ORDER
Y. Bhaskar Rao, J.
1. That batch of Writ Petitions is filed assailing the constitutional validity of Rule 3 read with Rule 5 of A.P. Factories Rules and the amendment of the Schedule under Rule 5 vide G.O. Ms. No. 154 dated 26-7-1994 increasing the licence fee payable under Rule 7(3) for obtaining licence and renewal of licence for the factories.
2. The petitioners herein are the licencees of the factories in this State. They obtained licence under the Factories Act (the Act), 1948 by paying requisite fee upto 1987. The maximum licence fee levied was Rs. 10,000/- basing on the installation of Horse Power (H.P.) and man power, In the year 1994 the Schedule to Rule 5 was amended and there was a change in the slab system. The new slab system starts with 7,500 H.P. installation with 10,000 workers. The maximum installation of H.P. is 3 lakhs and above and the maximum man power is over and above 20,000. The maximum fee fixed is Rs. 18 lakhs. In the new schedule there is an increase of licence fee from 2 1/2 to 3 times for medium and small scale factories and for the hazardous and heavy industries, the licencee fee is enhanced as mentioned in the schedule. This is challenged in all these Writ Petitions.
3. Since the provisions of the Act and the Rules are challenged, we feel it is not an out of place to look into the scope and objects of the Act.
4. The Factories Act LXIII of 1948 (the Act) is a pre-constitutional enactment covering all the aspects regarding the factories. The Indian Factories Act XV of 1881 did not contain suitable provisions for inspection and enforcement. With the growth of factory organisations there was a demand for a stricter piece of legislation. On the recommendations of the Factories Commission appointed by the Government of India in 1890, the Factories Act XI of 1891 was passed. The Factories Act was amended in the year 1911, 1923, 1926 and 1931. The Indian Factories Act was amended by the Factories Amendment Acts 1935, 1937, 1940, 1941,1944, 1945, 1946 and 1947. Thereafter Act LXIII of 1948 was enacted, which is in force even after commencement of the Constitution of India and is valid by virtue of Article 372 of the Constitution of India.
5. The objects of the Act and the reasons for enacting the present Act are as follows:
The law relating to the regulation of labour employed in the factories in India was embodied in the Factories Act, 1934. That Act revealed a number of defects and weaknesses which hamper the effective administration. Though that Act was amended in a piecemeal fashion, yet the general frame-work of the Act has remained unchanged in respect of safety, and welfare of the labour. The provisions relating to safety, health and welfare of the workers are generally found inadequate and unsatisfactory and even such protection does not extend to the large means of workers employed in work places not covered by the Act. In view of the large and growing industrial activities in the country, a radical overhauling of the Factories Law was essentially called for. The present Factories Act is meant to provide protection to the workers from being exploited by the greedy business establishment. The Act is enacted primarily with the object of protecting workers employed in factories against industrial and occupational hazards. For that purpose it seeks to impose upon owners or occupiers certain obligations to protect the workers unwary as well as negligent and to secure for them employment in conditions conducive to their health and safety. To achieve these objects more effectively, the Factories Act was amended and the present Act has come into force.
6. The A.P. Factories Rules, 1950 (the Rules) were framed for the purpose of implementation of the Act. Rule 3-A of the Rules provides for approval of plans of the factory or a building in the factory. Rule 4 deals with the registration and grant of licence of the factory. Rule 5 relates to the renewal of licence of the factory. Rule 11 prescribes the payment of fees.
7. In the year 1986 earlier Schedule was amended and the licence fee was increased providing a slab system. The fixation of licence fees is based on the installation of H.P. and man power employed in the factory. Where the maximum H.P. installed is 5000 or above and where the men employed are 5000 or above, the fee chargeable was Rs. 10,000/-. That was the maximum under the Schedule. The Government wanted to increase the licence fee. Therefore a Draft Notification was issued vide G.O.Ms.No. 32 dated 21-2-1994, which was published in the Gazette on 1-3-1994 stipulating 45 days from the date of Notification to make representations and that 45 days period expired by 15-4-1994. During the said period of 45 days, no objections were received from anybody. After the expiry of 45 days period, seven representations were received. The Government after considering the said representations, issued the impugned G.O.Ms.No. 154 dated 26-7-1994 increasing the licence fee in the slab system which was in existence and adding the higher categories of industries which are consuming more H.P. and employing man-power over and above 5000 and starting with 7500 H.P. installation and employing 20,000 30 and above man-power. Under the Amended Schedule the maximum licence fee to be paid is, Rs. 18 lakhs. The hike in the licence fee is challenged by the writ petitioners.
