Judgment :- 1. These writ petitions challenge the validity of the demand by the respondent Panchayat of licence fee for the machinery used in the tea factory of the petitioner's estate. S.96 of the Kerala Panchayats Act (Act 32 of 1960) empowered the Panchayat to notify that no place in the Panchayat area shall be used for any of the purposes specified in the Rules, being purposes which, in the opinion of the Government are likely to be offensive or dangerous to the human life or health or property, without a licence issued by the Executive Authority. S.109 provides for application for any licence or permission under the Act or Rules and enacts that fees may be charged on such units and at such rates as may be fixed by the Director. R.3 of the Kerala Panchayats (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963 provides that for the purpose of S.96 of the Act the Government may specify in schedule I to the Rules the purposes which, in their opinion, are likely to be offensive or dangerous to human life, health or property. R.18 of the Rules provides that the maximum fee for a licence under S.96 of the Act for a place in which any machinery or manufacturing plant driven by electric power is used shall not exceed the maxima specified in Schedule If of the Rules. Item 83 of Schedule I reads: "Machinery Using for industrial purposes except country chakkus used for oil manufacture in the premises of oil workers." It is enough to notice that the maxima fixed in Schedule II of the Rules show a progressive increase depending upon the horse power of the installations. Such is the schema of the imposition of the licence fee in question. 2. The petitioner's counsel contended that if the imposition were to be viewed as a fee there was no quid pro quo or services to the payer in return for the levy and as such the levy was invalid. Alternatively it was argued that if the levy were to be viewed as a tax, the same was invalid and beyond the competence of the State Legislature, and therefore of the Panchayat. Counsel appearing for the respondents sustained the levy on three alternative grounds. Alternatively it was argued that if the levy were to be viewed as a tax, the same was invalid and beyond the competence of the State Legislature, and therefore of the Panchayat. Counsel appearing for the respondents sustained the levy on three alternative grounds. Firstly that the levy was a "licence fee" and not a tax, and that there was no need for any return or quid pro quo by way of services and none had been provided by the statute. Secondly, assuming that a return by way of services is necessary, the constitution of a Panchayat Fund under S.76(1) of the Act and the defrayal of the duties and functions of the Panchayat under S.57 of the Act would constitute a sufficient return or quid pro quo for the levy. Thirdly that the imposition was a tax which the Panchayat was competent to levy under S.96 and S.109 of the Act. 3. I have no hesitation in rejecting the last of the alternative contentions of the counsel for the respondents, that the levy is valid even as a tax. Counsel could only point to the entry 66 of List II of the Seventh Schedule to the Constitution to justify the levy as a tax. The said entry which reads "fees in respect of any of the matters in this list, but not including fees taken in any court" is wholly inappropriate to sustain the levy as a tax. Counsel for the respondents plainly realised this and made only a feeble attempt to sustain the levy as a tax. 4. Nor can I accept the contention of the counsel for the respondent that the imposition is a special one as "licence fee", for which there need not be any return by way of services. For this part of his argument counsel for the respondent fairly stated that the statutory provisions contemplated and posited no services in return for the fee. But relying on the judgment of the Supreme Court in The Corporation of Calcutta v. The Liberty Cinema AIR. (1965 SC. 1107) it was argued that the stipulation for a return was unnecessary for a "licence fee". The question there considered related to the validity of a levy under S.443 of the Calcutta Municipal Act 1951, which provided that no person shall without a licence granted by the Corporation keep open any cinema house for public amusement. (1965 SC. 1107) it was argued that the stipulation for a return was unnecessary for a "licence fee". The question there considered related to the validity of a levy under S.443 of the Calcutta Municipal Act 1951, which provided that no person shall without a licence granted by the Corporation keep open any cinema house for public amusement. S.548 (2) of the Act provided that for every licence under the Act fee may be charged at such rates as may be prescribed. The Supreme Court was called upon to consider the nature and the character of the levy as well as its validity. The majority judgment of the Court held that the levy was a tax, and was not invalid by reason of its having left it to the delegated authority to prescribe the rate of the tax without even indicating a limit therefor. The dissenting judgment took the view that it was a fee, and failed as such, as there was no correlation between the fee