpretation of provisions therefore would

lead to logical conclusion that power under Section 8 of the Excise

Act can be exercised by the Executive Magistrate of First Class

who is to be accompanied by an Excise Officer and a Police Officer

as specified by the State Government. The team constituted by the

respondents for inspecting petitioner’s premises did not have

Executive Magistrate of First Class. Apparently, this team did not

even have Police Officer of the rank specified in the Excise Act &

the Notification. The inspection report prepared by respondent No. 3

though mentions participation of a ‘Special Investigation Cell’ of

District Police but does not give names of specific Police Officers or

their ranks. The inspection report furnished by respondent No. 4

does not even state about association of any Police Officer during

inspection. The reply filed by the respondents does not dispute

inspection having been carried out under Section 8 of the Excise

Act or the requirement of associating Executive Officer as also the

Police Officer during inspection but tries to downplay it by pleading

that procedural lapses would not vitiate the inspection. It has to be

held that constitution of the team that inspected the premises was

not in consonance with the Act & the applicable Notification.

2026:HHC:10080

22

4(ii) Yet another contention raised for the petitioner is that it

has been denied the opportunity of filing an appeal against the order

passed by the Collector (Excise)-cum-Additional Commissioner

ST&E, SZ, Shimla; that the Commissioner State Taxes & Excise was

greatly influenced by the Collector (Excise) in passing the impugned

order.

4(ii)(a) I have heard learned counsel on both sides on the above

issues. In terms of Section 29 of the Himachal Pradesh Excise Act,

subject to restrictions which the State Government may prescribe,

the authority granting any lease, license, permit or pass under the

Act may cancel or suspend it. The provision reads as under:-

“29. Power to cancel or suspend licenses etc.- Subject to

such restrictions as the State Government may prescribe,

the authority granting any lease, license, permit or pass

under this Act, may cancel or suspend it-

(a) if it is transferred or sublet by the holder thereof without

the permission of the said authority; or

(b) if any excise duty or countervailing duty or, other fee

payable by the holder thereof is not duly paid; or

(c) in the event of any breach by the holder of such lease,

license, permit or pass or by his servants, or by any one

acting on his behalf with his express or implied

permission, of any of the terms or conditions of such

license, permit or pass; or

(d) if the holder thereof is convicted of any offence

punishable under this Act or the Himachal Pradesh

2026:HHC:10080

23

Value Added Tax Act, 2005, the Central Sales Tax Act,

1956 or the Himachal Pradesh Prevention of Specific

Corrupt Practices Act, 1983 or of any cognizable and

non-bailable offence, or any offence punishable under

the Narcotic Drugs and Psychotropic Substances Act,

1985, or under the Trade and Merchandise Marks Act,

1958 or under the Medicinal and Toilet Preparations

(Excise Duties) Act, 1955 or of any offence punishable

under sections 482 to 489 ( both inclusive) of the Indian

Penal Code, 1860 or any offence referred to in section

135 of the Customs Act, 1962; or

(e) where a license, permit or pass has been granted on

the application of the grantee of a lease under this Act,

on the request in writing of such grantee; or

(f) at will, if the conditions of the license, permit or pass

provides for such cancellation or suspension.”

Section 68 of the Excise Act gives right to appeal to a

person aggrieved by an order passed by any Excise Officer under

this Act as under:-

“68. Appeal.- (1) Any person aggrieved by an order passed

by any Excise Officer under this Act may, within thirty days

from the date of communication of such order, appeal to the

Collector in the manner prescribed.

(2) Any person aggrieved by an order passed by the

Collector, under sub-section (1) may, within thirty days from

the communication of such order, appeal to the Financial

Commissioner.”

Remedy of revision is available before the Financial

Commissioner under Section 69 that goes as under:-

2026:HHC:10080

24

“69. Revision.- (1) The Financial Commissioner may, of his

own at any time, call for the record of any proceedings which

are pending before, or have been disposed of, by any

Collector or Excise Officer, for the purpose of satisfying

himself as to the legality or propriety of such proceedings or

order made therein and may pass such order in relation

thereto as he may think fit.

