The Supreme Court of India ruled in favor of Pernod Ricard India (P) Ltd, holding that penalties for exceeding permissible limits of liquor wastage during transit should be imposed under the amended Rule 19 of the Madhya Pradesh Foreign Liquor Rules, 1996, which came into force in 2011. The Court emphasized that the substituted rule, which reduced the penalty from four times the duty to an amount not exceeding the duty payable, must be applied to ongoing proceedings, even if the violation occurred prior to the amendment.

The Court overruled the Madhya Pradesh High Court's decision that upheld the old rule applicable at the time of the offense in 2009-2010, stressing that the purpose of the amendment was to ensure a fair balance between offense and punishment.

• Issue: Whether penalties for exceeding liquor wastage limits during the 2009-2010 license period should be imposed under the old or the amended rule.
• Original Rule 19: Provided for a penalty up to four times the duty on foreign liquor.
• Substituted Rule 19 (2011): Reduced penalty to an amount not exceeding the duty payable.
• Proceedings: Demand notice issued in 2011 under the old rule. The High Court upheld the demand under the old rule, but the Supreme Court overruled this decision.

Ratio Decidendi:

The Supreme Court ruled that the substituted Rule 19 should apply retroactively to ongoing proceedings because the amendment was intended to reduce the severity of penalties for better governance. Applying the old rule would unjustifiably penalize the appellant when the purpose of the amendment was to impose more balanced penalties. This substitution does not violate the principle of retrospective application of law as the amendment only softens the punishment, not exacerbates it.

Acts and Sections Discussed:

• Madhya Pradesh Excise Act, 1915
  • Section 62 & 63: Rule-making powers of the state government.
• Madhya Pradesh Foreign Liquor Rules, 1996
  • Rule 16: Prescribes permissible limits for liquor wastage during transit.
  • Rule 19 (Old & Amended): Governs penalties for exceeding wastage limits.

Subjects:

Retrospective Application of Law, Penalties
Excise Act, Liquor Penalties, Rule Substitution, Madhya Pradesh Excise