REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1079  OF 2009 (Arising out of SLP (C) No.12139 of 2007)

M. Chandru … Appellant

Versus

The Member Secretary, Chennai Metropolitan Development Authority & Anr. … Respondents

WITH

CIVIL APPEAL NOS. 1080, 1081, 1083, 1082 & 1084 OF 2009

(Arising out of SLP (C) Nos.12438, 16200, 16203, 16202 and 14359 of 2007)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

INTRODUCTION

2. Legality and/or validity of Infrastructure Development Charges (IDC)

by  Chennai  Metropolitan  Development  Authority  (CMDA)  allegedly  on

behalf  of  Chennai  Metropolitan  Water  Supply  and  Sewerage  Board  (the

Sewerage  Board)  for  issuing  planning  permission  in  regard  to  the

construction  of  multi-storeyed  building  and/or  special  building  is  in

question  in  this  appeal  which  arises  out  of  a  judgment  and  order  dated

20.12.2006 passed by a Division Bench of the High Court of Judicature at

Madras in W.P. No.34702 of 2006.

BACKGROUND FACTS

3. Appellants  herein are builders  and developers  and individuals  who

had  applied  for  grant  of  permission  for  construction  of  multi-storeyed

building and/or  special  building before the CMDA.  They were asked to

deposit  specified  sums  towards  IDC payable  to  the  Sewerage  Board  by

CMDA.  Contending  that  CMDA had  no  power  to  collect  IDC and  the

Sewerage  Board  is  otherwise  obligated  to  supply  water  and  provide

sewerage  connection,  they  filed  writ  petitions  before  the  High  Court  of

Madras.   The  said  writ  petitions  have  been  dismissed  by  reason  of  the

impugned judgment.

SUBMISSIONS

4. Mr. L. Nageshwar Rao, learned counsel appearing on behalf of the

appellants, would contend :

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1) The  Chennai  Metropolitan  Water  Supply  and  Sewerage  Act,  1978

(the 1978 Act) containing no provision for delegation of power to an

outsider, the purported demand made by the CMDA must be held to

be wholly illegal;

2) As  no  special  services  are  to  be  rendered  to  the  builders  and/or

developers or individuals so as to satisfy the doctrine of quid pro quo,

the impugned judgment cannot be sustained.

5. Mr. Krishnamurty, learned senior counsel appearing on behalf of the

respondent, on the other hand, urged :

1) The Board being bound by the directions issued by the State of Tamil

Nadu, delegation to compute the IDC and collect the same by CMDA

cannot be held to be ultra vires the power of the Sewerage Board..

2) CMDA being the local authority and having been in-charge of supply

of  water  and  providing  sewerage,  such  delegation  was  made  for

convenience of the applicants.

3) As charges are being levied and collected towards provision for or

improvement of water supply or sewerage service, the same meet the

legal requirement of quid pro quo.

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STATUTORY PROVISIONS  

6. The Legislature of the State of Tamil Nadu enacted the Tamil Nadu

Town  and  Country  Planning  Act,  1971  (the  1971  Act).   Levy  of

development fees by CMDA is prescribed thereunder as a pre-condition for

grant of permission to construct building.   

Relevant provisions of the 1971 Act read as under:

“9-A.  Establishment  of  the  Chennai Metropolitan  Development  Authority.—(1) With  effect  from  such  date  as  the  Government may,  by  notification  in  the  Tamil  Nadu Government Gazette appoint in this  behalf,  there shall be established for the Chennai Metropolitan Planning  area  an  authority  by  the  name  of  the Chennai Metropolitan Development Authority.

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9-E.  Relation  with  the  Chennai  Metropolitan Water  Supply  and  Sewerage  Board.—(1) Notwithstanding  anything  contained  in  this  Act, the Chennai Metropolitan Development Authority shall  fully  consult  and  collaborate  the  Chennai Metropolitan  Water  Supply and Sewerage Board constituted under the Chennai Metropolitan Water Supply  and  Sewerage  Act,  1978  with  respect  to any provision regarding water supply or sewerage services and matters connected therewith that may be included in any development plan prepared or to  be  prepared  under  this  Act  for  the  Chennai Metropolitan Planning Area or any part thereof.

