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Dhirendra Mishra, J.—Chhattisgarh Petroleum Dealers Association, a registered association of petroleum dealers, has questioned the legality, propriety and constitutional validity of the notification dated 20th February, 2006 whereby the State Government, in exercise of powers conferred u/s 3 of the Essential Commodities Act, 1955 (for short ''the Act'') read with the order of the Government of India, Ministry of Industry and Civil Supplies (Department of Civil Supplies and Co-operation) Order No. S.O. 681 (E) dated 30th November, 1974, has amended the Chhattisgarh Motor Spirit and High Speed Diesel Oil (Licensing and Control) Order, 1980 (for brevity ''the Control Order, 1980'') and enhanced the licence fee, fee of issuance of duplicate licence and deposit of security under sub-clause (2) of clause 7, clause 8 and sub-clause (i) of clause 14 of the Control Order, respectively. Learned counsel for the petitioner submitted that the Control Order, 1980 was made by the erstwhile State of Madhya Pradesh in exercise of powers delegated by the Union of India u/s 3 of the Act in the year 1980. Thus, the Control Order, 1980 is a delegated legislation made under the authorization of the Central Government. The State is strictly bound by the precincts of authority so delegated and also by the purpose of delegation If the State proposes to amend the aforesaid Control Order, in that case, a further approved/delegation of power from the Central Government was necessary. In the absence of any further delegation to amend the Control Order, 1980. the impugned notification amending the Control Order is without any authority of law and is liable to be struck down.
Reliance is placed on the decision of the Supreme Court in the matter of Harishankar Bagla and Another Vs. The State of Madhya Pradesh,
Second limb of challenge to the impugned notification is that the Control Order of 1980 was made under the authorization of the Central Government when the Central Government did not promulgate any Control Order in exercise of powers u/s 3 of the Act, however, in the meanwhile, the Central Government in exercise of powers conferred u/s 3 of the Essential Commodities Act, 1955 and in super session of Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 1998 has made Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 (for short ''the Order, 2005''). Clause 10 of the above order overrides anything to the contrary contained in any Order made by a State Government or by an officer of such Government before the commencement of this Order except as respects anything done or omitted to be done thereunder before such commencement. Since the Central Government has already made the Control Order, 2005, the powers delegated to the State Government to make Order in the same field would be inoperative and inapplicable.
Lastly, it was argued that by the impugned notification, the State seeks to enhance licence fee for issue, re-issue and renewal of licence under clause 7 (2) and deposit of security by hundred times by amending clause 8. Ten fold increase has been made towards fee for issuance of duplicate licence.
It is settled law that fee or compensatory fee for grant of licence is imposed towards facilities/services that are extended to the licensees by the licenser.
In the instant case, the State Government does not extend any facility/service to the licensee which may justify hundred fold increase in the licence fee. The State Government has not created any separate/individual department to give effect to the provisions of the Control Order, 1980, as officers of the Food and Civil Supplies Department as also officers of the Revenue Department of the State have been authorized by the State in effecting search and seizure etc. under the Control Order. The State has failed to show any element of public interest for impugned action and it does not disclose any objective parameter for hundred times increase in the licence fee and deposit of security.
The State of Madhya Pradesh has revised its licence fee by amendment in the Control Order, 1980 on 20-7-2004 and increased licence fee for issue, re-issue and renewal of licence as well as deposit of security by ten times. The contention of the State that licence fee has been increased to augment additional revenue is not permissible under the law, as fee is imposed for the purposes of regulation. From the statistics furnished by the State with return vide Annexure-R/1 and R/2, it may be seen that 551 licencees petroleum dealers are operating in the State and only 41 cases of malpractices have been noticed. It is also not clear whether malpractices were with regard to the contravention of the licencing condition or with regard to breach of agreement executed between the petroleum dealers and companies.
On the other hand, learned counsel for the State/respondents would argue that as per amendment in clause 14(i) of the Control Order, deposit of security of Rs. 1 lakh may be made by the licensees in the form of refundable fixed deposit receipt, bank guarantees or national saving certificates etc. as per their own convenience. The interest accrued on such deposit remains exclusive property of the individual licensee, which he is entitled to get back in the event of termination of licence and the same cannot be termed to be excessive or irrational. The Control Order has been issued for maintaining supplies and for securing availability at fair prices of motor spirit and high speed diesel in the State of Chhattisgarh. In order to ensure due fulfillment of object and purpose of the Control Order, 1980, the respondent/State has to maintain large battery of inspecting officers as well as other officers. The state has to incur expenditure on the officers and staff who are engaged in due compliance of the Control Order. The increase has been made in the year 2006 for the first time after 1980. In the meanwhile, number of licensees in the State has increased from 82 to 551 and there is phenomenal increase in the cases of malpractices which is steadily rising from 28 in the year 2003-04 to 41 in the year 2005-06, as would be evident from the document of Annexure-R/1 and R/2.
