Judgment :- 1. Sri P. S. Kesavan Vaidyan, the petitioner in these two original petitions, is the managing partner of S. D. Pharmacy, Alleppey, which has branches in places like Shertallai and Thiruvalla. In these petitions the petitioner challenges the validity of the licence fee charged on him by the Shertallai and Thiruvalla Municipalities, on the ground that the proposed levy is illegal and ultra vires of the power of the. Municipal Council, and therefore liable to be quashed. Notices were issued to the petitioner under the relevant sections of the Kerala Municipalities Act, 960 Act 14 of 1961 (shortly stated the Act) asking him to close down the shop or face the consequences of non-compliance of the provisions of the Act. O. P. 725 of 1970 is against the notice issued by the Shertallai Municipality and O. P. 731 of 1970 is against that issued by the Thiruvalla Municipality. Copy of the notice is Ex-P1. The notice issued by the commissioner of the Shertallai Municipality has called upon the petitioner to take the requisite licence from the municipality or close down the business within three days, failing which further steps as provided by the Act would be taken without further notice. The notice issued by the municipality states that the petitioner is engaged in the preparation and storing of chemical preparations in his shop within the municipality without taking the requisite licence and, therefore, to show cause why he should not be prosecuted and steps taken to close his shop within three days of the receipt of the notice. 2. The petitioner's case is that he does not store any chemical preparations in his shop. The only preparations that he is storing in the shop are "aristhams" and "asavams", which according to him are not chemical preparations coming under Schedule III of the Act, so as to require a licence being taken as provided in S.284 of the Act. In the preparation of arishtams and asavams, according to him, nothing pertaining to chemistry is involved; and no chemical change results. Apart from the natural changes, putrefaction and decay, none of the component parts inter-act mutually. 3. The petitioner has further stated that the levy is, in fact, a tax and not fee, and as tax it is unsustainable. If treated as fee, it is lacking in "quid pro quo" and as such unenforceable in law. Apart from the natural changes, putrefaction and decay, none of the component parts inter-act mutually. 3. The petitioner has further stated that the levy is, in fact, a tax and not fee, and as tax it is unsustainable. If treated as fee, it is lacking in "quid pro quo" and as such unenforceable in law. On these grounds the petitioner would pray for the quashing of Ex-P1 notice, and also for the issue of a writ of prohibition or other appropriate writ or direction prohibiting the respondent-Municipal Commissioner, from leaving licence fee for the preparation of arishtams and asavams and from prosecuting the petitioner for the non-obtaining of the licence. 4. The respondent-municipal commissioner has, in his counter, refuted the contention of the petitioner that arishtams and asavams are not chemical preparations. According to him, aristhams and asavams result from fermentation and are the products of chemical reactions and they are chemical preparations. The petitioner's case that the levy amounts to a tax is also denied. The places where aristhams and asavams are prepared and stored have to be controlled in the interests of public health and also for the reason that they are likely to cause nuisance. Unless such places are inspected and controlled they are likely to be dangerous to public health. The petitioner's place of business is frequently inspected by the municipal staff and necessary instructions are given by them with a view to prevent disease spreading due to the insanitary conditions brought about by the preparations of these medicines. The expenses incurred on these accounts have also been indicated in the counter. 5. The point to be considered in these petitions is whether the levy is justified. Under S.284 of the Act, no place within the municipal limits is allowed to be used for any of the purposes specified in Schedule III without the licence issued by the commissioner. Storing, packing, pressing, cleansing, preparing, or manufacturing by any process whatever of chemical preparations is one of the items falling under Schedule III and it is by virtue of this provision that the taking of licence is insisted on by the municipality. The petitioner would try to wriggle out from the situation under the plea that arishtams and asavams are not chemical preparations. The petitioner would try to wriggle out from the situation under the plea that arishtams and asavams are not chemical preparations. According to the learned counsel, chemical preparations must involve chemical action which is a process by which the properties of a substance are completely altered and the resulting product is altogether a new and distinct substance having properties entirely different from the elements which go into its preparation. In the case of arishtams and asavams the constituent elements will be present even after its preparation or manufacture. In short, according to the learned counsel there is nothing "chemical" in the preparation of arishtams and asavams. Ia support of this position reliance was placed by the learned counsel on J. R. Short Milling Co. Ltd. v. Geo Weston Bread & Cakes Ltd. (1941 Canada Law Reports 69). The "substance" under consideration