ivil Appeal No 1086 of 1971
From the Judgment and Order dated 28471 of the Gujarat High Court in SCA No 671 of 1970
RF Nariman AK Verma and DN Misra for the Appellant
VJ Francis NP Krishan Kumar Vimal Dave  Co MN Shroff NP and Girish Chandra for the Respondent
The Judgment ofthe Court was delivered by OZA J
This appeal on certificate by the High Court of Gujarat is filed against the judgment of the Gujarat High Court dated 28th April 1971 holding Standing Order No 3 framed under Section 4661Af read with Section 147 of The Bombay Provincial Corporations Act 1949  Act  for short as illegal and without the authority of law
This Act applies to the city of Baroda and the present appellant the Municipal Corporation Baroda is governed by this Act
It is not in dispute that octroi on the import of goods is chargeable under the scheme of the Act
Before this Standing Order which is the subject matter of challenge before the High Court and before us was framed a trans porter who brought the goods within the limits of the Munic ipal Corporation in view of Section 147 of this Act was to pay the octroi duty chargeable on the goods on the assump tion that the goods have been imported for sale consumption or use in the limits of the city of Baroda
Under the scheme as it was in force if the goods were not consumed or sold within the limits of the Municipal Corporation and are taken out on the other end and if the octroi post authority was satisfied that the goods which had entered are being taken out then the transporter had to get the tax which he had paid at the octroi post refunded
According to the appellant corporation this procedure took time at both the ends and for those transporters who were carrying goods which only were in transit in the city of Baroda still had to suffer the inconvenience of paying the octroi duty when they en tered the city limits and then satisfy the authorities at the post from where they went out of town and also had to pay first the tax and then claim a refund in order to avoid inconvenience and the burden on the transporter this Stand ing Order was provided so that when a transporter enters the corporation limits with goods which are only in transit and not to be 865 unloaded for sale or consumption within the corporation limits and if the transporter so chooses on payment of supervision fees the transporter can carry the goods through the corporation limits without payment of octroi under the supervision of the staff of the corporation and for this purpose under this Standing Order fee of Rs2 per heavy vehicle was prescribed
It is alleged that originally the fee suggested was Rs5 but on a representation made by the respondent association itself this was reduced to Rs2 per vehicle
By the impugned judgment the High Court of Gujarat came to the conclusion that under Section 4661Af of the Act no doubt the Commissioner had the authority to frame stand ing orders but he can only frame standing orders in respect of goods on which octroi was payable under Section 4661Af and as the goods admittedly for which this fee was prescribed were goods not to be imported for sale or consumption the octroi was not payable thereon and therefore no standing orders could be framed under Section 4661Af and therefore standing order providing for fees as discussed above was beyond the authority of the Commis sioner under this Act
The High Court also accepted the second contention of the respondent that although the Corporation claim to charge the fee as a fee for the convenience of the transporter but after examining the scheme the learned Judges of the High Court came to the conclusion that there is no quid pro quo established nor it is established that the charge and the collection made on the basis of this charge had any ration ale ratio with the services rendered by the corporation
Aggrieved by this decision of the High Court the Municipal Corporation has come up in appeal
The main contention advanced on behalf of the appellant was that imposition of this fee by the Corporation could not be said to be an imposition as it was optional as when a transporter brings goods and enters into the Corporation limits it was open to him either to choose to take advantage of this Standing Order by paying supervision fees and taking the goods straight under the supervision of the Corporation authorities without  the payment of octroi duty but if a transporter chooses not to take advantage of this Standing Order it was not compulsory and it was open to the trans porter to pay the octroi in accordance with the normal rule and follow the normal procedure by satisfying the checkpost authorities on the other end and claim refund and get it after following the due procedure
It was therefore contend ed that in fact this was an option given to the transporter so that if they so 866 choose they may follow this Standing Order and save them selves from the hardship of paying the octroi and then claiming the refund and for that purpose stopping at the entry checkpost and again at the exit checkpost and also to satisfy the checkpost authorities that the goods which had entered the corporation limits are being taken out in the same state and it also involved handling of sum by the transporter so that it may be possible for him to pay the octroi on the entry checkpost itself
