LexSTATE OF TAMIL NADU &ANR. versus TVL. SOUTH INDIAN SUGAR MILLS ASSN. & ORS.
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A B [2015]9S.C.R.148 STATE OF TAMIL NADU &ANR. v. TVL. SOUTH INDIAN SUGAR MILLS ASSN. & ORS. (Civil Appeal Nos. 1028-1037 of 2005) AUGUST 12, 2015 [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] Tamil Nadu Distillery Rules - r. 5-A [as amended by c G.O.M. No. 64, dated 12.4.2000, Home Prohibition and Excise (XIII) Department of the State Government]- Increase in administrative service fee to Rs. 11- per bulk litre (from 50 paise per bulk litre) for industrial alcohol produced by the sundry distilleries located in the State - Challenged on the· D ground that the calculation of the fee is not based on quid pro quo - Single Judge as well as Division Bench of High Court quashed the G 0. M. No. 64 - Despite the order, State coerced the petitioners to pay the fee@ Rs. 11- per bulk litre - On appeal, held: Administrative or service charges can be E recovered, but there must be a perceptible correlation between the expenses and the collections - In the present case, collection even at 50 paise per bulk litre would cover expenses over and above those incurred by the State- The State has failed to furnish credible details of its expenditure F - However, in the facts of the case, refund of the charges over and above 50 paise not directed - Direction to State to pay cost of litigation before High Court and this Court to the respondent company. G Dismissing the appeals, the Court HELD: 1.1 The charges should not be restricted only to those establishment expenses incurred by the State in the distilleries alone, or that any collection over H and above those expenses would ipso facto tantamount 148 STATE OF TAMIL NADU v. TVL. SOUTH INDIAN SUGAR 149 MILLS ASSN. to unjust enrichment. However, the fact remains that A the figures of expenditure as noted by the Division Bench of High Court in the impugned judgment were ~93.20 lakhs, whereas the collections even at the rate of 50 paise per bulk litre aggregated 11.73 crore, which since it was not interfered with, would undoubtedly cover expenses . B over and above those incurred by the State only on its establishments/office in the respective distilleries. The Division Bench also underscored the fact that details 'Of expenses incurred by the State in connection with the supervision or regulation of production of industrial C alcohol, with a view to ensure that there is no diversion thereof for the purpose of or reconversion to potable alcohol, had not been provided in this regard. Thus, the State has failed to furnish credible details of expenditure 0 whicti, according to it, related to administrative or regulatory or ser-Vice expenses. [Para 3] [156-C-F] 1.2 Administrative or service charges can be recovered, but nothing over and above them. While it · would be unfair to insist on mathematical exactitude in E the calculation of administrative service charges, there must bea perceptible correlation between the expenses and the collections. It will not be permissible for the State to collect fees in respect of expenses incurred· in its F Excise Department, except those bearing a reasonable nexus with the administrative steps taken to ensure that there is no misutilisation or diversion of industrial alcohol for the purposes of producing potable alcohol. [Para 4] [156-G-H; 157-A-B] G Synthetics and Chemicals Ltd. v. State of U.P. (1990) 1 SCC 109: 1989 (1) Suppl. SCR 623 - followed. State of U.P. v. Varn Organic Chemicals Ltd. (2004) 1 SC 225: 2003 (4) Suppl. SCR 957- relied on. H 150 SUPREME COURT REPORTS [2015] 9 S.C.R. A B.S.E. Brokers' Forum, Bombay and Ors. v. Securities and Exchange Board of India and Ors. (2001) 3 SCC 482 - referred to. Shri Bileshwar Khand Udyog Khedut Sahakari Mandali B Ltd. v. State of Gujarat (1992) 2 SCC 42: 1992 (1) SCR 391; Gujchem Distillers India Ltd. v. State of Gujarat (1992) 2 SCC 399: 1992 (1) SCR 675; BiharOistillery . v. Union oflndia AIR 1997 SC 1208: 1997 (1) SCR 680; Sreenivasa General Traders v. State of Andhra C Pradesh (1983) 4 SCC 353: 1983 (3) SCR 843; PM. Ashwathanarayana v. State ofKamataka (1989) Supp.1 SCC 696; Vam Organic Chemicals Ltd. v. State of UP (1997) 2 SCC 715: 1997 (1) SCR 403; Secunderabad Hyderabad Hotel Owners' Association v. Hyderabad D Municipal Corporation (1992) 2 SCC 274 - referred to. 2. If administrative or service charges are sought to be recovered from the Respondent Distilleries to cover E nefarious activities carried out by
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