Kailasam, J.- The Second Appeal and the two Civil Revision Petitions arise out of three suits instituted by the Municipal Council, Melapalayam, through its Commissioner for recovery of licence fees for private market kept by the defendants in the respective suits. In the Second Appeal (S.A. No. 624 of 1962) the Municipality sued the defendants for licence fees for private market for the financial years 1956-57 1957-58 1958-59. The suit was resisted by the defendants on the ground that the licence fee which was fixed at 15 per cent of the gross income was illegal as the Municipality did not spend any money for the upkeep of the market and the fee was not commensurate with the services rendered. The trial Court found that the fee levied by the Municipality was legal under section 262-A of the District Municipalities Act and granted a decree as prayed for. On appeal by the defendants the District Judge came to the conclusion that the fee levied by the Municipality was not commensurate with the services rendered and as such the levy was illegal and therefore the plaintiff was not entitled to a decree as prayed for. In the Second Appeal by the Municipality the Government Pleader fairly conceded that the general law is that the fee levied should be commensurate with the services rendered by the Municipality. But he contended that there is a Bench decision of this Court reported in Tiruvarur Municipality v. Md. Abu Baker1in which it was held that the effect of section 262-A of the District Municipalities Act is to alter the law as rendered in the Privy Council Judgment in Pazundaung Bazar Co. Ltd. v. Municipal Corporation of Rangoon2and that the object of the amended section was to put an end to constant litigation with regard to charges levied by the municipal authorities and a licence fee not exceeding 15 per cent of the gross income can be legally charged by the Municipality. In Pazundaung Bazar Co. Ltd. v. Municipal Corporation of Rangoon2it was held that the Corporation of Rangoon had fixed the scale of licence fees taking into consideration the expenses that might be incurred for the special services necessitated by the duties and liabilities imposed upon it and therefore the levy was legal. In Pazundaung Bazar Co. Ltd. v. Municipal Corporation of Rangoon2it was held that the Corporation of Rangoon had fixed the scale of licence fees taking into consideration the expenses that might be incurred for the special services necessitated by the duties and liabilities imposed upon it and therefore the levy was legal. It is not disputed that it has been held in several cases that the fee levied should be commensurate with the services rendered by the Municipality. In Annamalai Bus Transport v. Dharapuram Municipality3, Rajagopalan, J. dealing with a levy by the Municipality under Section 270-E (5) of the District Municipalities Act held that the fee must bear a just and reasonable proportion to the services rendered by the Municipality. The decision of the Bench in Tiruvarur Municipality v. Md. Abu Baker1was not brought to the notice of the learned Judge. The Supreme Court in Hingir Rampur Coal Co. v. State of Orissa4observed: “In regard to fees there is, and must always be, co-relation between the fee collected and the services intended to be rendered. Gases may arise where under the guise of levying a fee, Legislature may attempt to impose a tax; and in the case of such colourable exercise of legislative power, Courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the services and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a pretence of a fee and not a fee in reality.” In Krishnarao Pradhan v. Jasjit Singh5it was held that a fee is an amount collected to reimburse the Government for the expenses of licensing and it must reasonably be measured against the cost which may be entailed in the process of granting licences. The decisions of the Supreme Court referred to above are clear that the fees levied in order to be valid should be commensurate with the services rendered. Learned Government Pleader does not dispute the position of the law. He also did not justify the levy of the licence fee on the ground that it was commensurate with the cost of collection and supervision as it was common ground that no services had been rendered in respect of the market in question by the Municipality. Learned Government Pleader does not dispute the position of the law. He also did not justify the levy of the licence fee on the ground that it was commensurate with the cost of collection and supervision as it was common ground that no services had been rendered in respect of the market in question by the Municipality. But he pointed out that the only decision which specifically dealt with section 262-A is Tiruvarur Municipality v. Md. Abu Baker1and that decision has not been either expressly or impliedly over-ruled. It has also to be noted that it was observed in Tiruvarur Municipality v. Abu Baker1that the effect of the amendment to section 262-A. is to alter the law as laid down in Pazundaung Bazar Co., Ltd. v. Municipal Corporation of Rangoon2. As the decision of the Bench has not been specifically over-ruled, it is binding on me and as the general law is not in conformity with the decision relied on by the learned Counsel, the only course open to me is to place the Second Appeal and the two connected Civil Revision Petitions before my Lord the Chief Justice for being posted before a Bench or a Full Bench as he may deem it necessary. The Second Appeal and Revision Petitions came on for hearing before a Bench (Veeraswami and Kunhamed Kutti, JJ.) in pursuance of the above Order of Reference. A. Alagiriswami (The Government Pleader), for Appellant. T. Martin, for Respondents. The Judgment of the Court was delivered by Veeraswami, J.