(2) With respect to any such development plan, the execution of or the carrying out of any work

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under such plan shall, in so far it relates to water supply or  sewerage service  or  matters  connected therewith,  be  entrusted  to  and  be  the  sole responsibility of the Chennai Metropolitan Water Supply  and  Sewerage  Board,  and  if  any  work under such plan is in the process of being executed or carried out on the date of coming into force of this  section,  the  Chennai  Metropolitan Development  Authority  shall  continue  and complete such work in accordance with section 27 of  the  Chennai  Metropolitan  Water  Supply  and Sewerage Act, 1978.

xxx xxx xxx

59.  Levy of  development charges.—(1)  Subject to  the provisions of this  Act  and the rules made thereunder  every  planning  authority  including  a local  authority  where  such  local  authority  is  the planning authority, shall levy charges (hereinafter called the development charges) on the institution of  use  or  change  of  use  of  land  or  building  or development  of  any  land  or  building  for  which permission is required under this Act in the whole area or  any part  of  the planning  area within the maximum rates specified in section 60:

Provided  that  the  rates  of  development  charges may be different for different parts of the planning area and for different uses:

Provided further that the previous sanction of the Government  has  been  obtained  for  the  rates  of levy.

(2) When a planning authority including a local authority  where  such  local  authority  is  the planning authority shall  have determined to levy development charges for the first time or at a new rate,  such  authority  shall  forthwith  publish  a notification  in  the  Tamil  Nadu  Government

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Gazette  specifying  the  rates  of  levy  of development charges.

(3) The development charges shall be livable on any person who undertakes or carries out any such development or institutes or changes any such use.

(4) Notwithstanding anything contained in sub- section (1) and (2), no development charges shall be levied on development, or institution of use or of change of use of, any land or building vested in or under the control or any State Government or of any local authority.

xxx xxx xxx

63-A.  Apportionment  of  development  charges in  certain  cases.—Where  any  development charges  are  levied  or  recovered  under  the provisions of this Chapter in respect of the use or change of use of land or building or development of  any  land  or  building  in  the  Channai Metropolitan Planning Area, and if any such chare or any part, thereof is relateable to provision for or improvement of water supply or sewerage service, the Chennai Metropolitan Development Authority shall  pay  over  the  Chennai  Metropolitan  Water Supply and Sewerage Board constituted under the Chennai Metropolitan Water Supply and Sewerage Act, 1978, such charge or part thereof.”  

7. The  1978  Act   was  enacted  to  provide  for  the  constitution  of

Sewerage Board to attend to the growing needs and for proper development

and  regulation  of  water  supply  and  sewerage  services  in  the  Chennai

Metropolitan Area.  Relevant provisions of 1978 Act are as under :

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2.(f) “local authority” means –

(i) the Municipal Corporation of Chennai; or

xxx xxx xxx

(v) the Tamil Nadu Water Supply and Drainage Board  constituted  under  Section  4  of  the Tamil  Nadu  Water  Supply  and  Drainage Board Act, 1970 (Tamil Nadu Act No.4 of 1971) (hereinafter  referred to as the Tamil Nadu  Water  Supply  and  Drainage  Board); or

xxx xxx xxx

(vii) the  Chennai  Metropolitan  Development Authority established under Section 9-A of the Tamil Nadu Town and Country Planning Act,  1971  (Tamil  Nadu  Act  No.35  of 19721),  (hereinafter  referred  to  as  the Chennai  Metropolitan  Development Authority);

xxx xxx xxx

6. Powers  of  the  Board.—(1)  The  Board shall, subject to the provisions of this Act, have the power to do anything which may be necessary or expedient for the purpose of carrying out its  functions and duties under this Act.

(2) Without  prejudice  to  the  generality  of  the foregoing  provision,  the  Board  shall  have  the power --

(i) to  take  over  all  existing  responsibilities, powers,  controls,  facilities,  services  and administration relating to water supply and sewerage in or for the Chennai Metropolitan Area;

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(ii) to  enlarge,  improve  or  develop  existing facilities  and to construct  and operate new facilities  for water supply and sewerage in or for the Chennai Metropolitan Area;

(iii) to  prepare  schemes  for  water  supply  and  sewerage (including abstraction of water from any natural source and the disposal of waste and pollution water) in or for the Chennai Metropolitan Area;

xxx xxx xxx

(xii-a)to  collect  infrastructure  development charges  from  the  applicant  builder  or developer of such multistoreyed building or special  building  as  may  be  prescribed  for the  provision  of  adequate  water  supply  or sewerage;

xxx xxx xxx

(xv) to do all things necessary for the purpose of carrying out the provisions of this Act.”

