JUDGMENT
K.S. Rathore, J.
1. These are 19 similar writ petitions involving similar question of law. At the request of the respective parties the aforesaid writ petitions are being decided by this common order. Facts of the case of Nihchal Dass & Company and Ors. v. Union of India and Anr. (S.B. Civil Writ Petition No. 2465/2004) are taken as leading case.
2. The petitioners are all carrying the business of Catering at various stations of the Jaipur Division of North Western Railway. They are providing catering service to traveling passengers, Earlier also the respondents increased license fees and therefore, the Federation of Railway Porters, Vendors and Bearers filed S.B. Civil Writ Petition No. 4123/1991, which was decided on 11.12.1992. The operative portion of the order is reproduced as under.
“This writ petition is, therefore, allowed and it is directed that the respondents would charge the licence fee from the members of the petitioner federation of the basis of increase by 25% to 50% in the existing license fee in terms of the decision, which was taken in the meeting of the Chief Commercial Superintendent and Member Traffic of the Railway Board in the month of September, 1986, in terms of which the instructions contained in the Circular Annexure-2 and 3 dated 2nd January, 1987 and 5th January, 1987 were issued and, any notice of demand or circular which may have been issued by the railway authorities in contravention of the aforesaid two circulars shall not be acted upon and given effect to against the members of the petitioner federation as such demand has already been stayed by this Court on 24th July, 1991.”
3. Earlier the license fees, which was charged from the petitioners was at the fixed rate and at some point of time it was charged on the percentage of sale turn over bearing 3 to 4%. That system was given go bye and fixed license fee was levied.
4. The controversy arose when the respondents have issued a new Catering Policy-2000. The learned counsel for the petitioners referred para 15.4 of new Policy, which deals with the license fee and the same is reproduced as under:-
“15.4 License Fee
License fee will be 12% (or any other percentage commission on sales notified from time to time) of estimated annual sales turn over for both general and reserved categories. In the case of static units, there will be no separate charges towards rent for building/land, vendor’s fee and conservancy charges etc. except electricity and water charges based on actual consumption.”
5. As per Clause 15.4 of the new Policy of 2000 the license fees is charged on the basis of annual sales turn over and same is challenged by the petitioner in the aforesaid writ petitions on several counts.
6. The challenge the policy of 2000 regarding charging license fee on the basis of annual sales turn over on the ground that it is not a fee, it is a tax as they are charging the fee on the basis of turn over. In support of his submissions Mr. Bapna referred Entry 54 List II of VII Schedule and by referring the Entry 54 List II he submits that it is only the State Legislature, which is competent to levy the sales tax and not the Union of India and therefore, the levy of license fee, which is in pith and substance sales tax is beyond the competence of Union of India and as such para 15.4 of the Catering Policy 2000 is illegal beyond the legislature competence.
7. Mr. Bapna further submits that the respondents are only providing permission to carry on the Catering activity on the platform on the terms and conditions enumerated in the contract agreement. The fee, which has been charged on the basis of turn over is not a fee but a sales tax. Merely a nomenclature of fee does not give the right to the respondents to levy sales tax, which is beyond the competence of Union of India as per Entry 54 List II.
8. This policy is also challenged on the ground that the respondents are not allowing the petitioners to charge the rate of their like and the petitioners only charging the rate fixed by the respondents and the rate so fixed by the respondents are highly competitive and the margin of profit does not exceed 5 to 10%. Therefore, if the license fee is charged with 12% of the sales turn over then the petitioners would not be able to earn their livelihood because there would hardly be any margin.
9. Further this policy has been challenged by the petitioners on the ground that application of the catering policy 2000 is made retrospective as indicated in Annex.1 that the dues outstanding shown from 1999-2003 is made retrospectively effective from the year 1999 i.e. w.e.f. 1.7.1999. As also evident by the notice issued by the respondents dated 26.12.2003 to the petitioners levying license fee with retrospective effect from 1.7.99 to 31.12.2003 at the rate of 12% of the sales turn over and has raised huge demand in an illegal manner.