in that case was a bleaching material and the question that arose for decision was whether the said bleaching material was a substance prepared or produced by chemical process. The learned judge in that case, on an analysis of the process by which the bleaching material was manufactured, came to the conclusion that it was not prepared or produced by chemical process. The learned judge observed: - "I do not think, therefore, that it can be said that the bleaching material prepared by the processes described, was one prepared or produced by a cherical process, within the meaning and intendment of S.40 (1) and that is the conclusion which I have reached. The raw material involved in the process in that case was soy-bean flour. According to the learned judge, the evidence would seem to make it clear that what occurs in the bleaching of flour is the oxidation of the carotin pigments therein. The change that occurs is in the one material or element, that is to say, the carotin in the flour is decolourised, the flour is not otherwise changed." In the same decision (1941 CLR. 69) the learned judge has quoted from a decision of the Law Officer under the English Patents Acts (1925-42 RPC. 303), which has sounded a different note. Therein it was observed: "One must not interpret, "enemical process" in a narrow way. 69) the learned judge has quoted from a decision of the Law Officer under the English Patents Acts (1925-42 RPC. 303), which has sounded a different note. Therein it was observed: "One must not interpret, "enemical process" in a narrow way. I should have read that section in such a way as to enable me to come to the conclusion in the present case that what is called the fractional distillation of these natural mineral oils is a chemical process, which has resulted in the production of a substance which is the subject matter of the invention claimed. I have come to the conclusion, as a pure question of fact in this case, that the process in question is a chemical process within the meaning of S.38A of the Act." We do not, therefore, think that the above decision of the learned judge (1941 Canada Law Reports 69) can be accepted as an authority in the present case to enable us to hold that arishtams and asavams are not "chemical preparations". The various steps in the process of making arishtams and asavams, if correctly understood, will show that they are 'chemical preparations'. Arishtam is prepared from certain herbs by first beating or grinding them into a consolidated mass and fermenting it in a specified measure of water and then after adding a prescribed quantity of molasses add few other herbs, the substance will be kept underground in earthen vessels for a fixed period, and arishtam is the resultant liquid form which we get from the process. In the formation of 'Lohasavam' steel-oxide or steel powder is also used (see Arishtasavachintamani by G. Kochusankaran Vaidyan). "Books on chemistry show that sugars, such as, sucrose (cane sugar), fructose (fruit sugar), glucose (grape sugar) etc., are converted into alcohols by fermentation, that sugars and alcohols have differing chemical compositions and chemical properties, and that the conversion of sugar into alcohol involves a chemical change." (vide Executive Authority of Vilakudy Panchayat v. Janardhana Rao-1964 KLT. 441). "It was discovered centuries ago that preparations could be made from certain plants, such as poppies and coca, which, when taken by a human being serve to deaden pain. From these plants chemists isolated pure substances, morphine and cocaine, which have the pain deadening property. 441). "It was discovered centuries ago that preparations could be made from certain plants, such as poppies and coca, which, when taken by a human being serve to deaden pain. From these plants chemists isolated pure substances, morphine and cocaine, which have the pain deadening property. Chemists then investigated morphine and cocaine, to learn their chemical structure, and then made in the laboratory a great number of other substances, somewhat similar in structure, and tested these substances for their powers of deadening pain and of producing addiction. In this way some drugs that are far more valuable than the natural ones have been discovered," (vide College Chemistry by Pauling, 3rd Indian Edn. p. 4). In the same book (College Chemistry by Pauling) at page 718 the learned author would observe "Alkaloids are basic substances of plant origin that contain atleast one nitrogen atom, usually in a heterocyclic ring. Most of the alkaloids are physiologically active, and many are useful in medicine. An example is cocaine, a powerful local anesthetic and stimulant obtained from coca leaves. It is highly toxic and is used as an insecticide." Most of the organic compounds are extracted from leaves or fruits of plants. "Many substances may be fermented, yielding alcohol and other organic compounds, and each raw material imparts a distinct flavour to the product. Thus, brandy is the distillate from fermented fruit; rum is distilled from molasses; Bourbon whisky from corn, rye whisky from rye, scotch whisky from barley, Irish whisky from potatoes, saki from rice, and beer from malt to which the flower of the hop plant has been added to produce a bitter taste. Molasses has become in important raw material for the production of other substances by fermentation, such as antibiotics, Pharmaceuticals, and many chemical intermediates." (vide Textbook of Organic Chemistry by LLoyd N. Ferguson, 2nd