No Double Taxation: Orissa HC Modifies Order, Prevents State From Collecting Excise Duty Twice on Liquor MGQ [Read Order]

In a major relief to a liquor licensee, the Orissa High Court has modified an excise department ruling making it clear that the State cannot charge excise duty twice on the same Minimum Guaranteed Quantity (MGQ) deficit, thereby safeguarding the licensees from double taxation.

A demand notice for shortage in lifting of MGQ for the year 2023-24 was sent upon the petitioner Ranjeeta Kumari Sahu in the month of May 2024. She took the matter to the High Court and in September 2024 the court passed an interim order. Her licence renewal would allow her to withdraw the pending amount under the MGQ after she deposited 50% of the contested demand, which mostly comprised of excise duty and a 10% penalty, the interim order said.

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Despite the petitioner complying with the court’s direction, the authorities refused to allow her to lift the spirits stock. After several writ petitions and consequent court orders to apply the interim order, a fresh order was given by the Principal Secretary of the Excise Department in May 2026. In terms of this ruling, the petitioner was only to lift the liquor on making full payment to the Odisha State Beverages Corporation (OSBC) wallet. The OSBC wallet payment is for the full MRP inclusive of State excise charge as per the Supply Chain Management Policy, 2020.

The State, through the Additional Government Advocate, tried to legitimise this twofold demand. It said the initial 50% deposit was related to the backlog of the previous year while the OSBC wallet payment was a statutory need to lift goods under the renewed licence period. The State also attempted to construe the Court’s interim injunction as applicable exclusively to the future renewed period, a reasoning that the Court deemed totally unpersuasive.

“The State’s interpretation of the law was preposterous,” a division bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman said. The Court has stated that interim orders are not to be read as statutes or interpreted by strict interpretative canons. They have to be rather comprehended in the context of the subject dispute. The court said that if the Court wanted the deposit to be for the MGQ of the next year the language of the order would have been wholly different.

Significantly, the Court observed the State to be in a contradictory position and relied upon the supplementary affidavit produced by the State in a comparable pending matter (W.P.(C) No.17482 of 2024). The excise authorities themselves had explicitly admitted in that affidavit that the licenseers who were complying with the 50% deposit could bring down the backlog MGQ by paying only the cost of the liquor, "sans the excise duty" into the OSBC wallet, as the duty was already paid.

The Court found that levying excise duty again through the OSBC wallet would be double taxation, relying on the State's own earlier admission. The bench said that while the State had legislative competence to impose taxes, equity and justice demanded a balance between the licensee’s rights and the State’s revenue interests, which precluded any double recovery.

Therefore, the Court altered the order in May 2026 and held that the only liability on the petitioner is to deposit the MRP in the OSBC wallet after subtracting the excise duty amount already paid under the interim order of September 2024. The petitioner was granted to immediately take out the MGQ backlog for 2023-2024 as the validity of the licence expired on June 30, 2026.

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