10. Mr. Bapna in support of his submissions placed reliance on the judgment reported in AIR 1959 SC 582 (Western India Theatres Ltd. v. Cantonment Board, Poona) wherein the Hon’ble Supreme Court while dealing with the power to levy tax on person, who provides entertainment opined that it is a tax imposed on every show, that is to say, on every instance of the exercise of the particular trade, calling or employment. If there is no show, there is no tax. A lawyer has to pay a tax or fee to take out a license irrespective of whether or not he actually practices. That tax is a tax for the privilege of having the right to exercise the profession if an when the person taking out the license chooses to do so. The impugned tax is a tax on the act of entertainment resulting in a; show. In our opinion, therefore, Section 73 is a law with respect to matters enumerated in entry 50 and not entry 46 and the Bombay legislature had ample power to enact this law.
11. Mr. Bapna also referred the case reported in AIR 1960 SC 424 (Chaturbhai M. Patel v. Union of India and Ors.) again with regard to the competence to levy the tax. In this case also the Hon’ble Supreme Court has observed “Besides, the levying of licence fees is itself a form of taxation”
12. Placing reliance on the judgment of State of Madhya Pradesh and Ors. v. Orient Paper Mills Ltd. reported in 1977 (2) SCC 77 wherein the Supreme Court while dealing with the lease granted by the Forest Department is contract for sale of timber, which is goods and the royalty paid on the lease being the sale price has also dealt with the ‘turnover’ used in relation to any period means the aggregate of the amount of sale prices received and receivable by a dealer in respect of any sale or supply or distribution of goods made during that period, whether or not the whole or any portion of such turnover is liable to tax but after deducting the amount, if any refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period.
13. He also referred the case of India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors. reported in 1990 (1) SCC 12 wherein the Hon’ble Supreme Court has held that the question involved in the appeals and the writ petition is about the constitutional validity of Section 115(1) of the Act, insofar as it sought to levy as local cess @ 45 naye paise on every rupee of the land revenue payable to the government, the meaning of land revenue being artificially expanded by the Explanation so as to include royalty payable under the mining lease. The Hon’ble Apex Court further observed that cess is not on land, but no royalty, which is included in the definition of ‘land revenue.’ Thus there is a clear distinction between tax directly on land and tax on income arising from land. Hence, It is manifest that it is not related to land as a unit which is the only method of valuation of land under Entry 49 of List II, but is relatable to minerals extracted. The Hon’ble Supreme Court was of the view that cess on royalty cannot be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user of land.
14. The learned counsel for the petitioners also placed reliance on the judgment reported in AIR 1993 SC 148 (Hotel Balaji and Ors. v. State of Andhra Pradesh and Ors.). Particularly he referred para 9 of the judgment. In para 9 of the judgment the Hon’ble Supreme Court is of the view that the tax levied one with reference to the sale or purchase of goods. The ambit of the power of levy a tax in respect of sale of goods is very vide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
15. He also referred para 6 of the judgment reported in 1990 WLN (UC) 217 = RLW 1990(2) Raj. 205 (Amarjeet Singh v. State of Rajasthan and Anr.) wherein the Division Bench of this High Court has held that whether it can be said on the basis of the formula that the competent authority is authorised to revise the dead rent from a back date. The revision of dead rent would operate prospectively and not retrospectively. This judgment is referred in support of this face that since the respondents have implemented the Policy of 2000 w.e.f. 1.7.1999, thus, they are applying this policy with retrospective effect not prospectively.
16. On the same point the further referred the judgment rendered by this Court in the case of Gordhan Das v. State of Rajasthan and Ors. reported in WLC (Raj.) 1997(1) 59 = RLW 1996 (3) Raj. 230 and the judgment of the Division Bench of this court in the case of Mool Chand v. State of Rajasthan and Anr. reported in 1996(2) WLC 60.
