Liquor licensees may claim fee refund without surrender only for 171 Covid lockdown days, subject to proof.

The respondents were holders of FL-3 liquor licences and, in one appeal, an FL-2 licence.

They claimed refund of privilege fee and licence fee for periods during which liquor business was allegedly not transacted.

The FL-3 licensees sought refunds for the non-transactional period from 1 April 2017 to 3/4 September 2017, while the FL-2 licensee claimed refund for the period from 2017–18 to 2020–21, including the COVID-19 lockdown period.

The Commissioner of Prohibition and Excise rejected the claims by orders dated 18 April 2022 and 10 June 2022.

The respondents successfully challenged those orders before a learned Single Judge, who allowed the writ petitions by following an earlier common order dated 25 July 2023 concerning Rule 24-A of the Tamil Nadu Liquor Licence and Permit Rules, 1981.

The State preferred the present writ appeals, contending that surrender of the liquor licence was a mandatory condition for claiming refund under the proviso to Rule 24-A.

Whether surrender of a liquor licence is mandatory for claiming refund of privilege fee and licence fee under the proviso to Rule 24-A of the Tamil Nadu Liquor Licence and Permit Rules, 1981, for a period during which business was not transacted?

Whether the licensees were nevertheless entitled, on equitable grounds, to refund or adjustment for the COVID-19 lockdown period despite not surrendering their licences?

The Court applied Rule 24-A of the Tamil Nadu Liquor Licence and Permit Rules, 1981, and its proviso, governing refund of privilege fee and licence fee where licensed business is not transacted.

The legal position adopted from the Court’s earlier common judgment dated 10 August 2026 in W.A. Nos. 824 of 2026 and connected matters was that the respondents’ claim could not succeed as a matter of law without satisfying the requirements of the proviso, including the requirement relating to surrender of the licence.

However, the Court recognised a limited equitable exception for the COVID-19 lockdown: where business was prevented by circumstances beyond the licensee’s control and not by any default, refund or adjustment could be considered for 171 days, subject to proof that no business was transacted during that period.

The Court held that the central question had already been considered in its judgment dated 10 August 2026 and that the legal issue had been decided against the licensees.

Accordingly, the learned Single Judge’s orders granting relief by relying on the earlier 25 July 2023 decision could not stand.

The Court nevertheless distinguished the COVID-19 period on equitable grounds: the lockdown prevented the licensees from conducting business for reasons beyond their control, and therefore strict enforcement of the surrender requirement would be inequitable for the limited period of 171 days.

This equitable relief was confined to the COVID-related claim and remained subject to the Commissioner’s verification of supporting evidence.

The non-COVID refund claims of the FL-3 licensees did not receive any comparable equitable relief.

In W.A. Nos. 3926 of 2025 and 877 of 2026, concerning the FL-3 licence claims, the Court set aside the orders under challenge without granting the claimed non-COVID refunds.

In W.A. No. 3852 of 2025, concerning the FL-2 licensee’s claim, the respondent was granted liberty to approach the Commissioner of Prohibition and Excise for refund or adjustment of licence and privilege fee restricted to 171 COVID-lockdown days.

The claim petition was directed to be filed within two weeks, and the Commissioner was directed to decide it on merits and in accordance with law, preferably within twelve weeks of receiving the petition and supporting evidence.

No costs were awarded, and the connected miscellaneous petitions were closed.