JUDGMENT S.N.P. Singh, J. The petitioner is a company having its registered office at Jhumritilaiya in the district of Hazaribagh. The company is engaged in the manufacture of micanite products. It purchases denatured spirit from the who1esellers or the manufacturers for the purpose of manufacturing micanite. In this writ application under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the validity of Rule 111 of the Rules framed by the Board of Revenue, Bihar, by which license fee has been levied at the rate of 0.55 paise per litre for the possession and import of denatured spirit. 2. The Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act II of 1915) came into force on the 19th January, 1916. In pursuance of the provisions of the Act, rules were made both by the Provincial Government and the Board of Revenue for the levy of excise duty and license fee. Fees payable on licenses for wholesale vend of denatured spirit, for the retail sale of denatured spirit and for possession of such spirit in excess of the limit of retail sale, were prescribed in Rule 111 of the Rules. The fee for the licence to possess denatured spirit in 1919 was only Rs. 2/- per annum, irrespective of the quantity in the possession of a person. This rate continued to be in force till 1937. The fee for possession of denatured spirit was fixed at eight annas per bulk gallon when the rule was amended on the 10th September 1937. This was raised to Rs. 2/-per bulk gallon by the Board's notification, dated the 24th March, 1952. The fee was subsequently changed to 0.55 paise per litre and, as alleged in the writ application, it has been further altered to 0.75 paise per litre. 3. This writ application was heard by a Bench of this Court, and, by its judgment, dated the 14th of October, 1966, the writ application was dimissed. In this court, the validity of the Rules was challenged mainly on the ground that the fee chargeable under the impugned rule was, in essence, a tax or duty and the State Government could not constitutionally levy such duty in respect of alcoholic liquors not fit for human consumption. The Bench took the view that the impugned levy was, in essence, a fee, and not tax. The Bench took the view that the impugned levy was, in essence, a fee, and not tax. One of the ground on which the Bench of this Court upheld the levy as ‘fee’ was stated in paragraph 8 of the judgment in these words : " . . . . when a manufacturer wants to keep in his possession large quantity of denatured spirit for manufacturing purposes, he wants a special privilege or concession of immunity from prosecution. For that purpose he has to obtain a licence or pass on payment of requisite fees. There is thus a quid pro quo element and the immunity from prosecution is in the nature of a special benefit or privilege." In upholding the levy as fee, the Bench of this Court gave another ground in these words: “...... the Excise Department have to maintain an elaborate staff not only for the purpose of ensuring that denaturation is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession of denatured spirit in the hands either of a wholesale dealer or retail seller or any other licensee or permit holder is not misused. The danger lies in the fact that here is a very strong temptation to convert denatured spirit into alcohol fit for human consumption and there by evade payment of heavy duty....." It was ultimately held that, considering the nature of the supervision which was required by the statutory provisions to be exercised in granting licenses, permits and passes for persons to remain in possession of denatured spirit and also the fact that the person to whom such licence or pass was granted, obtained a special privilege and got immunity for prosecution under the Bihar and Orissa Excise Act, it was reasonable to hold that there was necessary quid pro quo clement in charging 55 paise or 75 paise per litre of denatured spirit. It was also observed that there was correlation between the privilege granted, or the service rendered to a licensee and permit-holder, on the one hand, and the amount levied from him, on the other. 4. Being aggrieved by the Judgment of this Court, the petitioner filed an appeal in the Supreme Court, which was numbered as Civil Appeal no. 770 of 1970, 1971 S.C. 1182. That appeal was heard by a Bench of five Judges of the Supreme Court. 4. Being aggrieved by the Judgment of this Court, the petitioner filed an appeal in the Supreme Court, which was numbered as Civil Appeal no. 770 of 1970, 1971 S.C. 1182. That appeal was heard by a Bench of five Judges of the Supreme Court. Their Lordships of the Supreme Court, while considering the ground on which the Bench of this court upheld the levy as fee in paragraph 8 of its judgment, which I have referred to above, observed as follows :- "The implication of this observation is somewhat astounding. These observations imply that the Government can barter away its duty to prosecute an offender for consideration. The requirement to take a licence is prescribed to safeguard public interest and not as a source to gather revenue, What is made punishable is either a person's failure to take the required licence or the breach of the conditions of the licence; otherwise there would be no sanction behind the rule requiring to take a licence. Generally speaking, by granting a licence the State does not confer any privilege or benefit on anyone. All that it does is to regulate a trade, business or profession in public interest. There may be cases where a Government which is the owner of a particular property may grant permit or licence to someone to exploit that property for his benefit. Such a right may be given for consideration. It is only is those cases that a licence or a permit in a conferment of a benefit or a privilege and not in the case of grant of a licence for carrying on any ordinary trade, business or profession. If it is otherwise the State can sell the right to practice the profession of law in Courts or to practice the profession of medicine or any of the other numerous professions, at exhorbitant prices or may even put up those rights for auction to be given to the highest bidder. Nothing so bad can be within the contemplation of our laws. We are inclined to think that the learned judges of the High Court had misunderstood the observations of Soligman quoted in the Commissioner, Hindu Religious Endowments, Madras V. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (Supra) to the effect that it is a special benefit accruing to the individual which is the reason for the payment of fee". We are inclined to think that the learned judges of the High Court had misunderstood the observations of Soligman quoted in the Commissioner, Hindu Religious Endowments, Madras V. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (Supra) to the effect that it is a special benefit accruing to the individual which is the reason for the payment of fee". With regard to the other observation made by this Court relating to the services rendered by Government, their lordships of the Supreme Court observed thus :- "According to the finding of the High Court the only services rendered by the Government to the appellant and to other similar licensees is that the Excise Department have to maintain an elaborate staff not only for the purposes of ensuring that denaturing is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession of denatured spirit in the hands either of a wholesale dealer or retail seller or any other licenses or permit-holder is not misused by converting the denatured spirit into alcohol fit for human consumption and thereby evade payment of heavy duty. So far as the manufacturing process is concerned, the appellant/or other similar licensees have nothing to do with it. They are only the purchasers of manufactured spirit. Hence the cost of supervising the manufacturing process or any assistance rendered to the manufacturers can not be recovered from the consumers like the appellant. Further under rule 9 of the Board's rules, the actual cost of supervision of the manufacturing process by the Excise Department is required to be borne by the manufacturer. There can not be a double levy in that regard. In the opinion of the High Court the subsequent transfer of denatured spirit and possession of the same in the hands of various persons such as wholesale dealer, retail dealer or other manufacturers also requires close and effective super vision because of the risk of the denatured spirit being converted into portable liquor and thus evading heavy duty. Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer. It is merely protecting its own rights. Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer. It is merely protecting its own rights. Further in this case the State which was in a position to 'Place material before the Court to show what services had been rendered by it to the appellant and other similar licensees, the costs or at any rate the probable costs that can be said to have been incurred for rendering those services and the amount realised as fees has failed to do so". 5. The Supreme Court, ultimately, took the view that prima facie the levy appeared to be excessive, even if the State could be said to be rendering some service to the licensees. It was also observed that the State ought -to be in possession of materials from which a correlationship between the levy and the services rendered by the State could be established at least in a general way, but the State had not chosen to place those materials before the Court the levy under the impugned rule, therefore, could not be justified. It appears that the learned Counsel appearing for the State before the Supreme Court made a prayer for giving an opportunity to the State to place materials to show that the levy in question is not disproportionate to the value of the services rendered by the State. In view of the prayer made on behalf of the State, their Lordships of the Supreme Court, after setting aside the judgment of this Court, have remanded the case to this Court for disposal after giving an opportunity to the State to place materials before this Court to show that the value of the services rendered by the State is reasonably correlated with the fee charged. In pursuance of the remand order of the Supreme Court, this application has been placed before us for rehearing. 6. An affidavit on behalf of the State was filed on the 2nd of March, 1973 in which certain facts have been stated. Learned Government Pleader no. 2 referred to paragraph 2 to 6 of the said affidavit in support of the contention that the levy is fee and there is a correlationship between the levy and the services rendered by the State. Paragraphs 2 to 6 of the said affidavit read as follows :- "2. Learned Government Pleader no. 2 referred to paragraph 2 to 6 of the said affidavit in support of the contention that the levy is fee and there is a correlationship between the levy and the services rendered by the State. Paragraphs 2 to 6 of the said affidavit read as follows :- "2. That denatured spirit is an inflammable article, and the licensee is required not to keep any naked light or fire in or near about the store room and he is further required to keep all receptacles containing such spirits closed so as to prevent the accumulation of spirit fumes in the room. The store room is also required to be well ventilated. The supervisory and inspecting staff visit the licensees' premises and direct them to keep the premises in perfect condition so as to prevent any accident or fire involving danger to the licensee's property and human life. Such a supervision is really for the benefit of the licensee. 