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The Madras Pinto and Rotary Oil Owners' Association represented by Its President, Mr. P.M. Kumaraswamy and Ors. Vs. the Commissioner (23.02.1984 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Reported in(1984)2MLJ328
AppellantThe Madras Pinto and Rotary Oil Owners' Association represented by Its President, Mr. P.M. Kumaraswa
RespondentThe Commissioner
Cases ReferredKewal Krishan v. State of Punjab
Excerpt:
.....viewed from this perspective, the conclusion is inevitable that the observation made in kewal krishan puri's case [1979]3scr1217 ,that 'at least a good and substantial portion of the amount collected on account of fees, may be in the neighbourhood of two-thirds or three-fourths, must be shown with reasonable certainty as being spent for rendering services in the market to the payer of the fee' was not intended to lay down a rule of universal application but it was a decision which must be confined to the special facts of that case. an attempt made in 1975 to increase by 50 per cent proved unsuccessful, because of the judgment of this court in w. the judgment goes to show that the corporation failed to place any relevant material to justify the increase. failure to increase the..........apart from several earlier decisions of this court and that of the supreme court, the decision in kewal krishan v. state of punjab : [1979]3scr1217 , having laid down certain tests to be applied and satisfied substantiating the legality of a fee, the reliance placed by respondents on subsequent decisions, rendered by benches of supreme court composed of lesser number of learned judges, cannot be relied on, and that they could apply only to the facts of those cases, and not as laying down a different proposition of law. relying of kewal krishan v. state of punjab : [1979]3scr1217 , he submits that the tests laid down in paragraph 23 therein, unless satisfied, the doubling of the licence fee, is unjustified. he then refers to union of india v. k.s. subramanian : (1977)illj5sc , wherein it.....
Judgment:
ORDER

T. Sathiadev, J.

1. Respondent Corporation having increased licence fees for all trades, industries, etc., at double the existing rates with effect from licensing year 1984-85, these writ petitions have been filed claiming that the increase is disproportionate and in total disregard of the concept of quid pro quo which is an essential ingredient in imposition of fee. Learned Counsel for petitioners pleads that apart from several earlier decisions of this Court and that of the Supreme Court, the decision in Kewal Krishan v. State of Punjab : [1979]3SCR1217 , having laid down certain tests to be applied and satisfied substantiating the legality of a fee, the reliance placed by respondents on subsequent decisions, rendered by Benches of Supreme Court composed of lesser number of learned Judges, cannot be relied on, and that they could apply only to the facts of those cases, and not as laying down a different proposition of law. Relying of Kewal Krishan v. state of Punjab : [1979]3SCR1217 , he submits that the tests laid down in paragraph 23 therein, unless satisfied, the doubling of the licence fee, is unjustified. He then refers to Union of India v. K.S. Subramanian : (1977)ILLJ5SC , wherein it was held that the proper course would be to try to find out and follow the opinions expressed by the larger Benches in preference to those expressed by smaller Benches of the Supreme Court. If the views expressed by larger Benches were not applicable to the facts of a particular case, then the High Court should give reasons in support of the view it takes. Mattulal v. Radhe Lal : [1975]1SCR127 , is also referred to for the claim made that a former decision of a larger Bench than the latter, has to prevail.

2. As for the decision in Kewal Krishan v. State of Punjab : [1979]3SCR1217 , the Supreme Court itself in subsequent decisions had stated as to how it has to be understood, and hence the peculiar situation prevailing in respect of the said decision, has to be borne in mind. Learned Judges of the Supreme Court having stated in more than one subsequent decision as to how far the principles laid down will have to be understood as stated by them, the principle laid down in Mattulal v. Radhe Lal : [1975]1SCR127 , and Union of India v. K.S. Subramanian : (1977)ILLJ5SC , has to be read in conjunction with what had been specifically stated in the subsequent decisions. Before dealing with the subsequent decisions, it is made clear that this is not a case wherein the proposed levy of fee is not in compliance with some of the principles laid down in Kewal Krishan v. State of Punjab : [1979]3SCR1217 .

3. In Southern Pharmaceuticals & Chemicals v. State of Kerala, : [1982]1SCR519 , after referring to Kewal Krishan v. State of Punjab : [1979]3SCR1217 , it is held that the element of quid pro quo stricto sensu is not always a sine quo non may not be possible, or even necessary, to be established with arithmetical exactitude, but even broadly and reasonably, it must be established by the authorities, who impose the fees to show that the amount is being spent for rendering services to those on whom falls the burden of the fees. Hence, what is required is a broad corelationship between the fee collected and the cost of the establishment. By referring to Southern Pharmaceuticals &. Chemicals v. State of Kerala, : [1982]1SCR519 , in Delhi Municipality v. Mohd. Yasin : [1983]142ITR737(SC) , it is held that compulsion is not the hall-mark of the distinction between a tax and a fee; and merely because it goes to the consolidated fund, it would not become a tax. The aspect of services rendered or advantages conferred need not be direct and a mere causal relation may be enough. Neither the incidence of the fee nor the service rendered need be uniform, and Ors. may be benefited out of those collections, and it may so happen that the payers of the fees may obtain a secondary benefit as compared with the primary motive of regulation in the public interest. The Court shall not assume the role of a cost accountant and it is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc., against the amount of fees collected, so as to evidently balance the two. A broad corelationship is all that is necessary. Learned Counsel for petitioners would hasten to point out that Kewal Krishan v. State of Punjab : [1979]3SCR1217 , had not been placed before the learned Judges but, as rightly pointed out by learned Counsel for respondent, the decision in Southern Pharmaceuticals & Chemicals v. State of Kerala, : [1982]1SCR519 , which had taken into account Kewal Krishan v. State of Punjab : [1979]3SCR1217 , having been relied upon, it cannot be held that the propositions enunciated in this decision were confined only to the facts of that case and could not be applied by the respondent herein. In Sreenivasa General Traders v. State of A.P. : [1983]3SCR843 , the learned Judges state that,

