Manufacture, Sale, Possession (Sections 13–25)

Sections 13 to 25 form the operative heart of the Rajasthan Excise Act, 1950 (Act 2 of 1950): they convert the policy of State control over intoxicants into a chain of prohibitions, each lifted only by a licence, pass or permit. The scheme moves logically from movement (import, export, transport under Sections 13-15), to creation (manufacture under Sections 16-18), to holding (possession under Section 19), and finally to distribution (sale and the exclusive privilege under Sections 20-24). Underpinning every one of these provisions is a constitutional premise the Supreme Court has affirmed repeatedly — that there is no fundamental right to trade in liquor, and that what the citizen receives is a privilege the State chooses to part with for consideration. This note maps each section and ties it to the controlling case law.

The Scheme of Control and Its Constitutional Premise

The Act builds a regulatory pyramid. The base is a series of blanket prohibitions; the apex is a discretionary licence. Nothing in the chain of dealing with an excisable article — defined to cover country liquor, foreign liquor, and intoxicating drugs — is permitted unless an excise authority has expressly allowed it. The constitutional justification for so total a control was settled in Har Shankar v. Deputy Excise & Taxation Commissioner, AIR 1975 SC 1121, where the Supreme Court held that there is no fundamental right under Article 19(1)(g) to carry on trade or business in intoxicants, and that the State, owning the exclusive right or privilege of manufacturing and selling liquor, may part with that right for consideration. This was reinforced in Khoday Distilleries Ltd. v. State of Karnataka, (1995) 1 SCC 574, where a Constitution Bench classified potable liquor as res extra commercium — outside the stream of ordinary commerce — so that no citizen can claim a guaranteed right to deal in it. Sections 13-25 are the statutory expression of that doctrine. For the foundations of these definitions, see the note on definitions of liquor, intoxicant, bhang and opium, and for the policy background the Rajasthan Excise Act hub.

Import, Export and Transport (Section 13)

Section 13, headed "Power of State Government to prohibit import, export and transport of excisable article", empowers the State Government, by notification in the Official Gazette, to (a) prohibit the import or export of any excisable article into or from the territories to which the Act extends or any part thereof, and (b) prohibit the transport of any excisable article. The three verbs are terms of art under the Act: import means bringing into Rajasthan from outside, export means sending out of Rajasthan, and transport means movement from one place to another within Rajasthan. The power is a prohibitory one, allowing the Government to seal off particular articles or particular areas entirely. Where movement is not absolutely prohibited, it is still channelled — nothing may cross these notional borders without compliance with the pass regime in Sections 14-15. The width of this regulatory power is itself an application of the Har Shankar principle that the State may prohibit absolutely every form of activity in relation to intoxicants, including their movement.

Passes for Movement (Sections 14-15)

Section 14, "Passes necessary for import, export and transport", provides that no excisable article exceeding such quantity as the State Government may prescribe shall be imported, exported or transported except under a pass issued under the Act. The prescription may be made for the whole State or for any local area by notification, so the quantity threshold is variable and locality-specific. A proviso exempts from a fresh pass any excisable article being transported under a pass already issued by a competent officer of another State or jurisdiction. Section 15 supplies the machinery: the Excise Commissioner, or an Excise Officer duly empowered, may grant passes for the import, export or transport of excisable articles, and such passes may be general (for a defined period and class of articles) or special (for a particular occasion or consignment), subject to restrictions the State Government may impose. The pass is thus the document that legitimises the controlled movement Section 13 otherwise forbids, and breach of the pass conditions feeds directly into the penal provisions discussed in the offences note.

Manufacture Prohibited Except Under Licence (Section 16)

Section 16 is the central prohibition on creation. Headed "Manufacture of excisable article prohibited except under the provisions of this Act", it provides that except under the authority and subject to the terms and conditions of a licence: no excisable article shall be manufactured; no hemp plant (Cannabis sativa) shall be cultivated; no portion of the hemp plant from which an intoxicating drug can be manufactured shall be collected; no liquor shall be bottled for sale; no tari-producing tree shall be tapped and no tari shall be drawn from any tree; and no person shall use, keep or have in his possession any materials, still, utensil, implement, instrument or apparatus whatsoever for the purpose of manufacturing any excisable article. The sweep is deliberately exhaustive — it reaches not merely the finished product but the cultivation, the tapping, the bottling, and even the mere keeping of manufacturing apparatus. Because possession of an unlicensed still is itself an offence, the prosecution need not always prove that liquor was actually produced. The licensing authority for manufacture is the Excise Commissioner; the conditions attached to a manufacturing licence are governed by the licensing framework.

Distilleries, Pot-Stills and Warehouses (Section 17)

Section 17 channels manufacture into approved installations. Subject to such restrictions or conditions as the State Government may impose, the Excise Commissioner may: (a) establish a distillery or pot-still in which spirit may be manufactured under a licence; (b) discontinue any distillery or pot-still so established; (c) licence the construction and working of a distillery, pot-still or brewery on conditions the State Government may impose; (d) establish or licence a warehouse wherein any excisable article may be deposited and kept without payment of duty; and (e) discontinue any warehouse so established. The clause (d) bonded warehouse is significant for the duty scheme: it permits liquor to be stored before the taxable event — removal — crystallises. The Excise Commissioner's discretion to grant or refuse these privileges is an aspect of the State's exclusive control affirmed in Khoday Distilleries, and is exercised through the excise officers and their powers.

