FACTS- The appellant is a sub-licensee under the M.P. Excise Act, 1915 for manufacture, import and sale of Foreign Liquor, regulated under the Madhya Pradesh Foreign Liquor Rules, 1996. Sub-licensees importing Foreign Liquor are granted transit permits in which the origin, quality, quantity and point of delivery of the imported liquor are recorded. At the point of destination, the consignment is verified for quality and quantity, and a certificate under Rule 13 is granted. The breach, in this case, took place during the license period of 2009-10. The penalty for the same was around four times the maximum duty payable on foreign liquor. However, no action against the appellant was taken during this period.

Subsequently, in March 2011, Rule 19 was substituted by an amendment. As a result, the penalty was reduced from four times the maximum duty payable to an amount not exceeding the duty payable on foreign liquor. Following this development, a notice was issued to the appellant for payment of the penalty as per the old Rule 19.

The relevant rules for the present case are Rule 16 and 19. Rule 16 prescribes the permissible limits of loss of liquor in transit due to leakage, evaporation, wastage etc. and Rule 19 provided penalty for the breach of this rule.

ISSUE-

• whether penalty was to be levied as per the old rule or the substituted one?

• whether it is the rule that existed when the violation occurred during the license period of 2009-10 or the rule that was substituted in 2011 when proceedings for penalty were initiated?

OBSERVATION-

Division bench of the High Court held that the Rule, that existed during that license year, must apply. Apart from this, the Court also reasoned that determination of penalty is a substantive law and thus, cannot operate retrospectively. The court also held that the operation of subordinate legislations is slightly different as they depend on the parent act. Against this backdrop, the matter reached to the Supreme Court.

Before allowing the present appeal, the Court emphasized the importance of a simple and plain understanding of laws, considering their intended purpose. In view of this observation, the Court concluded that the penalty should be imposed on the basis of the substituted law. Supreme Court observed that, subject to statutory stipulation, a repealed provision ceases to operate from the date of repeal, and the substituted provision starts operating as and when it is substituted.