JUDGMENT

D.S. Mathur, C.J. - This order shall govern special appeals Nos. 272 to 275 and 284 of 1973 by the State of U. P. and the Excise Commissioner to challenge the order of a learned Single Judge of this Court holding that Rule 7 (3) of the U. P. Bottling of Foreign Liquor Rules, 1969, is invalid on the ground that no service was rendered by the appellants when they maintained a staff for supervising the botting of the liquor. The respondents in these appeals are various distillers manufacturing Indian made foreign liquor which is bottled under the supervision of the Excise Staff. Excise duty on the liquor is paid only after the bottles of foreign liquor are issued from the bonded warehouse.

2. It is not in dispute that excise duty and also bottling charges at the rate of 14 paise per bottle for foreign liquor and 5 paise per bottle for bear is recovered. The imposition of the excise duty and the bottling charges is not in dispute in the present case. What has been challenged is the additional imposition of the charges under Rule 7 (3) which runs as follows :-

"The Excise Commissioner shall decide the strength of Excise personnel necessary for the proper supervision of the operations connected with the bottling and his decision shall be binding on the licensee.

The licensee shall pay to the State Government at the end of each calender month the cost of excise staff necessary for the supervision of bottling, as may be determined from time to time by the Excise Commissioner.

The licensee shall provide quarters to the excise staff to the satisfaction of the Excise Commissioner in the vicinity of the bonded warehouse for bottling of Indian made foreign liquor at a rent not exceeding ten per cent per month of the salary of each member of the staff.

The licensee shall be bound to keep the quarter and their appurtenances in proper repair and not to interrupt or annoy any officer residing therein, in his use or enjoyment thereof. In case any question should arise as to whether the rent demanded by the owner of such quarter is just and reasonable taking into consideration the nature and sufficiency of the accommodation, the question shall be referred to the Excise Commissioner whose decision shall be final and binding on the licensee.

3. The imposition of the additional charges cannot be justified under Section 30 of the Excise Act in view of the fact that any distiller can bottle foreign liquor manufactured by it and no exclusive privilege in respect of any kind of liquor or any specified area is conferred on them. Consequently, the imposition of Additional Charges under Rule 7 (3) shall be valid only if it amounts to a fee which can validly he imposed by the State Legislature. It is the admitted case of the parties that the Additional Charges under Rule 7 (3) do not fall in the category of excise duty.

4. For the purposes of the special appeals it is not necessary to lay down whether the appellants render any service by supervising the bottling of Indian made foreign liquor. In case no service is rendered to the distillers no fee can be imposed And Rule 7 (3) shall clearly be invalid. In case some service is rendered a fee highly disproportionate to the expenses incurred cannot be regarded as fee. Considering that excise duty is recovered on the basis of number of bottles of Indian made foreign liquor taken out of the bonded warehouse, the posting of the staff to supervise the process of bottling is chiefly for supervising this process and for the recovery of the proper excise duty. The maximum that may be said in favour of the State is that on the bottling process being supervised by the excise staff the public can be under the impression, even though the bottles do not bear any seal of warranty of the State, that bottles sealed under the supervision of the excise staff contain the proper quantity and percentage of liquor. The service, if render-ed by supervising the process of bottling, is a nominal one.

5. It is not in dispute that