Edn. p. 254). Molasses is a common ingredient in almost all arishtams and asavams and in forming the new substance by fermentation, molasses plays an important part. Direct authority is furnished by a division Bench of this court in Municipal Commissioner, Tellicherry v. Kanari Vydiar (1966 KLT. 704), wherein the learned judges have observed: "It is well-known that both Arishtams and Asavams are preparations made by the process of fermentation, which is a chemical process. Direct authority is furnished by a division Bench of this court in Municipal Commissioner, Tellicherry v. Kanari Vydiar (1966 KLT. 704), wherein the learned judges have observed: "It is well-known that both Arishtams and Asavams are preparations made by the process of fermentation, which is a chemical process. Anything specially prepared, whether food, or medicine, may be a'preparation' and if it involves a chemical process it is a chemical preparation. Arishtams and Asavams are therefore strictly chemical preparations and licence is necessary for storing them in buildings within the Municipality." We have, therefore, no doubt that Arishtams and Asavams are 'chemical preparations', and for storing them within the Municipality licence is necessary. 6. A rather faint suggestion was put forward by the learned counsel for the petitioner that the levy though called fee, is in fact, a tax and if so construed it is unsustainable as the mandatory procedure for imposition of tax has not been complied with. We do not think that the argument is sound. It is well settled that a tax and a fee are distinct and different exactions compulsorily. They differ in their purpose and nature. The distinction was well brought out by the Supreme Court in Ratilal v. State of Bombay (AIR. 1954 SC. 388). Their Lordships observed: "A tax is in the nature of a compulsory exaction of money by a public authority for public purpose, the payment of which is enforced by law. The other characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax. Thus although a tax may be levied upon particular classes of persons or particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied for general public purposes. Tax is a common burden and the only return which the tax payer gets is participation in the common benefits of the State." Adverting to some of the characteristics of a fee the learned judges would again observe: "In order that the collections made by the government can rank as fees, there must be correlation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. Thus two elements are 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 and in the second place the amount collected must be ear-marked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purpose". Viewed in the above background, we are satisfied, in the first place, that the levy in question is a fee and not a tax; and secondly, that there is correlation between the levy and the expenses incurred by the Municipality for the purpose of rendering services. From the counter-affidavit by the Municipality, we see that special services are being rendered by the Municipality to the payers of the fee. Special municipal staff has been constituted to inspect the places where Arishtams and Asavams are prepared and stored. Ameliorative measures, including spraying disinfectants and insecticides to kill flies and insects etc., are resorted to by the Municipality, The premises are inspected and necessary instructors are given from time to time to the occupants thereof so as to avoid the evil consequences resulting from the preparation and storing of Arishtams and Asavams befalling them. The necessary disinfectants and insecticides are purchased at considerable cost for the above purpose. The counter-affidavit filed on behalf of the Shertallai Municipality, for instance, shows that for the year 1968-69 the Municipality had incurred an aggregate expense of Rs. 17,041-50; and 1969-70 Rs. 19,947/-. The total licence fee collected, during 1968-69 was Rs. 18,718-93 and that collected in 1969-70 was Rs. 16853-50. On the whole there are 1450 places licensed under S.284 which had to be inspected. Like details have been furnished by the Thiruvalla Municipality also. In Delhi Cloth & General Mills Co., Ltd. v. Chief Commissioner, Delhi (1969-2.S.C.W.R. 481), 60% of the amount of licence fee realised was found to have been spent on services rendered to the factory owners. Learned Judges held that the contention was not open to the petitioners that the levy of the licence fees was wholly unrelated to the expenditure incurred out of the total realisation. In the case before us evidently the proportion is very much higher and. Learned Judges held that the contention was not open to the petitioners that the levy of the licence fees was wholly unrelated to the expenditure incurred out of the total realisation. In the case before us evidently the proportion is very much higher and. therefore, it cannot be contended with the least justification that there is no correlation between the levy and the cost of the services. 