(2) No order shall be passed under this section, which

adversely affects any person, unless such person has been

given a reasonable opportunity of being heard.”

4(ii)(b) According to the respondents, but for license in Form D-2,

all other licenses were issued to the petitioner by the Collector

(Excise)-cum-Additional Commissioner ST&E, SZ, Shimla. In the so

called recommendatory order dated 02.06.2025 passed by the

Collector (Excise) ST&E, SZ, Shimla he has formed an opinion that

petitioner had committed breach of mandatory provisions of the

Excise Act and, therefore, its parent licenses in Forms D-2 & L-11

were liable to be cancelled. Licenses in Forms L-11, L-1A, L-1C,

L-13C, L-15 & L-16 were issued by the Collector (Excise) ST&E, SZ,

Shimla. The order was passed pursuant to proceedings initiated by

the Collector (Excise) under a separate notice issued to the

petitioner. Instead of himself cancelling these licenses the Collector

(Excise) ST&E, SZ, Shimla recommended cancellation of licenses

to the Commissioner State Taxes & Excise and it is the

2026:HHC:10080

25

Commissioner State Taxes & Excise who actually cancelled the

licenses on 04.07.2025. There is no provision for respondent No. 3

to have issued recommendatory order for cancelling petitioner’s

licenses. Yet the fact remains that respondent No. 3 did issue an

order on 02.06.2025 under the nomenclature of ‘recommendations’.

Petitioner, certainly has been deprived of the remedy of appeal

against the order passed by the Collector (Excise) ST&E, SZ,

Shimla. The Collector (Excise) after recording the finding that

petitioner had violated the terms & conditions of the licenses

including the ones issued by the Collector (Excise) instead of himself

passing order in that regard recommended the cancellation thereof

to the Commissioner State Taxes & Excise. The procedure

mandated in law has certainly been breached.

4(ii)(c) There is force in the submission made by the learned

Senior Counsel for the petitioner that in passing the impugned order

on 04.07.2025 the Commissioner State Taxes & Excise appears to

have been greatly swayed by the recommendations made by the

Collector (Excise) on 02.06.2025 and further that there was no

jurisdiction in the Collector (Excise) to have made the

recommendations which he did. Since the parent licenses had

been issued by the Commissioner State Taxes & Excise,

jurisdiction to adjudicate upon allegations about petitioner having

2026:HHC:10080

26

committed breach of terms & conditions of the licenses lay with the

Commissioner. The record shows that parallel proceedings against

the petitioner were initiated by the Collector (Excise) as also by the

Commissioner (Excise) on the same subject matter with respect to

same set of violation of statutory provisions. The record also shows

that petitioner had requested the Collector (Excise) not to proceed

with the notice issued by him in view of notice having already been

issued to the petitioner by the Commissioner (Excise) who had

issued the parent licenses. This was also brought to the notice of

the Commissioner (Excise). Instead of himself proceeding further in

the matter in accordance with law, the Commissioner (Excise)

ordered to keep the proceedings pending before him in abeyance

awaiting the result of proceedings initiated by the Collector

(Excise). The Collector (Excise) vide a detailed order passed on

02.06.2025 recommended cancellation of the petitioner’s licenses to

the Commissioner (Excise). The procedure followed is neither

contemplated under the applicable Statute nor is in furtherance of

justice.

It is further to be noticed that all throughout in the

proceedings conducted against the petitioner, the Collector (Excise)

practically assumed the role of Judge in his own cause. He had

initially conducted inquiry into the matter and furnished his inquiry

2026:HHC:10080

27

report to the Commissioner (Excise) on 07.05.2025. During inquiry,

the Collector (Excise) had recorded statements of certain Officers.

