P. Ramakrishnan, J.
1. The petitioner, G. Sundararajan, is the Secretary of the Thirukalukundram Road Margin Hawkers' Association. He has also described himself as a trader who through his agents and hired servants hawks vegetables and other articles on the road margins in Thirukalukundram. He has filed this writ petition under Article 226 of the Constitution for the issue of a writ of certiorari quashing Resolution No. 189 passed by the first respondent, the Panchayat Board, Thirukalukundram, represented by its Executive Officer. The Resolution was confirmed by Revenue Divisional Officer, Chingleput when the petitioner appealed to him against the Resolution under the provisions of the Madras Panchayats Act (Madras Act XXXV of 1958). The impugned Resolution provides for the issue of an auction notice for collection of licence fee in the Thirukalukundram Town Panchayat weekly market, daily market stalls and from shops using the road margins. Then follows a list of areas where the auctionee would be permitted to collect the levy. It also says that the auctionee may permit shops to be kept up to a margin of six feet on either side. Then there is mention of the rate of levy from 1st April, 1966 per day as follows:
1. Lorry which brings goods for sale .. Re. 1-00 per lorry.
2. Double bullock carts goods for sale ... Re. 0-50 per cart.
3. Hand cart goods for sale .. Re. 0-15 per cart.
4. Shope to be kept on road margins .. Re. 0-06 per shop.
5. Market stalls per day .. Re. 0-50 per stall
2. In the affidavit the petitioner has attached only that part of the above notice which provides for a levy of 6 paise per shop on shops to be kept on road margins in this Writ petition, but not the rest, presumably because he is interested only in the road margin shops. According to him, the levy being in the nature of a fee, in order to validate it, it is essential that the Panchayat should render some service as quid pro quo to the licensee and further the rate should be correlated in a reasonable manner to the cost of rendering such service. But, according to him, no service is afforded, as quid pro quo, for the levy, and further, no extra cost has been incurred by the Panchayat for the purpose of affording that service. As against this contention, in the counter-affidavit of the first respondent, Panchayat Board, it is not denied that the levy is a ' fee '. But it is alleged that the Panchayat has to incur expenditure for attending to 'the sanitation and cleanliness on the road margins, if the road margins are used for vending articles.' As regards the plea that there is no expenditure incurred by the Panchayat for providing this additional service and there is no correlation between that expenditure and the licence fee, the counter-affidavit states:
It is incorrect to say that there is no quid pro quo for the licence fee. It is not necessary that there should be actual correlation between the quantum of licence fee and the actual costs of services rendered. It is also not necessary to do any separate or special service for the hawkers alone. As already submitted the Panchayat has to meet additional expenditure in keeping the road margins clean and for the regulation of the trade on the road margin.
3. Learned Counsel for the petitioner has referred me to the unreported decision of Rajagopala Ayyangar, J., in (Venkatavaradan v. Executive Officer, Panchayat Board Kallakurichi and Anr. W.P. No. 552 of 1953. The learned Judge in that judgment struck down levy of a fee by the Kallakurichi Panchayat, from persons who, without obstructing traffic on either side of the road or any portion thereof, sell or exhibits for sale an article or animal, according to the schedule specified. The learned Judge held that the difficulty in upholding the defence was that the fee had none of the incidents of a licence fee, and observed:
No licence is issued to the persons paying the fee, but they are merely granted a receipt for the sum paid. No conditions are stipulated as required to be carried out by the licensee, which would be the case if this were truly a licensing provision. Further, when the petitioner alleged in his petition that the Panchayat Board were not incurring any extra expenditure, which they legally make good by levying the fee, there is no denial of this allegation. It is clear law that a licence fee can be levied only to reimburse the public authority the extra expenses which the regulation of a trade, business or activity entails on it. In the present case, is the local authority is incurring no extra expense on account of the use of the roads by the cars or carts, in which articles for sale are transported, or by the hawkers who carry their wares on their heads--which constitute 4 out of 5 categories dealt with in this resolution,--the levy of the fee cannot be legal. In these circumstances the resolution of the Panchayat, dated 26th February, 1953 levying these licence fees in the name of taxes has to be quashed....