We have heard learned counsel for the parties.
From the averments in the writ petition and oral arguments advanced by the respective parties, the following issues emerge for our consideration:--
� Whether the impugned notification amending the Control Order, 1980, issued in purported exercise of powers u/s 3 of the Act read with authorization order of the Government of India dated 30-11-1974 is without jurisdiction in the absence of fresh authorization/approval by the Central Government?
� Whether the State Government was precluded from amending the Control Order, 1980 by the impugned notification in view of the fact that the Central Government has made Control Order, 2005 in exercise of powers u/s 3 of the Act superseding the earlier Control Order made in the year 1998?
� Whether hundred times increase in the licence fee for issue, re-issue and renewal of the licence under sub-clause (2) of clause 7 and deposit of security under Clause-14 and ten times increase in fee for issue of duplicate licence under clause 8 of the Control Order without any measurable benefit facility service made available to the licensees?
First point:--
Whether the impugned notification amending the Control Order, 1980, issued in purported exercise of powers u/s 3 of the Act read with authorization order of the Government of India dated 30-11-1974 is without jurisdiction in the absence of fresh authorization/ approval by the Central Government?
In the matter of Harishankar Bagla (Supra), the Supreme Court, while dealing with constitutional validity of Section 6 of the Essential Supplies (Temporary Powers) Act, 1946, observed that by enacting Section 6 Parliament itself has declared that an Order made u/s 3 shall have effect notwithstanding any inconsistency in this Order with any enactment other than this Act. This is not a declaration made by the delegate but the legislature itself has declared its will that way in Section 6, The abrogation or the implied repeal is by force of the legislative declaration contained in Section 6 and is not by force of the Order made by the delegate u/s 3. "The power of the delegate is only to make an Order u/s 3, once the delegate has made that order its power is exhausted" (emphasis supplied by us). Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act. Parliament being supreme, it certainly could make a law abrogating or repealing by implication provisions of any pre-existing law and no exception could be taken on the ground of excessive delegation to the act of the Parliament itself.
The observations quoted above were made by the Supreme Court while considering arguments of the High Court for declaring Section 6 unconstitutional on the ground that Section 6 declares that any Order made u/s 3 shall have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act i.e. it declares that if there is any repugnancy in an order made u/s 3 with the provisions of any other enactment, then notwithstanding that inconsistency the provisions of the Order will prevail in preference to the provisions of other laws which are thus inconsistent with the provisions of the Order. The power to do something which may have the effect of repealing, by implication, an existing law could not be delegated in view of the majority decision of the Supreme Court in AIR 1951 SC 332.
In the instant case, the Control Order, 1980 has been made in exercise of powers conferred by Section 3 of the Act read with the Central Government''s order dated 30th November, 1974 for the object of maintaining supplies and for securing availability at a fair price of motor spirit and high speed diesel oil in the State of Madhya Pradesh (now Chhattisgarh). The Order delegating power to make Control Order for the stated object including delegation of power to amend Order so made and, therefore, in our opinion, the State has power to amend the Control Order, 1980 and no fresh authorization, by the Central Government is necessary before effecting amendment in the Control Order and the observations of the Supreme Court in Harishankar Bagla''s case were entirely on different context.
Second point:--
Whether the State Government was precluded from amending the Control Order, 1980 by the impugned notification in view of the fact that the Central Government has made Control Order. 2005 in exercise of powers u/s 3 of the Act superseding the earlier Control Order made in the year 1998?
Clause 10 of the Order, 2005 only stipulates that the provisions of this Order shall have overriding effect notwithstanding anything to the contrary contained in any Order made by the State Government or by an officer of the State Government before commencement of this Order except as respects anything done or omitted to be done thereunder before such commencement. It nowhere prohibits the State Government to amend the Control Order made on the basis of earlier delegation by the Central Government. Clause 10 of the Order, 2005 overrides the provisions of any Control Order made by the State Government or any Order passed by any officer of the State Government which is inconsistent with the Order, 2005. It does not take away the State Government''s power to amend the Control Order.
Third point:--
Whether hundred times increase in the licence fee for issue, re-issue and renewal of the licence under sub-clause (2) of clause 7 and deposit of security under Clause 14 and ten times increase in fee for issue of duplicate licence under Clause 8 of the Control Order without any measurable benefit/facility/ service made available to the licencees?
