JUDGMENT
Mir Iqbal Husain, J.
(1) This is an application for the issue of a writ of certiorari filed on behalf of a firm run in the name and style of Faruk Anwar and Co., Oil Millers, Raichur, who are the petitioners before this Court, carrying on a business in the said town. The petitioners purchased quantities of ground-nut both in the Raichur town in the open market as well as in other places for the purpose of crushing them for producing oil in their own mill which is situated at Raichur.
It is contended by the petitioners that in respect of the ground-nuts purchased in the Raichur Market yard they have paid the fee levied by the first respondent, viz., the Market Committee of Raichur constituted under the provisions of the Hyderabad Agricultural Markets Act. They purchased quantities of ground-nut from other markets such as Saidapur, Kopbal, Gangavati etc. and transported this produce to their godowns in the Mills at Raichur for their own use and not for sale to anyone.
These were directly received in their godowns for their own consumption i.e., for manufacturing oil therefrom. In respect of the latter goods the petitioners contend, that the market Committee of Raichur has no right much less any authority to levy and fee. On the other hand the Market Committee wrongly considered that on these produce fees could also be levied. They issued a notice to the petitioners dated 3-4-1956 calling upon them to pay the market fees even on those direct imports from 1-4-1954 within a week of the receipt of that notice.
(2) On appeal by the petitioners on the ground that the Committee has no such authority, the matter was further considered in a meeting of the Market Committee on 16-3-1956 under the Chairmanship of the Collector who is the ex-officio Chairmanship of the Collector who is the ex-officio Chairman of the said Committee. The committee resolved that even as regards direct imports of ground-nuts from 1-4-1954, the petitioners are liable to pay fee as per the rules and in case the firm does not comply with the decision and pay the fee within seven days of the final notice the C. M. C., was authoritsed to cancel the license given to the said firm.
(3) Thereupon the petitioners restored to further remedies that were open to them but without success. As a last resort they submitted their representation to the Government of Hyderabad as well. Government, by its order dated 21-9-1953 rejected the application of the petitioners and held that it was futile to enquire as to whether the produce was brought directly from the agriculturists or purchased from any other agricultural market.
As per Rule 40 of the Rules made under the Hyderabad Agricultural Markets Act, government held that the fee was rightly levied as the produce came within the jurisdiction of the market.
(4) The petitioners contend that the fee so levied on produce purchased beyond Raichur and brought by the petitioners directly into the godowns of their mills is not subject to the said fees. It is contended by the Sri Shankar Ram, the learned advocate for petitioners that in the first place ‘fee’ is to be distinguished from ‘tax’ or ‘case’.
If there is to be a levy of fee, there should be a quid pro quo and when there is no quid pro quo, the levy of fee is illegal. The next contention of Mr. Shankar Ram is that there is no warrant for levy of such fee on those goods because it operates as an unreasonable restriction on trade and therefore, offends the provisions of Art. 19(1)(g) of the Constitution of India.
(5) The respondents admit the fact that the produce on which fee is proposed to be levied are directly brought into the petitioners’ godowns having been purchased outside Raichur town. But they contend that the petitioners are liable to pay the fee in respect of any goods that are brought within Raichur Municipal limits which is declared to be a market by the rules framed under the provisions of the said Act.
In other words, the respondents’ contention is that the word ‘market yard of Raichur’ includes the whole of the Municipal limits of Raichur town and therefore, on any produce brought into the godowns even of the petitioners which are situated within the Municipal limits fee is to be paid.
(6) The main point for consideration is whether the levy, demand and collection of fee in respect of produce brought by the petitioners from places outside Raichur and brought into the godowns of their mills situated in Raichur are wholly illegal as contended by the petitioners and whether such a levy is beyond the powers vested in the Market Committee.
The authority to demand and collect such fees to given to the Market Committee under the provisions of the Hyderabad Agricultural Markets Act (Act II of 1339F). A brief reference to some of the relevant provisions of this Act and the Rules framed thereunder is necessary to assess the object of the Act as well as whether the impugned levy is justifiable or without jurisdiction. The preamble states that it is expedient to provide for the establishment of open markets for the purchase and sale of cotton etc., and for the better regulation of such markets.
The gives an indication regarding the purposes for which the enactment is made. In fact, the pith and substance of this Act is to regulate the sale an purchase of the commodities mentioned in the Act in the open market. Section 3 gives power to the Government to notify the establishment of agricultural or open market.
Section 5 gives power to make rules and S. 5 (v) regarding the management of the market and prescribing of fees by the Market Committee and subject to the provisions of this Act, collection and disposal of such fees. This shows that the Market committee has got the power to impose fees, collect them and also the power of disposal regarding such fees.
As per sub-r. (xiii) it can make provision for storage arrangements for cotton and agricultural produce. A fund is constituted under S. 10 and all the money received by a market committee is pooled into this fund. This fund is called the Market Committee Fund, and R. 11 indicates the purposes for which such a fund could be utilised.
