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PETITIONER: THE STATE OF KERALA ETC.  ETC.

       Vs.

RESPONDENT: K.   P. GOVINDAN TAPIOCA EXPORTER ETC.  ETC.

DATE OF JUDGMENT07/11/1974

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. RAY, A.N. (CJ) MATHEW, KUTTYIL KURIEN

CITATION:  1975 AIR  152            1975 SCR  (2) 635  1975 SCC  (1) 281  CITATOR INFO :  E          1976 SC2243  (20)

ACT: Essential   Commodities   Act   1955-The   Kerala    Tapioca Manufacture  and Export (Control) Order  1966-Administrative surcharged  levied  under a scheme formulated by  the  State Government-Scheme  not  under any provision of the  Act,  if surcharge could be levied.

HEADNOTE: The  Kerala Tapioca Manufacture and Export (Control)  Order, 1966  was made by the State Government under  the  Essential Commodities  Act 1955. Even before the promulgation of  that order   the  State  Government  levied  an.   administrative surcharge under a scheme formulated by it.  The, respondents plea  that  the levy of administrative surcharge  was  ultra vires  the State Government and unwarranted by law had  been accepted  by  the High Court and their writ  petitions  were allowed. On  an  appeal  by  the State  it  was  contended  that  the administrative  surcharge  on the export of tapioca  wag  in effect and substance a licence fee charged irk! exercise  of the  police powers of the State for granting  permission  to export Tapioca. Dismissing the appeal, HELD  :  The administrative surcharge levied  by  the  State Government   on   the  export  of  tapioca  was   bad.   The realisations were without the authority of   law.      Assuming  that the’ State has got the police  power  to charge  licence  fee, the levies were bad as they  were  not levies of licence fee for regulating the trade or for  grant of  permits.  The scheme was not an order under any  of  the provisions     of   the   Essential  Commodities   Act.   in substance  and  in effect it was an impost on  export  which indisputably  the  State  had no power  to  do.  The  Kerala Tapioca  Manufacture  Export (Control) Order  1966  did  not provide  for imposition of any licence fee for the grant  of permits for export of tapioca. For the appellants Examining  the  Act and the provisions of the Section  as  a whole  it  is  manifest  that an  order  providing  for  the

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granting of a licence or permit and charging for  fees    is still an order under Sec. 3(1). An  order of the nature mentioned in Sec. 3 (2) (ii)  is  an order for maintaining    or increasing supplies of essential commodities  and for securing their  equitable  distribution and  availability  at fair prices. it is manifestly  not  an order  for rendering any services and admittedly no  service is rendered under the provisions of Sec. 3. The power itself is  simply for the benefit of the community at  large.  Thus Sec.  3(2)(ii)  does  not provide for  a  fee  for  services rendered.  It  is manifest from the scheme as a  whole  that export is banned except under a permit. The  imposition   is connected  and is for the purposes of permission to  export; is  precisely  what the licence fee may  mean.  The  ground, therefore on which the   High Court has acted is erroneous. For the respondents :      Power  under  the  Essential Commodities  Act  to  make orders  under  Section 3(1) and (2) vested  in  the  Central Government.  Under Section 5 of the Central  Government  can delegate  its  powers to State Government  subject  to  such conditions  as  it  may  choose  to  impose.  ’the   Central Government has limited the powers to delegate by  Resolution No. GSR 906 dated 9-6-1966. It delegates the powers    under Section  3(1)  for  the purposes  stated  in  the  different clauses of     Section 3(2). The general power of regulation claimed by the appellant is therefore not available. 636 Second  clause  in the delegation provides that  in  matters which  affect transport etc. of the commodity would  require the sanction of the Central Government.  Since imposition of export  duty  restricts  the  transport  of  the  commodity, sanction  would be required, which is absent in  this  case. This also would in-validate the levy. The levy is really not a licence fees but is on export as it clearly  purports  to  be and is a  tax.   Under  regulating powers no such tax can be_imposed.  Article 366(28)  defines a  tax in wide terms and all imposts would be  tax.   Viewed from  the  point of view of even regulatory  impost,  it  is clearly  a  tax  for levying which Article  265  requires  a legislative  enactment.  All taxing statutes must  in  clear language  authorise the levy, and if authorised it  must  be within the legislative competence of the State.   Admittedly there is no legislation.  The Central Government alone would have the power to levy the tax and not the State Government. What is delegated to the State Government is merely a  power to levy fee for licence, permits, etc.  In such a case  that must  be  a quid pro quo, which is admittedly  absent  here. The impost is clearly bad. The  levy made in connection with the export of  Tapioca  is not  a  tax.  It is in the nature of a fee and it  could  be sustained  only  if  there  is  correlation  and  legitimate connection between the quantum of the levy and the  expenses incurred  by the Government.  But in the instant  case.  the Government have not furnished any data, i.e. any particulars about the total collections made, the nature of the services rendered and the actual expenses incurred by the  Government in the matter of services rendered.  No particulars whatever have been given by the, Government. Section 3(2)(ii) does not empower the Government to levy any charge it likes and its powers in levying are  circumscribed by the very words employed in Section 3 (2) (ii) the fees in relation  to the permit or any other document which  in  the nature  of things should only be nominal.  It  is  therefore submitted  that  Section  3(2)(ii) has  no  application  and cannot justify the levy.