It would appear that there are certain observations to be found in the judgment in Kewal Krishan Puri's case : [1979]3SCR1217 (supra), which were really not necessary for purposes of the decision and go beyond the occasion and therefore they have no binding authority though they may have merely persuasive value. The observation made... appears to be an obiter.

Then after referring to the traditional view about quid pro quo having undergone a sea change in subsequent decisions, it was held that, all that is necessary is that there should be a 'reasonable relationship' between the levy of the fee and the services rendered. Further the learned Judges stated as follows:

Viewed from this perspective, the conclusion is inevitable that the observation made in Kewal Krishan Puri's case : [1979]3SCR1217 , that 'at least a good and substantial portion of the amount collected on account of fees, may be in the neighbourhood of two-thirds or three-fourths, must be shown with reasonable certainty as being spent for rendering services in the market to the payer of the fee' was not intended to lay down a rule of universal application but it was a decision which must be confined to the special facts of that case.

Again, they stated as follows:

In the subsequent decision in Ram Chandra v. State of U.P. : [1980]3SCR104 , Untwalia, J., speaking for the Court has considerably narrowed down this observations in Kewal Krishan Puri's case at p. 116 (of SCR) : (at page 1129 of A.I.R.) of the Report saying that the fee realised from the payer of the fee has, by and large, to be spent for his special benefit and for the benefit of other persons connected with the transactions of purchase and sale in the various Mandis.

4. When the learned Judges of the Supreme Court thus indicate as to how to understand and apply the decision in Kewal Krishan v. State of Punjab : [1979]3SCR1217 , the principles enunciated in the subsequent decisions, have to be applied to find out whether the levy, as proposed, would have a 'reasonable relationship', to the services rendered by respondent Corporation.

5. At this stage, the detailed consideration that would take place at the time of the final disposal of the writ petitions, can-not be done, and only a few of the relevant factors can be looked into. The licence fees presently collected is at the rate at which they were fixed in 1960. For 23 long long years, it had remained static. An attempt made in 1975 to increase by 50 per cent proved unsuccessful, because of the judgment of this Court in W.P. No. 291 of 1977 etc. on the main basis that there is no quid pro quo. The judgment goes to show that the Corporation failed to place any relevant material to justify the increase.

6. In paragraph 4 of the counter affidavit, after adverting to the huge percentage of increase in costs in respect of salaries and other expenses incurred towards officers and servants employed for the purpose of regulation and grant of licence, registration etc., the income derived by the Corporation in 1960-61 is stated as Rs. 15 lakhs, whereas in 1982-83 it has reached Rs. 45 lakhs. With just a therefold increase in income, the cost of maintaining personnel has increased by 3171%. It is further claimed that the increase is not even commensurate. A working sheet is annexed to the affidavit to show that, for trade licences, in 1960, for 96 staff, the total expenditure was Rs. 1,86,530/-, whereas in 1983 for 254 staff, the total expenditure is Rs. 28, 02, 410/. Likewise, for other licences particulars are furnished, and these calculations go to show how the percentage of increase of 3171% has been arrived at. As held by the Supreme Court, these calculations go to show that there is a broad corelationship, existing between the fees proposed to be collected and the amount to be expended.

7. It is next contended that, for each trade, the respondent must establish as to how much of amount is spent, in the licensing process, and when property tax had been already increased, any expenditure incurred in the general maintenance of personnel, cannot be fed into the expenditure that could be taken into account to determine the fee that could be imposed. In the counter-affidavit, it is stated that the expenditure incurred on account of the administration expenses, repairs and maintenance of buildings and other expenses, have not been included in the calculations furnished. It is obvious that if only respondent Corporation had increased licence fee from time to time, during the past 23 years, instead of doubling the amount, it could have been at least four times. Failure to increase the levy from time to time during the past 23 years, has now resulted in an impression being derived, as if the levy is being doubled, without any justification. What is required to be considered is not about the doubling of the levy, but as laid down by the Supreme Court, for the services rendered, whether the imposition could have a reasonable relationship or not.

8. It is claimed that for the limited services extended, respondent: does not deserve even the existing rate of fees. Respondent, having its own limitations, has the right to collect fees, as it is regulating trades. Exacting standards expected by traders may not exist, but so long as it controls the trade, in the manner it considers just and necessary, whether the amount collected is utilised for such services or not, is alone to be considered. Hence, no justifiable ground exists to stay the levy of fee at enhanced rates, and hence these petitions are dismissed.


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