- The Second Appeal and the Revision Petitions have been posted before us, as Kailasam, J., before whom they came up in the first instance considered that, in view of Municipal Council, Tiruvarur v. Muhammad Abu Baker1they should be decided by a Division Bench. They relate to levy of licence fee on private markets within the limits of the Melapalayam Municipality, in Tirunelveli District. The licence fee levied was computed at 15 per cent. of the gross income of the owner from the market in the preceding year. This was in accordance with section 262-A of the Madras District Municipalities Act, 1920. The Municipality instituted suits for recovery of the arrears of fees payable for the markets of the respondents in the Second Appeal and the petitioners in the Revision Petitions. Their defence was that as a fee it could not be justified on the quid pro quo basis. The Municipality instituted suits for recovery of the arrears of fees payable for the markets of the respondents in the Second Appeal and the petitioners in the Revision Petitions. Their defence was that as a fee it could not be justified on the quid pro quo basis. The suits were, however, decreed. In one of them, the respondents concerned preferred an appeal and successfully. It is from this decree in appeal that the Municipality has come up here in Second Appeal. The defendants who have been unsuccessful, have filed the two Revision Petitions. The common question that arises is, whether the licence fee claimed by the Municipality at 15 per centum is justifiable and legal. It is well settled now that a tax and a fee are distinct and different exactions compulsorily. They differ in their purpose and nature. A tax is a compulsory levy by the Government or local body for purposes of running the Government or the local institution, and the tax collected by the Government goes into what is called the “ Consolidated Fund”. A tax is not related to any particular object or purpose but is generally devoted for meeting the expenses of the State. But a fee is essentially in the nature of a compensation for special services rendered to particular persons or institutions. Having regard to that nature of the exaction, there should necessarily be a relationship between the exaction and the services rendered. As the fee is a quid pro quo for the services rendered by the Government or the local body, which levies the fee, such fee levied should be commensurate in their quantum with the expenses incurred in rendering the services. It is true, of course, that an exact balance or a precise equation is not expected between the two factors, for it is impossible in actual administration. There are several decided cases which lay down these propositions and it is quite needless to refer to them. In Municipal Council, Tiruvarur v. Muhammad Abu Baker1a Division Bench of this Court justified the levy of fees at 15 per centum of the gross income from a market, without reference to the quid pro quo basis. There are several decided cases which lay down these propositions and it is quite needless to refer to them. In Municipal Council, Tiruvarur v. Muhammad Abu Baker1a Division Bench of this Court justified the levy of fees at 15 per centum of the gross income from a market, without reference to the quid pro quo basis. In Muthuswamy Raja v. Kadayanallur Panchayat Union Council2one of us had occasion to refer to this decision and observe that it was not possible to regard it as laying down good law any longer, because it took no notice of the distinction between a tax and a fee. We are of the same view. Realising this position, Mr. Alagiriswami, for the Municipality, wanted to argue that the fee under section 262-A of the Act is really not that but a tax. But he could not pursue the point and sustain it in view of the constitutional position in regard to that matter. There is no entry in List II which empowers the State Legislature to levy a tax on the private market or the income from it. It is obvious that though the law in relation to local bodies is enacted and justified as coming within the put view of Entry 5 of List II, any provision therein delegating to the local body the authority to levy a tax or licence fee must be related to one or the other topic of legislative powers in List II, where the State Legislature is concerned. Since that test cannot be applied successfully, it follows that what is levied under section 262-A is not a tax. Since no attempt appears to have been made by the Municipality to justify the licence fee imposed on the quid pro quo basis, it follows the Second Appeal should fail, and the Revision Petitions should succeed. The Second Appeal is dismissed and the Revision Petitions are allowed. No costs. R.M. ---------- Appeal dismissed; Revision Petitions allowed.