JUDGMENT : C.K. Abdul Rehim, J. M/s. Bharat Petroleum Corporation Ltd, a public sector undertaking, running the 'Kochi Refinery' which is situated within the limits of the 2nd respondent Panchayat, is the petitioner. Challenge is against Ext.P6 order of the 3rd respondent Tribunal through which a revision petition filed by the petitioner against Ext.P5 decision of the 2nd respondent Panchayat was rejected. The revision petition was filed against the appellate order passed by the Panchayat, dismissing the appeal filed against the demand for payment of fee for renewal of licence, with respect to the years 2008-2009 & 2009-2010. 2. The petitioner company had approached this court earlier challenging increase in the rate of licence fee, levied under the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996 (hereinafter referred to as the 'Rules'). Validity of the Rules was challenged therein on the ground that it is ultravires of provisions in the Kerala Panchayat Raj Act, 1994 (hereinafter referred to as the 'Act') and on the ground that there exists no 'quid pro quo' since there is no service rendered to the payer in return of the levy. The challenge was ultimately settled in the decision of this court in W.A. No.191/2004 and connected cases, vide; judgment dated 18.08.2007. Challenge against validity of the Rules were repelled and the demand was upheld. Subsequently when the 2nd respondent issued Ext.P2 demand notice for payment of balance amount of licence fee due for the period 2008-2009 & 2009-2010, the petitioner submitted Ext.P3 objections before the Secretary of the 2nd respondent, inter alia contending that, computation of capacity of the total machineries used in the factory is not correct. It was contended that the machineries kept as 'stand-by' need to be excluded. The said objection was rejected by the Secretary of the Panchayat through Ext.P4. The petitioner preferred appeal before the 2nd respondent Panchayat. But the appeal was also rejected holding that all the machineries installed in the company need to be considered as in use and the licence fee under Rule 18 need to be reckoned based on all such machineries. It is found that the licence fee demanded is not in any manner exceeding the rates prescribed under Schedule III formulated under Rule 18. It is found that the licence fee demanded is not in any manner exceeding the rates prescribed under Schedule III formulated under Rule 18. The 3rd respondent Tribunal had dismissed the revision petition filed against the appellate order relying on the decision of this court in Indian Oil Corporation Ltd v. Thenhipalam Grama Panchayat [ 2010 (3) KLT 300 ]. 3. Contentions of the petitioner are mainly two folded. First contention is that the fee prescribed under Schedule III cannot be levied for renewal of licence on an yearly basis. The renewal fee need to be computed based on the turnover of the establishment, as prescribed under Schedule II appended to Rules. Further contention is that the panchayat is not entitled to fix licence fee based on capacity (Horse Power) of the machineries and other systems provided as back up/stand-by facility for running the factory. The maximum fee payable ought to be computed only based on capacity of the machineries in actual utilization. 4. Question whether the machineries provided as back up/stand-by need to be computed for fixing the licence fee, stands already settled in the decision in Indian Oil Corporation's case (cited supra). It is held that Rule 18 does not stipulate that fee can be charged only based on capacity of the machinery actually used in the manufacturing process. Fee can be charged for fire pumps and Diesel Generator sets and also with respect to machineries kept as stand-by for supporting the working of the establishment, is the finding. This court observed that, under Rule 18 the local authority is empowered to charge licence fee as contemplated under Section 232 of the Act for the place where the machinery or manufacturing plant is operated. Neither Rule 18 nor Schedule III draw a distinction between the machinery actually used and the machinery installed for the purpose of ensuring safety or uninterrupted supply of power, is the finding. 5. Learned counsel for the petitioner raised vehement contentions in an attempt to persuade this court to deviate from the view adopted in Indian Oil Corporation's case (cited supra). It is contended that, computation of the machineries not used in connection with the manufacturing process, like fire equipments, water pumps, diesel generators etc. is totally unjustified. 