8. It is contended by the learned Counsel for the petitioners that there is no delegation of power by the Parliament to the States under Section 6 or 6 (d) of the Act; that it is only conferment of statutory power by the State Government to deal with the factories regarding issue of licence (fee) and fixation of fee; that the enhancement is exorbitant and exapprobate; that there is no nexus to the fee levied and the services rendered to the factories; that the amount collected from the factories is much more than the amount spent for the factories, therefore the amount so collected ceased to be the fee and it amounts to tax; that the State Government has no power to levy tax and hence the impugned G.O. is liable to be quashed ; that there is an increase of 180 times in the fee levied i.e. increase of fee from Rs. 10,000/- to Rs. 18 lakhs which is arbitrary and illegal; that the amended Schedule applies to the factories established after the amendment came into force only and will not apply for the renewal of licence of old factories; that the Act or Rules do not provide any guidelines for the fixation of fee; that the fixation of fee by each State may result in discrimination; that the Classification under Rule 3-A and Schedule to Rule 5 is discriminatory, unreasonable and so violative of Article 14 of the Constitution of India; that the H.P. installed in the factory and the number of workmen cannot be taken as basis for fixation of licence fee as there is no nexus between the H.P. provided and the work-men employed in the factory and the licence fee fixed ; therefore the same is arbitrary and violative of Article 14 of the Constitution of India and that there is a good difference between the ‘tax’ and the ‘fee’.
9. On the other hand the learned Govt. Pleader contended that the Act empowers the Government to amend the Schedule; that the power conferred under Section 6 and 6(d) of the Act read with Rules 112 and 115 is not arbitrary; or discriminatory or violative of Article 14 of the Constitution of India; nor it infringes Article 19(1) (g) of the Constitution of India acting as restriction on the trade or occupation; that the doctrine of Quid Pro Quo is in toto followed; that there is no delegation of power by the Parliament to the State Government, that the licence fee imposed is not a ‘tax’ as there is a service rendered to all the petitioners-factories and that there are no merits in the writ petitions and they are liable to be dismissed with costs.
10. The learned Counsel appearing for the writ petitioners in all made the following submissions:
1. The Act does not impose licence fee as there is no charging section.
2. The Parliament is incompetent to legislate the conferring right to impose fee or impose an obligation to obtain a licence. Such power is essential and the legislative function cannot be delegated.
3. Assuming that the power to impose fee is an executive power, the Parliament under Central enactment has no power to delegate such power to the State Governments, as the subject ‘factories in the concurrent list and the State list’ is equally competent to make law.
4. The fee imposed amounts to fee on production of goods ; therefore it is a ‘tax’ and State has no power to levy tax.
5. The Parliament has no power to impose the licence fee as production of goods in the State, as it falls in the Entry 27 of List-II of Seventh Schedule.
6. The Rules or the Act do not provide any criteria or guidelines for fixation of the licence fees.
7. As Section 6 of the Factories Act provides that the State Government may make rules, it is not mandatory on every State to frame rules. In the State there may be rules for levying the licence fee and in another State there may not be any rules for levying the licence fee. So it will result in arbitrariness and discrimination.
8. Section 6 is arbitrary and discriminatory and is liable to be quashed.
9. The fee levied should correlate to service rendered and there should be Quid Pro Quo and should not be exorbitant and a total disproportion.
10. The fee should not be used to raise the General Budget of the State.
11. Collection of exorbitant fee to meet the State Budget is a colourable exercise of power. So there are legal mala fides in increasing the licence fee.
12. The State Government has no power to impose or increase the licence fee for any alleged services rendered or proposed to be rendered under other legislations other than the Factories Act, as the power is delegated under the Factories Act only.
13. The fee cannot be levied under Factories Act for the purpose of services rendered under other Acts.
14. Future proposed strengthening of the department and additional activities which are to be approved by the State Government cannot be a ground for revising the licence fee prior to increasing such expenditure. The proposal of strengthening the department is with reference to other enactments also.
