(1.) THE Municipal Prosecutor, Palghat Municipality, the complainant in S. C. No. 465 of 1966 in the Honorary Special First Class magistrate's Court, Palghat is the appellant. THE complaint was that the accused committed an offence under S. 284 of the Kerala Municipalities Act, 1960, Act XIV of 1961, read with S. 355 thereof, hereinafter referred to as the act, in that he did not take out a licence from the Commissioner of the municipality for running a stall in the Railway Platform, Olavakkot, for the year 1965-66. THE licence fee due to the Municipality was Rs. 6. 25. THE accused was storing in the stall fruits, confectionery, biscuits, matches, beedies and cigarettes etc. and selling them. A notice was sent to him requiring him to take out the licence. He omitted to comply with the terms of the notice.
(2.) THE learned Magistrate found that the accused was not bound to take out a licence under the Section for two reasons: (1) that S. 279 of the Act exempts the premises in the occupation or under the control of or any property belonging to the Central or State Government from the licensing provisions of the Act and (2) that since there was no quid pro quo, no licence fee could be levied, and therefore, the accused was not bound to take a licence after paying the licence fee.
The material portion of S. 284 of the Act runs as follows: " (1) The Council may publish a notification in the gazette and by beat of drum that no place within municipal limits shall be used for any one or more of the purposes specified in Schedule III without the licence of the Commissioner and except in accordance with the conditions specified therein and where the licence is for keeping hotels, restaurants, eating houses, coffee houses, laundries or running barber saloons the licence issued by the commissioner shall always contain and be deemed to contain a condition that admission or service therein shall be available to any member of the public: Provided that no such notification shall take effect until sixty days from the date of publication. (2) The owner or occupier of every such place shall within thirty days of the publication of such notification apply to the commissioner for a licence for the use of such place for such purpose. (3) The Commissioner may, by an order and under such restriction and regulations as he thinks fit, grant or, in the interest of the public, refuse to grant such licence". It is not contended that the requisite notification under the Section has not been published. It would appear from the wording of the section that if a person wants to use any place within the jurisdiction of a municipality for any of the purposes specified is schedule III of the Act, it is necessary that the person should take out a licence. But, it was contended that S. 279 of the Act exempts the State and central Governments from the licensing provisions of the Section in respect of any property in their occupation, control or belonging to them, and therefore, the accused, who was conducting the stall under a licence from the railway authorities, was also exempt from those provisions. S. 279 reads: "nothing in this Chapter shall be construed as requiring the State Government or the Centra! Government to take out a licence in respect of any place in the occupation or under the control of or any property belonging to such Government". In Alangavaram Chetty v. Municipal Council of Pollachi 1957-II M. L. J. 56 the Madras High Court held that a person who conducts a stall in the premises of a railway under a licence or permission from the railway authorities should take out a licence under the corresponding provisions of the Madras District Municipalities Act, V of 1920. This is what the court said: "the exemption granted by S. 244 of the District municipalities Act from its licensing provisions in S. 249 is only in favour of the activities of the Government and of the statutory bodies named in that section. Running a tea-stall even though on a railway platform under licence from the railway authorities, requires a licence from the municipality under the District Municipalities Act. Though the railway premises may be the property of the Union Government, still so long as it is in the territorial limits of a Municipality, the Municipality has jurisdiction to regulate and licence the trade carried thereon. " 'even though the language of S, 244 of the Madras district Municipalities Act is different from the language of the analogous sections of the City Municipal Act and the Madras District Boards Act, still having regard to the legislative history of the licensing regulations and having regard to the need to avoid an interpretation which might lead to patent absurdity, the exemption granted under S. 244 of the Act can only apply to activities carried on by Government or the enumerated statutory bodies and not to private individuals carrying on a trade requiring a licence, even though such trade might be carried on on the premises or land owned by Government. It is the activity that is carried on that attracts the licensing provisions and regulation under S. 249. " In Ramakrishna Iyer v. Municipal Council, Tirunelveli 1958-I-M. L. J. 348 this ruling has been followed.
It was argued on behalf of the respondent that a private individual carrying on a trade under a licence from the Central Government or a Railway Administration is in the same position as the Central Government, as he is only an instrumentality of the Central Government or the Railway administration, and therefore, the immunity from the licensing provisions attaching to the Government or to the Railway Administration would attach also to him. In this connection, reliance was placed upon S. 135 of the Indian railways Act, the relevant portion of which reads: "135. Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways and from railway administration in aid of the funds of local authorities, namely: (1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Central government has by notification in the Official Gazette, declared the railway administration to be liable to pay the tax. (5) "local Authority" in this section means a local authority as defined in the General Clauses Act, 1887, and includes any authority legally entitled to or entrusted with the control or management of any fund for the maintenance of watchmen or for the conservancy of a river". This section speaks of 'railway administration' and 'tax' and only says that a Railway Administration need not pay any tax in aid of the funds of any local authority unless the Central Government by a notification in the Gazette declared that railway administration to be liable to pay the tax. We do not think that this provision conferred immunity from payment of the licence fee upon the petitioner, who was conducting the stall as a licencee from the Railway Administration. We do not think that the activity carried on by the petitioner was an activity carried on by him as an instrumentality of the railway administration or of the Central Government and that the remote incidence of the fee, or the tax, as it is claimed to be, upon the railway administration or upon Government would not make the fee or tax, a fee or tax on an activity carried on by the railway administration or Government. If that be so, the first point must be answered in favour of the appellant.
