JUDGMENT : B.P. Jeevan Reddy, CJ. Vam Organic Chemicals Ltd., the Petitioner herein, is seeking issuance of an appropriate writ, order or direction quashing the notification dated 18th May 1990 (annexure I to the writ petition), issued by the Excise Commissioner, U.P. in exercise of his rule making power The impugned notification amends the rules issued earlier by means of a notification dated 26th September, 1990). Rule 2 of the impugned notification substitutes the existing Rule 2 under the heading "denaturation of spirit" in 1910 rules. The amended rule provides for a new licence in form DS-I to be taken out by a distillery. This licence is for denaturation of spirit for supply to persons holding licences in form FL-16, FL-39, FL-40 and FL-41. The licensee is also obliged to pay licence fee in advance at the rate of 7 paise per liter of spirit so denatured by it for supply to persons referred to above. For a proper appreciation of the contentions urged by the Petitioner, it is necessary to notice the pleadings of the parties as also the relevant provisions of the law. We shall first refer to the pleadings of the parties. The Petitioner has come forward with the following averments. 2. The Petitioner Vam Organic Chemicals Ltd. owns a factory/plant for manufacturing vinyl acetate monomer, a basic organic chemcial. Industrial alcohol is the main feed stock for manufacturing the said product. Initially, the Petitioner was obtaining the requisite supply of industrial alcohol from others, but subsequently it set up a distillery of its own. The entire industrial alcohol produced in the Petitioners distillery is consumed in the Petitioners chemical factory. The distillery, which is having a licence in form PD 2 produces ethyl alcohol. "Ethyl alcohol is an industrial alcohol even though it is not denatured. Ethyl alcohol produced in the distillery is first denatured as per the method approved by the State Excise Authorities and the denatured alcohol, which is unfit for human consumption and can be used only for industrial purposes to produce chemicals such as acetic anhydride, acetic acid, acetal dehyde and vinyl acetate monomer, and is carried through closed and sealed pipes directly to its main chemical plant for manufacture of other chemicals, which ensures that ethyl alcohol so manufactured in the distillery cannot be diverted at all". The industrial alcohol produced in the Petitioners distillery cannot be sold outside. The industrial alcohol produced in the Petitioners distillery cannot be sold outside. The Petitioner company has no facility for manufacturing of intoxicating liquors from the industrial alcohol produced in the distillery. Indeed, wherever the industrial alcohol produced in the Petitioners distillery is not sufficient to meet the requirements of the chemical plant, the Petitioner obtains its requirements from other distilleries. The Petitioners chemical factory has obtained a licence in form FL 39 with a view to enable it to use the industrial alcohol as main raw material for being converted into the aforesaid chemicals. While so, the Excise Commissioner has issued the notification dated 18th May, 1990 whereunder the Petitioners distillery is obliged to take out a licence in form DS-1 (prescribed by the impugned notification) and pay a licence fee at the rate of 7 paise per litre with effect from 2nd June, 1990. This creates an uncalled for burden upon the Petitioner. The impugned notification is incompetent and is not authorised by law. Even the State Legislature has no power to impose such a fee, if so the Excise Commissioner cannot do it by way of a rule made under the Act. The Petitioner denatures the spirit produced by it in accordance with the procedure prescribed by the U.P. Government notification dated 25-10-1975. The denaturing is done under the supervision of the Excise Officer-in-charge of the factory and in the manner prescribed by the said notification. The entire operation is carried out by the distillery under the supervision of the Excise Officials. The industrial alcohol is not potable alcohol. It is not fit for human consumption. This is a matter exclusively within the competence of the parliament by virtue of the declaration made by it in Section 2 of the Industries (Development and Regulation) Act, 1951. Even if it is assumed for any reason that the Excise Commissioner was competent to make the said rule, it is bad for the reason that no manner of service is being rendered for levying the said fee. At any rate, the fee charged is not commensurate with "the services rendered, if any. For all these reasons, the impugned notification ought to be quashed. 3. On behalf of the Respondents (State at U.P., Excise Commissioner and other Excise Officials), a counter-affidavit has been filed, sworn to by Tara Singh posted as Excise Inspector at the Petitioners distillery. At any rate, the fee charged is not commensurate with "the services rendered, if any. For all these reasons, the impugned notification ought to be quashed. 3. On behalf of the Respondents (State at U.P., Excise Commissioner and other Excise Officials), a counter-affidavit has been filed, sworn to by Tara Singh posted as Excise Inspector at the Petitioners distillery. The following are the averments in the counter affidavit. Right from 1863, rectified spirit of the prescribed strength was not considered liqour unfit for human consumption and that is why by Act No. XVI of 1868, a provision was made for rendering the rectified spirit, or any spirit for that matter, permanently unfit for human consumption. Section 1 of the Act XVI of 1863 read as follows: Section 1:--Spirit intended to be used exclusively in articles, manufacture or chemistry may be removed from any licensed distillery in any part of British India on payment of duty not exceeding 5 per cent on the value of the spirits provided no spirits shall be so removed until they have been effectively and permanently rendered unfit for human consumption. For making the rectified spirit unfit for human consumption, certain unpalatable, nauseating and obnoxious denaturants have to be mixed properly before the spirit is allowed to be removed from the primises of the distillery for industrial purposes. If really the rectified spirit was unfit for human consumption as contended by the writ Petitioners, question of denaturing it for making it unfit for human consumption would never arise and the process of denaturation would be an exercise in futility. Denaturation of rectified spirit is a highly technical process. Every drum/lot/batch has to be tested by Chief Development Officer at the Excise Head Quarters Libouratory so as to ensure that the same is according to the prescribed specification before they are allowed to be used for denaturing the rectified spirit. After they are properly tested, the denaturants have to be separately stored under lock and key of the officer-in-charge of the distillery, and measured quantities are pumped into denaturation vats at the time of denaturation. The process of mixing goes on for several hours. The resultant mixture is denatured spirit or specially denatured spirit, as the case may be. After denaturing, it is again tested to find out whether it has been properly denatured or not. The process of mixing goes on for several hours. The resultant mixture is denatured spirit or specially denatured spirit, as the case may be. After denaturing, it is again tested to find out whether it has been properly denatured or not. The Excise Department is obliged to, and does maintain laboratory for this purpose at the Head Quarters of the Excise Commissioner. There is a Chief Development Officer, assisted by four Assistant Alcohol Technologists and a large number of supporting staff apart from apparatus and other equipment. Denaturation takes place under the close supervision of the Excise Officials in accordance with the provisions of Rule 785 of the U.P. Excise Manual, Volume 1. It is, therefore, wrong to say that the State is not rendering any services for the impugned fee. The several units in the State engaged in production, distribution and delivery of industrial alcohol are closely controlled and supervised; While the denaturation fee fetches merely a sum of Rs. 70 lacs, the expenses incurred by the Department is in a sum of Rs. 8 crores. The levy of the impugned fee is perfectly competent and within the authority of the Excise Commissioner conferred upon him by the U.P. Excise Act. It is wholly incorrect to say that the ethyl alcohol, which is rectified spirit of 95% V/V in strength, produced in the Petitioners company is highly toxic and unfit for human consumption. If rectified spirit were toxic and unfit for human consumption, as stated by the Petitioners, it could not become fit for human consumption just by mixing water with it. In fact, in