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1958 DIGILAW 43 (KER)

K. P. Esthapanose And Sons v. Commissioner Alwaye Municipality

1958-02-27

M.S.MENON, N.VARADARAJA IYENGAR

body1958
JUDGMENT N. Varadaraja Iyengar, J. 1. This is a petition under Article 226 of the Constitution filed by Messrs. K. P. Esthapanose & Sons, against the Alwaye Municipality, questioning certain enhancement of licence fees. 2. The petitioners are a commercial firm dealing in hill produce within the limits of the respondent Municipality. They are accordingly required, on payment of the fees prescribed, to take out licences for the use of their place of business, in respect of the various goods in which they deal. These fees were till recently, governed by a schedule appended to the Travancore Government Notification dated 25-4-1945, which approved and confirmed the bye laws framed by the Municipal Council under S.362 of the District Municipalities Act, 1116, Act XXII of 1116, and in pursuance to powers reserved under S.261 and 342 of the Act. In a meeting held on 27-12-1956, a draft of the proposed new schedule to the existing bye laws was passed by the Council and the new rates so adopted were approved by Government and published in the State Gazette of 26-3-1957 so as to come into effect from 1-4-1957. This petition has been filed thereafter on 16-5-1957 for issue of a writ of certiorari or other writ, to quash the amended rates which concern the petitioner's business. The main grounds of complaint as set out in the affidavit accompanying the petition and urged before us, are that under the amendment, the rates of license fees have been uninformly increased without reference to the special services rendered and with the avowed object of increasing the Municipal revenue so as to disregard the distinction between license fees and tax and compel the petitioners 'to pay hundreds of rupees' and further, that in adopting the new scale of licence fees the respondent Council have fixed the fees 'on an indiscriminative basis' and hence violated Article 14 of the Constitution. The respondent Council has filed counter affidavit opposing the petition and asserting generally, that there has not been any illegality or violation of the Constitution in the proposed levy as alleged. The respondent Council has filed counter affidavit opposing the petition and asserting generally, that there has not been any illegality or violation of the Constitution in the proposed levy as alleged. They specifically denied that any levy of tax was intended to be imposed under and by virtue of the revision and added that "at the same time the loss sustained by the Municipality by exempting small traders from license fees had to be made up and this could only be done by raising license fees in the case of bigger traders. 3. The following tabular statement gives in a glance the old and the new rates in question. Notification of 1945 Notification of 1957 Pepper- Storing in any manner for wholesale trade. No license required (i) Quantities up to 1cwt. will not be considered as wholsale. (ii) Above 1cwt. And up to 20 cwts. Rs. 5 (iii) Above 20 cwts. And up to 5 tons Rs 25 Above 5 tons Cashewnuts storing packing, preparing or manufacturing by any process whatever Rs. 24 (i) Up to 1 candy at a time Rs. 5 (ii) Above 1candy up to 5 candies Rs. 10 (iii) Above 5 candies up to 20 candies Rs. 25 (iv) Above 20 candies up to 50 candies Rs. 50 (v) Above 50 candies up to 100 candies Rs. 100 (vi) Above 100 candies Rs. 250 Lemon grass oil storing packing, pressing, cleaning, preparing or manufacturing by any process whatever Re.1 for every 24 gallos or part therof (i) Up to 24 gallons at a time (ii) Above 24 gallons and up to 100 gallons Rs. 25 (iii) Above 100 gallons and up to 400 gallons Rs. 100 (iv) Above 400 gallons Rs. 200 Nuxvomica, marotty seeds and dry ginger, in which also petitioners carry on business appear not to be specifically dealt with, in the schedules old or new. 4. There can be no doubt from the above statement, that there is an increase in the amount of license fees levied against the petitioners and depending upon the amount of business done by them on the goods concerned. This appears really to be a general feature as regards most of the items covered by the schedule. One other feature which strikingly appears is the exemption from any levy, of petty traders in respect of all articles. This appears really to be a general feature as regards most of the items covered by the schedule. One other feature which strikingly appears is the exemption from any levy, of petty traders in respect of all articles. The counter affidavit did not, as we saw, make any apology about this matter. Indeed the report of the Commissioner to Government dated 13-2-1957 about the proposed amendment explained that the resolution of the Council to amend the schedule had been adopted "with a view to give relief to small and petty traders and at the same time to augment the resources of the Council." Mr. K. P. Abraham appearing for the Municipal Council sought to qualify this admission by saying, that in mentioning "the resources of the Council," the report referred rather to the special expenses incurred by the Council in connection with the enforcement of the license bye laws than its general revenue. But this argument is obviously inaccurate. We have to take it therefore that the effect of this amendment of the schedule has been to increase the rates of license fees charged against the petitioners and other bigger traders, with the two-fold object of giving relief to petty traders and increasing the Municipal revenues. The simple question is whether such increase is justifiable under law. 5. The principle is now well settled, in general that Courts are slow to hold that a power 'bona fide' exercised by a Municipal Council is void for unreasonableness, and it ought to be supported unless it is manifestly partial or unequal in its operation between different classes, or unjust, or made in bad faith, or clearly involving an unjustifiable interference with the liberty of those subject to it, See - 'Kruse v. Johnson' 1898-2 Q. B. 91(B), and in special, so