S.N.P. Singh, J.

The petitioner is a company having its registered office at Jhumritilaiya in the district of Hazaribagh. The company is engaged in the manufacture of micanite products. It purchases denatured spirit from the who1esellers or the manufacturers for the purpose of manufacturing micanite. In this writ application under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the validity of Rule 111 of the Rules framed by the Board of Revenue, Bihar, by which license fee has been levied at the rate of 0.55 paise per litre for the possession and import of denatured spirit.

2. The Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act II of 1915) came into force on the 19th January, 1916. In pursuance of the provisions of the Act, rules were made both by the Provincial Government and the Board of Revenue for the levy of excise duty and license fee. Fees payable on licenses for wholesale vend of denatured spirit, for the retail sale of denatured spirit and for possession of such spirit in excess of the limit of retail sale, were prescribed in Rule 111 of the Rules. The fee for the licence to possess denatured spirit in 1919 was only Rs. 2/- per annum, irrespective of the quantity in the possession of a person. This rate continued to be in force till 1937. The fee for possession of denatured spirit was fixed at eight annas per bulk gallon when the rule was amended on the 10th September 1937. This was raised to Rs. 2/-per bulk gallon by the Board's notification, dated the 24th March, 1952. The fee was subsequently changed to 0.55 paise per litre and, as alleged in the writ application, it has been further altered to 0.75 paise per litre.

3. This writ application was heard by a Bench of this Court, and, by its judgment, dated the 14th of October, 1966, the writ application was dimissed. In this court, the validity of the Rules was challenged mainly on the ground that the fee chargeable under the impugned rule was, in essence, a tax or duty and the State Government could not constitutionally levy such duty in respect of alcoholic liquors not fit for human consumption. The Bench took the view that the impugned levy was, in essence, a fee, and not tax. One of the ground on which the Bench of this Court upheld the levy as ‘fee’ was stated in paragraph 8 of the judgment in these words :

" . . . . when a manufacturer wants to keep in his possession large quantity of denatured spirit for manufacturing purposes, he wants a special privilege or concession of immunity from prosecution. For that purpose he has to obtain a licence or pass on payment of requisite fees. There is thus a quid pro quo element and the immunity from prosecution is in the nature of a special benefit or privilege."

In upholding the levy as fee, the Bench of this Court gave another ground in these words:

“...... the Excise Department have to maintain an elaborate staff not only for the purpose of ensuring that denaturation is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession of denatured spirit in the hands either of a wholesale dealer or retail seller or any other licensee or permit holder is not misused. The danger lies in the fact that here is a very strong temptation to convert denatured spirit into alcohol fit for human consumption and there by evade payment of heavy duty....."

It was ultimately held that, considering the nature of the supervision which was required by the statutory provisions to be exercised in granting licenses, permits and passes for persons to remain in possession of denatured spirit and also the fact that the person to whom such licence or pass was granted, obtained a special privilege and got immunity for prosecution under the Bihar and Orissa Excise Act, it was reasonable to hold that there was necessary quid pro quo clement in charging 55 paise or 75 paise per litre of denatured spirit. It was also observed that there was correlation between the privil