TRAVANCORE TEA ESTATES CO LTD Vs. EXECUTIVE OFFICER ELAPPARA PANCHAYAT
HIGH COURT OF KERALA
TRAVANCORE TEA ESTATES CO. LTD.
EXECUTIVE OFFICER, ELAPPARA PANCHAYAT
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(1.) These petitions have been referred to us for decision since the questions raised are identical to those raised in Writ Appeal Nos. 107 and 108 of 1967. The appeals have already been disposed of by us by judgment, dated 2nd July 1968. The petitioner herein challenges the validity of licence fee demanded by the Elappara Panchayat and the Vandiperiyar Panchayat respectively, under Ss 96 and 97 of the Kerala Panchayats Act (hereinafter to be referred to as "the Act"). The petitioner is the Travancore Tea Estates Company Limited. Vandiperiyar and the levy sought to be imposed is in respect of the estate owned by them in the two Panchayats, Elappara and Vandiperiyar. Notice was served on them by the Executive Officer of the Panchayat demanding licence fee for permission to use the place for keeping fuel and manure and also for keeping machinery for the manufacture of tea. Fee has been demanded under separate heads for the storing, and for the installation of the machinery. Exts. P 1 and P 2 in O. P. No. 1384 and Exts. P 1 to P 4 in O. P. No. 1406 are the demand notices. In answer to the demand, the Superintendent of the Estate wrote to the Panchayat saying that the Estate is not liable to take out any licence or for remitting any fee as there was no quid pro quo for the demand. The Executive Officer of the Panchayat wrote back explaining the grounds for the levy and pointing out the services rendered by the Panchayat in return for the levy. But according to the petitioners no particular service is rendered to them to justify the demand. The question of quid pro quo has been dealt with by us in some detail in our judgment in Writ Appeal Nos. "107 and 108 of 1957 and all that we have stated there, we think, should apply in the present instance also. The using of machinery for industrial purposes has been referred to in item 83 of Schedule I of the Kerala Panchayats (Licensing of Dangerous Offensive Trades and Factories) Rules, 1963. The entry is: "Machinery Using for industrial purposes except country chakkas used for oil manufacture in the premises of oil workers". Storing of fuel is item number 51 which reads:
"Fuel -- Using for any industrial purpose."
Item No. 84 is ' Manufacturing articles from which offensive or unwholesome smell, fumes, dust or noise arises." S.97 of the Act deals with permission for the construction of factories and the installation of machinery. The section reads:
"No person shall, without the permission of the Panchayat and except in accordance with the conditions specified in such permission --
(a) construct or establish any factory, workshop or workplace in which it is proposed to employ steam power, water power or other mechanical power or electrical power; or
(b) install in any premises any machinery or manufacturing plant driven by any power as aforesaid, not being machinery or manufacturing plant exempted by the rules".
(2.) The case of the petitioner is that the machinery in question is installed inside the factory, in the Estate, and it was installed long ago. Since 1st January 1962 no machinery has been installed by him. The petitioner would further point out that the machinery and the working thereof is controlled and regulated by the authorities functioning under the Factories Act 63 of 1948. The provisions of S.97 of the Act came into force only from 1st January 1962 by Government Notification No. 177/61/DD, dated 1st December 1961 published in the Kerala Gazette No. 49, dated 12th December 1961. The contention therefore is that the Panchayat cannot levy fee under S.97 of the Act, for permission to install the above machinery. At the time the machinery was installed, no permission was required.
The matter is fully covered by the decision of this Court in City Corporation of Calicut v. Sadasivan and others 1968 KLT 589 . There we have held that without quid pro quo the imposition of licence fee cannot be justified.
"Fees are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded. Thus in fees there is always an element of 'quid pro quo' which is absent in a tax. (Ratilal v. State of Bombay AIR 1954 SC 388 )."
This position was more or less conceded by the Panchayat as could be seen from the Executive Officer's letter to the petitioner Ext. P 4, in O. P. No. 1384 of 1966. In Ext. P 4 the Executive Officer would endeavour to justify the levy on the ground that services have been rendered by the Panchayat to the petitioner in return for the levy. The items of services have also been mentioned in the letter and they are:
"1. A cattle pound is conducted near your estate where you are sending the stray cattle found in your estate, and
2. A High School is conducted by the Panchayat to meet the educational needs of the pupils of the staff and estate workers."
It need hardly be pointed out that these are not services rendered in particular, to the petitioner. These are statutory duties which the Panchayat is bound to discharge in the interests of the public. In the recent case Nagar Mahapalika Varanasi v. Durga Das Bhattacharya and others Civil Appeal No. 558 of 1967 the Supreme Court has held:
"The expenditure .......... was incurred by the Municipal Board in the discharge of its statutory duty and it is manifest that the licence fee cannot be imposed for reimbursing the cost of ordinary municipal services which the Municipal Board was bound under the statute to provide to the general public."
The Panchayat has no case that the licence fee collected is earmarked to meet the expenses of rendering particular services to the petitioner and such amount does not go to the general revenue of the Panchayat to be spent for general public purposes. What distinguishes tax from a licence fee is that in tax the imposition is made for public purpose without reference to any special advantage to be conferred upon the payers of the tax. Fee on the other hand is exacted from individual persons for particular services rendered to them. The Panchayat was not able to establish before us that the fee in question is maintained as a separate fund to be used for the services to be rendered to the payers thereof. If the fee is to be construed merely as a fee for licence granted to a particular person to do a particular thing at a fixed place, there must be correlation between the fee and the expenses incurred for issuing the licence. Only so much amount necessary for covering the expenses of the licence, the Panchayat is entitled to collect. There is no indication anywhere in the evidence that the amount demanded is just sufficient to meet the expenses of the licence. Even if the fee is construed as a tax as contended for the Panchayat, the levy cannot be justified because the Panchayat cannot levy a tax in the guise of a licence fee. For the imposition of a tax it is mandatory that before the tax is levied, the provisions of S.66 to 81 of the Act are complied with. Otherwise the levy would be illegal. The Supreme Court in Nagar Mahapalika Varanasi v. Durga Das Bhattacharya and others Civil Appeal No. 558 of 1967 has held:
"It is therefore not permissible for the Municipal Board to impose a tax on the respondents under the guise of a license fee without following the mandatory procedure for imposition of the taxes prescribed by S.131 to 135 of the Act; otherwise there will be a circumvention of the provisions of S.131 to 135 of the Act."
The levy therefore cannot be supported by any one of the three heads namely, "fee for licence", "fee for services rendered" and "fee in the nature of a tax".
The petitions are therefore to be allowed and we do so and quash the demand notices Exts. P 1 and P 2 in O. P. No. 1384 and Exts. P 1 to P 4 in O. P. No. 1406 of 1966. There will be no order as to costs.
Madhavan Nair, J.
I concur. In view of the dicta of the Supreme Court in the decisions cited by my learned brother, no other conclusion appears possible, even though the Supreme Court had not to consider the provision like S.76(1) of the Kerala Panchayats Act, 1960, that reads:
'76. (1) All moneys received by the Panchayat shall constitute a fund called the Panchayat fund and shall be applied and disposed of in accordance with the provisions of this Act and other laws".
Krishnamoorthy Iyer, J.
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