K P GOVINDAN Vs. STATE OF KERALA

JUDGEMENT

(1.) THE question arising for consideration in all these original Petitions is the validity of a levy called Administrative Surcharge made by the Kerala State Government. By virtue of the delegation of powers under S. 5 of the Essential Commodities Act, 1955, to the State Government by the Central Government, the State Government in exercise of the power under S. 3 of that Act to control production, supply and distribution of essential commodities, passed on 1st July, 1966, the Kerala Tapioca (Manufacture and export Control) Order, 1966. Clause. 5 of that Order prohibited export of tapioca except under a permit. THE petitioners in all these Original Petitions are permit holders for export of tapioca. Even before passing the Order dated 1st july. 1966, the Government had by an executive order dated 15th April, 1966, directed levy of Administrative Surcharge for the export of tapioca and its products and fixed certain rates for raw tapioca, tuber chips and starch. Those rates were later on varied. THE validity of the levy is sought to be sustained by the State as revenue received incidentally in the exercise of police power or in the alternative as licence fee or as fee for services rendered.

(2.) THERE are several decisions of the Supreme Court and this Court bearing on similar levies. The validity of certain annual contributions made by religious institutions to the Government under the Madras hindu Religious and Charitable Endowments Act, 1951, came up for consideration before the Supreme Court in Commr. , FIRE. v. LT. Swamiar AIR. 1964 S. C. 282. Relying on Lutz on Public Finance, Find lay Shirras on Science of Public finance and Seligman's Essays on Taxation, the distinguishing features of taxes and fees were laid down there. Special assessments, fees and taxes were only different forms of mainfestation of the State's taxing power. Compulsion was common to all of them. While tax was levied as a part of the common burden, fee was for payment of special benefits or privileges. Fee was a kind of return or consideration for services rendered. While taxes collected merged in public revenue and went to the benefit of the general public, fees were set apart and appropriated specifically for the performance of services rendered. THERE should be correlation between fees levied and expenses incurred for the services rendered. On the face of the legislative provision for the levy of fees there should be correlation mentioned between the fees levied and expenses incurred by the Government in rendering the services and there should be setting apart of fees for rendering services. Art. 110 (2) of the Constitution indicated two kinds of levies as fees. The first was fees for licences and the second fees for services rendered. Dealing with the first class of cases namely fees for licenses, hereinafter referred to as licence fees, the Supreme Court observed: "in the first class of cases Government simply grants a permission or privilege to a person to do something which otherwise that person would not be competent to do and extracts fees either heavy or moderate from that person is return for the privilege that is conferred. " In the Madras Hindu Religious and Charitable Endowments act, 1951, all collections made by the Government went to the Consolidated Fund of the State and there was no correlation between the collections made and the services rendered. In such circumstances, it was held that it was tax and not fee and as tax, as it was beyond the power of the State Legislature to enact the provision, it was struck down.

(3.) UNDER S. 58 of the Bombay Trusts Act, 1950, contributions had to be made by public and religious trusts and they were to go to a separate fund called Public Trusts Administration Fund. That fund was created for the better administration of the trusts. It was to meet the expenses of the administration that the levy was made. It was held by the Supreme Court in ratilal v. The State of Bombay (AIR. 1954 SC. 388) that it was fee and that s. 58 of the Act which provided for the levy was valid.