whole of India, rectified spirit diluted with water is sold as country spirit and is taxed as such If rectified spirit were unfit for human consumption then the enormous expenditure incurred by the authorities world over will be an exercise in futility With the development of chemical industry, it is a child's play to eliminate denaturants from denatured spirit and make it fit for human consumption. In fact people are prone to re-nature the denatured spirit. Therefore, provision has been made u/s 62 of the U.P. Excise Act for punishing persons trying to re-nature the denatured spirit. In the Petitioners distillery also, rectified spirit is first manufactured and stored in the Receiver Room where it is gauged and probed by the Officer in-charge of the company and then transferred to storage vats. Therefore, provision has been made u/s 62 of the U.P. Excise Act for punishing persons trying to re-nature the denatured spirit. In the Petitioners distillery also, rectified spirit is first manufactured and stored in the Receiver Room where it is gauged and probed by the Officer in-charge of the company and then transferred to storage vats. From these storage vats, rectified spirit is transferred to the denaturation vats, where denaturants are added to make it unfit for human consumption. Aft r denaturing the spirit and after proper chemical analysis, the denatured spirit is transported to the chemical plant of the Petitioner through sealed pipes for manufacture of other products. Even so, it can be pilfered from the Receiver Room as well as from storage and denaturation vats. There is thus a possibility of the rectified spirit manufactured by the Petitioners distillery being diverted for potable purposes. "It is denied that the Petitioners company has no facility for manufacturing potable liquor from rectified spirit produced in the captive distillery." The distillery has enough supply of potable water and adequate storage facilities in the shape of vats to manufacture country spirit and the same facility is likely to be misused for manufacture and surreptitious sale of potable liquor. A substantial number of Excise staff is maintained at the factory and for analysis purposes, for which huge expenditure is incurred by the State. It is to off set the said expenditure that the impugned licence fee is charged. The impugned levy is, therefore perfectly valid and justified. 4. The Petitioners have filed a rejoinder-affidavit, in which the several averments made in the writ petition are re-iterated. In particular, it is stated that whereas the total income of the U.P. State Excise Department was Rs. 478 crores in the year 1990-91, the expenditure is only Rs. 6.98 crores. The said amount is the expenditure incurred on the entire department and not on the several laboratories meant for distilleries manufacturing rectified spirit or denatured spirit as the case may be. 5. Sri K. Parasaran, learned Counsel appearing for the Petitioners, urged the following contentions: (i) Ethyl alcohol, which is rectified spirit containing alcohol 95% V/V, is industrial alcohol, as held by the Supreme Court in Synthetics and Chemicals Ltd. and Others Vs. State of U.P. and Others, (1990) 1 SCC 109 , Industrial alcohol is not fit for human consumption. It is not potable alcohol. State of U.P. and Others, (1990) 1 SCC 109 , Industrial alcohol is not fit for human consumption. It is not potable alcohol. If so, the State Legislature has no power to make a law with respect to it or to charge a licence fee or levy any other impost. Industrial alcohol is within the exclusive domain of the Parliament by virtue of the declaration made by it in Section 2 of the IDR Act and the addition of item 26 in the schedule to the Act. The impugned levy cannot be sustained either with respect to Entry 8 or 51 of list II the Seventh Schedule to the constitution. It cannot also be sustained with reference to Entry 33 of List III inasmuch as the field is already occupied by the provisions contained in Section 18-G of I.D.R. Act (ii) The impugned fee is a licence fee. A fee can be justified only if it is supported by commensurate service rendered by the state. In short, there is no quid pro quo for the said fee. The counter-affidavit does not give any particulars to sustain the impugned levy: Merely giving an estimate of the expenditure incurred on the Entire Excise Department is not enough. The Respondents ought to have indicated the expenditure incurred by them on the staff and/or equipment and laboratories meant for supervising the activities of the distilleries manufacturing rectified spirit/industrial alcohol. In the absence of such material, levy of fee cannot be sustained. 6. On the other hand, the learned Advocate-General, appearing for the Respondents, sustained the levy with reference to Entries 6 and 8 of List II as also Entry 33 of List III of the Seventh Schedule to the Constitution. He submitted that the said fee is levied for the services rendered by the State, namely, for regulating and supervising the process of denaturation and also for ensuring that the denatured spirit is again not re-natured for rendering it fit for human consumption. It is not true to say that Section 18-G of the IDR Act occupies the field covered, by the impugned notification. Both of them operate on distinct and different fields. The judgment of the Supreme Court in Synthetics and Chemicals Ltd. and Others Vs. It is not true to say that Section 18-G of the IDR Act occupies the field covered, by the impugned notification. Both of them operate on distinct and different fields. The judgment of the Supreme Court in Synthetics and Chemicals Ltd. and Others Vs. State of U.P. and Others, (1990) 1 SCC 109 , should be read along with and in the light of the subsequent judgment of the Supreme Court in State of U.P. and Another Vs. Synthetics and Chemicals Ltd. and Another, (1991) 4 SCC 139 . Indeed, the levy is sustainable even with reference to the principles enunciated in the main judgment Synthetics and Chemicals Ltd. and Others Vs. State of U.P. and Others,. (Supra) The learned Advocate-General further submitted that the counter-affidavit filed by the Respondents contains sufficient material and sets out adequate data to establish that the State is rendering services broadly approximating to the fee charged. There has been a good amount of change in the concept of fee and service evidenced by several recent decisions of the Supreme Court. It is not necessary for the State to render a precise account of the fee collected and the services rendered; a broad co-relationship is enough. 7. We may now notice the relevant provisions of the Constitution as also of the U. F. Excise Act and the Rules made there under. Entries 6, 8, 24, 51 and 66 of List II of the 7th Schedule to the Constitution read as follows: 6. Public health and sanitation; hospitals and dispensaries. 8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors. 24. Industries subject to the provisions of Entries 7 and 52 of List I. 51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates or similar goods manufactured or produced elsewhere in India: (a) elcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in subparagraph (b) of this entry. 66. Fees in respect of any of the matters in this List, but not including fees taken in court. Entries 52 and 96 of List I read thus: 52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. 66. Fees in respect of any of the matters in this List, but not including fees taken in court. Entries 52 and 96 of List I read thus: 52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. 96. Fees in respect of any of the matters in this List, but not including fees taken in any court. Entry 33 of List III, which was substituted by Constitution (Third Amendment), Act, 1954, reads thus: 33. Trade and commerce in, and the production, supply and distribution of, (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products; (b) foodstuffs, including edible oilseeds and oils; (c) cattle fodder, including oilcakes and other concentrates; (d) raw cotton, whether ginned or unginned, and cotton seed; and (e) raw jute. The historical background to the introduction of the said substituted entry is set out in the decision of the Supreme Court in Ch. Tika Ramji and Others etc. Vs. The State of Uttar Pradesh and Others, AIR 1956 SC 676 . 