In the matter of Jindal Stainless Ltd. and another v. State of Harayana and others 2006 AIR SCW 3396, after elaborately discussing the difference between tax, fee and compensatory tax, it has been held that the basis of tax is the ability or capacity of the taxpayer to pay tax. The principle behind levy of 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, whereas, a fee is generally a term of licence. It is based on the ''principle of equivalence''. The basis of a fee or compensatory tax is the same. 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. The basic difference between the tax, on the one hand, and fee/compensatory tax on the other, is that the former is based on the concept of burden whereas the latter is based on the concept of recompense/ reimbursement, for a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which has to be reimbursed by compensatory tax or in the form of compensatory tax. In para 41 of the above judgment, it has been further observed that compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the costs of regulation or to meet the outlay incurred for some special advantage to trade, commerce and intercourse. It may incidentally bring in net-revenue to the government but that circumstance is not an essential ingredient of compensatory tax.
Similarly, in Municipal Corporation of Delhi and Others Vs. Mohd. Yasin, the notification issued by the Delhi Municipal Corporation enhancing the fee for slaughtering animals from Rs. 0.25 to Rs. 2/- for each animal, was quashed by the High Court of Delhi on the ground that the Corporation was, in fact, proposing levy of tax under the guise of enhancing the fee. In appeal preferred by the Municipal Corporation, the Hon''ble Supreme Court, after dealing with its various judgments on the subject-matter, has held in para 9 thus:--
What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory extraction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefits provided or privilege conferred Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere casual relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad co-relationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.
In the matter of A.P. Paper Mills Ltd. Vs. Government of A.P. and Another, constitutional validity of revision of licence fee under the Andhra Pradesh Factories Rules, 1950 was challenged as fee was enhanced from Rs. 10,000/- to Rs. 18 lakhs. The Supreme Court allowing the appeal, setting aside the order of the High Court and quashing revision of licence fee observed thus:--
This Court in the case of Vam Organic Chemicals Ltd. and Another Vs. State of U.P. and Others, held that there is a distinction between fees charged for licencee i.e. regulatory fees and the fees for services rendered as compensatory fees. In the case of regulatory fee like the licence fee existence of quid pro quo is not necessary although the fee imposed must not be in the circumstances of the case, excessive.
The question that remains to he considered is whether the enhanced licence fee under challenge is grossly high and excessive, and therefore arbitrary. On a first look it appeared to us that enhancement from Rs. 10,000/- to Rs. 18,00,000/- (maximum), was too high, We also did not find any material on record to show that there was justification for the enhancement of the fee to the extent prescribed. There was also no material on record to show existence of co-relation between the expenditure incurred by the Government for enforcement of the Act and the Rules and the enhanced levy.
In the matter of Sona Chandi Oal Committee and Others Vs. State of Maharashtra, as the Supreme Court, after considering large number of authorities, held that:--
The traditional concept of quid pro quo in a fee has undergone considerable transformation. So far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of a fee provided the fee so charged is not excessive. It was not necessary that service to be rendered by the collecting authority should be confined to the contributories alone. The levy does not cease to be a fee merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have a direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. Quid pro quo in the strict sense was not always a sine qua non for a fee. All that is necessary is that there should be a reasonable relationship between the levy of fee and the services rendered. It was observed that it was not necessary to establish that those who pay the fee must receive direct or special benefit or advantage of the services rendered for which the fee was being paid. It was held that if one who is liable to pay, receives general benefit from the authority levying the fee, the element of service required for collecting the fee is satisfied.
If we examine the notification of Annexure-P/3 in the light of above principles of law laid down by the Supreme Court, we find that licence fee for issue, re-issue or renewal of licence under Clause 7(2) of the Control Order has been enhanced from Rs. 100, Rs. 200, Rs. 300 for 1 year, 2 years and 3 years to Rs. 10,000/-, Rs. 20,000/- & Rs. 30,000/- respectively. Similarly, fee for issue of duplicate licence has been enhanced under Clause 8 from Rs. 100/- to Rs. 1,000/-, deposit of security has been enhanced from Rs. 1,000/- to Rs. 1 lakh under clause 14 of the Control Order. We also did not find any material on record to show that there was justification for enhancement of the fee to the extent prescribed. The respondents have also not produced any material to show existence of any co-relation between the expenditure incurred by the Government for enforcement of the order and enhanced licence fee. The respondents have tried to justify by pointing towards increase in number of petroleum dealers which has gone up from 82 in 1982 to 551 in the year 2006 and number of malpractices detected in the year 2003-04, 2004-05 and 2005-06 (Annexure-R/2). However, we are of the view that in the absence of any material to establish co-relation between the expenditure incurred in enforcing the Control Order and enhancement of licence fee and deposit of security being grossly excessive vide notification of Annexure-P/3 cannot be justified. In the result, we hereby quash clauses 5, 6 and 7 of the amendment in the Control Order, 1980 vide notification dated 20th February, 2006 (Annexure-P/3'') whereby fee payable for licence under sub-clause (2), Clause 7; fee payable under Clause-8 for issue of duplicate licence fee and deposit of security under sub-clause (i) of Clause 14 have been substituted, being grossly excessive and without justification.