15. No notional data is given for increasing the service with reference to the increase in Fee. In fact there is no increase in the service; on the contrary there is a decrease in the services rendered as the Factories have been increased, whereas the Factories Inspectors are only 39.
16. The classification shown in the Schedule to Rule 5 itself shows that the classification of Schedule to Rule 5 is discriminatory and unreasonable. So it is violative of Article 14 of the Constitution of India.
17. The expenditure incurred for the Hazardous Factories cannot be imposed on non-hazardous factories and the same is not sustainable.
18. The Schedule attached to Rule 5 and Section 6 (d) are unconstitutional and violative of the principles of natural justice.
19. There is no right to amend the Schedule to Rule 5 as the same is not provided in Section 6 or Section 6(d). Therefore, the amended schedule is ultra vires of Section 6 (d) of the Act.
20. The State Government has no power to approve or disapprove in respect of delegated legislation delegated by the Parliament.
21. Amended Schedule applies only to new factories established after the amendment came into force and will not apply for renewal of licence fee of the old factories.
Considering the contentions raised by both parties and also considering the submissions made by the learned Counsel for the petitioners, the points that arise for consideration in this batch of Writ Petitions are as follows:
1. Whether the fee to be charged under the impugned G.O, amounts to tax or fee?
2. Whether the fee levied has got any Quid Pro Quo?
3. Whether it is expropriatory or exorbitant and if so whether it amounts to tax, but not fee?
4. Whether the impugned G.O. is arbitrary and discriminatory as no guidelines are provided in the Act?
5. Whether there is a delegation of power by the Parliament to the State Government and the same is excessive, unguided and in violation of the provisions of the Constitution of India?
11. The first and fore-most important point to be considered in this batch of Writ Petitions is: Whether the fee levied amounts to tax?
12. Article 265 of the Constitution of India obligates that no tax shall be levied or collected except by authority of law. Entries 82, 86, 89 to 92-B of List-I of Seventh Schedule appended to the Constitution of India deals with different types of taxes to be levied by the Parliament. Entry 96 of the said list deals with fees in respect of any of the matters in that list but not including fees taken in any Court. Entry-97 deals with any other matter not enumerated in List-II or List-Ill including any tax not mentioned in either of those lists. Entries 46,49,50,52 to 58,60 and 62 of List-II of the Seventh Schedule provide for levying of different types of taxes. Entry 47 in List-Ill of Seventh Schedule deals with fees in respect of any of the matters in that list but not including fees taken in any Court. Admittedly, the Act falls under Entry 36 in List III of the Seventh Schedule appended to the Constitution of India. Thus, the above three lists in the Seventh Schedule appended to the Constitution of India make it clear that Entries in Lists I and II deal with levy of taxes and fees and Entries in List-Ill deal with only fees. Section 6(d) of the Act empowers the State Government to make Rules regulating the Registration and licensing of factories or any class or description of factories and prescribing the fees payable for such registration and licensing and for renewal of licences. By virtue of the said power, the Rules are framed. Rules 3-A, 5 and 7 of the Rules deal with approval of plans, grant of licences and renewal of licence respectively. The schedule attached to Rule 5 specifies the payment of fees for grant of licence. As per Rule 7(3) of the Rules the fees chargeable for renewal of licence is the same as charged for grant of licence. By virtue of the powers conferred Under Section 6 (d) of the Act, the Government issued the impugned G.O. increasing the licence fee, which is challenged in these writ petitions.
13. Now let us refer to the case-law on the subject to notice the distinction between the ‘tax’ and ‘fee’.
14. The Supreme Court of India in the decision reported in Commr., H.R.E. v. L.T. Swamiar, rendered by a Constitutional Bench consisting of seven Judges, defined what is ‘tax’ and what is ‘fee’ and made a clear distinction in between them. The Supreme Court held, while defining the ‘tax’ as under:
“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 characteristics 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 tax is that it is an imposition made for public purpose without reference to any special benefit to the conferred on the 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 to confer any special benefit upon any particular individual, there is no element of ‘quid 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-”
The Supreme Court also held, while defining ‘fee’, as under:
” 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, it is not possible to formulate a definition that would be applicable to all cases.”
