Palghat Chamber of Commerce v. State of Kerala, Represented By The Secretary To Government
2017-03-10
DEVAN RAMACHANDRAN
body2017
DigiLaw.ai
JUDGMENT : Devan Ramachandran, J. 1. What presents in these writ petitions is the tale of two regimes for licencing under the provisions of the Prevention of Food Adulteration Act, 1954, (here-in-after referred to as the 'Act', for short). 2. Under Section 24 of the Act, the Government of Kerala is empowered to frame and notify rules there under relating to purposes which are iterated therein. One of the purposes shown in Section 24 is to provide for licence and to fix the fees for such, for persons or concerns engaged in the manufacture of food for sale and for those engaged in sale of food without such manufacture. Authorised thus, the Government of Kerala notified Kerala Prevention of Food Adulteration Rules, 1957 (hereinafter referred to as 1957 Rules', for short) providing the procedure for various processes and requirements under the parent statute. 3. The 1957 Rules contain two Schedules: Schedule I prescribes fees for licence for manufacturers and sale of food and Schedule II provides for fees applicable to persons engaged in sale of food without such manufactures. The Schedules, which came into force in the year 1957, remained without any modification for the next more than 50 years. The rates shown therein for the licences were obviously very exiguous because the fees were in respect to the year 1957. There was no revision and the maximum licence fees under the original Rules was only about Rs. 20/-. Obviously, this had become redundant by efflux of time and on account of inflation, and the Government was, therefore, justified in thinking that the whole regime for licencing under the 1957 Rules required a quantum change. 4. Presumably by such intention, the Government notified the Kerala Prevention of Food Adulteration Rules, 2007 (hereinafter referred to as 2007 Rules', for short). There were several changes brought in through the 2007 Rules. But, the primary among them appears to be that the Schedules were completely reworked, rearmed and overhauled.
4. Presumably by such intention, the Government notified the Kerala Prevention of Food Adulteration Rules, 2007 (hereinafter referred to as 2007 Rules', for short). There were several changes brought in through the 2007 Rules. But, the primary among them appears to be that the Schedules were completely reworked, rearmed and overhauled. When the Schedules under Rules of 1957 contained not more than five or six headings, under which the fees were fixed, the regime under the 2007 Rules contains several heads, obviously to provide for the requirements and needs over the years and to ensure that all categories of persons obtain the best possible slots for them to be placed in with specific reference to their business or avocation, without the burden of being placed in categories to which they do not fit in or coalesce. The intentions were completely salutary and I have no reason to believe that the Rules were notified for any other reason other than the welfare of the citizenry. 5. However, the corollary question that comes up is whether the 2007 Rules, especially the Schedules relating to the licence fees therein, prescribe much larger fees than what was prescribed earlier. As already indicated, the 1957 Rules prescribed woefully insufficient amounts as licence fees, obviously because it related to the year 1957 and it was continued without any change for about half a century thereafter. Therefore, when the 2007 Rules were brought in, under certain new heads and categories, fees for licence were also refixed which start from about Rs. 200/- and then ascending all the way up to Rs. 10,000/-. The petitioners have filed these writ petitions primarily and essentially alleging that such escalation of rates in 2007 Rules from what was provided in the 1957 Rules is disproportionate, arbitrary and capricious because the rate of escalation is over 500 to 1000 times on certain heads. 6. At first blush and in a primary view, it might appear that these arguments are extremely attractive. However, I am afraid, that on a closer scrutiny of the Schedules that have been brought in under the 2007 Rules and the rates that are shown therein, most of the submissions lose their sheen.