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In the counter-affidavit filed by Government, the Government has taken the specific ground that the levy is made as a fee to  meet the heavy expenditure incurred on behalf  of  those who  engage themselves in the export trade of tapioca.   The Government’s further stand is that unauthorised export  will spoil  the  trade, diminish the profits  of  the  authorised exporters  and that to meet the expenditure incurred and  to protect  the interests of the authorised exporters  and  its return for the services rendered. the Government is charging a fee as a quid pro quo.  In the face of this specific  plea by  the  Government as a specific ground on which  they  are levying  the charges, it will not be open to the  Government to contend that it is not a fee for services rendered but  a fee for the issue of a permit and that there is no necessity to  establish any correlation between the expenses  incurred and the quantum of the levy.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 729 to 757 of 1972. From  the Judgment and Order dated the 27th September,  1971 of the Kerala High Court in O.P. Nos. 5103 and 5105/68 4261, 4329, 4369, 4518, 4580, 4618, 4657, 4769, 4829, 4837,  4870, 4948, 5919, and 5056/1969, 240-241, 433, 534, 536, 866, 869, 1559,  4982,  5050, and 5220, of 1970 and O.P. No.  3834  of 1969 (In CA No. 731/ 72 only), and CIVIL APPEAL Nos. 514 of 1973 and 515 of 1973. Appeals  from the Judgments and Order dated the 28th  March, 1972  and  11th February, 1972 of the Kerala High  Court  in Writ  Petition No. 33 of 1972 and W. Appeal No. 466 of  1971 respectively.                             637 M. Sinha Solicitor General for India and A. G. Pudissery for the appellants, (In, all the appeals). Y.   S.  Chitale,  D.  V.  Patel K.  S.  Ramamurthy,  V.  J. Francis,  V.  Hassan  Koyan, P. Sankaran  Kutty  and  A.  S. Nambiar  for  respondent No. 1 (In CA No.  746  and  748/72) respondent No. 2 (In CA 735/72, respondent No. 3 (In CA  No. 754/72) and for Respondents (In rest of the Appeals). The Judgment of the Court was delivered by UNTWALIA,  J.-All  these  Civil appeals filed  on  grant  of certificates  of  fitness by the High Court of  Kerala  have been heard together ,and. are being disposed of by a  common judgment as their facts and the points involved in them  are identical.   The  respondents filed various  writ  petitions questioning  the  validity  of  the  orders  of  the   State Government of Kerala levying administrative surcharge on the export  of tapioca.  Respondents are dealers in tapioca  and do  the business of exporting it also outside the  State  of Kerala.  In their writ petition, they also claimed refund of the amounts realised by the State Government on the basis of the impugned orders.  Writ petitions were allowed by a bench of  the Kerala-High Court and Civil Appeals 729-757 of  1972 are directed against the orders in the writ Petitions.   Two of  the  Civil Appeals namely Civil Appeals 514 and  515  of 1973  arise out. of the Appellate order of the  Kerala  High Court  dismissing the appeals from the orders  allowing  the writ petitions. In  exercise of the powers conferred by sub-section (1)  and subsection  (2)  of Section 3 of the  Essential  Commodities Act, 1955 (Central Act 10 of 1955), hereinafter referred  to as  the Act, read with the order of the Government of  India dated the 9th June, 1966 and with the prior concurrence,  of