4. To a similar purport is the decision of the Andhra High Court in Commissioner, Municipal Council v. Venkateswara Rao (1956) A.W.R. 616, which also arose out of a writ petition filed under Article 226 of the Constitution and the levy there was under Section 270 of the District Municipalities Act, which is similar to the provisions of the Madras Panchayat Act, namely, Section 103 under which the present levy is made. After observing that the levy in such a case cannot amount to a tax, but only a licence fee, the Bench of the Andhra High Court observed at page 622:
In the present case, the petitioner and others vend articles on road margins. There is nothing on record to show that the Municipality has incurred any extra expenditure other than that they had incurred for maintaining the roads as they should do under the Act. The roads would be laid and maintained from and out of the general funds. The only expenditure perhaps that may be attributable to the vending of articles, though it is not stated in the counter, is the proportionate supervisory charges incurred by the Municipality on its officers. There is no specific evidence as regards the approximate expenditure under this head.... The Municipality or the 2nd respondent who must be in a position to satisfy the Court did not attempt to place before it the nature of the services rendered and the income realised by the 2nd respondent.
5. In the present case also the Panchayat Board has not made any attempt to show the additional income which would be realised by the levy, and whether it could be correlated to any extra expenditure the Panchayat has to incur on account of the permission given to the hawkers on road margins. The attempted explanation in the counter-affidavit by mentioning the services rendered by keeping the road margins clean, keeping the public road lit, etc., covers only the existing obligations which the Panchayat has to discharge irrespective of whether there are hawkers who sell articles on the road margins or not. There is no reference at all to any extra expenditure for supervisory charges. My attention was drawn at the time of the hearing of this writ petition by the learned Counsel for the petitioner, to a Circular, No. 1963, of the Inspector of Municipal Councils and Local Boards, dated 15th June, 1954, which clearly makes reference to the Judgment of this Court in Venkatavaradan v. The Executive Officer, Panchayat Board, Kallakurichi and Anr. W.P. No. 552 of 1953, and directs the Executive Authorities of Panchayats that they should take steps to discontinue the levy of licence fees for the use of road by carts or other vehicles in which articles for sale are transported or by hawkers who carry their wares on their heads. The Panchayat Board, first respondent, in this case has contravened the above instructions, which are in terms of the unreported decision in Venkatavaradan v. The Executive Officer, Panchayat Board, Kallakurichi and Anr. W.P. No. 552 of 1953. That decision has made specific reference to hawkers who carry their ware on their heads or cart for cars in which articles for sale are transported. It is clear that exhibiting articles for sale in the road margin would also fall within the scope of the said decision and the principles laid down in it. The Andhra High Court decision has made pointed reference to articles exposed for sale on road margins and the need to conform to the principles of levying licence fee in their cases. Learned Counsel for the first respondent, Panchayat Board, draws my attention to the decision to the Supreme Court in Corporation of Calcutta V. Liberty Cinema : 2SCR477 . But that decision could be easily distinguished on the ground that though the levy in the case of a cinema house in that case was described as licence fee, the Supreme Court after a careful consideration of the circumstances, determined by a majority, that it was really a ' tax ' and then discussed the principles under which such a levy of tax could be upheld. But here there is no plea by the respondent that the levy is 'tax.' On the other hand, it is admitted to be a licence fee. Therefore, it should satisfy the requirements laid down in the unreported decision in Venkatavaradan v. The Executive Officer, Panchayat Board, Kallakurichi and Anr. W.P. No. 552 of 1953 and the Andhra High Court decision cited above. Obviously, those requirements are not satisfied in this case. Therefore, the writ petition is allowed as prayed for. No order as to costs.