7. Powers of Board to call for information.— The Board may, for the purpose of  carrying  out  the  provisions  of this  Act,  by notice  require  any person  to  furnish  such information  in  his  possession  relating  to  water  supply and sewerage systems, and shall act as a centre for the collection and exchange information on such matter, in order to facilitate the preparation of studies, scheme or plans and the development of policies which promote the purposes of this Act.

81. Power  to  make  regulations.—(1) The Board may make Regulations not inconsistent with this Act for carrying out the purposes of this Act.

(2) In  particular  and  without  prejudice  to  the generality  of  foregoing  power,  such  regulations may  provide  for  all  or  any  of  the  following matters, namely :–

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(a) to (j) …

(jj) the manner of  and  the  basis  on  which  the infrastructure  development  charges  shall  be collected;

(k) to (p) …”

8. Clause  (jj)  of  Section  81  of  the  1978  Act  provides  for  regulation

making  power  pursuant  whereto  or  in  furtherance  whereof  the  State  of

Tamil  Nadu  made Regulations  in  the  year  1998  known as  The  Chennai

Metropolitan  Water  Supply  and  Sewerage  Infrastructure  Development

Charges  (Levy and Collection)  Regulations,  1998 in  respect  of  ‘manner’

and ‘basis’  for  collection  of  charges,  relevant  provisions  whereof  are  as

under :

“3.(a) Applicant  mean and includes the applicant builder  or  development  of  multi-storeyed buildings or special buildings as the case may be for  the  provision  of  adequate  water  supply  or sewerage and matters connected thereto.

(b) ‘Multi-storeyed building’  means and block or  buildings  exceeding  of  4  floors  and/or  15 meters in height.

(c) ‘Special  building’  means  any  block  or buildings means not less than three floor but not exceeding four floors.

(d) ‘Infrastructure  Development’  means  any provision  made  by  the  Board  regarding  water supply  and  sewerage  services  and  matters connected therein.

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4. The  Board  shall  collect  infrastructure development  charges  through  Chennai Metropolitan  Development  Authority  from  the applicant  of  multi-storeyed  buildings  or  special building as the case may be for the provision of adequate water supply or sewerage and the matters connected thereto at the flat rate of Rs.64/- per sq. meter (of the built up area).”

DELEGATION

9. On or about 5.3.1998, the Sewerage Board in the 197th meeting of its

Board of Directors resolved to collect infrastructure development fee at a

flat rate of Rs.64/- per square meter and to authorize CMDA to act as its

agent  for  calculation,  collection  and  remittance  of  the  infrastructure

development charges or IDC to the Board and to grant NOC to applicant

builders  of  special  buildings  and  multistoreyed  flats  without  referring

individual  cases  to  the  Board.   An office  order  being  No.9/98 issued on

23.3.1998  by CMDA as  regards  processing  of  applications  for  planning

permission  fixing  Rs.64/-  per  square  meter  as  IDC  for  multi-storeyed

building  which  was  to  be  collected  by CMDA and transfer  to  Sewerage

Board.

10. A Government Order being No.146 was also passed by Housing and

Urban  Development  Department  directing  CMDA to  collect  Rs.64/-  per

square meter from applicants towards IDC.

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11. The 1978 Act was amended in terms whereof Sections 6(2)(xii-a) and

Section 81(jj) were inserted empowering the Sewerage Board to collect IDC

from applicant, builder or developer of multi-storeyed or special buildings.

12. Appellant herein applied for planning permission for construction of

a  multi-storeyed  building  before  CMDA  on  8.11.2005.   A  sum  of

Rs.53,29,500/- towards development charges was demanded by CMDA in

terms of its letter dated 8.9.2006 including a sum of Rs.5,30,500 towards

IDC payable  to  the  Sewerage  Board  for  developing  water  and sewerage

facilities as a pre-condition for considering the said application.

13. It is on the aforementioned premise, the writ petition was filed which

by reason of the impugned judgment has been dismissed.

FINDINGS OF THE HIGH COURT

14. (a) Levy has been made for the services rendered and to strengthen

and maintain the water supply and sewerage infrastructure.   

(b) Levy of development charges is permissible in law in terms of

Section 59 of the 1971 Act.   

(c) It helps the applicant to get processed the planning permission

application at one location.   

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(d) Special Buildings and multi-storeyed buildings are responsible

for the sudden spurt in demanding the infrastructure facilities at high rate

and sometimes it requires huge investment.   

(e) Sections 45 and 56 merely deal with charges for consumption

of  water  and  guidelines  for  availing  the  water  and  sewage  connection

whereas IDC is collected for overall infrastructure development.