15. The Supreme Court made the following distinction between ‘tax’ and ‘fee’ in that case.
“A careful examination reveals that the element of compulsion or coerciveness is present in all kinds of imposition, though in different degrees and it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees.
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 licences, 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 tax, the particular advantage if it exists at all is an incidental result of State action.
As 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. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax. There is really no generic difference between the tax and fees and the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes.”
16. In Sri Jagannath v. State of Orissa, another Constitutional Bench of Supreme Court consisting of five Judges who are also Members of the Commissioner’s case (1 supra), brought out the distinction between the ‘tax’ and ‘fee’. Justice Mukherjea, speaking for the Bench held as under:
“There is no generic difference between a tax & a fee and both are different forms in which the taxing power of a State manifests itself. Our Constitution, however, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein. A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax. The taxes collected are all merged in the general revenue of the State to be applied for general public purposes. Thus, tax is a common burden and the only return which the tax-payer gets is the participation in the common benefits of the State. Fees, on the other hand, 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 payments are demanded. Thus, in fees there is always an element of ‘quid pro quo’ which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose, but are merged in the general revenue of the State to be spent for general public purposes.”
The Supreme Court followed the above distinction between ‘tax’ and ‘fee’ in subsequent cases viz., Hingir-Rampur Coal Co. v. State of Orissa; Copn. of Calcutta v. Liberty Cinema; Nagar Mahapalika, Varanasi v. Durga Das, ; D.C. & G. Mills Co. v. Chief Commer, Delhi, : Kewal Krishan v. State of Punjab, etc.
17. From the above decisions of the Supreme Court, we can safely say that the distinction between a ‘tax’ and a ‘fee’ lies primarily in the fact that a ‘tax’ is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return; whereas a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. Thus in ‘fees’ there is always an element of ‘quid pro quo’ which is absent in a ‘tax’.
18. Keeping the above principle in mind, let us scrutinise the facts of the cases.
19. The contention advanced on behalf of the petitioners is that the fees requisitioned for grant of licence of renewal is exorbitant i.e. the maximum fee leviable is increased by 180 times i.e. from Rs. 10,000/- to Rs. 18 lakhs; similarly the hike in respect of other factories which are having different categories of installation of H.P. and man-power, is also excessive. On the other hand it is contended by the learned Government Pleader that the increase in the licence-fee is not expropriatory and not exorbitant; that the old slab system is modified and new slab system is incorporated covering all types of factories including those which are established after 1986 with installation of higher H.P. ranging from 7500 to 3 lakhs and above H.P. and therefore there is nothing arbitrary and illegal. He further contended that there are about 28170 factories in the State; among them the factories which are manufacturing major products are only 110 in our State, having more than 5000 H,P or employing more than 5000 workers or both; among them 67 factories are paying more than Rs. one lakh as licence fee; and 43 factories are paying more than Rs. 23,000/- but less than Rs. one lakh as licence fee; the hike in respect of the medium factories is about 2.5 or 3 times and regarding others it is 4.8 times ; the overall increase is 4.8 times only; thus the increase is not exorbitant or expropriatory as stated by the petitioners.
20. To decide this issue, let us consider the example given in the counter- affidavit. The Visakhapatnam Steel Plant, which has come up after 1986 is required to pay Rs. 18 lakhs as per the amended Schedule and their annual wage-bill is about Rs. 90 crores ; that they would be required to pay about 0.002% of their wage bill only, towards annual licence fee which should not be a burden at all and which cannot be said as arbitrary or expropriatory or exorbitant.
21. It is to be noticed that there is a requirement of additional expenditure for appointment of additional posts of Inspectors of Factories and Deputy Chief Inspectors of Factories etc. The total sum of such expenditure will come to Rs. 5,45,000/-. The Non-Plan expenditure for the year 1996-97 will come to Rs. 2,37,49,000/-. These facts clearly manifest that there is a need for the Government to increase the expenditure to implement the provisions of the Act in letter and spirit. If there is no increase in the licence fee, it is not possible for the Government to implement the provisions of the Act, resulting in failure of the duty conferred on it. Thus the licence fee increased under the amended Schedule cannot be said as expropriatory or exorbitant. Further the services rendered by the Government is to safe-guard the welfare of the workmen and the factories also. The major amount received towards licence fee is spent for the services rendered as stated supra. Therefore it cannot be said that there is no quid pro quo. Once the major licence fee received is spent for the services rendered by the factories, it cannot be said that the same amounts to tax, particularly when there is a nexus between the licence fee and the services rendered.