While adjudicating the notices issued to the petitioner and

recommending the cancellation of petitioner’s licenses to the

Commissioner (Excise) under the order dated 02.06.2025, the

Collector (Excise) heavily relied upon the aforesaid inquiry and also

the evidence collected by him in the said inquiry including the

statements of the officers recorded in that inquiry. The petitioner

was definitely prejudiced by this recourse resorted to by the

Collector (Excise). Further, the recommendations of the Collector

(Excise) in form of order dated 02.06.2025 were before the

Commissioner (Excise). The petitioner had been directed by the

Commissioner (Excise) to furnish his response to the notice issued

to him. In response to the reply filed by the petitioner, it is the

Collector (Excise) who filed rejoinder supporting his entire case as

also the inquiry conducted by him (report dated 07.05.2025) and the

recommendations (order dated 02.06.2025) of cancellation of

petitioner’s licenses made by him. The Collector (Excise) not only

became Judge in his own cause but was allowed to influence the

proceedings before the Commissioner (Excise). The impugned order

passed by the Financial Commissioner (Excise), therefore, cannot

2026:HHC:10080

28

be said to have been passed in exercise of an independent &

unbiased mind.

5. In normal circumstances, deviation from law in constitution

of the Committee that inspected petitioner’s premises would have

led to the conclusion of declaring entire inspection being vitiated or

in order words the very foundation of issuing the notice to the

petitioner and orders passed thereupon would have become illegal.

But this cannot be held so in the instant case. On the basis of

inspection & the inspection report of the Committee, FIR No. 67 of

2025 stands registered. Petitioner has failed to demonstrate the

prejudice caused to it by non-association of specified Executive

Officer & Police Official during inspection of its premises. Petitioner

has taken a specific defence on merits in its reply filed to the notice

issued by the Commissioner, State Taxes & Excise inter alia

pleading that it had entered into a lease agreement for the factory in

question with M/s Vinayak Enterprises; Physical possession of the

factory premises was handed over to M/s Vinayak Enterprises. This

was in response to respondents’ one set of allegations in the notice

about subletting or transfer of factory premises by the petitioner

without formal permission of respondent-department. The other

allegations and merits of the defence are not being commented

upon here lest it causes prejudice to the case of either side on

2026:HHC:10080

29

merits. Nonetheless keeping in view that defence/facts admitted, in

the given case, it will not be appropriate to quash the entire edifice

on the ground of wrong constitution of the Inspection Committee.

However at the same time it also cannot be ignored that the

impugned order passed by Commissioner State Taxes & Excise

cancelling petitioner’s parent licenses does not at all reflect either

the application of independent mind or that the order was passed

after following proper procedure. Therefore, in the interest of justice,

the petition is allowed to the extent that impugned order dated

04.07.2025 passed by the Commissioner State Taxes & Excise-

cum-Financial Commissioner (Excise), H.P. cancelling the

petitioner’s licenses in Form D-2 and L-11 (Annexure P-15) is

quashed & set aside. However, Commissioner State Taxes &

Excise-cum-Financial Commissioner (Excise) H.P. shall be at liberty

to adjudicate in accordance with law, on the notice issued to

petitioner on 26.05.2025, afresh without taking into consideration

the recommendations made to him by the Collector (Excise) –

respondent No. 3 under the order dated 02.06.2025 or the pleadings

placed on record of the case by the Collector (Excise). Such

recommendations/orders/pleadings of the Collector (Excise) shall be

treated as non-est. Petitioner shall be given reasonable opportunity

to place its case before the Commissioner State Taxes & Excise

2026:HHC:10080

30

H.P. The Commissioner shall decide the case with independent &

impartial mind without being influenced by any of the orders passed

previously in the matter. All objections, submissions raised by the

petitioner shall be delved in & decided in accordance with law. In

case, liberty as above is availed by the Commissioner, the entire

exercise shall be completed within two months. Respondents are

also directed to ensure that inspection team(s) are constituted in

future strictly in consonance with the applicable Act, Rules &

Notification(s) as deviation therefrom in given case may vitiate the

entire process.

Pending miscellaneous application(s), if any, to also stand

disposed of.

Jyotsna Rewal Dua,

Judge

April 02 , 2026 (PK)