DELEGATION ISSUE

15. Indisputably, development charges for land and building are levied in

terms of the provisions of Section 59, 60 and 69 of the 1971 Act.  Such

charges  are  payable  at  the  time  of  seeking  planning  permission  for  the

development of land and building.  The stipulated charges, at the relevant

time, was Rs.1,00,000/- per hectare in the case of development of land and

Rs.25/-  per  square  meter  in  the  case  of  buildings.   Water  and  sewage

charges are levied in terms of Sections 45 and 56 of 1978 Act, which are

required to be paid to the Sewerage Board at the time of seeking connection.

16. As noticed hereinbefore, IDC at the rate of Rs.64/- per square meter is

levied only on builders or developers of special buildings or multi-storeyed

buildings in terms of Section 6(2)(xii-a) of 1978 Act and Regulations made

pursuant to the amendment of Section 81(2)(jj) thereof.  IDC indisputably is

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in addition to the charges levied under Sections 59, 60 and 6 1 of 1971 Act

and Sections 45 and 56 of 1978 Act.  

17. Regulations,  as  noticed  hereinbefore,  were  framed  as  regards,

‘manner’ and ‘basis’ for collection of charges.

18. The High Court opined that as the CMDA had been empowered to

collect the said charges in terms of the Regulations by reason of a resolution

of  the  Board of  Directors  of  the Sewerage Board in  its  meeting  held on

5.3.1998, the same is valid in law.

19. The Sewerage Board is a State within the meaning of Article 12 of the

Constitution of India.  It is a creature of a statute.  It can delegate its power

provided there exists a provision in the Act.  Power to delegate, thus, being

a statutory requirement must find its place in the principal Act itself and not

in the Regulation.  The High Court, in our opinion, has asked unto itself a

wrong question.  The appropriate question required to be posed was not as

to whether the CMDA was appointed as an agent, but was as to whether the

Sewerage Board could delegate  its  power to CMDA.  It  may have some

advantages.  But the same may not answer the legal requirement.   

20. Mr. Krishnamurty, however, has submitted that the Sewerage Board

is bound by the direction issued by the Government.

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CMDA may be a local authority within the provisions of the 1978 Act

but it is an independent body.  Prima facie, there is nothing to show that it

has any statutory role to play in the functioning of the Sewerage Board.  As

a local authority, it has certain duties to perform.  It, however, appears that

the function relating to water supply and sewage services are vested in the

Board itself.  It was, therefore, the Board which could levy the charges.  It

had such a power in terms of Sections 45 and 54 of the Act.  Our attention

has been drawn to Section 78(b) of the Act to contend that the Government

has power to issue orders and directions.  Such orders and directions can be

issued when the Government forms an opinion that the same are necessary

or expedient for carrying out the purpose of the Act.  Directions cannot be

issued  in  respect  of  the  matters  which  are  beyond  the  provisions  of  the

statute.

21. However,  it  appears  that  Section  81(2)(jj)  which  was  inserted  by

Tamil  Nadu  Act  49  of  1988,  the  Board  has  been  empowered  to  frame

regulations in relation to the ‘manner’ and ‘basis’ on which the IDC shall be

collected.   In terms of the aforementioned power, Regulation 4 has been

made in terms whereof CMDA has been authorized to collect IDC.  Thus,

the matter providing for collection of IDC is a matter of procedure and not a

substantive provision.  It, in that view of the matter, is not a delegation of

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power.   CMDA is  not  appropriating  any fund collected  on behalf  of  the

Sewerage Board.   It  has no power to utilise any amount.   The power of

collection is merely an incidental power.  They have no power to assess or

appropriate the same; the rate having been fixed.

22. Although for different reasons, we, thus, uphold that part of the order

of the High Court on this count.

QUID PRO QUO

23. State or the Board did not state as to on what basis the rate of Rs.64/-

per  square  meter  was  fixed.   What  was  the amount  to  be  spent  towards

services to be rendered to the multi-storeyed and special buildings had not

been  spelt  out.   What  had  merely  been  stated  was  that  the  amount  was

necessary  to  be  spent  for  overall  development  of  the  water  supply  and

sewerage system.  It is not contended before us that IDC is not a fee but a

tax.  If it is a fee, the principle of quid pro quo shall apply.  Like a State, all

other authorities who are statutorily empowered to levy the same must spell

out as to on what basis, the same is charged.  The State has not placed any

material  before  the  High Court.   The High Court  has also  not  addressed

itself  properly on the same issue.   It  failed to pose unto itself  a relevant

question.  It proceeded on the basis as if over all development charges by

itself  is  sufficient  to  levy  a  fee  without  spelling  out  how  the  services

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rendered will satisfy the equivalence doctrine for the purpose of levy and

collection of fees.