8. The U.P. Excise Act, 1910 was enacted to consolidate and amend the law relating to the import, export, transport, manufacture, sac and possession of intoxicating liquor and of intoxicating drues. Section 3 of the Act defines certain expressions occurring in. the Act. Clause (8) of Section 3 defines the expression 'spirit', while Clause (9) defines the expression 'denatured', whereas the expression 'liquor' is defined in Clause (11). They read as follows: (8) "spirit" means any liquor containing alcohol obtained by distillation, whether it is denatured or not. (9) "denatured" means rendered unfit for human consumption in such manner as may be prescribed by the State Government by notification in this behalf when it is proved that any spirit contains any quantity of any substance prescribed by the Slate Government for the purpose of denaturation the court may presume that such spirit is or contains or has been derived from denatured spirit. (11) "liquor" means intoxicating liquor and includes spirits of wine, spirit, wine, tari, pachwal, beer and all liquid consisting of or containing alcohol, also any substance which the State Government may by notification declare to be liquor for the purposes of this Act; Section 40 of the Act empowers the State Government to make rules for the purposes of carrying out the provisions of Act or other law for the time being in force relating to excise revenue. Section 41 confers rule making power upon the Excise Commissioner. The power conferred upon the Excise Commissioner is to be exercised with the previous sanction of the State Government. It is in exercise of this rule making power that the impugned notification has been issued. It is not necessary to examine the various heads in respect of which the Commissioner is empowered to make rule's, inasmuch as it is not the case of the Petitioners that the impugned rule is beyond the rule-making power of the Commissioner. The submission, as mentioned hereinabove, is more fundamental, viz., that the very State Legislature has no power to levy the impugned licence fee on the Petitioners product and, therefore, the Commissioner could not have imposed the said levy. 9. As for back as 1st October, 1910, the Board of Revenue of the United Provinces issued a set of rules regulating the working of breweries and distilleries. The rules are divided into several sub-heads and under each sub-heading, a separate set of rules are made (At that time, Section 41 conferred the rule-making power upon the Board of Revenue) One of the sub-headings in the said rules is "Denaturation of spirit. There are only three rules under this sub-heading and it would be appropriate to set out the said three rules, They read: 1. The following process is prescribed for the denaturing of spirit manufacturing in British India: (1) the ingredients prescribed for admixture with the spirit are-- (1) light caoutaloucine. (2) mineral pyridine bases. They shall be mixed with the spirit to be denatured in the proportion of one half per cent by volume of light caoutaloucine and one half per cent of volume of mineral pyridine bases to the whole volume of spirit which shall be of not less strength than 50 per cent, over proof. (2) mineral pyridine bases. They shall be mixed with the spirit to be denatured in the proportion of one half per cent by volume of light caoutaloucine and one half per cent of volume of mineral pyridine bases to the whole volume of spirit which shall be of not less strength than 50 per cent, over proof. The specifications of light caouteloucine and of mineral pyridine bases shall be those published from time to time by the Excise Commissioner. Provided that, if it be proved to the satisfaction of the Board of Revenue that the above specified denaturants will render the spirit unsuitable for any industrial process or other purpose for which it is required, special sanction may be given to the use of some other denaturant subject to such additional safeguards and conditions as may be deemed necessary under the special circumstances of the case. 2. Spirit shall be denatured in a separate warehouse previously approved for the purpose by the Excise Commissioner, which will be secured by an excise lock. Denaturation shall take place under the direct supervision of the Excise Inspector in charge of the distillery. 3. For the purpose of ascertaining that the spirit has been effectually denatured the Collector of the district in which the distillery is situated shall, not less than once in every six months and without previous notice to the distiller, cause to be taken from a stock sample of such spirit, amounting to about six fluid ounces and shall send such sample at the expenses of the distiller to the officer in charge of the Central Excise Laboratory at Kasauli (or such other officer as the Board of Revenue may appoint in that behalf for examination and report. Note--A copy of the report shall be submitted to the Excise Commissioner. By the impugned notification, Rule 2 was substituted in its entirety. The substituted Rule 2 along with the form of DS-1 licence prescribed there under reads as follows: 2. (1) A licence in form DS-1 (Amended) may be granted by the Collector within his district to a distillery holding licence in Form PD-l or PD-2 for denituration of spirit for supply to persons holding licences in Form FL-16, FL-39, FL-40 and FL 41. (1) A licence in form DS-1 (Amended) may be granted by the Collector within his district to a distillery holding licence in Form PD-l or PD-2 for denituration of spirit for supply to persons holding licences in Form FL-16, FL-39, FL-40 and FL 41. (2) A licence fee in respect of the licence in Form DS-1 shall be payable in advance at the rate of 7 paise per litre of spirit so denatured by the distillery for supply to persons referred to in Sub-rule (1). (3) Separate premises previously approved for the purpose by the Excise Commissioner, shall be provided for the process of denaturation and for the storage of denaturing agents and the vessels and receptacles used in the process Denaturation shall take place in these premises only and issue and storage of denatured spirit shall only be made from or in these premises. The premises shall be secured by an excise lock and denaturation shall take place under the direct supervision of the officer -in-charge. (ii) after Rule 3, the following Form DS-1 shall be appended, namely DS-1 Licence for the denaturation of Rectified Spirit Absolute Alcohol in the distillery premises: Register No. ... Name of licensee.... Locality.... Licence for denaturing rectified spirit absolute alcohol by a distillery holding licence in Form PD-l or PD 2 in the premises specified below is granted to....son of....in the district of....for the period from....to....for which a security of rupees five hundred has been paid in advance subject to the provisions of rules relating to denaturation of spirit and orders issued by the Excise Commissioner in this respect, the infraction of any of which or a conviction for any offence under the Excise or Narcotic Drugs laws shall render the licensee liable to the forfeiture of his licence and security deposit in addition to any of the penalties imposed under the above laws. Description of premises: Collector Endorsement of renewal: This licence is hereby renewed on the conditions herein-before stated below: Period. Signature of Collector. 10. A reading of the impugned Rule 2 discloses the following scheme: Every distillery holding a licence in Form PD-1 or PD-2 shall have to obtain a licence in form DS-1 (Prescribed by the said Rule) "for denaturation of spirit for supply to persons holding licences in Form FL-16, FL-39. Signature of Collector. 10. A reading of the impugned Rule 2 discloses the following scheme: Every distillery holding a licence in Form PD-1 or PD-2 shall have to obtain a licence in form DS-1 (Prescribed by the said Rule) "for denaturation of spirit for supply to persons holding licences in Form FL-16, FL-39. Sub-rule (2) obliges such licensee (holding licence in Form DS-1) to pay in advance, what is called, a licence fee at the rate of 7 Paise per liter of spirit denatured by the distillery for supply to persons referred to in Sub-rule (1). Sub-rule (3) contains certain regulations, which it is not necessary to mention at this state. Form DS-1 carries the heading "Licence for the denaturation of rectified spirit/absolute alcohol in the distillery premises." It is evident that the licence is granted to a distillery to regulate the process of denaturing the rectified spirit/absolute alcohol. The question is whether the provisions contained in the said Rule 2 are incompetent and un-enforceable for the reason that such a levy could not have been created even by the State Legislature? According to the Rules framed under the Act, FL-16, FL-39, FL-40 and FL-41 licences are granted to industries, which consume alcohol for production of other Articles FL-39 licence is granted to an industry, which consumes alcohol in manufacturing a product which does nut contain alcohol. The Petitioners chemical factory falls within this category and was, therefore, granted a licence in Form FL-39. 