far as the ques-tion of license fees are concerned, that the court should be satisfied that the ground for imposing different rates of fees for the issue of a license for a particular place has some rational nexus with the subject matter of the license, namely the use of the premises by the licensee. As observed in Doraswami Ayyangar on the Law of Municipal Corporations, Vol. III, 1914 Edn. p. 136 : "A tax must be distinguished from the fee raised for licenses issued for regulating trades and occupations. As observed in Doraswami Ayyangar on the Law of Municipal Corporations, Vol. III, 1914 Edn. p. 136 : "A tax must be distinguished from the fee raised for licenses issued for regulating trades and occupations. The power to license and regulate particular branches of business or specified matters is what is usually called in Amercian text-books the police power; and the exercise of the police power carries with it the power to collect a fee for the issue of licenses. When authority is given to require the possession of a license as a condition for carrying on a particular trade, a reasonable fee to cover probable expenses may be demanded. But the exaction of sums in excess of such expenses and graduated by the amount of business done, can be nothing also than a tax upon such business". and further down at pages 226 and 227 the learned author points out that the license fees should be sufficient to cover all expenses of license, inspection and supervision. They may be fixed fees or a percentage of business receipts or both and graduation is lawful. But they should operate uniformly upon all within a certain class and must not discriminate as to individuals of the same class. 6. The rules which govern the matter were laid down in the recent case of Varadachari v. State of Madras, AIR 1952 Mad. 764 as follows :-- "For the grant of a licence, a fee may be charged to cover probable expenses which may have to be incurred for the regulation of the particular trade or business or calling in respect of which the license is required. The license fee is not intended to raise revenue for the general purpose of the authority levying the fee. For such purposes the levy should be in the shape of a tax. The licence fee must be reasonable, whereas a. tax need not be. Though, ultimately the decision in each case must depend upon the particular facts of that case, certain general tests have been formulated by the Courts in various decisions to decide whether a particular fee is reasonable in the circumstances. The licence fee must be reasonable, whereas a. tax need not be. Though, ultimately the decision in each case must depend upon the particular facts of that case, certain general tests have been formulated by the Courts in various decisions to decide whether a particular fee is reasonable in the circumstances. They are : (1) the licence fee may reasonably cover the cost of all special services necessitated by the duties and liabilities imposed on the authority in respect of the supervision and regulation of the particular trade or calling in respect of which the licence is issued: AIR 1931 PC 217 . (2) there must be some relation between the expenses incurred in the issue of licenses and in regulating the licensed trade and other occupation and the amount fees of leviable. When the licensing authority issues a number of licenses to persons engaged in different trades and occupations it would be unreasonable if they so fixed the fees that the whole costs incurred by them in connection with all the licenses or a grossly disproportionate part of it was imposed on the particular trade or a few particular trades. AIR 1930 Mad. 55" That was a case of enhancement of the license-fees in so far as it related to the oil mills in the State of Madras brought about by a G. O. which amended the Madras Manure Dealer's Licensing Order and the learned Judges held after scrutiny of the figures of expenses alleged to have been incurred by the State and set out in the counter affidavit that the enhancement was unreasonable as "the total fees that would be collected from all the mills in the state would be disproportionately high in comparison with expenditure which according to Government's own statement it would incur". And dealing with the aspect of discrimination the learned Judges said : "The G. O. in fixing a higher rate of fee for the oil millers while making all other manure dealers pay at flat rate of Rs. 20/- irrespective of the fact that they might stock and sell more than the oil millers could even produce, is discriminatory and offends Art. 14 of the Constitution.' 7. 20/- irrespective of the fact that they might stock and sell more than the oil millers could even produce, is discriminatory and offends Art. 14 of the Constitution.' 7. In this case the respondent Municipal Council has not placed before the court any material for enabling it to come to the conclusion that the rates fixed were or were not excessive from the point of view of the expenses incurred by them in the matter of administering the license bye laws. It is no doubt true that under Article 226 of the Constitution this court does not generally interfere if other suitable remedies are open to the applicants but where, as in this case a tax or a license fee is imposed which is challenged as improper and it affects a large number of people the court has the right to see if the complaint is justified. It is not possible nor is it desirable that in such cases, this court should examine the figures in any detail to judge whether the license fee was or was not excessive. But if the affidavits prima-facie show that it is unreasonable there is no reason why the court should not interfere. See Ram Adhar v. Dist. Board, Allahabad, AIR 1955 All. 184 . 8. It follows therefore that the enhanced fees now sought to be levied by the respondent Municipal Council as against the petitioners stand self condemned and in consequence, a writ of certiorari but limited to the levy as regards pepper, lemon-grass oil and raw cashew nuts must issue as prayed for and we order accordingly. The respondent will pay the costs of the petitioners. Counsel's fee Rs. 100/-.