22. It is next contended by the learned Counsel for the petitioners that the services rendered to the individuals must correlate with the fee collected. For example if the licence fee collected is Rs. 3 lakhs, the services rendered must correlate to that amount; otherwise it is not a fee at all. On the other hand the learned Govt. Pleader contended that the services rendered must be equal to the value of the amount collected from the individual, is an old principle, which has to be given a go-by.
23 To consider the above contentions, let us refer the case law on this subject.
24. In Commr. H.R.C.’s case (1 supra), a Constitutional Bench of Supreme Court consisting of seven Judges, while considering the contribution made by the Mahants to the Endowments Department, held that the services rendered must be correlative to the contribution of the individual. Considering the facts of that case, The Supreme Court held that there must be correlation between the fee collected and the services rendered by the department. To the same effect is the judgment of another Constitutional Bench of Supreme Court consisting of five Judges in Sri jagannath’s case (2 supra).
25. In Hingir-Rampur Coat case (3 supra) the Supreme Court held as under:
” It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business,, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefitting the specified class or area the State as a whole may ultimately and indirectly be benefitted would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy.”
26. In D.C. & G. Mills case (6 supra) the Supreme Court held as under:
” The levy of the licence fee for renewal of licence under the Delhi Factories Rules is not wholly unrelated to the expenditure incurred out of the total realisation. When it was never made out that the collections on account of the licence fee were merged in the general public revenue and were not appropriated in the manner laid down for the appropriate of expenses for the department concerned it could not be said that amount so paid was a tax and not fee.”
Delhi Municipality v. Mohd. Yasin, , Chinnappa Reddy, J., speaking for the Bench has considered the provisions of Delhi Municipal Corporation Act 66 of 1957 under which the fee for slaughtering animals in slaughter houses was increased. Considering the question whether levy of fee requires individual service or class service, Chinnappa Reddy, J., held as follows :
“that the enhancement could not be struck down as invalid, merely because the sum actually to be realised by way of enhanced fee, would exceed the direct expenditure to be incurred for that purpose, the expenditure need not be incurred directly nor even primarily in connection with the special benefit or advantage conferred and there need not be any fastidious balancing of the cost of the services rendered with the fees collected.”
27. In P.M. Ashwathanarayana Setty v. State of Karnataka, , the Supreme Court held as under :
“If the essential character of the impost is that some special service is intended or envisaged as a quid pro quo to the class of citizens which is intended to be benefitted by the service and there is a broad and general correlation between the amount so raised and the expenses involved in providing the services, the impost would partake the character of a ‘fee’ notwithstanding the circumstances that the identity of the amount so raised is not always kept distinguished but is merged in the general revenues of the State and notwithstanding the fact that such special services, for which the amount is raised, are, as they very often do, incidentally or indirectly benefit the general public also. The test is the primary object of the levy and the essential purpose it is intended to achieve. The correlationship between the amount raised through the ‘fee’ and the expenses involved in providing the services need not be examined with a view to ascertaining any accurate, arithmetical equivalence or precision in the correlation, but it would be sufficient that there is a broad and general correlation. (Stress supplied)
…….. ……… ……….
The concept of fee is not satisfied merely by showing that the class or persons from whom the fee is collected also derives some benefit from those activities of Government. The benefit the class of payers of fee obtain in such a case is clearly not a benefit intended as special service to it but derived by it as part of the general public. Nor does the concept of a fee and this is important require for its substance the requirement that every member of the class on whom the fee is imposed, must receive a corresponding benefit or degree of benefit commensurate with or proportionate to the payment that he individually makes. It would be sufficient if the benefit of the special services is available to and received by the class as such. It is not necessary that every individual composing the class should be shown to have derived any direct benefit. A fee has also the element of a compulsory exaction which it shares in common with the concept of a tax as the class of persons intended to be benefited by the special services has no violation to decline the benefit of the services. A fee is, therefore, a charge for the special service rendered to a class of citizens by Government or Governmental agencies and is generally based on the expenses incurred in rendering the services.”