It was therefore contended firstly that it being an option given to the transporter it could not be said to be an imposition or a tax and the question of the authority of the Commissioner does not arise
That in view of language of Section 4661Af it is clearly with the authority of the Commis sioner to frame Standing Orders and the Standing Orders had the approval of the Standing Committee and also of the State Government and therefore it could not be said that the Standing Orders are not framed in accordance with Section 466
It was also contended that the affidavit filed in the High Court by the appellant clearly shows that how this fee is collected and spent for the purpose of giving a facility to the transporter for carrying the goods in transit under the supervision of the corporation authorities so that they have not to suffer the inconvenience and it was contended that in substance therefore the requirement of quid pro quo is satisfied and in fact the fee is charged only to facili tate the transporter in carrying the goods in transit with out payment of octroi and without undue detention in the process of payment of octroi at the entry and claiming refund at the exit
It is alleged that a notice was issued suggesting this procedure as prescribed in Standing Orders a representation was made by the respondent association accepting the suggestion of the Corporation but suggested that Rs5 per vehicle suggested by the Corporation would be too much and it should be reduced to Rs2 and it was on this representation that in fact the Corporation the present appellant chose to reduce the supervision charges to Rs2 per vehicle
It was therefore contended that now this is not open to the respondent association to say that this is not in accordance with law
Learned counsel for the respondent stated that although a representation about the supervision fee was made by the association but it could not be said that there was any agreement entered into by the association nor it could be said that the Association could enter into such an agreement with the corporation
It was contended that the High Court was right in reaching the conclusion that the Commissioner had no authority under Section 466 and that in fact quid pro quo is not satisfied as no service is rendered to the transporter
Learned counsel 867 for the parties referred to the decision of this Court on the question of fee and the principle of quidpro quo
Section 4661Af reads 4661 The Commissioner may make standing orders consistent with the provisions of this Act and the rules and by laws in respect of the following matters namely A a xxx xxx xxx xxx xxx xxx f determining the supervision under which the routes by which and the time within which goods intended for immediate exportation shall be conveyed out of the City and the fees payable by persons so conveying the goods This contemplates the authority with the Commissioner to make Standing orders consistent with this Act rules or by laws in respect of the Act
Clause f talks of supervision under which and the routes by which and the time when goods introduced for immediate exportation shall be conveyed out of the city and the fee is payable by the person carrying the goods
It is therefore clear that this clause f con templates that Commissioner may by Standing Order prescribe the procedure for the goods which are introduced in the city limits for immediate exportation and also the fees which could be charged
It is therefore clear that this provision which confers the authority on the Commissioner to frame Standing Orders do not talk of goods on which octroi is payable
But Section 466 pertains t9 collection of octroi
Sub section 2 of this Section provides 2 No order made by the Commissioner under clause A of sub section 1 shall be valid unless it is approved by the Standing Commit tee and confirmed by the State Government and no order made by the Commissioner under clause B or paragraph e of clause c of sub section 1 shall be valid unless it is ap proved by the Standing Committee
 It is not in dispute that these Standing
Orders have been approved by the Standing Committee and confirmed by the State Government which is clear from the Notification which reads as under 868 BARODA MUNICIPAL CORPORATION The Standing Orders made by the Municipal Commissioner Baroda Municipal Corporation Baroda under Section 4661Af of the Bombay Provincial Municipal Corporation Act 1949 vide his order No 2441 dated 16869 and approved by the Standing Committee under its Resolution No 882 dated 28th Novem ber 1969 and confirmed by Government under their Resolution PHD No BMC 4470 160 P Dated the I2th March 1970
Section 147 of this Act reads Until the contrary is proved any goods im ported into the City shall be presumed to have been imported for the purpose of consumption use or sale therein unless such goods are conveyed from the place of import to the place of export by such routes within such time under such supervision and on payment of such fees therefore as shall be determined by the standing orders