charged and the services rendered. It was also held in the dissenting judgment that as a tax the levy was bad as the essential legislative function in the matter of fixing the rate of tax was parted with, in favour of the subordinate law-making body. In Para.7 and 8 of the judgment (of the majority judges) it was observed: 7. Now, on the first question, that is, whether the levy is in return for services, it is said that it is so because S.548 uses the word 'fee'. But surely, nothing turns on words used. The word 'fee' cannot be said to have acquired a rigid technical meaning in the English Language indicating only a levy in return for services. No authority for such a meaning of the word was cited. However that may be, it is conceded by the respondent that the Act uses the word 'fee indiscriminately. It is admitted that some of the levies authorised are taxes though called fees. Thus, for example, as Mitter J. pointed out, the levies authorised by S.218, 222 and 229 are really taxes though called fees, for no services are required to be rendered in respect of them The Act, therefore, did not intend to use the word fee as referring only to a levy in return for services. Thus, for example, as Mitter J. pointed out, the levies authorised by S.218, 222 and 229 are really taxes though called fees, for no services are required to be rendered in respect of them The Act, therefore, did not intend to use the word fee as referring only to a levy in return for services. (8) This contention is not really open to the respondent for S.548 does not use the word 'fee'; it uses the words 'Licence fee' and those words do not necessarily mean a fee in return for services. In fact in our Constitution fee for licence and fee for services rendered are contemplated as different kinds of levy. The former is not intended to be a fee for services rendered. This is apparent from a consideration of Art.110 (2) and Art.199 (2) where both the expressions are used indicating thereby that they are not the same. In Shannon v. Lower Mainland Dairy Products Board 1938 AC. 708: (AIR. 1939 PC. 36) it was observed at pp. 721-722 (of AC.) (at pp. 30-39 of AIR.): "If licences are granted, it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the Province or for both purposes. It cannot, as their Lordships think, be an objection to a licence plus a fee that it is directed both to the regulation of trade and to the provision of revenue " It would, therefore, appear that a provision for the imposition of a licence fee does not necessarily lead to the conclusion that the fee must be only for services rendered." I am quite unable to accept the contention of counsel for the respondent that the above observations of the Supreme Court either recognise or lend countenance to the theory, that apart from the two categories tax and fee there can be a third category of levy called "licence fee" without any return or quid pro quo. In the context of the discussion, as the succeeding and preceding paragraphs of the judgment clearly show, the Supreme Court was only emphasising the fact that use of expression 'fee' is not conclusive of the character of the levy. Indeed, at the end of Para.20 of the (majority) judgment of the Supreme Court, it is stated: "The levy is a tax. Indeed, at the end of Para.20 of the (majority) judgment of the Supreme Court, it is stated: "The levy is a tax. It is not disputed, it may be stated, that if the levy is not a fee, it must be a tax." 5. This aspect of the matter is also discussed by the dissenting judges in Para.58 and 59 of the judgment. In the light of the foregoing discussion of the Supreme Court, I cannot accept the contention of the counsel for the respondent, that the levy in question was a special kind of impost, namely "licence fee", which required no return by way of services and which was neither a tax nor a fee. 6. The only question then surviving is whether the levy as a fee provides for any return by way of services. That the statutory provisions themselves which provided for the impost do not stipulate for any service by way of return was frankly admitted. But it was claimed that S.76 (2) (i) of the Panchayats Act provides that all fees levied under the Act shall be credited to the Panchayat Fund and that S.75 provided that the purposes for which the Panchayat Fund can be applied included all objects authorised by the Act, the Rules made thereunder etc. It was stressed that S.57 had catalogued a long list of duties of the Panchayat and the performance of these duties and functions formed a sufficient return for the levy of the licence fee which was merged in the General Panchayat Fund. It seems to me that after the pronouncement of the Supreme Court in the Liberty Cinema's case noticed supra, this contention is no longer open. In that case, the Supreme Court had occasion to consider the nature of the service required to sustain the levy as a fee. After reviewing the earlier pronouncements in the Sairur Mutt's case (AIR. 1954 SC. 282), Sudhindra Thirtha Swamiar's case (AIR. 1963 SC. 966) and the Hingeir Rampur Coal Company's case, AIR. 1961 SC. In that case, the Supreme Court had occasion to consider the nature of the service required to sustain