28. In City Corpn. of Calicut v. T. Sadasivan, the Supreme Court held as follows:
” It is well-settled, by numerous recent decisions of the Supreme 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.”
29. The above decisions have clearly laid down that where a fee is collected, if the service rendered to a class or group of persons is there which has got correlative relationship with the fee collected, it cannot be said that there is no service rendered to comply with the requirements of collecting the fee. The facts and circumstances mentioned in the counter-affidavit clinchingly establish that the Government is rendering services to the factories as provided under the Act and also other Acts where the obligation is imposed on the Inspector of Factories. Therefore the contention raised on behalf of the petitioners that there is no quid pro quo in the fees collected and the services rendered by the department is not tenable.
30. The learned Counsel for the petitioners also contended that the impugned G.O. is arbitrary and discriminatory as there are no guidelines provided under Section 6 of the Act.
31. Let us see the force in the above contention raised by the learned Counsel for the petitioners. Section 6 (d) of the Act empowers the Government to make Rules and Regulations to prescribe the fees payable for grant of licence and for renewal of the same. The Parliament, while conferring the powers on the State Government, provided the powers to the State Governments to frame Rules. India is a vast country, having a number of States with different geographical, economic and social conditions. The State Government has to fix the licence fee depending upon the circumstances mentioned above and also the conditions of industrial growth of that particular State. Therefore each State has to fix its own Rules to levy licence fee, taking into consideration all the facts governing the field. The provisions of the Act provide for welfare of the workmen in the factories and for smooth running of the factories itself, they are taken as guidelines. It is a well-settled proposition of law that where the provisions of the Act itself act as guidelines, it cannot be said that there are no guidelines. Therefore we find ourselves unable to agree with the contention of the learned Counsel for the petitioners that Section 6 of the Act is without any guidelines and hence it is arbitrary, and discriminatory.
32. Another contention raised on behalf of the petitioners is that the fixing of different licence fee in different States, will result in discrimination and it is in violation of Article 14 of the Constitution of India. It is to be noticed that each State has got its own geographical, economical and social conditions and industrial infrastructures. Therefore the State has to fix the licence fee, taking into consideration all the facts and circumstances existing in that State. If different States fix different licence fees basing on different situations prevailing in those States, it cannot be said that it is discriminatory. On the other hand if each State fixes the same licence fee in different circumstances prevailing in each State, then it clearly amounts to discrimination. Therefore we are unable to accede to this contention raised on behalf of the writ petitioners.
33. Next contention raised on behalf of the writ petitioners is that the Act cannot impose licence fee as there is no charging section in the Act. The Act, it is to be noted, is a comprehensive Act, dealing with different processes of the factories. It is- also manifest that the Act governs the entire India, except Jammu and Kashmir. Therefore taking all the situations into consideration, the Parliament thought it fit to bestow the statutory power on the State Governments. When Section 6 of the Act empowers the State Government to make Rules for regulating the licence fee, it cannot be said that merely because of absence of a specific section for charging the licence fee, there is no power to the State Government to fix the licence fee. It should be remembered that the Rules framed under the Act are deemed to be part and parcel of that Act and have the same force and effect as that of the Sections, unless they affect or control the Sections.
34. Another contention raised on behalf of the petitioners is that the Parliament itself is incompetent to legislate conferring a right to levy licence fee, as the Parliament has no power to delegate such a power to State Government. It should be remembered that the Act is a pre-constitutional one, continued by virtue of Article 374 of the Constitution of India. Some amendments were brought by the Parliament, particularly incorporating Chapter IV-A. There is no dispute the Parliament has got absolute power to levy licence fee. In a Federal Government it is common that Federal Government enacts a law conferring power on the Provincial Government where the area of operation of a particular Industry exists. We have to notice that as per Article 254 of the Constitution of India, when the Parliament enacts a law for the subjects enumerated in the concurrent Lists, the State Government also can enact the law on the same subjects and the same will be valid, subject to the approval of the President. In the present cases the Act has been deemed to be enacted by a Federal Government and the Provincial Government has not made any law. Therefore there is no over-lapping or repugnancy between the law made by the Federal and Provincial Governments. There is no bar in the Constitution of India for the Parliament to confer statutory powers on the State Government. More over the learned Counsel appearing for the writ petitioners have not brought any such provision in the Constitution of India imposing such a bar. On the other hand the subject is enumerated in the List-III of VII Schedule of the Constitution of India, where the power is conferred on the Central and State Governments.
