The High Court of Judicature at Allahabad has quashed the cancellation of a country liquor retail shop licence and the subsequent indefinite blacklisting of a licensee, ruling that the power to cancel a licence under Section 34(2) of the U.P. Excise Act is discretionary and cannot be exercised mechanically as a consequence of the cancellation of another licence.
The Bench of Justice Piyush Agrawal, while allowing the writ petition in part, observed that authorities are duty-bound to apply their independent mind and record specific findings as to how permitting a licensee to continue with a second shop would be detrimental to the interest of the Revenue.
Background of the Case
The petitioner, Vijay Kumar Sharma, was granted licences to run retail country liquor shops in Village Mau Khas and Village Parikshitgarh in Meerut for the Excise Year 2020-21. During the COVID-19 lockdown on 29 March 2020, an FIR was lodged alleging that the petitioner was transporting liquor in a white Scorpio car.
Following this, the Licensing Authority/Collector, Meerut, cancelled the petitioner’s licence for the Parikshitgarh shop on 23 June 2020. Subsequently, on 18 September 2020, a show cause notice was issued for the Mau Khas shop, leading to an order dated 13 October 2020, which cancelled the Mau Khas licence, forfeited the basic licence fees and security amount, and blacklisted the petitioner indefinitely. The petitioner’s appeal against this order was dismissed on 7 March 2022.
Arguments of the Parties
The petitioner’s counsel argued that there were no violations or allegations against the Mau Khas shop. It was contended that Section 34(2) of the U.P. Excise Act is discretionary and requires the authority to show that continuing the second shop would harm the Revenue. The counsel also highlighted that the car allegedly used for transportation belonged to a serving Police Constable against whom no action was initiated, suggesting the story was “concocted with malice intention”. Furthermore, it was argued that indefinite blacklisting is legally impermissible.
The State (ACSC) raised a preliminary objection regarding maintainability, stating the petitioner had an equally efficacious remedy of filing a revision under Section 11(2) of the U.P. Excise Act. On merits, the State argued that once a licence is cancelled under Section 34(1), the authorities are empowered under Section 34(2) read with Rule 21(3) to cancel any other licence held by the person.
Court’s Analysis and Observations
The Court first addressed the issue of maintainability. Citing Godrej Sara Lee Limited v. Excise & Taxation Officer-Cum-Assessing Authority [(2023) SCC Online SC 95] and Whirlpool Corporation v. Registrar of Trade Marks [(1998) 8 SCC 1], the Court held:
“The rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion… where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court.”
On the merits of the cancellation under Section 34(2), the Court relied on its previous rulings in Sandeep Singh v. State of U.P. [Writ Tax No. 278/2020], stating:
“Section 34(2) of the U.P. Excise Act is discretionary and not mandatory. Its application cannot be consequence of cancellation of another licence of licensee without offering any reason of doing so.”
The Court found that the authorities failed to record any independent findings or reasons showing how the Mau Khas shop was detrimental to the Revenue. It also noted the discrepancy where no action was taken against the police constable who owned the vehicle used in the alleged transport.
Regarding the blacklisting, the Court observed that the petitioner was blacklisted for an indefinite period. Referring to Daffodills Pharmaceuticals Limited v. State of U.P. [(2020) 18 SCC 550] and Union of India v. Tarsem Singh [(2008) 8 SCC 648], the Court held that an order of blacklisting must indicate a specific duration and cannot operate indefinitely.
The Decision
The High Court quashed the cancellation order dated 13 October 2020, and the appellate order dated 7 March 2022. The Court noted:
“This Court finds that neither in the show cause notice, nor in the order, any finding of facts has been mentioned to show as to how, permitting the petitioner to continue with Village – Maukhas, is detrimental to the interest of the Revenue.”
As the excise year had concluded, the Court ruled that the petitioner has no right to claim continuance of the licence but directed the respondents to refund the forfeited amounts within three months.
Case Details
- Case Title: Vijay Kumar Sharma v. State of U.P. and 4 others
- Case No.: WRIT TAX No. 5977 of 2025
- Bench: Justice Piyush Agrawal
- Counsel for Petitioner: Shri Raj Kumar Singh, Shri Rajat Aren
- Counsel for Respondents: Shri Ravi Shankar Pandey, ACSC
- Date: 24 March 2026