6. At first blush and in a primary view, it might appear that these arguments are extremely attractive. However, I am afraid, that on a closer scrutiny of the Schedules that have been brought in under the 2007 Rules and the rates that are shown therein, most of the submissions lose their sheen. I say this because an evaluation of the Schedules under the 1957 Rules and the 2007 Rules would make it irrefrangible that the difference therein are not merely in the nature of escalation of rates but is far more profound and the 2007 Rules concede to bring a completely new system of licencing. It will therefore be only applicative that the Schedules in the two Rules are read in full. 7. Under the 1957 Rules, Schedules I and II read as under:- "Schedule I Table of Licence-Fees for manufacture and Sale of Food 1. Carbonated water, ice candies, ice, ice-cream, biscuits, bread and other bakery products, confectionery, sweetmeats 12 2. Molasses, jaggery, sugar 12 3. Coffee 12 4. Tea 12 5. Drying copra, crushing vegetable oil by country chucks 6 6. Grinding, chillies, grams, cereals, condiments, etc. and preparing sago and starches 6 7. Dairy products. 12 8. Oil Mills including drying copra 20 9. Rice mills 20 10. Restaurants and hotels 15 11. Any other article of food 72 Provided any manufacturer who is not registered under the General Sales Tax Act, for the time being in force need only pay a licence fee of Rs.2/-. Note : A licence under category 10 will cover manufacture of all articles incidental to the business of sale in the hotel or restaurant. Schedule II Tables of Licence - Fee for Sale of Food 1. Wholesale sales 12 2. Retail sales 6 3. Dealer not registered under the General Sales-tax Act for the time being in force including hawkers 2" And, under the 2007 Rules, the Schedules have been given a complete makeover and they read as under:- "Schedule I Table of licence fees for one year or part of a year for the manufacture of food for sale 1. Manufacture with mechanical and electrical power of any articles of food such as Spices and Condiment, Oil, Rice, Pickle, Aerated water, Mineral water, non-alcoholic beverages, Dairy products, Bread, Biscuits and any other bakery products.
Manufacture with mechanical and electrical power of any articles of food such as Spices and Condiment, Oil, Rice, Pickle, Aerated water, Mineral water, non-alcoholic beverages, Dairy products, Bread, Biscuits and any other bakery products. Toffees and hard boiled sugar, candies and other confectioneries, ice cream and such products, pan masala, Fish processing and freezing plants, Baby food, includes any other food articles which are not included in the above list including food additive such as food colours, preservatives, antioxidents, anti caking emulsifying and establishing agents. Rs.5000 2. Manufacture or preparation of any article of food without mechanical and electrical power such as pickles, jaggery, soda, vinegar, non-alcoholic beverages or any other food. Rs. 500 3. Manufacture all type of alcoholic beverages as specified in any law in force Rs.10,000 4. Tea, Coffee, Cashew nut or any such pany Rs.5000 5. Five Star Hotel Rs.10,000 6. Four Star Hotel Rs.9,000 7. Three star Hotel/Hotel (Bar Attached) Rs.8,000 8. Hotel-cum-Restaurant with lodging Rs.5000 9. Hotel-cum-Restaurant/Tourist Resorts Rs.3000 10. Catering units and food contractors (diet contractors) Food vending machinery unit/Food counter Rs.2000 11. Hotel including fast food, canteen Rs.1000 12. Manufacture or preparation of any other article of food Rs.500 13. House boat with kitchen facility Rs.500 Provided that any manufacture who is not registered under the Kerala General Sales Tax Act, for the time being in force need only pay a licence fee of Rs.500/-. Note:-A licence under category 5 to 11 will cover manufacture of all articles incidental to the business of sale in the Hotel and restaurant. Schedule II Table of licence fee for sale of food Amount in Rupees 1. Foreign Liquor wholesale shop 8000 2. Foreign Liquor retail shop 5000 3. Wholesaler/Distributor, Commission agents, clearing and forwarding agent, Brokers of all items of food articles including fish, dried fish, egg, meat etc. 3000 4. Wholesaler-cum-Retailer of any article of food including coconuts and its products, wholesale of vegetable and fruits products etc., mobile food units, bakery, ice cream units etc. 2000 5. Toddy shop/parlour, medical shops selling baby foods and other proprietary weaning food etc. 1000 6. Chicken stall, sweet stall, egg stall, meat stall, ice cream parlour, soft drinks parlour, milk booth, cafeteria snack bar, tea shop, temporary food stalls during fares and festivals and any other gathering. 500 7.