 It is clear from this Section that when any goods are brought within the corporation limits a presumption arises that they have been brought in for the purposes or sale or consumption and the burden lies on the person who imports the goods to prove that they are not for sale or consumption and it is on the basis of language of Section 147 that the normal procedure before this Standing Order was introduced was that the goods when entered into the corporation limits have to stop at the checkpost and pay octroi duty on the goods as provided by the rules
For getting out of the local limits the transporter has to satisfy the checkpost author ities that the goods on which he has paid octroi and import ed are being exported out of the city and it is only after satisfying the authorities about the goods on which octroi is paid being exported that the transporter can claim refund of the octroi duty already paid
It is therefore clear that the language of Section 147 in the scheme of the Octroi clearly indicates a presumption which is a rebuttable pre sumption
Burden however lay on the transporter to establish that the goods are not for consumption or sale
So far as this scheme before the introduction of disputed Standing Order is concerned there is no controversy
The only con troversy is the Standing Order which has been introduced
It is also clear that so far as this Standing Order No 3 is concerned wherein the transporter is to pay a supervision fees it is not compulsory as it is the option of the trans por 869 ter to take advantage of this Standing Order if he so chooses otherwise follow the normal procedure of payment of octroi and claiming refund as is clear from the affidavit filed before the High Court by the appellant s officer ie Octroi Superintendent
Paragraph 14 of this affidavit reads Thus the system of clearing the through traffic on charging normal supervision fees is really in the larger interest of the import ers
As I have pointed out hereinabove this is not obligatory but purely voluntary and op tional
Those who do not want to avail of this facility need not avail it and allow the other procedure already indicated hereinabove
 It is therefore clear that there is no compulsion on the transporter to pay a supervision fee
It is only an option so that if the transporter wishes to take advantage of this scheme and save time he can choose to follow it
It is thus clear that so far as the authority of the Commissioner under Section 466 of the Act is concerned and the manner in which the Standing Orders are framed it is clear that the Commissioner had the authority and the Stand ing Orders have been framed in accordance with procedure prescribed under Section 466 and therefore on that count the judgment of the High Court could not be sustained
The High Court took the view that the State Legislature could enact Section 466 only if it can be brought within the ambit of Entry 52 of this State list as that is the only entry which authorises the State Legislature to impose a tax on entry of goods into a local area and the learned Judges felt that as under Section 466 and under the standing order in question a supervision fee is charged on goods which are not for sale or consumption in the local limits
This could not be justified under Entry 52
The learned Judges there fore took the view that Standing Orders which the Commis sioner could frame under Section 466 could be in respect of goods on which octroi is payable and not pertaining to the goods on which the octroi is not payable
It appears that while taking this view the High Court was examining this fees prescribed as a tax and it is on the basis of this that the High Court took the view that no such tax could be levied on goods on which no octroi is payable
So far as the question as to whether this fees could be said to be a tax is concerned there is no difficulty as even the learned counsel appearing for the appellant do not contend that it can be said to be a tax and as it is not a tax the imposi tion could not be said to be 870 bad because the State Legislature had no authority to impose it
It was contended by the learned counsel that in view of Section 147 quoted above any import within the local limits would draw a presumption that it is for consumption or sale and therefore octroi duty on the goods becomes payable
By this Standing Order the Corporation has attempted to make it convenient to the transporter not to involve in the payment of octroi duty at the entry and after satisfying the authorities at the exit end claim the refund of the octroi paid thereby the Corporation intended to help the trans porter in saving time and also in payment of the octroi at one end and later on claiming a refund