17. Per contra learned counsel for the respondents Mr. Pareek first of all referred the Catering Policy-2000, which is also annexed as Annex.C in the writ petition of Hari Kishan Ojha and Ors. v. Union of India and Ors. More particularly Mr. Pareek refereed arbitration Clause No. 12.3, which is reproduced as under:-
“In the even of any question, dispute or difference arising under these conditions of contract or in connection with this contract (except as to any matter, the decision of this is specially provided for by these or the special conditions) the same shall be referred to the Arbitration Tribunal or the person appointed to be the sole arbitrator, by the GM of the concerned zonal railways. The person to be appointed as arbitrator, however, will not be one of those who held an opportunity to deal with the matters to which the contract relates or who in the course of his duties has expressed views on all or any of the matter under disputes or difference. The award of the Arbitrator shall be final and binding on the parties to the contract.
In the event of the arbitrator dying, neglecting or refusing to actor resigning of being unable to act for any reasons, or his award being set aside by the court for any reasons, it shall be lawful for the authority appointing the arbitrator to appoint any other arbitrator in place or the outgoing arbitrator in the manner aforesaid.
The arbitration referred to above shall be governed by Arbitration and Conciliation Act 1996.”
18. He also placed original format of agreement. Clause No. 55 of the agreement is reproduced as under:-
“All questions, disputes and/or differences arising under or in connection with this Agreement or in any way touching or relating to or concerning the construction, meaning or effect of these presents (except as to matters the decision whereof is otherwise herein before expressly provided for) shall be referred to the sole arbitration of the Divisional Railway manager for the time being of the Railway Administration or, in case his designation is changed or his Office is abolished, to the sole arbitration of the Officer who for the time being is entrusted, whether or not is addition to other functions, with the functions of the Divisional Railway Manager Western Railway by whatever designation such officer may be called (hereinafter, referred to as the said officer), and if the Division Railway Manager for the time being of the Western Railway of the said officer is unable or unwilling to act, to the sole arbitration of some other person appointed by the Divisional Railway Manager or the said officer wiling to act as such arbitrator. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant that he had to deal with the matters to which this Agreement relates and that in the course of this duties as such Government servant he has expressed view on all or any of the matters in dispute or difference. The award of the arbitrator so appointed shall be final and binding on the parties hereto.”
19. By referring this clause he gave much emphasis on the issue that since this writ petition involves disputed questions of fact, in any case the petitioner is aggrieved by the revision of the clause, the petitioners may have raised the dispute before the Arbitrator and the Arbitrator is competent to decide the questions involve in the present petitions even with regard to the jurisdiction and the competence of the legislation.
20. He also referred Section 16 of the Arbitration and Conciliation Act, 1996 to show competence of arbitral tribunal to rule on its jurisdiction. Section 16 is reproduced as under:-
“(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections, with respect to the existence of validity to the arbitration agreement, and for that purpose-
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later that the submission of the statement of defense; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred to in Sub-section (2) or Sub-section (3), admits later plea if it considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in Sub-section (2) of Sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34.”
21. After reading over the Section 16 Mr. Pareek further submits that this writ petition is not maintainable as there is arbitration clause in the agreement as well as this clause is also introduced in new Catering Policy 2000 and the Arbitrator is only competent to resolve the present controversy and thus, this petition is not maintainable.
22. In support of his submissions he referred the judgment reported in AIR 2000 SC 1886 (P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (died) and Ors.) wherein the Hon’ble Supreme Court has observed that the Court can exercise its power to refer parties to arbitration are: (1) there is an arbitration agreement; (2) a party to the agreement brings an action in the Court against the other party; (3) subject matter of the action is same as the subject matter of the arbitration agreement; (4) the other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.