24. In Sri  Krishna  Das v.  Town Area  Committee,  Chirgaon [(1990)  3

SCC 645], this Court observed :

“22. A fee is paid for performing a function. A fee is not ordinarily considered to be a tax. If the fee is merely  to  compensate  an  authority  for  services performed  or  as  compensation  for  the  services rendered, it can hardly be called a tax. However, if the object of the fee is to provide general revenue of the authority rather than to compensate it, and the amount of the fee has no relation to the value of the services, the fee will amount to a tax. In the words of  Cooley, “A charge fixed by statute  for the service to be performed by an officer,  where the  charge  has  no  relation  to  the  value  of  the services  performed  and  where  the  amount collected eventually finds its way into the treasury of the branch of the government whose officer or officers collect the charge is not a fee but a tax.”

23. Under  the  Indian  Constitution  the  State Government’s power to levy a tax is not identical with  that  of  its  power  to  levy  a  fee.  While  the powers  to  levy  taxes  is  conferred  on  the  State legislatures by the various entries in List II, in it there is Entry 66 relating to fees, empowering the State Government to levy fees “in respect of any of the matters in this list,  but  not including fees taken in any court”.  The result  is that each State legislature  has  the power,  to  levy fees,  which  is co-extensive  with  its  powers  to  legislate  with respect to substantive matters and it may levy a fee with  reference  to  the  services  that  would  be rendered by the State under such law. The State may  also  delegate  such  a  power  to  a  local

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authority.  When  a  levy  or  an  imposition  is questioned,  the  court  has  to  inquire  into  its  real nature  inasmuch  as  though  an  imposition  is labelled as a fee, in reality it may not be a fee but a tax, and vice versa. The question to be determined is  whether  the  power  to  levy  the  tax  or  fee  is conferred on that authority and if it falls beyond, to declare it ultra vires.

24. We have seen that a fee is a payment levied by an authority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on  all  tax  payers.  A fee  is  a  payment  made for some special benefit enjoyed by the payer and the payment  is  proportional  to  such  benefit.  Money raised by fee is appropriated for the performance of the service and does not merge in the general revenue.  Where,  however,  the  service  is indistinguishable  from  the  public  services  and forms part  of  the latter  it  is  necessary to inquire what  is  the  primary  object  of  the  levy  and  the essential purpose which it is intended to achieve. While there is no quid pro quo between a tax payer and  the  authority  in  case  of  a  tax,  there  is  a necessary  co-relation  between  fee  collected  and the service intended to be rendered. Of course the quid  pro  quo  need  not  be  understood  in mathematical  equivalence  but  only  in  a  fair correspondence  between  the  two.  A  broad  co- relationship is all that is necessary.”

In Jindal Stainless Ltd. (2) & Anr. v. State of Haryana & Ors. [(2006)

7 SCC 241],  a Constitution Bench of this Court stated:

“40. Tax is  levied  as  a  part  of  common burden. The basis of a tax is the ability or the capacity of the taxpayer to pay. The principle behind the levy

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of a tax is the principle of ability or capacity. In the case  of  a  tax,  there  is  no  identification  of  a specific benefit  and even if such identification is there, it  is not capable of direct measurement.  In the case of a tax, a particular advantage, if it exists at  all,  is  incidental  to  the  State’s  action.  It  is assessed on certain elements of business, such as, manufacture,  purchase,  sale,  consumption,  use, capital,  etc.  but  its  payment  is  not  a  condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment  where  the  special  benefit,  if  any,  is converted into common burden.

41. On  the  other  hand,  a  fee  is  based  on  the “principle  of  equivalence”.  This  principle  is  the converse of the “principle of ability” to pay. In the case of a fee or compensatory tax, the “principle of equivalence”  applies.  The  basis  of  a  fee  or  a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable  benefit.  In the case of a tax,  even if there is any benefit,  the same is incidental to the government action and even if such benefit results from  the  government  action,  the  same  is  not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an  indication  of  a  quantifiable  data,  namely,  a benefit which is measurable.”

In  Mumbai  Agricultural  Produce  Market  Committee  &  Anr. v.