35. It is also contended on behalf of the writ petitioners that the fee imposed amounts to tax on goods and the Parliament has no power to impose such a fee on the products of the goods which fall in the Entry 27 of List-II of Seventh Schedule appended to the Constitution of India. We are unable to accept such a contention, as we held supra that the fee hiked in the GO. is only a fee and not a tax. When once it is a fee within the purview of the provisions of the Act and Rules, it cannot be said that the same amounts to imposition of tax or fee on products of goods when it is imposed for issuing of licence or renewal of licence only.
36. The other contention raised on behalf of the Writ Petitioners is that the classification of the factories for levying the fee, basing on the installation of H.P. or workmen-power, is arbitrary, discriminatory and in violation of Article 14 of the Constitution of India. It should be remembered that the Schedule earlier to amendment, which was incorporated by the Parliament in 1986, also takes the basis of installation of H.P. and the workmen employed in industries to levy the licence fee. Under the impugned G.O. also the installation of H.P. and manpower employed in the industries was taken as a basis for classification. In M.S.U. Mills Ltd., v. State of Rajasthan, , while dealing with a similar question Wanchoo, Chief Justice of Rajasthan High Court (as he then was) considered the validity of licence fee levied by the Rajasthan State Government and the question whether the fee levied under the Factories Act basing on the H.P, and man-power of the factory, is arbitrary and discriminatory as there was no nexus in between them. The learned Chief Justice held as under:
“Licence fees for factories levied under sliding scale, according to horse power and men employed, by the Rajasthan State, under Rajasthan Factory Rules made under Section 6 read with Section 112 of the Factories Act, whether the levy is a tax or a fee strictly so called, has an authority of law behind it and the condition regulated by Article 265 is satisfied.
There is a reasonable basis for classification of factories according to horse power, and the maximum number of persons employed during the year.”
The above decision was followed by the Punjab High Court in Delhi Cloth & General Mills Co. v. Chief Commr., (1967-68) 32 F.J.R. 99. Against this decision of Punjab High Court, an appeal was preferred to the Supreme court in D.C. & G Mill’s v. Chief Commissioner case (6 supra) and the Supreme Court dismissed the appeal upholding the decision of Punjab High Court. Thus, the principle laid down in the decision in M.S. U. Mill’s case (11 supra) was confirmed by the Supreme Court. Therefore, the principle laid down in the above decisions makes it clear :hat where a classification is rational, merely because such classification is based on some factors and not on all other factors, it cannot be said that such classification is irrational and discriminatory. Except contending that the classification is discriminatory and irrational, the learned Counsel for the petitioners did not place any material before us to substantiate his contention, Therefore, this contention falls to ground.
37. It is to be noted that where the Parliament enacts a law and confers on the State Governments the power to execute the same, it cannot be said :hat the power is delegated to the State Governments. Therefore, there is no delegation of power by the Parliament to the State Governments.
38. The power to impose any fee as per the guidelines provided in the Act as an executive power, conferred on the State Government. Therefore there is nothing wrong in delegating such power by the Parliament to the State Government. Even assuming there is delegation, the power to fix different rates of fees can be delegated and there is nothing wrong in such delegation as has been affirmed by the Supreme Court in Corporation of Calcutta’s Case (4 supra) wherein Sarkar, J. speaking from the Bench (Majority view) held as under ;
“No doubt a delegation of essential legislative power would be bad. But the fixation of the rates of taxes is not of the essence of legislative power of taxation. The fixation of rates of taxes may be legitimately left by a statute to a non-legislative authority, for there is no distinction in principle between delegation of power to fix rates of taxes to be charged on different classes of goods and power to fix rates can be delegated then equally the power to fix rates generally can be delegated”.
39. Therefore even if there is delegation of the power to levy the fees by the Parliament to the State Governments, there are sufficient guidelines for fixation of fee in the Act itself. The provisions of the Act which provide different measures for the welfare of the labourers are sufficient guidelines for fixation of the fee. Therefore such delegation is not bad nor constitutional (sic. unconstitutional).
40. For all aforesaid reasons, we hold that these Writ Petitions lack merits and deserve dismissal. We do so accordingly, without costs.