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1978 Supreme(AP) 381
Andhra Pradesh High Court
Paradise Bar - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 11-17-78
The government has the power to fix the license fee for liquor licenses as it deems fit, and the fixation of the fee on the basis of population is not irrational or discriminatory.
Headnote:
ANDHRA PRADESH EXCISE ACT - LICENCE FEE - ENHANCEMENT - VALIDITY - ARTICLES 14 AND 19 (1) (G) OF THE CONSTITUTION - WHETHER VIOLATED - FIXATION OF LICENCE FEE ON THE BASIS OF POPULATION - WHETHER ARBITRARY.
Fact of the Case:
The petitioners, who are licensees under the Andhra Pradesh Excise Act, challenged the notification issued by the Government of Andhra Pradesh enhancing the license fee for various types of liquor licenses. They contended that the enhanced fee was arbitrary, violative of Articles 14 and 19 (1) (g) of the Constitution, and not authorized by law.
Finding of the Court:
The court held that the enhanced license fee was not arbitrary or violative of Articles 14 and 19 (1) (g) of the Constitution. It held that the government had the power to fix the license fee as it deemed fit, and that the fixation of the fee on the basis of population was not irrational or discriminatory. The court also held that the enhanced fee was authorized by law, as the Andhra Pradesh Excise Act empowered the government to prescribe the license fee.
Issues: 1. Whether the enhanced license fee was arbitrary or violative of Articles 14 and 19 (1) (g) of the Constitution? 2. Whether the fixation of the license fee on the basis of population was irrational or discriminatory? 3. Whether the enhanced fee was authorized by law?
Ratio Decidendi: 1. The court held that the enhanced license fee was not arbitrary or violative of Articles 14 and 19 (1) (g) of the Constitution because: a. The government had the power to fix the license fee as it deemed fit. b. The fixation of the fee on the basis of population was not irrational or discriminatory, as it was a reasonable way to regulate the business and secure the highest revenue for the State. 2. The court held that the fixation of the license fee on the basis of population was not irrational or discriminatory because: a. The government had the power to fix the license fee as it deemed fit. b. The fixation of the fee on the basis of population was a reasonable way to regulate the business and secure the highest revenue for the State. 3. The court held that the enhanced fee was authorized by law because the Andhra Pradesh Excise Act empowered the government to prescribe the license fee.
Final Decision: The court dismissed the petitions and upheld the validity of the notification enhancing the license fee.
( 1 ) IN this group of writ petitions, the Licensees under the Andhra pradesh Excise Act read with the Andhra Pradesh Foreign Liquor and lndialiquor Rules, 1970 call in question the Notification of the Government of andhra Pradesh amending the Schedule to the Andhra Pradesh Foreign liquor and Indian Liquor Rules, 1970 by which the licence fee payable for f. L. 15, F. L. 16, F. L. 17, F. L. 18, F. L 19, F. L. 20, F. L. 21, F. L 22, F. L. 23. and F. L. 24 licences was enhanced and varying enhanced fee was fixed on the basis of population with effect from 1-10-78. That notification reads as under : "notification: In exercise of the powers conferred by Section 72 read with Sections 15 and 28 of the Andhra Pradesh Excise Act. 1968 (Act 17 of 1968), the Governor of Andhra Pradesh hereby makes the following amendments to the Andhra Pradesh Foreign liquor and Indian Liquor Rules, 1970 the draft of the same having been previously published as required under sub-section (1) of section 72, of the said Act.
( 2 ) THE amendments hereby made shall come into force with effect on and from the 1st October, 1978. AMENDMENTS in the said rules: - (i) for the existing Schedule, the following Schedule shall be substituted, namely:-
( 21 ) FURTHER in view of the pronouncement of the Supreme Court in har Shankar vs. The Deputy Excise and Taxation Commissioner AIR. 1975 s. C. 1121 also the assumption that it is a fee like any other licence fee no longer holds good. The Supreme Court observed;" The distinction which the constitution makes for legislative purposes between a tax and a fee and the characteristics of these two as also of excise duty are well known. a tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not a payment for services rendered . Per Latham, C. J. , in Mathews vs. Chickory Marketing Board 60 CLR 263, 276. A fee is a charge for special services rendered to individuals by some governmental agency and such a charge has an element in it of a quid pro quo. Commr. , H. R. E. Madras vs. Lakshmindra Thirtha Swamiar, 1954 SCR 1005, 1041-AIR 1954 S. C. 282 at 295. Excise Duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. M/s. Guruswamy and Co. , vs. State of Mysore (1967) (1) SCR 548 : AIR. 1967, S. C. 1512 ). The amounts charged to the licencees in the instant cases are, evidently neither in the nature of a tax nor of excise duty. But then, the licence fee which the State Government charged to the licensees through the medium of auctions or the fixed fee which it charged to the vendors of foreign liquor holding licences in Forms L3, L4, and l5 need bear no quid pro quo to the services rendered to the licencees. The word fee is not used in the Act or the rules in the technical sense of the expression. By licence fee or fixed fee is meant the price or consideration which the Government charges to the licensees for parting with its privileges and fundaing them to the licensees. As the State can carry on a trade or business, such a charge is normal incident of a trading or business transaction. "the Supreme Court further observed in that Judgment as under :". . . . . . . . . Licence Fee or fixed fee in the instant case does not have to conform to the requirement that it must bear a reasonable relationship with the services rendered to the licensees. The amount charged to the licensees is not a fee properly so-called nor indeed a tax but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transaction".
( 22 ) MR. Babul Reddy, learned counsel for the petitioners, contend that this observation of the Supreme Court was in the context of the provisions contained in Section 34 of the Punjab Excise Act, 1914 and the punjab Liquor Second Amendment Rules, 1968 with which Their Lordships were concerned in that case and cannot apply to the licences issued
