LexINDIAN MICA & MICANITE INDUSTRIES LID. versus STATE OF BIHAR & ORS.
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... 319 INDIAN MICA & MICANITE INDUSTRIES LID. A v. STATE OF BIBAR & ORS. April 2, 1971 IS. M. Snoo, c. J., G. K. MITTER, K. s. HEGDE, A. N. GROVER B AND P. JAGANMOHAN REDDY, JJ.] Bi/Jar and Orissa ExCise Act, 1915, s. 90 and rules made thereunder, r. 111-Levy of licence fee for possession of liquor-Whtther fee commen· 5urace 14:fth .service rendered by State-Immunity from prosecution on pay- ment of licence fee-If quid pro quo. The appellant was using denatured spirit in the manufacture of mica- C nite. It challenged. the vires of r. 111 of the Rules framed under s. 90 of the Bibar and OriSsa Excise Act, 1915, by which a fee for· a licence to pos- sess denatured spirit was' imposed. The High Court upheld the levy as a fee for se.rvices rendered by the Government In appeal .to !his Court, HELD: (1) Denatured spirit being intoxicating liquor (though unfit D for human consumption), the State Legislature ·has power lo levy a fee. But, before the levy can be upheld as a fee it must be shown that the levy was a quid pro quo for services rendered by the GovemmenL An arith- metic exactitude is not expected but correlationship of a general character must be established. [321D·f1 In the present case, the only services rendered were that the Excise Department wr.s maintaining an elaborate staff for the purpose of ensur- E ma that denahlring was done properly by the manufacturer and for the purpose of seeing that the subsequent possession of the denatured spirit was not misuaed . by converting· the denatured spirit into alcohol fit for human consumption. [326H; 327 A-BJ (a) So far as the manufacturing process is concerned the appellant had nothing to do with it. It was only a purchaser of the denatured spirit and hence the cost of supotvisiq the. manufacturing process or any as- F sistance rendered to the man~ could not be recovered from con- sumers like the appellant. Further, under, r. 9 the.actual cost of sq~ision of the manufacturing process was required ~ be l!IJme by ·the tllllllulactunor and there could not be a double levy in that Cljlard [327B.C) (b) Assuming that the possession of the denatured spirit in the hands of various persons required close and effective supervision because of the risk of its being converted jnto potable liquor, in provi,din& against inisuse G the Stab! Was not renderlDi any service to the consumer. ' [327D) (c) Tbe appellant had alleged that the State was collecting the "!llOUnt without. rendering ipy . •vice in return. The correlationship · between the services rendered and the fee levied Is essentially a question of act. Prima fad• in the· present cue, ·the IC19Y was excessive, even 'if the State could be said to be rendering some oervice to the licensees. The State was in jlOS&tSSion of material from 'llhich the . correlationship between the levy 'H and the services rendered coukl be .Oltabliahed at least in a general way. but the State had not placed any i:natetial before the Court. Therefore, the levy under the impucned rule could DOI be justified. (327B-G) 320 SUPREME COURT IlEPORTS [1971] SUPP. s.c.R. A B c D E G H Commissioner, Hindu Religious Endowmtnts, Madras v. Sri Lakshmi- ndra Thirtha Swamiar of Sri Shir11r Mull, [1954] S.C.R. 1005, Mal1"nt Sri Jagannath Ramanuj Das & Anr. v. State of Orissa & Anr., [1954] S.C.R. 1046, Ratilal Panachand Gandhi v. State of Bombay & Ors., [1954] S.C.R. 1055, Hingir Rampur Coal Co. Ltd. v. State of Orissa & Ors., [1961] 2 S.CR. 537. H. H. Sudhuntlra Thirtha Swamiar v. Commissioner of Hindi, Religious and Charitable Endowments .. Mysore, [1963] Supp, 2 S.C.R. 302 Corporation oj Calcutta &: Anr. v. Liberty Cinema, [1965) 2 S.C.R. 477 ttnd Delhi Cloth &: General Mills Co. Ltd. v. Chi~! Commissioner, Delhi, [1970] 2 S.C.R. 348, followed. (2) The Hiah Court erred in observina that when the manufacturtr1 wanted to keep in their possession a larae quantity of denatured spirit for manufacturing purposes. they wanted a privilege and immunity from pro- secution. that the payment of the requisite licence fee was for that purpose and that it operated as the quid pro quo. [325C-D] (a) The grantin& of a license generally does not .confer any privilege ur benefit on anyone, except in those cases where a permit or liceoce is &ranted to someone to exploit Government property. The requirement to take a licence is prescribed to safeguard public interest by regulating a trade. business or
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