The legal framework under the Kerala Panchayat Raj Act, 1994, and the 1996 rules empowers the local authority to levy license fees based on daily turnover and machinery capacity, including safety and backup equipment, and allows for additional fees for belated applications.

1. The Plant Manager of the LPG Bottling Plant established by the Indian Oil Corporation within the local limits of Thenhipalam Grama Panchayat, in Malappuram District is the petitioner in this original petition.

2. The Indian Oil Corporation established the bottling plant within the local limits of Thenhipalam Grama Panchayat in the year 1992-93. After the plant was established, they applied for a licence under the provisions of the Kerala Panchayats (Licensing of Dangerous and Offensive Trades and Factories) Rules, 1963. Such a licence was granted and it was renewed up to 31.3.1995. In the meanwhile, the Kerala Panchayat Raj Act, 1994 was enacted and brought into force. The Government thereupon issued the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996. The Indian Oil Corporation did not however apply for renewal of the licence issued under the erstwhile rules. The Secretary, Thenhipalam Grama Panchayat thereupon issued Ext.P5 demand notice dated 18.9.2001 to the petitioner demanding payment of the sum of Rs.2,28,789/- being the licence fee and penalty payable for the period from 1996-1997 to 2001-2002. Reference was made to sections 231 and 231B of the Kerala Panchayat Raj Act, 1994. Another notice dated 17.9.2001 was also issued calling upon the petitioner to show cause why he should not be prosecuted for running the plant without a licence. The petitioner responded to the said notices by sending Ext.P7 letter dated 27.9.2001 raising various contentions including the contention that section 231 referred to in Ext.P5 notice has no application and that section 231B is not in the statute. The Panchayat thereupon issued Ext.P8 proceedings dated 29.9.2001 withdrawing Ext.P5 notice and the notice dated 17.9.2001 on the ground that reference was made to wrong provisions of law. The Panchayat thereafter issued Ext.P9 notice dated 5.10.2001 calling upon the petitioner to show cause why proceedings should not be taken against the establishment for running the bottling plant without a licence. The petitioner in turn sent Ext.P10 letter dated 20.10.2001 contending that licence fee can be levied only for machinery having a total capacity of 432 HP and that fire pumps and diesel generating sets are not machinery used in the manufacturing process.

3. The Panchayat considered the said contention and thereafter issued Ext.P11 notice dated 30.10.2001 demanding payment of the sum of Rs.1,69,875/- being the arrears of licence fee payable for the period from 1996-97 to 2001-2002. Ext.P11 notice was issued on the basis that the capacity of the machinery installed in the bottling plant is 1865 HP, that the licence fee payable under rule 7 of the Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and Factories) Rules, 1996 based on the average daily turnover is Rs.4,000/-in terms of Schedule II of the said rules, that the licence fee payable in respect of the machinery used in the bottling plant, calculated in accordance with Schedule III thereof is Rs.18650/-and that the additional fee payable under rule 19 of the aforesaid rules for belated payment of licence fee and application for licence is 25% of the licence fee of Rs.22650/-, namely Rs.5,662.50. Ext.P11 discloses that the Panchayat had on that basis demanded from the petitioner the sum of Rs.28,312.50 per year during the period from 1996-97 to 2001-2002. The petitioner thereupon remitted the sum of Rs.15,560/-which according to the petitioner was the actual amount of fee and additional fee payable for the said period and submitted Ext.P12 application dated 7.11.2001 for renewal of the licence for the period from 199697 to 2001-2002. The Panchayat received the said payment and after giving credit to it issued Ext.P14 notice dated 26.11.2001 demanding payment of the balance amount of Rs.1,54,315/- so that Ext.Ext.P12 application can be considered. The petitioner was also cautioned that unless the licence is r