11. Before we take up the legal contentions urged by Sri K. Parasran, it is necessary to clear the factual aspect According to the Petitioner it produces ethyl alcohol, which is highly toxic and unfit for human consumption. According to the Petitioner, further ethyl alcohol is an industrial alcohol, even though it is not denatured. Having said so, the Petitioner proceeds to say that ethyl alcohol produced in the distillery is denatured as per method approved by the State Excise Authorities and the denatured alcohol which is unfit for human consumption and can be used only for industrial purposes to produce chemicals such as...." (vide paragraph 9 of the writ petition) Whereas according to the Respondents, ethyl alcohol i.e. rectified spirit containing alcohol 95% V/V, is neither highly toxic nor unfit for human consumption According to them, in whole of India, rectified spirit diluted with water is sold as country spirit and is taxed as such. They say, if rectified spirit were toxic and unfit for human consumption, as alleged by the Petitioner, it would not become fit for human consumption just by mixing water with it They say that with a view to render the rectified spirit/ethyl alcohol unfit for human consumption, it has to be denatured by adding certain obnoxious and unpalatable denaturants. According to the Respondents, this process of denaturing, to render the rectified spirit unfit for human consumption, has been in vague since 1863. They have also set out the process by which, and the chemicals by mixing which, the rectified spirit is converted into denatured spirit or specially denatured spirit, as the case may be. According to the Respondents, however, the denaturing is necessary to preclude the misuse of rectified spirit for drinking purposes. They go further and say that even after denaturing, it is necessary to ensure that denatured spirit is not re-natured to render it fit for human consumption. It is towards this regulation and service, the Respondents save, that they are charging the impugned fee. Indeed, the act of denaturing for supply to holders for FL-39 licences can only be done under a licence in Form DS-1 and on payment of the fee prescribed there for. Though the Petitioners have filed a reply affidavit (rejoinder-Affidavit), they have not denied the facts mentioned in paragraphs 4, 5 and in particular, paragraph 17 of the counter-affidavit. What is, however, emphasised is that according to the decision of the Supreme Court in Synthetics and Chemicals (main decision), the levy is incompetent. The Petitioners say that for using the rectified spirit/ehyl alcohol for industrial purposes, it is not necessary to denature it and that the ethyl alcohol produced in its distillery can be used in its chemical factory even without denaturing it. 12. From the above pleadings of the parties, the following position emerges: Ethyl alcohol, which is also called rectified spirit, the alcoholic content of which is 95% V/V, can be used both as an industrial alcohol and also for obtaining country liquor and other liquors. Even without denaturing it, rectified spirit can be used for industrial purposes. But, it is not correct to say that ethyl alcohol/rectified spirit can be used only for industrial purposes and for no other purpose. Even without denaturing it, rectified spirit can be used for industrial purposes. But, it is not correct to say that ethyl alcohol/rectified spirit can be used only for industrial purposes and for no other purpose. As stated by the Respondents, just by mixing water with it, it becomes country liquor and is sold and taxed as such by the State. Further, it can also be used as a raw material for producing Indian made foreign liquors (IMFL), wines rums etc Denaturing is insisted upon by the State with a view to ensure that a particular quantity of rectified spirit/ethyl alcohal is not misused or diverted for being utilised for human consumption, viz. either for obtaining country liquor or for manufacturing MFLS, wines etc Once denatured, the rectified spirit/ethyl alcohol cannot be used either for obtaining country liquor or for manufacturing IMFLS, wines, etc. unless, of course, it is re-natured again. This basic factual position must be kept in mind while examining the contentions urged in the writ petition. 13. It is well-known that production, possession, storage and distribution of country liquor, IMFLS, wines, etc are all totally and fully controlled by the State. The U.P. Excise Act and the Rules made thereunder prescribed a system of licensing. Both for producing the rectified spirit/ethyl alcohol and for obtaining country liquor and or IMFLs, licences are necessary. Similarly, licences are necessary for possessson, storage and sale, whether whole-sale or retail, of the said products. This regulation is done not only in the interest of public health, but also, with a view to regulate trade in these noxious goods. As pointed out by the Supreme Court in Cooverjee B. Bharucha Vs. The Excise Commissioner and the Chief Commissioner, Ajmer and Others, AIR 1954 SC 220 , the twin objects of the excise law are to regulate trade in noxious goods and also to raise revenue. A law providing for such regulation is relatable both to Entry 6 as well as 8 of List II of the 7th Schedule to the Constitution. In so far duties are levied upon these alcoholic liquors for human consumption, it is Entry 51 which is relevant. A law providing for such regulation is relatable both to Entry 6 as well as 8 of List II of the 7th Schedule to the Constitution. In so far duties are levied upon these alcoholic liquors for human consumption, it is Entry 51 which is relevant. As part of this regulation, the State insists that ethyl alcohol/rectified spirit, which is proposed to be used for industrial purposes, should be denatured first so that it cannot thereafter be used for obtaining country liquor or for manufacturing IMFLs (We are told that as at present, recapturing of denatured spirit is an involved process, that, is, not an easy process.) The State, thus, draws a dividing line. It says that all ethyle alcohol/rectified spirit, which is proposed to be used for industrial purposes, should be denatured first. Once denatured, it cannot be used except for industrial purposes. Once denatured, it goes out of the season of the State Legislature. But, the State over-sees the process of denaturing so that that quantity of rectified spirit is no longer available for obtaining or producing potable liquors Rule 2 provides for such regulation and also-charges. What it calls, a licence fee There for. can it be said that this is beyond the purview of the State Legislature. In other words, can it be said that such regulation is outside the purview of Entries 6 and 8 of List II? The said entries are reproduced hereunder for the sake of ready reference. They read as follows: 6. Public health and sanitation; hospitals and dispensaries. 8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors. We are of the considered opinion that the said rule is clearly within the four corners of the said Entries. 14. It is brought to our notice that in Synthetic and Chamicals (main judgment), ethyl alcohol which has 95% alcohol V/V, which is also known as rectified spirit, is treated as an industrial alcohol. In particular, the opening sentences in paragraph 74 of the judgment are relied upon. It must, however, be made clear that in the said decision, the distinction between ethyl alcohol/rectified spirit as such and denatured spirit was not in issue, nor was it considered. It was generally mentioned that ethyl alcohol/rectified spirit containing 95% alcohol V/V is an industrial alcohol. In particular, the opening sentences in paragraph 74 of the judgment are relied upon. It must, however, be made clear that in the said decision, the distinction between ethyl alcohol/rectified spirit as such and denatured spirit was not in issue, nor was it considered. It was generally mentioned that ethyl alcohol/rectified spirit containing 95% alcohol V/V is an industrial alcohol. As we have pointed out hereinabove, even without denaturing, such ethyl alcohol/rectified spirit can be used for industrial purposes. But that does not mean that such rectified spirit/ethyl alcohol cannot be used for obtaining country liquor (just by adding water to it) or as main raw material for manufacturing IMFLs and wines etc. The distinction, which is brought out in this case, was not in issue before the Supreme Court in Synthetics and Chemicals (main judgment). It, therefore, cannot be said that the Supreme Court has ruled, as a matter of law, that any and every rectified spirit/ethyl alcohol is an industrial alcohol. The precise distinction between them has been brought out in the pleadings of this writ petition, which we have set out and discussed hereinabove. We agree that once denatured, it becomes exclusively industrial alcohol, since it cannot be used for obtained country liquor or for manufacturing IMFLs. But, before denaturing, it can be used both as industrial alcohol and also for obtaining and/or manufacturing potable liquors. Indeed, in the very paragraph 74 of the judgment in Synthetics and Chemicals, it is observed: In other words, ethyl alcohol (95 per cent) is not alcoholic liquor for human consumption but can be used as raw material input after processing and substantial dilution in the production of whisky, gin, country liquor, etc. It is true that the Supreme Court proceeds further and state that "rectified spirit is not alcohol fit for human consumption", but that only means that it is unfit for human consumption as it is. All one has to do is to add water to it and it becomes country liquor. It is equally relevant to note in this behalf that even in IMFLs, like wiskies and brandies, the alcohol content is upto 40 per cent which means that the rectified spirit is the main component. 