This in fact was the service rendered by the corporation to the benefit of the transporter and this fees which was charged was just to meet the approximate expenses that the Corporation may have to incur to provide this facility as has been clearly stated by the corporation officer in his affidavit before the High Court and in fact even the corporation accepted the sugges tion of the petitioner association when the association suggested to the appellant corporation to reduce this fees from Rs5 to Rs2 which is clear from the letter written by the Association to the Corporation dated 31st March 1970
As regards this aspect of the matter the learned Judges of the High Court came to the conclusion that there was no quid pro quo established which could justify the levy of this fees as fees for the services rendered in the interest of the transporter
In Southern Pharmaceuticals  Chemicals Trichur  Ors etc
vs State of Kerala  Ors etc
  this Court after considering the various decision distinguished fees from tax in these words  Fees  are the amounts paid for a privilege and are not an obligation but the payment is voluntary
Fees are distinguished from taxes in that the chief purpose of a tax is to raise fundsfor the support of the Government or for a public purpose while a fee may be charged for the privilege or benefit conferred or service rendered or to meet the expenses connected therewith
Thus fees are nothing out payment for some special privilege granted or service rendered
 As regards the principle of quid pro quo rule in the same judgment it was observed That is because the Constitution did not contemplate it to be an essential element of a fee that it should be credited to a separate fund and not to the consolidated fund
It is also 871 increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee
It is needless to stress that the element of quid pro quo is not necessarily absent in every tax
 In the light of these observations if the affidavit filed on behalf of the appellant Corporation explaining the amount expected to be collected and spent in the process of super vision is examined it could not be said as was stated by the High Court that it did not satisfy the quid pro quo princi ple
It is in this background that the question that this Standing Order does not impose a compulsory levy but it only gives an option to the transporter to take advantage of this provision makes it further clear that it is not a levy or an imposition of tax but merely a fees charged for the privi lege or services rendered to the payer
In Sreenivasa Gener al Traders  Ors etc
vs State of Andhra Pradesh  Ors etc
  this Court considered series of decisions on the question and observed There is no generic difference between a tax and a fee
Both are compulsory exactions of money by public authorities
Compulsion lies in the fact that payment is enforceable by law against a person inspite of his unwillingness or want of consent
A levy in the nature of a fee does not cease to be of that character merely because there is an element of compul sion or coerciveness present in it nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service
It is now increasingly realized that merely because the collections for the service rendered or grant of a privi lege or licence are taken to the consolidated fund of the State and not separately appropri ated towards the expenditure for rendering the service is not by itself decisive
Presumably the attention of the Court in the Shirur Mutt case was not drawn to article 266 of the Consti tution
The Constitution nowhere contemplates it to be an essential element of fee that it should be credited to a separate fund and not to the consolidated fund
It is also increas ingly realized that the element of quid pro quo in the strict sense is not always a sine qua non for a fee
It is needless to stress that the element of quid pro quo is not neces sarily absent in every tax Constitutional Law of India by HM Seervail Vol 2 2nd Edn
p 1252 para 2239
 872 It is therefore clear that in order to establish a quid pro quo concept it is not necessary to establish exactly that the amount collected is spent on the services rendered as it was further observed in this decision The traditional view that there must be actual quid pro quo for a fee has under gone a sea change in the subsequent decisions
The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public in public interest
If the element of revenue for general purpose of the State predominates the levy becomes a tax
In regard to fees there is and must always be correlation between the fee collected and the service intended to be rendered
In determining whether a levy is a fee the true test must be whether its primary and essential purpose is to render specific services to a specified area or class it may be of no consequence that the State may ultimately and indirectly be bene fitted by it
The power of any legislature to levy a fee is conditioned by the fact that it must be by and large  a quid pro quo for the services rendered
However co relationship between the levy and the services rendered expected is lone of the general character and not of mathematical exactitude
All that is necessary is that there should be a reasona ble relationship between the levy of the fee and the services rendered