3. That the Board's Rule 71(3) also lays down certain conditions which the licensee has to follow. It runs as under 'The room where denatured spirit may be stored by vendors there of or by persons licensed to possess in excess of limit of retail sale shall be build of an inflammable materials: provided that the Collector may, at his discretion, relax this rule in favour of persons holding licenses for retail sale and for use storage only, who may store denatured spirt in properly stoppered bottles only and only in quantities less than 10 gallons at a time. In any case, the room shall be ventilated so as to prevent the accumulation of spirit fumes and naked lights or fire shall not be used or kept in such room.. ...'. The supervisory and inspecting staff have to keep a vigil and ensure that this rule which is primarily for the licensee, is followed. 4. That the State Government have employed a large number of Excise staff for proper supervision, inspection and control of such dangerous spirits which do not involve only risk of property but also to human life inside and outside the licensee's premises. Denatured spirit is available at very cheap rate and if consumed by human being as a beverage my prove fatal. 5. That the supervisory or inspecting staff have to look after other spirits also, and the Government have to spend about Rs. Denatured spirit is available at very cheap rate and if consumed by human being as a beverage my prove fatal. 5. That the supervisory or inspecting staff have to look after other spirits also, and the Government have to spend about Rs. 70 lacs over the establishment per year. The actual expenditure of the Excise Department for the year 1970-71 was Rs 67,48, 936 while the budgeted expenditure for 1972-73 has been estimated at Rs. 83,38,500/-. As against this, the fees realised from denatured spirit during 1970-71 was Rs. 4,26, 796 - while the budgeted estimate for 1972-73 is Rs. 5 lacs. This shows roughly 6% expenditure over the, supervision and inspection of the licensees of denatured spirit. The receipts from country liquor, foreign liquor, denatured spirit and other spirits is about 8.5 crores per year. The rate of duty on country liquor is between Rs. 5.10 paise to Rs. 9.40 paise per L.P. litre. On foreign liquor it is Rs. 26.20 per L.P. litre. The fee on denatured spirit is only o.75 paise per L.P. litre. In cases of industrial units registered with Industries Department the fee on denatured spirit is fixed at Rs. 0.30 paise per litre. 6. That the Excise staff have to devote almost the same time in supervising the licensees of denatured spirit as in the case of other spirits. It is, therefore, clear that the fee realised from such licensees is only nominal compared to the services rendered to them. It is submitted there is a correlation between the fee realised and services rendered". 7. In my opinion, the statements made in paragraphs 2 to 6 of affidavit are too vague to justify the inference that the supervision of the business premises of a licensee by the supervisory staff of the Excise Department is really done for the benefit of the licensee. The supervision by the supervisory staff is generally made to prevent a breach of the rules. In paragraph 5 of the said affidavit, only a bold statement has been made that Government have to spend about Rs. 70 lacs over the establishment of the supervisory and inspecting staff. It has also been stated that roughly 6% is incurred over the supervision and inspection of the business premises of the licensees of denatured spirit. In paragraph 5 of the said affidavit, only a bold statement has been made that Government have to spend about Rs. 70 lacs over the establishment of the supervisory and inspecting staff. It has also been stated that roughly 6% is incurred over the supervision and inspection of the business premises of the licensees of denatured spirit. From these two statements, it is difficult to hold that a correlationship between the levy and the services rendered by the State has been established. No other material, except the statements made in paragraphs 2 to 6 of the aforesaid affidavit, has been placed on behalf of the State to justify the levy. Upon a consideration of the facts stated in the affidavit filed on behalf of the State, I am of the view that the State has failed to show that the levy in question is not disproportionate to the value of the services rendered by the State. As observed by their Lordships of the Supreme Court, even if the State could be said to be rendering some service to the licensees, the levy appears to be excessive. In my opinion, there has been no difference in the position in as much as the statements contained in paragraphs 2 to 6 of the affidavit filed on behalf of the State do not establish a correlationship between the levy and the services rendered by the State. 8. In the result, this application is allowed and the levy under the impugned rule, is held to be unjustified. A writ of mandamus is, accordingly issued on the respondents not to impose levy under the impugned rule. 9. It is stated on behalf of the petitioner that some levy has already been paid under the impugned rule. If so, the authorities will certainly refund the amount realised to the petitioner. There will be no order as to costs after remand by the Supreme Court. K.B.N. Singh, J : I agree. Application allowed.