15. All one has to do is to add water to it and it becomes country liquor. It is equally relevant to note in this behalf that even in IMFLs, like wiskies and brandies, the alcohol content is upto 40 per cent which means that the rectified spirit is the main component. 15. In one of the decisions rendered by a Bench of this Court, of which one of us (B.P. Jeevan Reddy, C.J.) was a member (CMWP No. 600 of 1989 Narang Industries Ltd. v. State of U.P. disposed of on 1-2-1991, it has been held that the decision in Synthetics and Chemicals (main judgment) deals with industrial alcohol and that the several observations made therein must be understood in that context. That was a case where the question was whether the State of U.P. is empowered to levy export duty (excise duty) on malt spirit, which was manufactured by the Petitioner therein The alcohol content of malt spirit ranged between 55 to 65% V/V. Malt spirit was utilised for producing malt whisky by adding water and certain other agents. The argument for the Petitioner therein was that in as much as alcohol content of malt spirit is more than 43% and since it cannot be consumed by an ordinary human being directly, i.e. as it is, it is not potable liquor and is, therefore, outside the province of the State Legislature. Strong reliance was placed upon certain observations of the Supreme Court in Synthetics and Chemicals (main judgment) including paragraph 74. The Bench, however expressed the opinion: While making this observation, the Supreme Court did not hold that if the content of ethyl alcohol in the liquor is below 19% or above 43%, it could not be termed as potable alcohol. It has merely referred to the I.S.I, specifications. The question, what should be the percentage of ethyl alcohol in potable liquor was not a matter of decision in that case. These observations, therefore, cannot be said to constitute the ratio of the case-not even obiter dicta." The Bench then proceeded to say; "In this connection, it would be relevant to refer to Excise Manual, Volume II, Appendix I, wherein various potable spirits have been classified. According to this classification, "Brandy' contains 43 to 57% of absolute alcohol by weight or 60 per cent at an average by volume. According to this classification, "Brandy' contains 43 to 57% of absolute alcohol by weight or 60 per cent at an average by volume. Similarly, 'Whisky' contains 51 to 59 per cent of absolute alcohol by weight or 50 per cent at an average by volume. Same is the case with 'Rum'. Obviously, 'Whisky', 'Rum' or 'Brandy', as mentioned in this Appendix, do not cease to be potable alcohols on account of alcohol content being higher than 43% V/V. In the case of vodka, which is a well known Russian drink, the alcoholic content could be between 40 to 55%. Thus merely because the alcoholic content in liquor exceeds 30% V/V or even 43% V/V, it does not cease to be liquor for human consumption, if it is otherwise meant for that purpose. The following further observations of the Bench are equally relevant: We are of the considered opinion that what is true of industrial alcohol is not true of Malt spirit. Malt spirit is not manufactured for any industrial purpose. The only purpose for which it is manufactured is for human consumption it is true that according to the Petitioners, prior to its sale, it is diluted and bottled. The dilution in this case is by adding water to it to bring down the percentage of alcohol. However, the fact remains that the Malt spent, which is being exported from U.P. and is being transported from distillery or bonded warehouse, is only for human consumption, and for no other purpose The Petitioners have not even mentioned that the Malt spirit is manufactured for any purpose other than for "Human consumption' in the circumstances, the Malt Spirit manufacture by the Petitioners must be said to be Alcoholic liquor for human consumption' as mentioned in Entry 51 of List II of the VII Schedule to the Constitution. 16. The position with respect to ethyl alcohol/rectified spirit is slightly different in the sense that it is neither exclusively meant for human consumption nor is it exclusively meant for industrial use. It can be used for both purpose. It is to ensure that ethyl alcohol meant for industrial use is not misused or diverted for human consumption that the impugned regulation is provided for by the State. The regulation is part of genera regulation of the trade in alcohol in the interest of public health, relatable to entries 6 and 8 in List II. It is to ensure that ethyl alcohol meant for industrial use is not misused or diverted for human consumption that the impugned regulation is provided for by the State. The regulation is part of genera regulation of the trade in alcohol in the interest of public health, relatable to entries 6 and 8 in List II. To repeat, one denatured it can be used only for industrial purposes (unless, of course, it is re-natured which, as stated above, is said to be an involved process today). Indeed, in our opinion, for an effective regulation and to prevent abuse and misuse, the State Legislature must be deemed to be clothed with the power to provide for the impugned regulation. For example, it has been held that a law made with reference to Entry 82 of List I (Taxes on Income) can also contain provisions designed to prevent evasion of tax and for a proper implementation of the provisions of the Act. (See Navinchandra Mafailal 1955 SC 58: Bhairwan Das 1981 SC 907). In this connection, we think it relevant to emphasise the language of the impugned rule. It says that a distillery has to take out a licence in from DS 1 (New licence) for denaturation of spirit for supply to persons holding licences in from FL-16. FL-39, FL-40 and FL-41". i.e. when supplied to industries consuming denatured spirit for manufacture of other products. 17. We shall now take up the contention of the learned Advocate General that the State Legislature is competent to provide for such regulation even by virtue of Entry 33 of List III of 7th Schedule to the Constitution, which, inter-alia, empowers both Parliament and State Legislature to make a law relating to trade and commerce in, and the production supply and distribution of products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest. This contention is met by Shri K. Parasaran saying that by virtue of the declaration made by Parliament in Section 2 of the Industries (Development and Regulation) Act, 1951 (and the introduction of item 26 in the first Schedule) read with Section 18-G of the said Act, the held is already occupied by a law made by Parliament and, if so, the State Legislation (i.e., the impugned Rule) must fail being repugnant thereto. 18. 