2000 5. Toddy shop/parlour, medical shops selling baby foods and other proprietary weaning food etc. 1000 6. Chicken stall, sweet stall, egg stall, meat stall, ice cream parlour, soft drinks parlour, milk booth, cafeteria snack bar, tea shop, temporary food stalls during fares and festivals and any other gathering. 500 7. Pan shops with sweets, bakery products, Retailer of all articles of food including fish, dried fish, egg, meat etc. 250 8. Any other food articles or prepared food seller not included in the above list. 200 9. Dealer not registered under the Kerala General Sales Tax Act for the time being in force including hawker mobile food unit, itinerant vendor 200" 8. I have extracted the Schedules for one purpose and that is to show the genetic evolution that the Rules were justified in having, on account of the ever changing needs and requirements of the contemporary society. The 1957 Rules and the Schedules are extremely uncomplicated. It has only five or six heads and as can be seen from it, it was very basic, and therefore, provided for very exiguous amounts as licence fee. However, the 2007 Rules, taking into account the vagaries of modern life and its requirements, have taken into its fold several heads which were not even thought of in 1957. 9. On an independent and dispassionate examination, even the fees prescribed for the various licences there in cannot be said to be excessive. This is because except for the manufacture of alcoholic beverages or for licences of five star hotel, four star hotel, three star hotel, hotel cum restaurant with lodging, hotel cum restaurant/tourist resorts or for manufacture of food with mechanical and electrical power, all the other heads still prescribe licence fees which are extremely reasonable. It may look grossly excessive going by the 1957 Rules, but taking into account the fact that this has come more than 50 years thereafter, the extant rates would inevitably justify their rates. No different is the case of Schedule II of the 2007 Rules. Except in the case of foreign liquor wholesale shops or foreign liquor retail shops or wholesale distributors, commission agents etc. of certain foods, the rates for small shops like chicken stall, sweet stall, egg stall, tea shop etc., are obviously reasonable and cannot concede to any challenge on the ground that it is extremely disproportionate. 10.
Except in the case of foreign liquor wholesale shops or foreign liquor retail shops or wholesale distributors, commission agents etc. of certain foods, the rates for small shops like chicken stall, sweet stall, egg stall, tea shop etc., are obviously reasonable and cannot concede to any challenge on the ground that it is extremely disproportionate. 10. I am, therefore, of the view that what has been done by the 2007 Rules is not merely to enhance the licence fee but to bring in and incorporate a completely new regime. This is purely a matter of Policy that the Government had taken up for themselves while considering the ever evolving and growing requirements of licencing under the Act and the Rules. It is now well settled that in matters of Policy, the jurisdiction of this Court is barricaded to a large extent and I am, on account of the well recognised jurisdictional constraints, proscribed from delving into or engaging in any consideration as to the validity or legality of such matters, which are squarely within the matter of Policy. {See for support : Tata Cellular v. Union of India [ AIR 1996 (SC) 11 ], Balco Employees Union v. Union of India [ (2002) 2 SCC 333 ], Satyanarayana and Ors. v. Purushotham and Ors. [ (2008) 5 SCC 416 ] and Delhi Development Authority and another v. Joint Action Committee, Allottees of SFS Flats and Others.[ (2008) 2 SCC 672 ]}. I cannot, therefore, move any forward in the examination of the validity of these issues and I leave it there. 11. The question that then survives is as to whether the rates in the 2007 Rules are disproportionate to the ones shown in the 1957 Rules. I have already indicated that I cannot see that these rates are disproportionate except faintly in the case of certain heads like foreign liquor, five star hotels etc. I have to, therefore, examine the rates for licences in the 2007 Rules in relation to the purposes for which it is sought to be imposed. Relatively large rates of licence fee are imposed only on large manufacturers and on persons/concerns involved in the manufacture and sale of articles like alcoholic beverages etc., which are essentially in the realm of res extra commercium. I cannot find fault with the imposition of larger fees on these categories.
Relatively large rates of licence fee are imposed only on large manufacturers and on persons/concerns involved in the manufacture and sale of articles like alcoholic beverages etc., which are essentially in the realm of res extra commercium. I cannot find fault with the imposition of larger fees on these categories. However, I am guiding my examination to see whether small manufacturers and small traders would find themselves asphyxiated on account of the fees that have been imposed by the 2007 Rules. I have examined the Schedules very thoroughly for this purpose. I have seen that the maximum fees that would be imposed for the licence of a small trader or for a small to medium manufacturer is not more than 1000/- or 2000/- Rupees. This, by no stretch of imagination, can be said to be excessive or incommensurate especially in view of the fact that the Act is intended to be a regulatory one. Regulation requires discipline and mandates a professional system to ensure that the controls and regulations are applied and enforced properly and without fail. Imposition of a fee, as low as Rs. 500/- or 1000/- at the most, cannot be found to be excessive, exorbitant or boundless. I have, therefore, no doubt that the Schedules in the 2007 Rules cannot be found to be arbitrary or capricious or to be lacking a reasonable or rational nexus to the purposes for which it has been brought in. 12. That brings to the issue as to whether the petitioners should be now asked to pay the differential amounts under the 2007 Rules, being the balance after what was paid by them under the various interim orders of this Court, at this point of time. I say this because, I notice that this Court had, by an interim order dated 12.04.2007, permitted all the petitioners to pay licence fee under the 2007 Rules at 25 times over the fees fixed in the 1957 Rules. I am told that the petitioners have all paid the fees at this rate for obtaining licence for the periods after 2007-2008. Normally, when payments are made under interim orders, the position of the petitioners would not be protected if the final result goes against them. 13.