23. After referring the judgment he submits that in the instant case also it is not disputed that there is arbitration clause in the agreement and also incorporated in the New Catering Policy 2000 and it is fully covered by the provisions of the Arbitration and Conciliation Act 1996 as new catering policy 2000 has been introduced after the Arbitration and Conciliation Act 1996 is made effective, therefore, Section 16 of the Arbitration and Conciliation Act is also applicable to the instant case.
24. To strengthen the aforesaid submissions he also placed reliance on the case reported in 2002(10) SCC 71 (Niko Resources Ltd. v. Gujarat State Petroleum Corporation).
25. Learned counsel for the respondents has raised first issue with regard to the maintainability of this present writ petition as all the petitioners have alternative efficacious remedy by way of invoking arbitration clause and second question regarding maintainability of these writ petitions is raised by the respondents as the present mater is contractual matter and while exercising power under Article 226 of the Constitution normally the courts should not interfere in contractual matters.
26. He also referred Clause 1 of the Agreement wherein it was made clear that the charges are subject to revision by the Administration, as and when considered necessary. The Administration also reserves the right to charge the mode of payment either in one lump sum or in installments as decided by the Administration from time to time.
27. The petitioners agree to this clause and all the petitioners executed the agreement accepting this clause and in view of this clause the respondents are at liberty to charge and revise and also adopted different mode other than the prevalent mode. It is further given out that except the petitioners and few others all the fully satisfied with new Policy and abiding the agreement and are paying the license fee in accordance with the new Catering Policy 2000.
28. It is further submitted by learned counsel for the respondents that the licensee agrees to the payment of any increase in the rate fixed by the Administration from time to time during the continuance of the agreement and also agrees to pay the administration licence fee and rental at the rates revised by the Administration pursuant to this clause with effect from the day the revised rate has been brought in to force notwithstanding that the Licensee is informed of the revised licence fee and rental after the date from which such revised rates become effective under this clause. The licence fee and rental shall be paid the Licensee at the rate fixed or revised together with arrears of license fee and rental due under this clause immediately on demand. The decision of the Administration in regard to the rate fixed or revised shall be final and binding on the Licensee.
29. To strengthen his submissions he referred certain judgments, wherein it is held that normally in contractual matters the Court should not interfere. He referred the cases reported in RLW 2001(3) Raj. 1524 (Doshi Ion Exchange & Chemical Industries Ltd. v. Union of India and Ors.), RLW 2001 (3) 1533) (Hanuman Das Chhagan Lal v. Union of India and Ors.), 2001(10) SCC 513, JT 2001 (9) 582.
30. Mr. Pareek further submits that since it is a policy decision taken by the Union of India and normally the policy decision so taken by the respondents should not be interfered until unless the policy decision is arbitrary and issued in gross violation of law. As the petitioners have no raised this issue that policy decision of New Catering Policy 2000 is arbitrary but only raised the objections that the policy is issued without competence as it is not a fee but a tax and levying of tax is subject matter of State not Union of India. In support of his submissions he placed reliance on the judgments reported in 2002(2) SCC 333, 1996 (1) SCC 104 and 2003(5) SCC 437.
31. In reply to the submission and arguments advanced on behalf of the petitioners he also referred Entry 96 to show that the respondents are competent to levy the fee on the turn over basis and further demonstrated with relation to difference between the tax and the fee. The strengthen his submissions he placed reliance on the judgments reported in AIR 1980 SC 1008 and particularly he referred Para 21, AIR 1996 SC 676, Para 14 AIR 1978 SC 1181, 1993 Suppl. (4) SCC 461 and 2003(4) SCC 187.
32. Learned counsel for the respondents lastly addressed this Court on the aspect of the application of the new Catering Policy 2000 with retrospective effect. He submits that it is wrong to say that they are applying this policy with retrospective effect. It is only operative with effect from its inception i.e. from the year 2000. The notices, which are referred by the petitioners are only with relation to the outstanding dues pertains to 1999 and they undertake that they are not charging any license fee in view of the new Catering Policy 2000 with retrospective effect.