18. The IDR was enacted by Parliament to provide for development and regulation of certain industries. Section 2 of the Act contains a declaration as contemplated by Entry 52 of List 1 of the 7th Schedule to the Constitution. Through this section, the Parliament has declared "that it is expedient in the public interest that the union should take under its control the industries specified in the first schedule." Item 26 of the Schedule reads thus: 26. Fermentation Industries. (1) Alcohol. (2) other products of fermentation industries. It is not, and it cannot be, the contention of the Union of India-or for that matter any one that anything and everything connected with alcohol industry is taken within the purview of the Parliament by virtue of the said declaration in the IDR Act and that the State Legislature cannot make a law touching the said industry. The legislative power conferred upon the State by virtue of Entry 24 of List 11 of the 7th Schedule to the Constitution is taken away only to the extent provided by the IDR Act. In other words, the deprivation of the legislative power of the State Legislature is only to the extent provided by the IDR Act. Though unlike entries 34 and 56 of List I Entry 52 of List I does not emply the words to the extent to which....control of Union is declared by Parliament by law to be expedient in the public interest", it goes without saying that deprivation of the power of the State Legislature is only to the extent to which Parliament has indicated its intention to occupy the field. The IDR Act describes and delineates the extent to which Parliament has resolved to assume the power, or occupy the field, as it may be called. Mr. Parasaran fairly stated that he does not content this position. We shall, therefore, have to determine the extent to which the IDR Act has occupied the field. The field which is not so occupied is left upon and unhampered to the State Legislature. The only provision relied upon in this behalf is Section 18-G of the IDR Act. Section 18-G comprises five sub-sections. It is more in the nature of an enabling provision. The field which is not so occupied is left upon and unhampered to the State Legislature. The only provision relied upon in this behalf is Section 18-G of the IDR Act. Section 18-G comprises five sub-sections. It is more in the nature of an enabling provision. It empowers the Central Government in "so far as it appears to it to be necessary or expedient for securing the equitable distribution and availability at fair prices of any articles or class of articles ralatable to any schedule industry" to provide for regulating the supply and distribution thereof and (sic) and commerce therein. Sub-section (2) specifies the various heads in respect of which an order under Sub-section (1) can be made. It is not necessary for out purposes to refer to Sub-sections (3) to (5). For the sake of ready reference, we may set out Sub-sections (1) to (2) of Section 18-G. They read as follows: 18-G. Power to control supply, distribution, price, etc. of certain Articles--(1) The Central Government so far as it appears to it to be necessary or expedient for securing the equitable distribution, and availability at fair prices of any article or class of articles relatable to any schedule industry may notwithstanding anything contained in any other provision of this Act, by notified order, provide, for regulating the supply and distribution thereof and trade and commerce therein. (2) Without prejudice to the generality of the powers conferred by Sub-section (1) a notified order made there under may provide (a) For controlling the prices at which any such article or class thereof may be bought or sold; (b) For regulating by licences, permits, or otherwise, the distribution transport disposal, acquisition, possession, use or consumption of any such article or class thereof; (c) For prohibiting the withholding from sale of any such article or class thereof ordinary kept for sale; (d) For requiring any person manufacturing producing or holding in stock such article or class thereof to sell the whole or the part of the articles so manufactured or produced during a specified period or to sell the whole or a part of the articles so held in stock to such person or class or persons and in such circumstances as may be specified in the order; (e) For regulating or prohibiting any class or commercial or financial transaction relating to such article or class thereof which in the opinion of the authority making the order are, or if unregulated are likely to be detrimental to public interest; (f) For requiring persons engaged in the distribution and trade and commerce in any such article or class thereof to mark the articles exposed or intended for sale with the sale price or to exhibit at some easily accessible place on the premises the price-lists of articles held for sale and also to similarly exhibit on the first day of every month, at such other time as may be prescribed, a statement of the total quantifies of any such articles in stock; (g) for collecting any information on statistics with a view to regulation or prohibiting any of the aforesaid matters; and (h) for any incidental or supplementary matters, including, in particular, the grant or issue of licences, permits or other documents and charging of fees there for. The words to be noted, and which we have emphasised hereinabove by underlining are "so far as it appears to it to be necessary or expedient for securing the equitable distribution and availability at fair prices of any article or class or articles relating to any schedule industry," It is for the said purpose that the Central Government is empowered to make an order (referred to in Sub-section (1) as notified Order, regulating the supply and distribution of such articles and so regulating the trade and commerce in such articles. Sub-section (2) clarifies that such regulation of supply and distribution and trade and commerce can take the form of controlling the prices, regulating the distribution, transport, disposal, acquisition etc. by a licence, permit or otherwise, prohibiting sale or giving directions for compulsory sale and so on. The power u/s 18-G cannot be used for any purpose other than that mentioned in Sub-section (1) of course, besides Section 18G, there are several other provisions contained in Chapter III regulating the scheduled industries. Inter alia, they provide for licensing new industrial undertakings and also for issue of licences for producing and manufacturing new articles. We do not however, think it necessary to detail the several provisions in Chapter III, since it is no the case of the Petitioner that any of them provide for and prescribe the regulation which is provided for and prescribed by the impugned rule. All this discussion is for the purpose of establishing that by virtue of the IDR Act, the State Legislatures are not completely and totally deprived of the power conferred upon them by Entry 24 of List II, but that the deprivation Entry 24 of List II, but that the deprivation is only partial, viz., to the extent indicated in the IDR Act. This discussion is equally relevant for the purpose of determining whether the field indicated by Entry 33 of List III has been totally occupied by Parliament or whether any field is still left unoccupied for the State Legislature to make a law. This discussion is equally relevant for the purpose of determining whether the field indicated by Entry 33 of List III has been totally occupied by Parliament or whether any field is still left unoccupied for the State Legislature to make a law. Entry 33, it may be reiterated, empowers both Parliament and State Legislature to make a law with respect to trade and commerce in products of any industry included in the first schedule to the IDR Act The said entry further empowers both Parliament and State Legislature to make a law with respect to production, supply and distribution of the products of such industry. Rectified spirit is, without a doubt, a product of an industry specified in the first schedule to the IDR Act. If so, both the Parliament and State Legislatures can make a law with respect to the production, supply and distribution of products of such industry. By virtue of Section 18-G of the IDR Act, the State Legislature cannot, of course, make a law regulating the supply and distribution of and/or trade and commerce in such products for securing the equitable distribution and availability at fair prices of such product; such an order can be made only by the Central Government under that Section, but in other respects, the field is open for the State Legislature. This in turn raises the question, what does the impugned rule purport to do? Does it purport to provide for any of the matters covered by Section 18-G of the IDR Act? We think not. The object and purpose underlying the impugned rule is to ensure that rectified spirit sought to be used for industrial purposes is used only for that purpose and is not diverted or misused for obtaining country liquor or for manufacturing other IMFLs. It is in no way concerned with the equitable distribution and availability at fair prices of either rectified spirit or the denatured spirit, as the case may be. This is a regulation made in the interest of public health (Entry 6 of List II). It is also a law with respect to possession and sale of intoxicating liquors-Entry 8 List II. We may immediately point out again that rectified spirit (95% alcohol V/V), though not fit for human consumption, as it is, can be consumed straightway after mixing water. It is also a law with respect to possession and sale of intoxicating liquors-Entry 8 List II. We may immediately point out again that rectified spirit (95% alcohol V/V), though not fit for human consumption, as it is, can be consumed straightway after mixing water. We have repeatedly pointed out hereinabove that just by adding water, rectified spirit can be consumed by any normal human being and indeed such a diluted rectified spirit