the levy as a fee. After reviewing the earlier pronouncements in the Sairur Mutt's case (AIR. 1954 SC. 282), Sudhindra Thirtha Swamiar's case (AIR. 1963 SC. 966) and the Hingeir Rampur Coal Company's case, AIR. 1961 SC. 459), the majority judgment clearly stated thus: "We have referred to these cases only for showing that to make a levy a fee the service rendered in respect of it must benefit or confer advantage on the person who pays the levy, (paragraph 16 of the judgment)." "These decisions of this Court clearly establish that in order to make a levy a fee for services rendered the Levy must confer special benefit on the persons on whom it is imposed. No case has been brought to our notice in which it has been held that a mere control exercised on the activities of the persons on whom the levy is imposed so as to make these activities more onerous is service rendered to them, making the levy a fee." (Paragraph 17). 7. On this point a divergent view is reflected in the dissenting judgment as can be seen, for instance, from Para.47, 55 and 57 of the judgment. The dissenting judges observed: "The placing of an activity, industrial or commercial, under regulation and control is no doubt done in furtherance of public interest but so are most of the activities of public bodies. Nevertheless the supervision, inspection and regulation is from a long term point of view considered to be and is in the interest of the industry or the activity itself. To say that to enable a fee strictly so called to be levied an immediate advantage measurable in terms of money should be conferred on the payer, is to take too narrow a view of the concept of a fee. We do not consider that the decisions of this Court in the Endowment cases lay down such a proposition or compel us to adopt this construction. On the other hand, the Orissa Endowments Act and the Bombay Public Trusts Act cases, as also the Orissa Mining Area Development Fund case support a broader view of what constitutes services to the fee-payer (Paragraph 55.) "We are not, therefore, disposed to read the judgments of this Court in the Shirur Mutt case, 1954 SCR. On the other hand, the Orissa Endowments Act and the Bombay Public Trusts Act cases, as also the Orissa Mining Area Development Fund case support a broader view of what constitutes services to the fee-payer (Paragraph 55.) "We are not, therefore, disposed to read the judgments of this Court in the Shirur Mutt case, 1954 SCR. 1005; (AIR. 1954 SC. 282) and the cases following as laying down that where an activity is regulated by licences the imposition of charges for the inspection, supervision and control of the activity to ensure compliance with the regulation is not a benefit conferred on the licencee so as to render the amount charged for such a licence not a fee in the real sense but a tax, whose constitutional validity could be sustained only by reference to the taxation entries in Lists I and II". (Paragraph 57). 8. In the light of the majority judgment of the Supreme Court, it must be accepted as well settled that in order to constitute a levy a fee, the same must confer special benefit on the persons on whom it is imposed. No such special benefit was either claimed or brought to my notice. 9. Counsel for the petitioners argued that even the general duties catalogued in S.57 of the Act cannot be traced to this particular head of licence fee and that almost all of them could be referred to specific imposts raised for the purpose. He referred for instance to S.66(2) of the Panchayats Act pertaining to the levy of service tax for sanitation etc., and to the Panchayats (Service Taxes) R.1962, and to R.4 of the Panchayats (Objects of Expenditure) R.1962. It is unnecessary to go into the question as to whether even the performance of the general functions under S.57 of the Panchayats Act can be correlated either wholly or partly to this particular fee. No case has either been pleaded or substantiated that there was any special benefit to the payer in return for the licence fee. In that view it follows that the levy of the licence fee in question is invalid and cannot be sustained. 10. In O. P. No. 1354 of 1965, the petitioner has prayed for the return of a sum of Rs. 730/- paid by the petitioner under protest in pursuance of Ex. P-4 notice. In that view it follows that the levy of the licence fee in question is invalid and cannot be sustained. 10. In O. P. No. 1354 of 1965, the petitioner has prayed for the return of a sum of Rs. 730/- paid by the petitioner under protest in pursuance of Ex. P-4 notice. There was no argument on the side of the respondents that in case the levy is invalid the petitioner was not entitled to the refund of the amount. I accordingly direct the 1st and the 2nd respondents to refund to the petitioner in O. P. No. 1354 of 1955 the sum of Rs. 730/-paid in pursuance of Ex. P-4. 11. The O. Ps. are allowed and Exs. P-2 and P-3 in O. P. No. 1353 of 1965 and Exs. P-2, P-3 and P-4 in O. P. No. 1354 of 1965 are quashed. Respondents 1 and 2 in O. P. No. 1354 of 1965 will refund to the petitioner in the said O. P. the sum of Rs. 730/- paid in pursuance of Ex. P-4. There will be no order as to costs in these O. Ps. Allowed.