5. Learned counsel for the petitioner raised vehement contentions in an attempt to persuade this court to deviate from the view adopted in Indian Oil Corporation's case (cited supra). It is contended that, computation of the machineries not used in connection with the manufacturing process, like fire equipments, water pumps, diesel generators etc. is totally unjustified. But this court is of the considered opinion that since the element of 'quid pro quo' need not be applied in the case of levy of licence fee, fixation of the rate based on total capacity of machineries installed, is justified. There need not be any direct nexus between the rate of licence fee and the capacity of machineries used in the manufacturing process. It is for fixing a slab system in the levy of licence fee, that the rule making authority had adopted capacity of the total machineries as basis. Licence fee at different slabs is fixed under Schedule III based on the total capacity of machineries installed in the factory/workplace. Keeping in mind the objective of fixing different slabs/rates of licence fee it cannot be held that the licence fee should be fixed strictly based on the capacity of machineries actually used in the process of manufacturing. Hence I am of the opinion that computation of capacity of the entire machinery's installed at the premises, for fixation of the slab of licence fee under Schedule III, is to be upheld. In this regard I concur with the view taken by this court in the decision in Indian Oil Corporation's case (cited supra). 6. Another important challenge raised against the demand is on the ground that the licence fee prescribed under Schedule III cannot be charged for the renewal of any existing licence. In other words, for the renewal of licence on yearly basis collection of licence fee should be based on the turnover, as prescribed under Schedule II of the Rules, is the contention. 7. As a preliminary objection the 2nd respondent contended that such a challenge cannot be sustained in view of Ext.P1 judgment. But on a perusal of Ext.P1 it is evident that challenge raised against validity of the Rules was based on the ground as to whether it is ultravires of the Act and on principles of 'quid pro quo'. 7. As a preliminary objection the 2nd respondent contended that such a challenge cannot be sustained in view of Ext.P1 judgment. But on a perusal of Ext.P1 it is evident that challenge raised against validity of the Rules was based on the ground as to whether it is ultravires of the Act and on principles of 'quid pro quo'. Question as to whether the rate of fee for renewal of licence need to be as provided under Schedule III or Schedule II, was not an issue agitated. This court is of the opinion that the petitioner is not estopped from raising such challenge. 8. From Ext.P2 Notice it is evident that, fee for the years 2008 - 2009 & 2009 - 2010 were demanded under two heads. An amount of Rs. 4,000/- is demanded as licence fee. In addition, a fee for usage of machinery, computed based on the capacity of machineries at 159463 HP and 162080 HP for the two years was also demanded. Question mooted for consideration is as to whether the 2nd respondent is entitled to demand licence fee as well as fee for usage of machineries, separately. 9. Section 232 of the Kerala Panchayat Raj Act, 1994 stipulates that no place within the limits of the panchayat shall be used for any of the purposes specified in the Rules, which in the opinion of the Government are likely to be offensive or dangerous to human life or health or property, without a licence issued by the Secretary and except in accordance with the conditions stipulated in such licence. Rule 4 prescribes the procedure for notifying places in the Panchayat area which shall not be used for any purpose or purposes specified in Schedule I appended to the Rules, without obtaining licence issued by the competent authority and except in accordance with the conditions specified therein. Rules 5 & 6 prescribes the procedure for application and grant/refusal of the licence. Rule 7 enables the Panchayat to levy an amount not exceeding the rates mentioned in Schedule II as fee for grant of the licence. From those provisions it is clear that the fee chargeable for the grant of licence permitting utilisation of any area for purposes which are enumerated in Schedule-I, is the fee prescribed under Schedule II. Rules 8 & 10 prescribe the period of licence and the procedure for its renewal. From those provisions it is clear that the fee chargeable for the grant of licence permitting utilisation of any area for purposes which are enumerated in Schedule-I, is the fee prescribed under Schedule II. Rules 8 & 10 prescribe the period of licence and the procedure for its renewal. Section 233 of the Kerala Panchayat Raj Act insists that, no person shall construct or establish any factory, workshop or workplace or install in any premises any machinery or manufacturing plant, without permission of the Village Panchayat and except in accordance with the conditions specified in such permission. Sub-section (2) to (5) of Section 233 deals with the procedure for submitting application for such permission and grant/refusal of