Judgment

DESAI, J. :- The respondents in these two appeals filed Original Petitions Nos. 2892-3073 of 1965 challenging the validity of the licence fee levied by the appellant The City Corporation of Calicut to be paid for use of the land or premises for soaking of coconut husks. The appellant. Corporation by its resolution dated January 25, 1963 levied licence fees in respect of various items set out in Schedule IV of the Calicut City Municipal Act, 1961 subsequently restyled as Kerala Municipal Corporation Act, 1964 (Corporation Act for short) including for use of premises and land for soaking coconut husks. The respondents are admittedly carrying on the trade of soaking coconut husks and they had not taken out a licence for carrying on the trade. The Commissioner of the appellant Corporation issued a notice to each of the respondents calling upon him to show cause why within three days of the receipt of the notice, the respondents should not be prosecuted for using premises for soaking coconut husks without obtaining a licence as required by law. The respondents challenged the validity and legality of the aforementioned notices issued by the Corporation and served upon them in the aforementioned two writ petitions on diverse grounds, inter alia contending that if the licence fee is levied as a fee, no service is rendered or special advantage or favour is conferred by the Corporation on the respondents for collecting such fee and that there is no quid pro quo and that the relevant provisions of the Act do not enable the Corporation to levy such a fee. Alternatively, it was contended that if it is levied as a tax, it is beyond the taxing powers of the Corporation.

2. The Corporation filed its counter-affidavit and sought to justify the fee as a licence fee or in the alternative it was contended that the Corporation had the power to levy a tax of the nature levied by it.

3. Both the petitions came up before a learned single Judge of the High Court who held that the levy of the impugned licence fee is not legal in the absence of conferment of special benefits on the petitoners and other persons who soak coconut husks. The alternative. submission that the Corporation had the power to levy it as a tax was negatived observing that the power to levy the various taxes conferred on the Corporation under Chapter V of the 1964 Act does not comprehend the impugned levy and accordingly held that as a tax it was not valid and legal. Accordingly both the writ petitions were allowed and the impugned notices were quashed. The Corporation after unsuccessful Writ Appeals Nos. 107-108 of 1967 filed these appeals by special leave.

4. Mr. A. S. Nambiar, learned counsel who appeared for the appellant-Corporation urged that the levy of licence fee as fee is fully justified and the High Court was in error in rejecting it as such on the ground that the respondents do not enjoy any special service or benefit for paying the fees on the traditional views of law more or less then prevailing that for a fee there must necessarily be quid pro quo. He submitted that the trend revealed by recent decisions of this Court would show that traditional view about fee has undergone a sea change and that the demarcating line between tax and fee has become so blurred as to become almost invisible. It was alternatively submitted that even according to traditional view the Corporation has placed enough evidence on record to show that the respondents have been and are receiving special service or benefit in return for the fees levied and paid. It is not necessary to examine the alternative submission save saying in passing that the respondents do enjoy certain benefits from the functions discharged by the Corporation. The first limb of the contention must prevail in view of the three recent decisions of this Court.

5. In Municipal Corporation of Delhi v. Mohd. Yasin (1983) 3 SCC 229 after a review of the earlier decisions it was observed as under :

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