1. By a notification published in the Gazette on 4th of February, 1999, objections to the revised rates of licence fee applicable with effect from 1-4-1999 were invited from those interested in opposing the revision. No objections having been received, the Council passed a resolution on 31st of March, 1999 revising the rates of fee for different trade and professional licences, which it is competent to issue. A notification issued on the same date brought into force the revised fee structure, aggrieved whereof the petitioner has filed the present writ petition.
2. Mr. Nargund, Counsel appearing for the petitioner strenuously argued that the earlier fee of Rs. 50/- had been suddenly hiked ten times and fixed at Rs. 500/- for all such traders, as are carrying on business in cloth, cotton and art silk etc. This increase was, according to the learned Counsel, neither justified nor otherwise sustainable having regard to the nature of the service rendered by the Council to the licensees. Relying upon a decision of this Court in K. Pundalika Nayak v City Municipal Council, Mangalore and Others, he contended that the levy had ceased to be a fee and could therefore be interfered with.
3. Decisions of the Supreme Court on what constitutes and distinguishes a fee from a tax are a legion. Reference to some of those decisions only should in my opinion suffice. In Municipal Corporation of Delhi and Others v Mohd. Yasin, the Court declared that there was no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden without promise of any special advantages to the tax-payers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. The Court held that though, a fee must have relation to the services rendered, or
the advantages conferred, such relation need not be direct. A mere casual relation would be enough. Further, Courts examining the character of a levy need not assume the role of a Cost Accountant nor is it necessary to weigh too meticulously the cost of services rendered against the amount of fee collected so as to evenly balance the two. This position was reiterated in Sreenivasa General Traders and Others v State of Andhra Pradesh and Others, and in I.T.C. Limited and Others v State of Karnataka and Others.
4. In City Corporation of Calicut v Thachambalath Sadasivan and Others, the Court declared that the traditional concept of a quid pro quo was undergoing a transformation and that though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct. If one who is liable to pay, receives general benefit from the authority levying the fee the element of service required for collecting the fee is satisfied. It is not necessary that the person liable to pay must receive some special benefit or advantage for payment of the fee. The following passage is in this regard apposite.–
“It is thus well-settled by numerous recent decisions of this Court that the traditional concept in a fee of quid pro quo is undergoing a transformation and that though the fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere casual relation may be enough. It is not necessary to establish that those who pay the fee must receive direct benefit of the services rendered for which the fee is being paid. If one who is liable to pay receives general benefit from the authority levying the fee the element of service required for collecting fee is satisfied. It is not necessary that the person liable to pay must receive some special benefit or advantage for payment of the fee”.
5. To the same effect is the decision of the Supreme Court in M/s. Gasket Radiators Private Limited v Employees’ State Insurance Corporation and Another, where the Court declared that merely because the benefits to be received are postponed, it could not be said that there was no quid pro quo. Krishi Upaj Mandi Samiti and Others v Orient Paper and Industries Limited, reiterates the above propositions.
6. In Secunderabad-Hyderabad Hotel Owners’ Association v Hyderabad Municipal Corporation, their Lordships were examining the validity of a revision in the licence fee prescribed for lodging and eating houses. The Court held that doubling the fee after a lapse of nearly nine
years was not excessive looking to the increase in the cost of various activities carried on by the Hyderabad Municipal Corporation. The following para is in this regard relevant:
“A licence fee may be either regulatory or compensatory. When a fee is charged for rendering specific services a certain element of quid pro quo must be there before the service rendered and the fee charged so that the licence fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. Licence fees can also be regulatory when the activities for which a licence is given require to be regulated or controlled. The fee which is charged for regulation for such activity would be validly classifiable as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive”.
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“Nevertheless, looking to the fact that the licence fees collected form only a very small part of the total expenditure incurred by the municipal corporation, it cannot be held that the levy of these fees as excessive. It is also necessary to note that the impugned increase in 1981 was the first increase after 1972. Looking to the increase in the cost of the various activities carried on by the Hyderabad Municipal Corporation, doubling of licence fees after nine years cannot be considered as an excessive increase”
7. In the light of the above it is not possible to interfere with the revision in the fee structure either on the ground that the nature and the extent of the services rendered by the Council does not justify the burden or on the ground that there is no direct relationship with the fee paid and the service rendered. This Court cannot in the words of their Lordships take upon itself the job of a Cost Accountant to meticulously evaluate the services rendered so as to balance the amount paid with the expenditure, which the Council incurs in the rendition of such service. It is true that the fee has been hiked ten times the amount earlier prescribed, but sight cannot be lost of the fact that the old rate was prescribed as early as in the year 1993. There was no revision in the fee prescribed for licences for a period of nearly six years or so. A revision given after such a long interval even when the same may be a few times more than what was originally stipulated cannot be struck down as improper, unjustified or legally bad. The argument that the Council’s power to levy the fee has been and may be exercised in an arbitrary and unbridled fashion must also fail keeping in view the provisions of Section 256(4) of the Municipalities Act, which prescribes the outer limit for the fee, which may be stipulated by the Council. That, in my opinion, is a sufficient safeguard against the apprehension harboured by the petitioner that the Council can run amuck in fixing and revising the fees.
There is no merit in this writ petition, which fails and is hereby dismissed in limine.