Hindustan Lever Ltd. & Ors. [(2008) SCC 575], this Court observed :

“14. The quantum of recovery, however, need not be based on mathematical exactitude as such cost is  levied having regard to the  liability of  all  the licensees or a section of them.  It would, however, require some calculation.”

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It was further stated :

“18. Cost of supervision, if borne by the State has to be recovered by it.  The burden was, therefore, on the State to justify the levy.  Even the general or  special  order,  if  any,  purported  to  have  been issued by the State has not been brought on record. On what basis, the supervision charges were being calculated is not known.  The premise for levy or recovery of the amount of supervisory charges is not  founded  on  any  factual  matrix.   Only  the source of the power has been stated but the basis for exercise of the power has not been disclosed.”

Recently, in  Mohan Meakin Ltd. v.  State of H.P. & Ors. [2009 (1)

SCALE 510], this Court opined that the jurisdiction of the State to impose

such a levy is limited.  When a fee is levied, the question as regards ‘aspects

of power to levy fee vis-à-vis tax’ must be borne in mind.  

25. Furthermore, it was held in A.P. Paper Mills Ltd. v. Govt. of A.P. and

Another [(2000)  8 SCC 167] that  even if  a  fee is  levied for  issuance of

permit, it was only for the purpose of recovering the administrative charges.

[See also  Ashok Lanka and Another v.  Rishi  Dixit  and Others (2005) 5

SCC 598].

This Court in Kerala Samsthana Chethu Thozhilali Union v. State of

Kerala and Others [(2006) 4 SCC 327], upon noticing  State of Kerala and

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Others v.  Maharashtra  Distilleries  Ltd.  and  Others [(2005)  11  SCC  1],

opined:

“39. In  State  of  Kerala v.  Maharashtra Distilleries  Ltd. this  Court  took  notice  of  the provisions of Section 18-A of the Act. It was held that  the  State  had  no  jurisdiction  to  realise  the turnover tax from the manufacturers in the garb of exercising  its  monopoly  power.  It  was  held  that turnover tax cannot be directed to be paid either by way of excise duty or as a price of privilege.”

26. Even while levying a fee, a quantum jump is deprecated.

In Indian Mica Micanite Industries v. The State of Bihar and Others

[(1971) 2 SCC 236], it has been held:

“17…  There  cannot  be  a  double  levy  in  that regard.  In  the  opinion  of  the  High  Court  the subsequent  transfer  of  denatured  spirit  and possession  of  the  same  in  the  hands  of  various persons such as wholesale dealer, retail dealer or other  manufacturers  also  requires  close  and effective  supervision  because  of  the  risk  of  the denatured  spirit  being  converted  into  palatable liquor and thus evading heavy duty. Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer. It is merely protecting its own rights. Further in this case, the State  which  was  in  a  position  to  place  material before the Court to show what services had been rendered by it  to  the  appellant  and other  similar licensees,  the  costs  or  at  any  rate  the  probable costs  that  can  be  said  to  have  been incurred  for rendering those services and the amount realised

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as  fees  has  failed  to  do  so.  On  the  side  of  the appellant, it is alleged that the State is collecting huge amount as fees and that it is rendering little or  no  service  in  return.  The  co-relationship between the services rendered and the fee levied is essentially a question of fact. Prima facie, the levy appears  to be excessive even if  the State can be said to be rendering some service to the licensees. The State ought to be in possession of the material from which  the co-relationship  between the  levy and  the  services  rendered  can  be  established  at least  in  a  general  way.  But  the  State  has  not chosen to place those materials before the Court. Therefore  the  levy  under  the  impugned  Rule cannot be justified.”

In  this  case,  the  State  in  fact  has  not  produced  any  material

whatsoever before the High Court, which it  was required for meeting the

challenge on imposition of fee by it.  

27. As in the case of Mohan Meakin Ltd., in this case also no justification

for levy of fee has been placed before the High Court,  we are of the opinion

that the matter should be remitted to the High Court for consideration of the

matter afresh.   

In the writ petition, State of Tamil Nadu may be impleaded as a party.

The  parties  shall  be  at  liberty  to  produce  such  material  before  the  High

Court for justification for levy of fee.  The State of Tamil Nadu is directed

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to file an affidavit  before the High Court  to justify the levy of fee.  The

affidavit should be filed within four weeks.   

28. The impugned order is set aside.  The appeals are allowed.  The High

Court is requested to dispose of the matter as expeditiously as possible.  No

costs.

………………………….J.         [S.B. Sinha]

..…………………………J.     [Dr. Mukundakam Sharma]

New Delhi; February 17, 2009

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