7. The further contention of the petitioner is that these services are general in nature to which the public are generally entitled. The occupiers of premises are generally entitled to the services of the Health Department of the nature referred to above by reason of the ordinary taxes they pay and if the petitioner who pays the ordinary taxes is charged separately for the services of the Health Department he will have to pay twice over. This is also not a correct approach to the question. The services of the Health Department required by the ordinary tax payer in respect of his premises are negligible in quantity when compared to the services required by the petitioner which are greater in volume, continuity and degree as seen from the counter-affidavit, the contents of which were not controverted before us. The amount collected from the petitioner is only for the extra burden placed by him on the Municipality by reason of the extra supervision and inspection of his premises. 8. In this connection our attention was invited by the learned counsel for the Municipality to the Full Bench decisions of this court in City Corporation of Calicut v. Sadasivan (1968 KLT. 589 FB), Commissioner, Municipal Council, Tellicherry v. Ramesh S. M. Prabhu (1968 KLT. 628) and Travancore Tea Estate Co., Ltd. v. Executive Officer, Elappara Panchayat (1968 KLT. 776) and it was pointed out that therein we have proceeded as if the services rendered, to satisfy the requirements of law, should be services rendered in particular to the petitioner. We hasten to point out that it is not correct. Reference to petitioners individually, if at all made in those decisions must be understood to have been made with reference to the payers of the licence fee as a class and not to persons individually benefitted by the services. Services are rendered to the licensees collectively. Even if particular individuals do not obtain the benefit of the services, they would nevertheless be liable for the contribution. Services are rendered to the licensees collectively. Even if particular individuals do not obtain the benefit of the services, they would nevertheless be liable for the contribution. This view has been reiterated by the Supreme Court in a recent decision, Commissioner of Hindu Religious and Charitable Endowments, Mysore v. Krishna Rao (AIR. 1970 SC. 1114), wherein their Lordships observed: "Under the Act a fee though levied for rendering services of a particular type is not to be correlated to the services performed fop each individual who is intended to obtain the benefit of the services. The correlation must be between the expenses incurred by authority levying the fee for generally providing the service and the aggregate of the levy from persons who are to be made subject thereto. It is a necessary corollary that under the Act general rules prescribing the levy of fee from religious endowments have to be made, and not rules governing individual endowments. If services are provided, assuming that a particular institution either does not need the services, or does not obtain the benefit of the services, the contribution would still be recoverable." It is thus clear that the services are not to be correlated to the services performed for each individual; it is the group of licensees that is taken into consideration in imposing the levy. 9. The petitioner raised also the contention that the respondent-municipalities are not maintaining separate accounts for the receipt of licence fee and there is, therefore, no indication in the evidence from which it could be gathered that the licence fee collected is ear-marked for the particular services to be rendered to the payers of the licence fee. But according to the Municipality) separate accounts are maintained with respect to the licence fee collected by the Municipality, even though it is not possible to maintain separate accounts with respect to the collection from each of the licensee or with respect to the expenses to be incurred in connection with each of the places supervised or controlled by the Municipality. S.135 of the Act, no doubt, says that all monies received by the Municipal Council shall constitute a fund called the Municipal fund and that indicates that monies collected from whichever source will go to the common fund, viz., Municipal fund. S.135 of the Act, no doubt, says that all monies received by the Municipal Council shall constitute a fund called the Municipal fund and that indicates that monies collected from whichever source will go to the common fund, viz., Municipal fund. Merely because the entire revenue of the municipality is kept in one fund it cannot be inferred therefrom that the various sources from which the income has been derived are of the same nature. In the cases before us, any way there is no difficulty, because the amount of fees collected and the cost of services rendered to the licensees have separately been given and in the face of the said statement, the truth of which was not disputed, the contention is not open to the petitioner that by the merger of the fees collected with other items of revenue it is difficult to trace out the quantum of fees collected and the purpose for which they are spent. 10. Lastly, it was contended that by the supervision, control and regulation of the activity the payers of the fee are not directly benefited and the object behind such measures is to detect lapses from or violation of the rules by the licensees, and that in effect is the exercise of the "police power" vested in the Municipality. This takes us to the third category of levy which is neither a fee nor tax. But in the nature of the present case, and in view of our clear conclusion that the impugned levy is a fee and not tax, we do not think it necessary to dwell on it at great length. 11. The result is that there is no point in any of the contentions of the petitioner and both the petitions are dismissed; but in the circumstances without costs.