No Removal Without Payment of Duty (Section 18)

Section 18 fixes the point at which excise revenue accrues. It prohibits the removal of any excisable article from any distillery, brewery, pot-still, warehouse or other place of storage established or licensed under the Act unless the duty (if any) payable under the Act has been paid or a bond has been executed for its payment. The provision embodies the established rule of excise jurisprudence that duty attaches to the article and becomes recoverable on removal rather than at the moment of production. The bond facility allows duty to be deferred against security, which is why the bonded warehouse under Section 17(d) and the removal control under Section 18 work as a pair: the article may rest duty-free in the warehouse, but the instant it leaves, duty must be paid or secured. This connects to the broader revenue logic explained in Panna Lal v. State of Rajasthan, AIR 1975 SC 2008, where the Supreme Court distinguished excise duty proper from the consideration payable for the exclusive privilege of vend.

Possession Beyond the Retail Limit (Section 19)

Section 19 governs holding. Headed so as to prohibit possession of excisable articles in excess of the quantity prescribed by the State Government except under permission, it provides in sub-section (1) that no person who is not licensed to manufacture, cultivate, collect or sell an excisable article shall have in his possession any quantity of such article in excess of the limit of retail sale declared by the State Government under Section 5, except under a permit from the Excise Commissioner or an empowered Excise Officer. Section 5 is the enabling provision: it lets the State Government declare by notification the quantity of any excisable article that shall be the limit of sale by retail, and that figure may vary by area, by class of purchaser or by occasion. Sub-section (2) exempts foreign liquor (other than denatured spirit) in the possession of a common carrier or warehouseman acting as such. Sub-section (3) bars even a licensed vendor from keeping excisable articles beyond the retail limit at a place other than that authorised by his licence, and sub-section (4) lets the State Government, by notification, prohibit or restrict possession by any person or class, absolutely or conditionally, in any specified area. The detailed quantitative thresholds are taken up in the possession limits note.

Conscious Possession and the Burden of Proof

Liability under Section 19 turns on the legal meaning of "possession", which Indian courts read as conscious possession — physical control coupled with knowledge of the nature of the thing held. The leading exposition is Mohan Lal v. State of Rajasthan, 2015 (8) SCALE 627, decided under the analogous narcotics regime, where the Supreme Court held that possession is a mental state requiring custody with animus, that dominion and control plus knowledge of the contraband establish conscious possession, and that once possession is shown the burden of proving that it was not conscious shifts to the accused, since the manner of coming into possession lies within his special knowledge. Applied to excise prosecutions, this means the State must prove physical custody and circumstances pointing to knowledge; thereafter the accused found with liquor in excess of the retail limit, or with an unlicensed still under Section 16, must explain the lawful source or authority. The principle prevents an accused from escaping merely by denying awareness while exercising obvious control.

Sale Without Licence Prohibited (Sections 20-21)

Section 20 prohibits sale: no excisable article shall be sold except under a licence granted by the Excise Commissioner or an Excise Officer duly empowered in that behalf. Two narrow exceptions are recognised — a cultivator of the hemp plant may sell the portions of the plant to a licensed dealer, and a private person may sell foreign liquor lawfully possessed (for example, on quitting a station or under a devolution by inheritance) without a vend licence. Section 21 supplements this by requiring that liquor shall not be bottled for sale, and excisable articles shall not be sold, otherwise than in accordance with the terms and conditions of the licence. Read together, Sections 20-21 make the licence the sole gateway to lawful distribution and bind the licensee to its conditions; a sale outside the licensed premises, hours or manner is an unlicensed sale. The fee charged for such a vend licence is, per Har Shankar and Panna Lal, the price of a privilege rather than a tax, which is why the State may auction or negotiate it.

Restrictions on Manner of Sale and Employment (Sections 22-23)

Sections 22 and 23 regulate how a licensed sale may be conducted. Section 22 forbids a licensed vendor from selling liquor or an intoxicating drug to a person apparently under a prescribed age, to a person of unsound mind, or to a serving soldier except as permitted, and prohibits accepting in exchange for liquor any article such as ornaments, clothes, arms, utensils or household goods — a safeguard against debt-bondage and pawning at the vend. Section 23 prohibits a licensee, in any place where liquor is consumed on the premises by the public, from employing any person under the age of eighteen years, or any leper or person suffering from an infectious or contagious disease; sub-section (2) requires the prior written permission of the Excise Commissioner before employing any woman during business hours in premises where foreign liquor is consumed, and sub-section (3) allows that permission to be modified or withdrawn. These provisions show that the licence is not a bare commercial concession but a tightly conditioned permission, the breach of which is penal and may attract cancellation under the licensing machinery.

The Exclusive Privilege (Section 24)

Section 24 is the apex provision. Subject to Section 31, the Excise Commissioner may order the grant to any person of a licence for the exclusive privilege (1) of manufacturing, or of supplying by wholesale, or of both; or (2) of selling by wholesale or by retail; or (3) of manufacturing or supplying by wholesale, or of both, and of selling by retail — of any country liquor, foreign liquor or intoxicating drug within any local area of Rajasthan to which the Act extends. The exclusive privilege is the legal device by which the State monopolises dealing in liquor and then farms it out for consideration. Its character was authoritatively explained for this very Act in Panna Lal v. State of Rajasthan, AIR 1975 SC 2008: the lump sum a licensee agrees to pay under a guarantee or exclusive-privilege system is not excise duty but is in the nature of rental or the price of the privilege parted with by the State. Har Shankar reached the same conclusion for the analogous Punjab scheme, holding the amount charged to be the price of a privilege and not a fee or tax. Because the privilege belongs to the State, a successful bidder who later refuses to honour his bid cannot resile on the ground that he is being charged a tax without authority — he has simply contracted to buy a privilege. Section 25 in the original numbering does not survive as a substantive operative provision in the current series, the privilege scheme continuing through Sections 26 and 27 (assignment of, and payment for, the exclusive privilege).