the same. Rule 12 prescribes the procedure for submitting application and for grant of permission for constructing or establishing any factory, workshop or workplace or for installation of any machinery or manufacturing plant. Detailed procedure for submission of the application and for disposal of such application, either by granting or refusing such permission, is prescribed under sub-rule (2) to (6) of Rule 12. Rule 17 provides that the fee which may be charged for granting permission under Section 233 shall not exceed the maximum specified in Schedule III. Therefore it is clear that the fee which can be levied for granting permission for construction or establishment of any factory, workshop or workplace or other installation of machinery or manufacturing plant is the fee as prescribed in Schedule III. It is pertinent to note that the rate of licence fee prescribed under Schedule II is on the basis of the average daily turnover of the establishment. Whereas the rate of fee for grant of permission under Schedule III is based on the capacity of machineries in Horse Power. The basis for prescribing the rate of licence fee and the fee for grant of permission are clearly indicative. At the time of granting the permission for construction of the factory or for installation of machinery, the fee for grant of such permission is to be levied based on the capacity of the machinery which is proposed to be installed. Whereas for grant of licence to use any area for purposes mentioned in Schedule I, the rate of licence fee need to be collected based on the average daily turnover of the establishment. Whereas for grant of licence to use any area for purposes mentioned in Schedule I, the rate of licence fee need to be collected based on the average daily turnover of the establishment. Considering the relevant provisions relating to renewal of licence, it is to be held that for the purpose of renewal of licence the fee prescribed is under Rule 7 read with Schedule II and not the fee prescribed for grant of permission under Rule 17 read with Schedule III. 10. In this regard attention of the court is drawn to provisions contained in Rule 18 and Rule 21. Rule 18 provides that the fee that may be charged for granting licence or for renewal of licence for one year under Section 232 shall not exceed the maximum specified in Schedule III, where the machinery or manufacturing plant is operated by electricity. So also Rule 21 prescribes that the fee that may be charged for granting or renewal of licence for one year under Section 232 with respect to machinery or manufacturing plant operated by power other than electricity, shall not exceed the maximum specified in Schedule IV. Learned senior counsel appearing for the 2nd respondent canvassed for an interpretation based on Rules 18 & 21 that those provisions enable the Panchayat to levy fee for renewal of licence based on the rates contained in Schedule III & IV respectively. But such a contention cannot be accepted on considering the specific provisions contained in Rules 18 & 21 read in conjunction with Rule 7 which specifically stipulates that the fee leviable for grant of licence under Section 232 shall not exceed the rates mentioned in Schedule II. Therefore it is evident that what is intended through Rules 18 & 21 is only to put a maximum ceiling with respect to levy of licence fee under Rule 7. It stipulates that the fee for grant or renewal of licence stipulated under Schedule II shall not in any case exceed the maximum of the fee specified for grant of permission under Rule 17 read with Schedule III. It stipulates that the fee for grant or renewal of licence stipulated under Schedule II shall not in any case exceed the maximum of the fee specified for grant of permission under Rule 17 read with Schedule III. In other words, if the fee for grant of permission with respect to any particular establishment payable based on Schedule III is less than the licence fee chargeable under Rule 7 and Schedule II, then the panchayat is entitled to levy the fee only upto a maximum as prescribed for the said establishment under Schedule III. No other interpretation can be possible permitting the Panchayat to levy both the licence fee under Rule 7 read with Schedule II and fee for permission under Rule 17 read with Schedule III, for the purpose of renewal of licence. 11. Based on conclusions arrived as above, this court is of the opinion that the demand issued by the 2nd respondent Panchayat under Exts.P2 and P4 cannot be sustained. It is declared that the 2nd respondent panchayat is entitled to collect from the petitioner fee for renewal of the licence only at the rates specified in Schedule II of the Act. 12. The writ petition is allowed to the above extent. The 2nd respondent is directed to revise the impugned demand. Needless to observe that amount if any already paid shall be appropriated accordingly.