A license fee can only be imposed if there is a reasonable correlation between the fee and the services rendered by the Government. A lump sum license fee payable in advance cannot be subsequently varied based on the quantum of sales.

S.K. Jha, J.

As the points involved in both these writ applications are mainly common, we propose to deliver a common JUDGMENT : with regard to both of them. But so far as the fact are concerned, they will be given separately at appropriate places.

2. In C.W.J.C. 42 of 1971 the petitioner prayed for quashing of an ORDER :of the Board of Revenue, Bihar dated 17th December, 1970 rejecting the petitioner's application objecting to the realisation of Re.1.47 for the year 1968-69 and Rs.29,546.51 for the year 1969-70 by way of licence fee for licence granted to it for wholesale trade of India made foreign liquor. A copy of the ORDER :has been marked Annexure 3 to the writ application. The licence was granted to the petitioner in form I for the sale of India made foreign liquor to trade, i.e., wholesale trade in India made foreign liquor. The ORDER :contained in Annexure 3 aforesaid was passed after the petitioner had objected to the demand made on 15th of April, 1970 by an ORDER :contained in Annexure 2 to the writ application. It is pertinent to mention that the licence for the year 1968-69 expired on the 31st of March, 1969 and that for the year 1969-70 expired on 31st March, 1970 and the demand under Annexure 2 was made 16 days later than the expiry of the last mentioned licence. The demand is purported to have been made by way of a levy of licence fee under the provision of Rule 106 of the Rules framed by the Board of Revenue (hereinafter called the Rules) under Section 90(7) of the Bihar and Orissa Excise Act, 1915 (Act II or 1915). Rule 106 of the Rules formerly prescribed a licence fee of Rs.36/- per annum payable in advance, which, it is now admitted by all concerned, was raised to Rs.200/- per annum for the years in question.

3. Mr. Rajeshwari Prasad, learned counsel for the petitioner has challenged the validity of the levy of the so-called licence fee on three grounds-

(i) That the fee being based on sale was not a fee for the licence but was a tax which the Commissioner of Excise was not entitled to levy. In other word the amount purported to have been levied as licence fee has no correlationship with any service rendered by the State in the Excise Department for having granted licence for wholesale trade in India made foreign liquor and as such, the levy was not authorised, there being no quid pro quo

(ii) That even under the express language of Rule 106 as read in juxtaposition to Rule 107, the imposition of licence fee on the basis of quantum of sale was not authorised.

(iii) That the terms of the licence having expired, the demand was not authorised by law.

4. Learned counsel for the petitioner, in support of his first contention, has placed reliance on a decision of the Supreme court in (1) The Indian Mica and Micanite Industries, Ltd. V. The State of Bihar (A.I.R. 1971 Supreme Court 1182). What was a case in which a licence fee in respect of a licence for wholesale vend of denatured spirit has been sought to be levied under the provisions of Rule III of the Rules on the basis of quantum of sale and the grounds on which the levy in present case is being sought to be justified were also put forward as grounds of defence in that case. Before this High Court, in a writ application filed by the petitioner of that case, such a levy under Rule III of the Rules having been challenged, the stand of the State Government in the Excise Department found favour with this Court, where a Bench of this court held such a levy to be legal and valid as being an imposition of fee. Having lost in this Court, the petitioner of that case went up in appeal to the Supreme Court, certificate having been granted by this Court itself. After reviewing a series of decisions starting from Sudhundra Thirtha Swamiar V. Commissioner for Hindu Religions and Charitable Endowments, Mysore [(1963) Supplementary 2 Supreme Court Report 302)] up to date, the Supreme Court held:-

(a) "From the above discussion it is clear that before any levy can be uph