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the, Central Government. the Govt. of Kerala made the Kerala Tapioca Manufacture and Export (Control) Order, 1966.  Under clause  5 of the said order no person could  export  tapioca except  under and in accordance with a permit issued by  the Commissioner  or  any  officer authorised  by  him  in  this behalf.   Clause 6 of the order provides for the filling  of applications  for the grant of permits for tapioca  in  Form III  and  the permit for the export of tapioca shall  be  in form IV.  Even before the promulgation of the Kerala Tapioca Manufacture  and  Export  (Control)  Order,   administrative surcharge was levied under a Scheme formulated by the  State Government, on the 15th April, 1966 published in the  Kerala Gazette dated 3-5-1966.  The rates of administrative  charge levied  on tapioca in the Scheme dated 15th April, 1966  was varied from time to time and a copy of the order dated  20th October, 1967 specifying the revised rates was Ext.  P-1  in one  of the writ petitions.  A copy of the order dated  15th April,  1966  was  given to us  by  the-  learned  Solicitor General appearing for the appellant State.  The respondents’ plea  that  the levy of, administrative charges,  was  ultra vires  the State Government and unwarranted by law has  been accepted  by  the  Kerala  High  Court.   Learned  Solicitor General appearing for the appellant State submitted that the orders  levying  administrative  charge on  the  export  of. tapioca, was, in effect and substance a licence fee  charged in  the  exercise  of the police powers  of  the  State  for permitting the 638 respondents  by grant of permits to export tapioca.  Such  a levy  counsel  submitted, can very well  be  supported  with reference  to  the  provisions of sub-section  (1)  or  sub- section(2)  of 53 the Act, whereby the State as a result  of the authorisation under section 5 of the Act is empowered to regulate  the transport or export of tapioca, and  essential foodstuffs. Learned Solicitor General strenuously attached the  findings of  the  Kerala High Court that  the  administrative  charge imposed on the export of tapioca was a fee and since it  had no  correlation with the service rendered by the State,  the most was bad. In  the  instant case it is not necessary for us  to  decide whether  the view aforesaid of the Kerala High Court or  the submission made on behalf of the appellant in that regard is correct  or not.  The Tapioca Export Control Order was  made by  the State Government on being authorised by the  Central Government in its notification dated the 9th June, 1966.   A copy  of the said notification was placed before us  at  the time of hearing of these appeals. It purported to  authorise the  State Government to make orders under section 3 of  the Act  to  provide for some of the matters  mentioned  in  the various clauses. of sub-section (2) Learned counsel for  the respondents   submitted   that   it  was   not   a   general authorisation to make an order under sub-section(1).  It  is not necessary for us to go into this question either. We  shall  assume  in favour of  the  appellant  that  while regulating   or  prohibiting  the  production,  supply   and distribution  of tapioca and trade and commerce  therein  it has  got  the  police power to charge licence  fee  for  the purpose  of regulating the tapioca trade or to  charge  fees for grant of issue of licences/permits or other documents in accordance  with clause (ii) of sub-section(2) of Section  3 of  the  Act.  Still we find that the impugned  levies  have rightly  been  held  to be bad as they were  not  levies  of licence  fees  for  regulating the trade  or  for  grant  of permits.   The order dated 15th April, 1966 formulating  the

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scheme  was  not  an order under any of  the  provisions  of section is 3 of the Act.  It did not impose any licence  fee or fee for grant of permit.  It merely provided for  levying of  administrative surcharge for the export of  tapioca  and its  products at the specified rates which varied from  time to  time.   In substance and in effect it was an  impost  on export which indisputably the State had no power to do.  The orders levying the administrative charge which followed  the Tapioca Export Control Order did, not refer to the  exercise of  any  power  under the said  Order.   It  was  completely independent of it.  The Tapioca Export Control Order did not provide  for imposition of any licence fee for the grant  of permit  for  export  of tapioca.  Argument  put  forward  on behalf of the appellant that the order dated the 15th April, 1966 was in substance and in effect an order under section 3 of  the  Act runs counter to its case in the’  petitions  of appeal wherein it has been stated "That the deterioration in food  position  in  the State of Kerala  started  from  1963 onwards  and  to avert the further won seeing  of  the  food position, the Government, under Rule 125 of the 639 Defence  of  India Rules, 1962 issued  the  Tapioca  Control Order, 1964, whereby Government imposed certain restrictions in the export of tapioca and its products from the State and permitted  the export of limited quantity  through  selected dealers.  The State, in accordance with this order framed  a scheme  known as "Scheme for the export of Tapioca  and  its products"  on  15-4-1966  whereby the  Govt.  clarified  the manner  and  mode of selection of the  dealer,  the  details regarding  the submission of applications of  the  intending exporters,  the  issue  of  permits  and  the  payments   of Administrative Surcharge." The  stand taken in the petitions of appeal was not  pursued at  the time of the hearing.  It is, therefore,  clear  that the administrative surcharge levied by the State  Government on  the export of tapioca,as it was bad.   The  realisations thereunder  were  without the authority of  law.   It  will, however,  be open to the State Government to impose  tax  or fee, as they may be advised to do in accordance with law and if  permissible under it, for permitting the respondents  to export  tapioca outside the State of Kerala.  The  debatable question  as  to the nature of  impost,  its  constitutional validity and legal justifiability will have to be gone  into then. On  the facts as they stand in these appeals, we uphold  the orders of the Kerala High Court for the reasons given by us. The appeals fail and are dismissed with costs.  One  hearing fee. P.B.R.                           Appeals dismissed L319SupCI/75 640