(7) Coming now to the Rules framed under the said Act, Rule (2)(c)(d) and (e) define “Market” “Cotton Market Yard” and “Grain market”. Market is defined to mean the whole area notified under S. 3 of the Act. Cotton Market Yard means any enclosure or land reserved for cotton dealings and includes any land which may be notified as such in the Gazette.
‘Grain Market’ means any land or enclosure reserved for dealing in agricultural produce and includes any land which may be notified as such in the Gazette. The Explanation to the said rules states that the same area may be reserved for the dealings in both cotton and agricultural produce. The expression ‘Market Yard’ includes both cotton market-yard and the grain market-yard.
Rule 5 states that the Committee has absolute control over the Market Yard. The only other relevant rule that I would like to refer to is R. 40 which deals with the levy of market fees and it runs as follows:
(1) “The Market Committee shall levy fees as prescribed by the Secretary to Government, Marketing Department or such officer as may be designated by the Government in this behalf on all cotton or agricultural produce coming into a market-yard either for storage in godowns or for immediate sale as follows:
(The rates are here mentioned)
Clause (2) of Rule 40 states:
“The market committee may collect such fees through its licensed adatyas or in the absence of adatyas through its licensed buyers or from the purchaser himself either directly or indirectly,”
The Market Committee viz., the first respondent purports to have taken action under the provisions of this Rule as is evident even from the order passed by the Minister, Rural Reconstruction dated 21-91-1953 referred to above.
(8) From a perusal of this Act and Rules framed thereunder it is abundantly clear that the object of the Act is to regulate transactions of the kind mentioned in the Act for the purchase and sale of agricultural produce. It is also clear, and it is not also disputed by the petitioner, that the Raichur Municipal limits has been notified as market area. But the crucial question to be decided is whether agricultural produce brought into this area from other parts not for the purpose of sale or purchase but for consumption is to be subjected to the fees to be levied by the market committee.
There can be no doubt that in respect of the produce that comes within the market-yard the transactions of either of sale, purchase or for storage. But so far as the market area is concerned, it is conceded by the petitioner that Market Committee has a right but the restriction is this, viz., if the sale or purchase takes place within the market proper or market area which is wider than the market-yard and which includes by notification, the whole of Raichur town then and then only fee is livable. But if the produce is purchased from other places and brought within the municipal limits to the godown of the petitioners for purpose of converting the seeds into oil, in other words, for their own consumption, could it be regarded as a purchase or sale within the area? To me it appears there is great force in the contention of the petitioner’s advocate that such a transaction cannot come within the four corners of the Act or the rules framed thereunder and that no fees could be leviable thereon.
The petitioners themselves in their affidavit, have admitted that for such transactions of purchase of oil seeds from the market-yard they have paid the requisite fees without any hesitation. Has the market committee a wider jurisdiction in respect of transfactions that have not taken place either in the market-yard or in the market area or market proper but that have taken place outside Raichur town.
If the logic within the market yard or within the municipal limits is extended to these transactions, it would be an unreasonable levy not contemplated under the Act or the rules framed thereunder and therefore, beyond the jurisdiction of the market committee.
(9) After all levy of a fee is different from a levy of tax. So far as the tax is concerned, it is levied on the persons not for the purpose of giving them any benefit but for the general purposes of the State. No doubt ultimately the benefit may accrue generally from taxes so collected to the public at large. Regarding the levy of fee, there must be what is called ‘quid pro quo.’
In other words, for the services that have been rendered a fee is levied and taking the example of the market, for the management of the market, particularly in the market yard constructing godowns, creating facilities for the purchase and sale of produce, necessary staff and all the incidental charges connected therewith. But when there is no such quid pro quo at all, when in a case like the present one where produce has been purchased from other towns other than Raichur and brought for the purpose of consumption only, no fee could be levied.
Hence if a levy like a fee is made and a levy which is a burden on the subject the provisions of the Act and the Rules made thereunder empowering such a levy are to be strictly construed. For “it is a well-settled rule of law that all charges upon the subject must be imposed by a clear and unambiguous language because in some degree they operate as penalties. The subject is not to be taxed unless the language of the statute clearly imposes the obligation.” This quotation is from the standard book on the subject of Interpretation of Statutes by Maxwell, 9th Edition, page 291.
(10) Scanning the provisions of the Act and the Rules made thereunder with a little care, I find that there is no provision for imposition of a fee on produce purchased outside Raichur and brought to the petitioner’s godown for consumption. The respondents, in their counter-affidavit, contend as follows:
“The market-yard of Raichur has been declared to be the whole Municipal limits of Raichur town and therefore the godown of the petitioners is situated within the market yard and hence the Market. Committee has a right either to levy fees on the agricultural produce imported into the market yard as per R. 40 and S. 5 (v).”