 It is therefore clear that so far as the charging of super vision fees is concerned it reasonably appears to be a charge for the services rendered from the affidavit filed by the Officers of the Appellant Corporation and therefore the High Court was not right in coming to the conclusion that this fees was not justified as it is not established that it reasonably satisfies that it is in consideration of the services or privilege conferred on the transporter on goods in transit
In our opinion therefore the judgment of the High Court could not be sustained
The appeal is therefore al lowed
The judgment of the High Court is set aside and it is held that the Standing Order No 3 passed by the appellant Municipal Corporation is valid and enforceable
The appel lant shall also be entitled to costs of this appeal
Costs quantified at Rs5000
RSS Appeal allowed


Summary:
The appellant had joined service in the Orissa Govern ment as an Assistant Engineer in 1955 and in 1983 he was working on the post of Superintending Engineer
Since he had completed 50 years of age a Review Committee considered his service record for determining his suitability for retention in service in accordance with the first proviso to Rule 71a of the Orissa Service Code
On the recommendation of the Review Committee the State Government by its order dated 10111983 pre maturely retired the appellant from service
The appellant filed a civil suit challenging the validity of his pre mature retirement
The suit was transferred to the Administrative Tribunal
The Tribunal held that the recom mendation of the Review Committee was bona fide and did not suffer from any legal infirmity
Before this Court it was contended that the recommenda tion of the Review Committee was vitiated as it was founded on irrelevant and inadmissible material
It was urged that the Review Committee had considered a number of adverse remarks contained in the appellant s service record for the remote past years and had also considered adverse entries relating to recent years although those adverse entries had not become final
Allowing the appeal and setting aside the order of premature retirement of the appellant this Court HELD 1 The purpose of the Rule conferring power on the Government to retire Government servants prematurely is to energise 804 its machinery by chopping of the dead wood 
807C Union of India vs JN Sinha 1971 1 SCR 791
2 When a Government servant is promoted to a higher post on the basis of merit and selection prior adverse entries if any contained in his service record lose their significance and those remain on record as part of past history
It would therefore be unjust to curtail the service career of Government servant on the basis of those entries in the absence of any significant fail in his per formance after his promotion
807F 3 If the adverse remarks awarded to a Government servant are communicated to him after several years the object of communicating entries is defeated
It is there fore imperative that the adverse entries awarded to a Government servant must he communicated to him within a reasonable period to afford him opportunity to improve his work and conduct and also to make representation in the event of the entry being unjustified
In the instant case belated communication of the entries resulted into denial of reasonable opportunity to the appellant to improve his performance
808A B 4 The appellant s representation against the adverse entries relating to a number of years was rejected on the ground that the representation was barred by time
Since the communication of the adverse entries was itself highly belated the representation against those adverse remarks should have been considered on merits and the same could not be rejected on the alleged ground of delay as the Government itself was guilty of inordinate delay in communicating the adverse remarks to the appellant
808D 5 The appellant had a right to make representation against the adverse entries within six months period
There fore the adverse entries awarded to the appellant in the years 1981 82 and 1982 83 could not be taken into account either by the Review Committee or by the State Government in forming the requisite opinion contemplated by Rule 711a of the Orissa Service Code before the expiry of the period of six months
It is settled view that it is not permissible to prematurely retire a Government servant on the basis of adverse entries representations against which are not considered and disposed of
809C D 808H 809A Brij Mohan Chopra vs State of Punjab  6 The Members of the Tribunal must follow rules of natural 805 justice in administering justice like judges
They should not sit in judgment on their own decisions
In the instant case Shri Gian Chand who had administratively taken a decision as Chief Secretary against the Appellant consid ered the matter judiciary as the Chairman of the Administra tive Tribunal thereby he acted as a Judge of his own cause
While it is true that there is no allegation of personal bias against Shri Gian Chand he may have acted bona fide nevertheless the principles of natural justice fair play and judicial discipline required that he should have ab stained from hearing the appellant s case
810B 809F H