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of <h1>Supreme Court: Licence Fee for Factory Renewal Upheld as Fee, Not Tax</h1> The Supreme Court upheld the validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950, determining that the licence fee for ... - Issues Involved:1. Validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950.2. Whether the licence fee for renewal constitutes a fee or a tax.3. Examination of services rendered by Inspectors under the Factories Act 1948.Issue-wise Detailed Analysis:1. Validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950:The appeal concerns the validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950, which prescribe the licence fee for factories. The appellant company, operating several factories in Delhi, challenged the annual licence fee of Rs. 12,775.00, arguing it was excessive and not commensurate with services rendered. The High Court dismissed the petition, and the company appealed.2. Whether the licence fee for renewal constitutes a fee or a tax:The appellant contended that the renewal fee was merely an endorsement for the next year and did not entail services commensurate with the amount charged, thus lacking the element of quid-pro-quo, which distinguishes a fee from a tax. The High Court, however, found that the work carried out by Inspectors under the Act, ensuring health and welfare provisions for workers, constituted services rendered in return for the fee. The court noted that 60% of the licence fee was used for running the department.The Supreme Court referenced prior cases, including *Corporation of Calcutta v. Liberty Cinema* and *H.H. Sudhundra Thirtha Swamiar v. Commissioner for Hindu Religious & Charitable Endowments, Mysore*, to determine the nature of the levy. It was established that a fee does not lose its character due to compulsion or lack of direct service to individuals. The levy is a fee if there is a reasonable relation between the levy and the expenses for maintaining the service.3. Examination of services rendered by Inspectors under the Factories Act 1948:The Supreme Court examined the Factories Act provisions, highlighting the extensive duties of Inspectors, including ensuring compliance with health, safety, and welfare standards. Inspectors provide technical advice and guidance, which benefits factory owners by preventing dangerous conditions and ensuring timely repairs. The court concluded that the Inspectors' duties involve significant technical knowledge and provide substantial benefits to factory owners, thus justifying the licence fee.The Supreme Court affirmed the High Court's finding that 60% of the licence fee was spent on services for factory owners, and there was no evidence that the fees were merged into the general public revenue. Therefore, the licence fee was not a tax but a fee appropriately levied.Conclusion:The Supreme Court dismissed the appeal, upholding the validity of Rule 7 read with Rule 5 and its Schedule of the Delhi Factories Rules 1950. The court concluded that the licence fee for renewal was a fee, not a tax, and was justified by the services rendered by Inspectors under the Factories Act 1948. The appeal was dismissed with costs.
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