I am afraid this averment has no basis whatsoever in fact or in law. No such notification has been produced in support of this contention that the Municipal limits of Raichur town is declared as a “Municipal Yard”. Moreover, market yard has a narrow connotation as is evident from R. 2 (d) and (e) and the explanation to the said Rule, while on the other hand, ‘market’ has a wider connotation as is evident from R. 2(C) of the Rules.
Again, as per the said counter-affidavit, reliance is placed on R. 40 for the levy of fees. That could be only with regard to transactions which come into the market yard either for storage in godowns or for immediate sale. In the present case the produce has not come into the market yard at all for either of the purposes so mentioned.
It would, therefore, be stretching the application of R. 40(1) beyond its legitimate limit to the detriment of the subject which, I consider, is improper.
(11) A distinction between ‘tax’ and ‘fee’ is clearly brought out in a decision of the Supreme Court , Commr. of Hindu Religious Endowments, Madras v. Lakshmindra Thirtha Swamiar, where it is held as follows:
“A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. This definition brings out the essential characteristic of a tax as distinguished from other forms of imposition which, in a general sense, are included within it.
The essence of taxation is compulsion, that is to say, it is imposed under statutory power without the tax-payer’s consent and the payment is enforced by law. The second characteristic of a tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on payer of the tax.
This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not confer any special benefit upon my particular individual, there is no element of ‘quit pro quo’ between the tax payer and the public authority.
Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the tax-payer depends generally upon his capacity to pay.”
“A fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay.
These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, is not possible to formulate a definition that would be applicable to all cases.
The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden while a fee is a payment for a special benefit or privilege. Fees confer a capacity although the special advantage, as for example in the case of registration fees for documents or marriage licenses, is secondary to the primary motive of regulation in the public interest.
Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. It is the special benefit accruing to the individual which is the reason for payment in the case of fees; in the case of a tax, the particular advantage if it exists at all is an incidental result of State action.
As a fee is a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should on the face of the legislative provision, be correlated to the expenses incurred by Government in rendering the services.” Thus, if there is no ‘quid pro quo’, fees cannot be levied. In the present case, as there is no ‘quid pro quo’ for the produce that has been purchases outside Raichur Municipal town and brought for the purpose of consumption, there is every justification for the petitioner to contend that the fee levied thereon is unjustifiable and without jurisdiction.
(12) The decision , Mohammad Yasin v. Town Area Committee, Jalalabad, lays down the principle
“that it s license fee cannot be justified on the basis of any valid law, no question of its reasonableness can arise for, an illegal impost must at all times be an unreasonable restriction and will necessarily infringe the right of the citizen to carry on his occupation, trade or business under Art. 19(1)(g) and such infringement can property be made the subject-matter of a challenge under Art. 32 of the Constitution.”
Even under Art. 226 it can be challenged. To me, it appears that the levy of fee on such produce is an interference with the free trade and business which an individual citizen of a State is allowed to carry on under the Constitution and hence contravenes the provisions of Art. 19(1)(g). Even on this ground the petitioner is entitled to succeed.
(13) The learned Government Pleader for the respondents, viz., the Market Committee as well as the Government of Mysore strongly relies on an unreported case of a Division Bench of the erst-while Hyderabad High Court in Writ Petition No. 28/5 of 1952: The Warrangal Industries Ltd. V. The market Committee, Warrangal–Similar to this case, the was an application for the issue of a writ of certiorari by the company which challenged the levy of a fee by the Market Committee.
But it is not clear from the facts recited in the said judgment whether the produce viz., the seeds, were purchased in Warrangal town or in the market yard or were brought from outside places for purposes of consumption. It was contended on behalf of the petitioner before their Lordships of the Hyderabad High Court, as is evident from the judgment, that no fee could be levied because the purchase was not for the purpose of storage but for crushing the oil, that the produce was brought into the market yard.
Now the market is a term with wider connotation than the market yard. But their Lordships confine their attention to R. 40 and state that the produce or cotton which comes into the market yard either for storage in godown or for immediate sale is liable to the levy of fee. There can be no dispute so far as that finding is concerned. In the present case, however, the produce was not sold or stored in much less brought into the market yard.
The uncontroverted contention of the petitioners is that these seeds were purchased from outside in other markets like Siadapur, Kopbal and Gangavati etc., and brought to their own godowns not for the purpose of sale but for the purpose of their own consumption. Hence the facts of the unreported case referred to above are distinguishable from the instant case.
(14) In the result, the writ petition is to be allowed and it is so ordered. The demand for the collection of market fee in respect of goods purchased beyond Raichur market and brought into the petitioners’ own godowns for their own consumption and not for sale is held to be beyond the jurisdiction of the Market Committee, is improper and is liable to be quashed. It is so ordered.
(15) We make no order as regards costs.
(16) Petition allowed.