I am told that the petitioners have all paid the fees at this rate for obtaining licence for the periods after 2007-2008. Normally, when payments are made under interim orders, the position of the petitioners would not be protected if the final result goes against them. 13. However, in these cases, there is an intervening fact and that is that the Government appears to have taken a view, as early as in 2008, that the licence fees under the 2007 Rules shall stand frozen and that fees will be levied only as per the rates shown in the pre-existing 1957 Rules. This is discernible from Ext.P6 order of Government dated 09.01.2009, exhibited in WP(C) No.12679/2010. This order requires a closer look. 14. The Government has in the said order, stated unequivocally that it has frozen the new Rules and that the old fees would have become applicable. However, it has noticed the above mentioned interim order of this Court and has also, therefore, provided that the licences will be renewed on condition that the petitioners pay 25 times of the pre-existing licence fees on the condition that an undertaking will be filed by them that if the writ petitions are dismissed, the balance would be paid by them. I notice that this order was issued only on 09.01.2009. Obviously therefore, during the period from 12.04.2007, when the interim order was issued by this Court, till 09.01.2009, when Ext.P6 order was issued, the licence fee was being collected only at 25 times of the pre-revised schedule. I am, therefore, of the opinion that since the Government had unilaterally taken a decision, without being so ordered by this Court, to freeze the rates prescribed by the new Rules, and since the traders (petitioners) had enjoyed the benefit of the said Government Order dated 04.06.2008, they cannot be mulcted with liability to make payment at the post revised rates, at least for this period. Since Ext.P6 is dated 09.01.2009, the benefit of that order would continue obviously until 31.03.2009 after which the traders would have required to obtain a new licence with effect from 01.04.2009, being a new financial year. 15. Therefore, the question is as to whether from that date onwards should they need be made liable for the differential amounts.
Since Ext.P6 is dated 09.01.2009, the benefit of that order would continue obviously until 31.03.2009 after which the traders would have required to obtain a new licence with effect from 01.04.2009, being a new financial year. 15. Therefore, the question is as to whether from that date onwards should they need be made liable for the differential amounts. This Court had interdicted the recovery of money under the post revised scales in the prima facie view that the rates are exorbitant. However, I find it to be otherwise. It would, therefore, be up to the Government to consider and take a decision as to whether all these traders will have to be now asked to make payment of the differential amount, but only with effect from 01.04.2009. 16. I am not saying that the Government should do this, but I am saying that I leave liberty to the Government to do so, if they find that it is so required. However, while doing so, the Government should also be aware that even the 2007 regime under the Food Adulteration Act has completely been effaced by the new central statute, namely the Food Safety and Standards Act, 2006 (hereinafter referred to as the 'FSS Act', for short) which has come into effect in the year 2011. Obviously, therefore, even if the Government wants to recover the differential amounts in terms of the liberty granted by me herein, it would be possible for them to do so only for about an year or, at best, two, from 01.04.2009 and until such time, as the FSS Act came into force. 17. Since all the petitioners are stated to have paid the licence fee for all the years under interim orders of this Court, it would certainly be desirable that they continue to obtain such benefit for this about two year period also. But this is a matter that the Government has to take a call on, if they require to rethink as to the collection of the differential licence fee beyond what has already been paid for the period from 01.04.2009 till the FSS Act came into effect in the year 2011. 18.
But this is a matter that the Government has to take a call on, if they require to rethink as to the collection of the differential licence fee beyond what has already been paid for the period from 01.04.2009 till the FSS Act came into effect in the year 2011. 18. In such view of the matter and on a conspectus of all that is recorded above, I have no hesitation in holding that the 2007 Rules are in order and that it has been issued and notified within the powers available to the Government of Kerala, however, directing the Government of Kerala not to recover the licence fee from the petitioners in these cases at the post revised scales until 01.04.2009. The liberty granted to them to consider the demand for the period after 01.04.2009 is to be used by them with great care and after proper thought and only if they are of the view that it requires to be done, in spite of their stated position as is discernible from Government Order No. GO(MS) No.15/08/H&FWD dated 09.01.2009. These writ petitions are thus ordered and I direct the parties in all the cases to suffer their respective costs.