is called country liquor and is sold as such. The basic factual aspect is central to the discussion contained in this judgment and has to be borne in mind. The impugned rule merely provides that if a distiller.) purposes to supply rectified spirit to an industry utilising such rectified spirit for producing other articles, it must first denature that rectified spirit and then only supply the same to the industry consuming it (i.e. industries holding licences in form FL-16, FL-39, FL-40 and FL-41). The primary concern of the impugned rule is to ensure that rectified spirit meant for industrial use is used only for that purpose and is not diverted or misused for human consumption. In this sense, the impugned rule and Section 18-G of the IDR Act operate on different fields. They are not even cognate fields doctrine of pith and substance. In this connection, we may refer to the oft-quoted decision of the Supreme Court in Ch. Tika Ramji and Others etc. Vs. The State of Uttar Pradesh and Others, AIR 1956 SC 676 , where it was pointed out that if Parliamentary legislation and State Legislation deal with 'separate and distinct matters though of a cognate and allied character," repugnancy does not arise. The question in that case was whether the Act made by the State Legislature, namely, U.P. Sugarcane (regulation) of supply and purchase) Act, 1953 was unenforceable being repugnant to IDR. Act and the Essential Commodities Act, It was pointed out that Section 18-G of the IDR. Act does not take in raw material required for the manufacture of production of sugar (controlled industry) and that, therefore, the State Legislature was free to make a law regulating the supply and purchase of sugarcane to and by sugar factories. It was also pointed out that there was no repugnancy between the provisions of the Essential Commodities Act and the said State Act. It was also pointed out that there was no repugnancy between the provisions of the Essential Commodities Act and the said State Act. In particular, it was pointed out that repugnancy must exist in fact and not depend merely on a possibility (vide paragraph 34). It was observed, "the possibility of an order u/s 18G being issued by the Central Government _would not be enough. The existence of such an order would be the essential prerequisite before any repugnancy could ever arise. "Applying this test also, we must hold that the impugned rule is not bad in as much as no order has so far, been issued by the Central Government u/s 18-G of the IDR Act providing for regulation identical to the one provided by the impugned rule For all the above reasons, we are of the opinion that the field occupied by the impugned rule is not already occupied by any Central Legislation or by an order made under such Central Legislation and, therefore, the impugned rule is neither incompetent nor unenforceable. 19. Sri Parasaran relied upon certain observations in the judgment of the Supreme Court in Synthetics and Chemicals (main judgment) to contend that Section 18-G of the IDR Act has the effect of occupying the entire field indicated by Entry 33 of List III. In particular, the following sentence in paragraph 85 is relied upon: The State cannot claim that under Entry 33 of List III, it can regulate industrial alcohol as a product of the scheduled industry, because the Union, u/s 18-G of the IDR Act, has evidenced clear intention to occupy the whole field. For a proper appreciation of the said sentence, one has to go back to the meaning of the expression 'industrial alcohol. We have pointed out hereinbefore that rectified spirit, which is not denatured, can also be used for industrial purposes. So far as denatured rectified spirit is concerned, it can be used for industrial purposes only. But it is not correct to say that rectified spirit is per se industrial alcohol. Rectified spirit is as much meant for human consumption as for industrial use. Just by adding water, it becomes 'country liquor' and is consumable by ordinary human beings. It is also used as the base and as the main component in the manufacture of IMFLs. But it is not correct to say that rectified spirit is per se industrial alcohol. Rectified spirit is as much meant for human consumption as for industrial use. Just by adding water, it becomes 'country liquor' and is consumable by ordinary human beings. It is also used as the base and as the main component in the manufacture of IMFLs. Whereas denatured spirit, or for that matter, specially denatured spirit can be used only for industrial purposes-unless, of course, it is re-natured, which process, as pointed out by us hereinbefore, is, as on today, an involved process. In this sense, denatured spirit is really and per sc industrial alcohol. 20. Mr. Parasaran, however, relied upon paragraph 74 of the said judgment wherein it was observed? In many decisions, it was held that rectified spirit is not alcohol fit for human consumption. Reference may be made in this connection to Delhi Cloth and General Mills Co. Ltd. v. Excise Commissioner U.P. Allahabad (Special Appeal No. 177 of 1970 decided on March 29, 1973). The judgment in Special appeal No. 177 of 1970 has not been made available to us, but having regard to the subject matter of discussion in Synthetics and Chemicals (main judgment), we cannot read the said observation as holding that rectified spirit is 'per se' industrial alcohol. The entire judgment in Synthetics and Chemicals deals only with industrial alcohol, which would be evident from the opening words of the judgment in paragraph 1 as also the opening words in paragraph 2. Indeed, paragraph 2 sets out the questions which arose for consideration of the Supreme Court in that case. It is repeatedly stated that questions before them related to industrial alcohol. We may also point out that the question whether 'rectified spirit is 'industrial alcohol' or not, is not a question of law. Moreover, merely because rectified spirit, as it is, is not fit for human consumption, does not mean that it is 'industrial alcohol.' We have already elaborated this aspect hereinbefore at more than one place and need not repeat it over again. 21. Moreover, merely because rectified spirit, as it is, is not fit for human consumption, does not mean that it is 'industrial alcohol.' We have already elaborated this aspect hereinbefore at more than one place and need not repeat it over again. 21. Since we have not agreed with, the first submission of Sri Parasaran, it is necessary to deal with his second contention In short, the submission is that since the impugned Rule levies licence fee, it must be commensurate with services rendered, whereas in this case, no service whatsoever is rendered by the State to the distilleries In any event, it is argued, services, if any, rendered do not justify the levy of fee at such a high rate as 7 paise per litre. The levy is excessive, it is submitted. For a proper appreciation of this contention, we may hark back to our finding regarding the nature and character of the impugned Rule We have held it, and justified it, as a regulatory provision relatable to Entries 6 and 8 of List II of the 7th Schedule to the Constitution We think it necessary to point out that fees can be both reguhtory and compensatory in nature. Where it is regulatory, it is not necessary that there should be an element or quid pro quo. The element of quid pro quo is necessary only where it is compensatory fee The distinction between fees for licences and fees for services rendered has to be borne in mind. Fees charged for granting licences is regulatory in nature, while fees charged for services rendered is generally referred to as compensatory fees This distinction is recognised by the Constitution itself, as would be evident from Clause (2) of Article 110 as also Clause (2) of Article 199 of the Constitution Clause (2) of Article 110 reads as follows: (2) A bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provises for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes. Clause (2) of Article 199 is in identical terms. This distinction is indeed pointed out by Supreme Court in the Corporation of Calcutta and Another Vs. Clause (2) of Article 199 is in identical terms. This distinction is indeed pointed out by Supreme Court in the Corporation of Calcutta and Another Vs. Liberty Cinema, AIR 1965 SC 1107 . It would be instructive to quote paragraph 8 of the said judgment in full: (8) This contention is not really open to the Respondent for Section 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 counterplotted as different kinds of levy The former is not intended to be a fee for services rendered This is apparent from a consideration of Article 110(2) and Article 199(2) where both the expressions are used indicating thereby that they are not the same. In Shannon v. Lower Mainland