TaxTMI 
TaxTMI 
2013 (6) TMI 36
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....rit Petition No. 2511 (MB) of 2004, writ petition no. 2510 (MB) of 2004 and writ petition no. 2354(MB) of 2004, are holders of excise licenses for selling Indian Made Foreign Liquor in sealed bottles for which licences were granted to them as per provisions of The U.P. Excise Act, on payment of license fee for financial year 2001-2002 by the Collector, Lucknow. They have questioned the bye-laws framed by Nagar Nigam,Lucknow, which enjoins upon the petitioners to take licence, in view of clause 5 and 7 of the Bye-laws, from Nagar Nigam for selling Indian Made Foreign Liquor (IMFL) and pay Rs. 12,000/- per annum as licence fee. According to petitioners, Nagar Nigam does not have any power to impose a license on the petitioners when they have already obtained a license from the Excise Department under the U.P. Excise Act. It has been contended on behalf of the petitioners that U.P. Excise Act and the Rules framed thereunder fully cover all aspects incidental to the excise business. Also, the license granted to them lays down very strict conditions for a liquor shop to operate. The conditions include the location of the shops, its opening and closing time, the premises at which the ....
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....umber of cases. The Apex Court in the case of Khodey Distillery Ltd. versus State of Karnataka [(1995) 1 SCC 574] has held that the Excise Trade is "Res Extra Commercian" that is non-commercial i.e. trade of no commerce. Therefore, selling of liquor is not covered by Section 541 and 438 of the Nagar Nigam Adhiniyam. It has also been vehemently contended that prior to formulating bye laws by the Nagar Nigam, its proposal has to be published in the Government Gazette under Section 543 of the said Adhiniyam, inviting objections from public, which is lacking in the instant case and as such bye-laws enacted by the Nagar Nigam suffers from procedural defect. Moreover, there is no notification of the State Government for imposing licence fee contained in the bye-laws. It was through Government order dated 27.10.1994 that licence fee was imposed on IMFL which was a new item and imposing licence fee on new item was in breach of Section 543 of the Act. Lastly, it has been argued on behalf of petitioners that there is vast distinction between 'fee' and 'tax'. The Tax is revenue for the State as well as for the Corporation to meet its obligations. Fee is usually charged for rendering som....
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....vely covered by the provisions of the Uttar Pradesh Excise Act. It has been contended that licence fee is being charged from the petitioners for the alleged purpose of regulating the excise business of the petitioners. When the licence of the petitioners is already being regulated under the provisions of the Excise Act and Rules framed thereunder for which the State Government has already provided separate mechanism under the Excise Act. Therefore, no restrictions or conditions can be imposed by the Nagar Palika Parishad, on the business of the petitioners or for that matter any regulatory fee can be charged by the Nagar Palika Parishad. In contrast, Counsel for the respondents have argued that the contesting respondents were much within their power in formulating the impugned bye laws. Clarifying the position, it has been submitted that under Section 541 of the Nagar Nigam Act, the Nagar Nigam and under Section 298 (1) of the U.P. Municipalities Act, the Nagar Palika Parishad is vested with the power to frame bye-laws from time to time in respect of the matters envisaged in different sub-section of Section 541, so long as the bye-laws are not inconsistent with the Nagar Nigam A....
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....nd fee. Hence while drafting the Bill or making the legislation, one has to keep in mind the relevant entries of the Constitution of India. The distribution of the power to levy a tax in not identical, with that of the power to levy a fee. Taxes are specifically distributed as between the Union and the State Legislation by various entries in List I and List II and residuary power to levy a tax which is not enumerated in any of the entries lies under Entry 97 of List I exclusively for the Parliament. On the other hand, entry relating to fee has been specifically mentioned in the end of the three List I, II and III. Every legislature has the power to levy fee which is co-extensive with power to legislate with respect to substantive matters and legislature may while making law relating to a subject matter within its competence, levy a fee with reference to the services that would be rendered by the State under such Law. Taxes are specifically divided between List I Entries 82 to 92A and in List II Entries 46 to 63. The fees are however, not mentioned specifically. There is a general entry towards the end of each list which empowers the legislature to levy a fee in respect of any ma....
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....ely because there is an element of compulsion or coerciveness present in it, not is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual nor that each should obtain the benefit of the service." In view of the aforesaid law laid down by Hon'ble Apex Court in M/s Kishan Lal Lakhmi Chand vs. State of Haryana, there may be a regulatory fee and a compensatory fee. In the cases of licence fee, which is a regulatory fee, the condition of quid pro quo is not necessary. It would, therefore, appear that a provision for the imposition of licence fee does not necessarily lead to the conclusion that the fee must be only for services rendered." Same view was taken:- P. Kannadsan etc. vs. State of Tamil Nadu & other etc. J.T. 1996 (7) SC 16. It has been observed that : "Even in the matter of fees, it is not necessary that element of quid pro quo should be established in each and every case, for it is well settled that fees can be both regulatory and compensatory and that in the case of regulatory fee, the element of quid pro quo is totally irrelevant." In Vam Organic Chemicals Limited and Anr. vs. State of U.P.....
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....re well known and time and again liquor has proved a threat to peace and law and order. There is no denying that the effects of liquor intake cause nuisance to public. The state government by a Government Order dated 27.10.94 had issued directions to all Nagar Nigam/Nagar Palika Parishad/Nagar Panchayat throughout the State of U.P. in respect of imposition of license fee in respect of the commodity along with the rate of fee to be charged. A list of commodities and the fee to be charged was annexed with the said Government Order. One of the objects of this government order was to empower the Nagar Nigam to create its sources of income in order to meet its huge financial burden for providing different services and carrying out the obligations prescribed under the Act for the public purposes. By another Government Order the State Government directed the Nagar Nigam/Nagar Palika Parishad/Nagar Panchayat to amend the bye-laws. Therefore, this imposition of fee was done not only with respect to liquor trade but in respect of other commodities as well. Hence in this case there is no violation of Article 14 of the constitution. Further the imposition of license fee is different from the l....
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....ms and conditions of a license granted by the Mukhya Nagar Adhikari, no person shall- a) Keep in or upon any premises any article specified in the bye-laws as the maximum quantity of such article which may at one time be kept in or upon the same premises without a license. Clause - (d) of sub section (i) of section 438 further provides that no person shall carry on or allow to be carried on, in or upon any premises: I)any trade or operation connected with any trade specified in the bye-laws, II) any trade or operation which is dangerous to life or health or property, or likely to create nuisance either from its nature or by reason of the manner in which or the conditions under which, the same, is or is proposed to be carried on. Thus, from the reading of the above sections, it is imminently clear that the IMFL and Country liquor is of such nature that it can be regulated by the Nagar Nigam. Further, as far as the position of the Nagar Nigam is concerned with regards to the state acts and laws in the matter of Excise Shops it is important to our discussion to mention rule known as 'Uttar Pradesh Number and Location of Excise Shop Rules, 1968' framed in exercise of ....