33. Learned counsel for the respondents further submits that this policy was under challenge before the Kerala High Court and the Division Bench of the Kerala High Court after considering all submissions upheld the new Catering Policy 2000.
34. He also referred the judgment passed in S.B. Civil Writ Petition No. 343/1997 on 24.4.2000 wherein also this Court has dealt with such question as well as dispute and has opined that the petitioner should approach the Arbitrator as per the Clause 60 of the Agreement within one month from today for redressal of their grievances then the respondents shall cooperate in the Arbitration proceedings and the learned Arbitrator shall try to decide the case as early as possible.
35. The Division Bench of this Court while dealing such controversy in D.B. Civil Special Appeal (Writ) No. 754/2003 vide its judgment dated 29.10.2003 has observed as under:-
“It is not in dispute that the parties are governed by the Arbitration Clause. In view of the Arbitration Clause, the parties are bound to refer their disputes to the Arbitrator.
Learned counsel for the respondents has presented before us the agreement prevailing between the parties. The agreement is directed to be filed. The parties are agreed that the matter be referred to the Arbitrator under Clause 55 of the Arbitration Agreement.
Accordingly, the matter in dispute is referred to Divisional Railway Manager, Western Railway, Jaipur division. The parties shall be at liberty to file their claims and counter claims before the Arbitrator.
The appeal stands disposed of in terms of the aforesaid order.”
36. Heard rival submissions of the respective parties, perused the relevant clauses of the Arbitration and Conciliation Act and the agreement as well as the new Catering Policy 2000. I also carefully considered the judgments referred by the respective parties.
37. First question, which is to be decided by this Court is with regard to whether new Catering Policy 2000, which is uniformly applied throughout India is with in the competence with the respondents or not to formulate such new Catering Policy. Learned counsel for the respondents referred the Division Bench decision dated 3.12.2001 passed by the Kerala High Court wherein the Kerala High Court has also considered this controversy and after discussing at length the Division Bench of the Kerala High Court has upheld the policy.
38. It is also given out that the judgment dated 3.12.2001 passed by the Division Bench of the Kerala High Court holds filed as it is not reversed by the Supreme Court. In such circumstances since new Catering Policy has been upheld by the Division Bench of the Kerala High Court, no scope left for this Court to examine this aspect afresh and the observations made by the Division Bench of the Kerala High Court I find no fault in the new Catering Policy 2000. Consequently, this policy is valid and I uphold the revised policy as reasonable and valid.
39. Now the question is with regard to the submissions made on behalf of the petitioners whether the respondents are levying license fee or as per the new Catering Policy 2000 they are charging license fee on the basis of turn over is termed as tax or not. Upon carefully perusal of the judgments referred by the petitioners of course the Hon’ble Supreme Court has observed that is it is very thin distinction whether it is tax or fee, but as per the judgment referred by the respondents it is held by the Hon’ble Supreme Court that license fee is only be charged in care respondents provide some facilities. It is not disputed that all the petitioners are provided the facility to install their stalls and they are provided space at platform to sell their goods, therefore, fee, which has been levied on the turn over is not a tax but a fee against the facilities provided by the respondents.
40. I also carefully perused the new Catering Policy 2000, which has been formulated after due deliberation and most of the vendors, as submitted by learned counsel for the respondents, through in India are paying their license fee in accordance with the new Catering Policy 2000 and only few vendors have challenged this policy. In view of this fact I am not impressed with the submissions made on behalf of the petitioners that it is a tax not a fee and as per the Entry 56 it is the domain of the State and not of the Union of India.
41. Now the only controversy remains with regard to the retrospective application of new Catering Policy 2000. As the respondents agree that they are not charging the fee in view of the new Catering Policy 2000 retrospectively, considering their submissions nothing remains and so far as the application of the Policy 2000 is concerned, admittedly it should be prospectively not retrospectively.
42. In view of the observations made herein above all the writ petitions fails and are herewith dismissed with no order as to costs. Consequently, the interim orders granted by the this Court also stand vacated.