Dairy Products Board, AIR 1939 PC 36 it was observed at pp 721-722 (of ACP)(at pp 38-39 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. This distinction was also emphasised in a recent judgment delivered by us in CMWP No. 14644 of 1983 Bharat Rice Mills v. State of U.P. (decided on 27th August, 1991). The relevant portion reads thus: ...it would be appropriate to point out the distinction between regulatory fee and compensatory fee. In the case of former, the concept of service to prayer is absent, while in the latter, there ought to be element of service. It is true that even a regulatory fee ought to be reasonable, but the requirement of service to person paying the fee is not there. The regulation may really be in the interest of the general public or a Section thereof; even so, fees can be collected from the person subjected to regulation. It is true that even a regulatory fee ought to be reasonable, but the requirement of service to person paying the fee is not there. The regulation may really be in the interest of the general public or a Section thereof; even so, fees can be collected from the person subjected to regulation. By way of illustration, we may take the case of food grains licensing. Dealing in food grains is a fundamental right. It is, however, regulated by orders made under the Essential Commodities Act. The place of storage, the books to be maintained, the hours of business and sometimes, even the price is regulated Violation of these provisions renders not only the food-grains liable to confiscation but the dealer may also be sent to jail on conviction. Here there is no service to him. The regulation is in the interest of general public. Yet a fees is changed for grant of such licence. Though the Supreme Court has approvingly quoted the decision of the Privy Council which says that a licence fee can be charged for raising revenues as well, we shall proceed on the footing that such a fee ought to be reasonable. This is the view we have expressed in the judgment referred to above. The question then arises, how to judge the reasonableness of such a fee. In our opinion, it would be appropriate, in such a case, to look to the expenditure which the State undergoes for administering the regulation, and if we find that there is a broad co-relation between the expenditure and the fees charged, we should sustain the same. (Situation would be different where the fee is so excessive as to operate as an unreasonable restriction upon the citizen's fundamental right to carry on trade, but that is not the case here). In the counter-affidavit, two facts relevant in this behalf are stated. One is that for the purpose of implementing the said regulation, the State is obliged to maintain laboratories with a substantial staff and that some staff is also posted at the distilleries to ensure proper implementation of the regulatory provision. The second relevant fact stated in the counter-affidavit is that by means of the impugned licence fee the State is deriving an income of Rs. 70 lakhs. The second relevant fact stated in the counter-affidavit is that by means of the impugned licence fee the State is deriving an income of Rs. 70 lakhs. While it is true that the counter-affidavit does not separately mention the expenditure incurred on the Headquarters laboratory, it is evident that a good number of officers and employees are engaged in manning the said laboratory besides the staff which is posted at the distilleries. In the circumstances, we are unable to say that there is no broad co-relationship between the amount of fee charged and the expenses incurred for implementing and over seeing the regulation. In this connection, we think it relevant to point out that even in case of compensatory fees, the concept of service and the charge has been undergoing a change. The law stated by Supreme Court in Kewal Krishan Puri and Others Vs. State of Punjab and Another, (1980) 1 SCC 416 and Ram Chandra Kailash Kumar and Company and Others Vs. State of U.P. and Another, AIR 1980 SC 1124 , has been modified to a marked extent by subsequent decisions and in particular by the decision of the Supreme Court in I.T.C. Ltd. and Others Vs. State of Karnataka and Others, (1985) SCC 476 Supp. We are therefore, unable to say that fees charged is either excessive or unreasonable. 22. Before parting with this aspect of the case, we think it necessary to refer to the decision of the Supreme Court in the Indian Mica Micanite Industries Vs. The State of Bihar and Others, AIR 1939 PC 36 . In that case, licence fee was levied under the rules framed by the Government of Bihar under the Bihar and Orissa Excise Act. The High Court had held that the levy under the said rules was a fee and that finding was not challenged before the Supreme Court. The only question examined by the Supreme Court was "whether the fee levied is within the permissible limits. In other words, whether there is sufficient quid pro quo for the levy in question" One important circumstance to be noted for a proper appreciation of this decision is that the Petitioners therein were not manufacturers of rectified spirit/denatured spirit but only purchasers and upon them was levied the said licence fee. In other words, whether there is sufficient quid pro quo for the levy in question" One important circumstance to be noted for a proper appreciation of this decision is that the Petitioners therein were not manufacturers of rectified spirit/denatured spirit but only purchasers and upon them was levied the said licence fee. Since the State failed to place any material before the Court to show that any service was rendered, the levy was held not sustainable. The relevant finding of the court is to the following effect: Prima fade, the levy appears to be excessive even if the State can be said to be rendering some service to the licensees The State ought to be in possession of the material from which the co-relationship between the lew and the services rendered can be established at least in a general way. But the State has not chosen to place those materials before the Court. Therefore, the levy under the impugned Rule cannot be justified. Having regard to the limited nature of the question considered by the Supreme Court (which assumed that the levy in question was a compensatory fee) and the fact that the Petitioners in that case were not manufacturers of rectified spirit/denatured spirit but only purchasers thereof, the said decision, in our opinion, cannot be read as holding that levy of licence fee (regulatory fee) must also be backed by service. 23. Reliance was also placed upon a decision of ours in Ram Surat Tiwari v. State of U.P. CMWP No. 13270 of 1990 disposed of on 4th April, 1991. That was a case where a person holding whole-sale vend licence for denatured spirit (FL-16 licence) questioned the licence fee as excessive and unreasonable. The licence fee was levied at the rate of 40% ad valorem. The Court examined the reasonableness of the said fee on the ground of service rendered and found that having regard to the service rendered, the levy of licence fee at the said rate was excessive and accordingly struck it down. The Court directed the Government to re-examine the matter and re-determine the rate of licence fee. Pending such determination, the State was permitted to charge, licence fee at the pre-existing rate (25% ad valorem). This case is of no help to the Petitioners herein because it dealt with a whole-sale licensee in denatured spirit, not a manufacturer of denatured spirit. The Court directed the Government to re-examine the matter and re-determine the rate of licence fee. Pending such determination, the State was permitted to charge, licence fee at the pre-existing rate (25% ad valorem). This case is of no help to the Petitioners herein because it dealt with a whole-sale licensee in denatured spirit, not a manufacturer of denatured spirit. In other words, the Petitioner therein was not a distillery, but a dealer. The second aspect to be noted is that the court did not hold levy of licence fee itself not sustainable but only held the rate (40% ad valorem) as excessive and directed the State to re-determine the licence fee at an appropriate rate. Sri Parasaran, however, relied upon those portions of the judgment where we discussed the case of Respondent with respect to the expenditure incurred on the Excise Department and the income thereof, which averments are similar to those made in the counter-affidavit in this writ petition. But inasmuch as in this case, nature of levy is different and is for a different purpose, the observations in the said judgment are of no help to the Petitioners, more so for the reasons given by us hereinbefore. 24. For the above reasons, the writ petition fails and is accordingly dismissed. There shall be no order as to costs.