(3.) AS regards the second point, it was conceded by Mr. Narayanan Potti appearing for the appellant that in view of the decision of the supreme Court in Corporation of Calcutta v. Liberty Cinema AIR. 1965 SC. 1107, holding that inspection is not a service rendered by the Municipality, it has to be held that the Municipality was not rendering any services to the respondent. From the evidence of pw. 1, it is clear that the Municipal Officers are allowed to enter the premises of the railways only with the permission of the railway authorities and that no services were being rendered by the municipality to the respondent in his business. AS there was no quid pro quo for the exaction of a licence fee, it has to be held that the respondent was not bound to take out a licence after paying the licence fee. Mr. Potti, however, contended that although the levy is in the form of a licence fee, it is really a tax and that the State Legislature was competent to authorise the municipality to levy the tax under Entry 49 or 60 or 62 in List II of the seventh Schedule of the Constitution. Mr. Potti said that the fee is really a tax on land under Entry 49, List II. The entry reads: "49. Taxes on lands and buildings". We are not satisfied that the fee sought to be levied is a tax on land. Reliance was placed upon the ruling in Ajoy v. Local Board (AIR, 1965 SC. 1561) to support the contention. The question that arose for consideration in that case was whether the tax imposed under the ASsam Local self-Government Act, Act 25 of 1953, was a tax on land. The provision of the act which came up for consideration in that case was sub-section (2) of S. 62 of the Act, which provides: "on the issue of an order as in sub-section (1) the board at a meeting may grant within the local limits of its jurisdiction a licence for the use of any land as a market and impose an annual tax thereon and such conditions as prescribed by rules. " Sub-section (3) of the Section provides that when it has been determined that a tax shall be imposed under the preceding sub-section, the Local Board shall make an order that the owner of any land used as a market specified in the order shall take out a licence for the purpose and that such order shall specify the tax not exceeding such amount as may be prescribed by rule, which shall be charged for the financial year. The Supreme Court inferred from the wording of these provisions that the Legislature intended to impose a tax on land for its use as a market. The expression 'impose an annual tax thereon' in sub-section (2) of S. 62 was considered by the Supreme Court as an indication of the intention of the Legislature that the tax is a tax on land. We cannot find any such indication in S. 284 of the Act. The levy here is upon an activity. That is emphasized by the Madras High Court in the rulings referred to above. If the fee for the licence under the Section is really a tax on land, the levy must bear some proportion either to income derived from the land or the fertility of the same. Otherwise, the tax will be discriminatory. A uniform levy not geared to the income or fertility of the land will certainly fly in the face of Art. 14 if the levy is treated as a tax on land. We therefore think that the fee cannot be considered as a tax on land under Entry 49 in List ii. Mr. Potti then submitted that the licence fee is really a tax on luxuries under Entry 62 in List II, and the State Legislature was competent to authorise the levy by the Municipality. ' Mr. Potti said that the licence was to be taken by the petitioner under S. 284 for using the premises for storing biscuits, confectionery and cigarettes etc. and these are luxury articles and so the levy is tax on luxuries. Apart from other objections to this argument, we think that the activity for which licence has to be taken under S. 284 is not for storing or selling luxury articles alone. Schedule III mentions the storing not only of luxury articles but of other articles as well. If Mr. Potti's argument is upheld, then, a levy for a licence under S. 284 for any of the activities specified under Schedule III, must be a tax on luxuries. This, we think, is impossible, as the activities specified in Schedule III are not confined to storing or dealing in luxury articles. We do not see how the levy of the fee can be justified as tax on luxuries. Mr. Potti did not put forward any argument on the basis of Entry 60 in List II and we do not therefore think it necessary to consider the scope of that Entry.
We, therefore, come back to the question whether the fee for licence is supported by quid pro quo. In view of the decision of the supreme Court in A. I. R 1965 S. C. 1107 we do not think that the fee sought to be levied is valid. This position is also supported by a ruling of this Court in Travancore Tea Estates v. Executive Officer 1967 K. L. T. 514. We would therefore hold that the acquittal of the accused was justified. The appeal is dismissed. Dismissed.;