THE HON'BLE SRI JUSTICE C.Y.SOMAYAJULU WRIT PETITION No.4368 of 1998 ORDER: 1 This petition is filed questioning the enhancement of licence fee for storing of jute between Rs.60/- to Rs.90/- per annum to Rs.5,000/- per annum irrespective of the business being wholesale or retail trade. 2 The case of the petitioners who, being dealers of jute, store and sell the same within the municipal limits of Vizainagaram Municipality (hereinafter referred to as the municipality) is that depending on the size of the godown, where the jute was being stored by them, the municipality was levying licence fees at the rate of Rs.60/- to Rs.90/- per annum up to 1996-97. It had on 21.01.1997 suddenly published a notification in the supplement to the Vizainagaram District Gazette enhancing the licence fees for storage and sale of jute within the municipal limits to Rs.5,000/- per annum with effect from 01.04.1997. As imposition of licence fees should have correlation with the services rendered by the municipality, the municipality, which is not rendering any services to them, cannot arbitrarily enhance the existing licence fees from Rs.60/- to Rs.90/- per annum to Rs.5,000/- per annum and so the said enhancement is liable to be quashed. 3 The Commissioner of the municipality filed his counter affidavit on its behalf inter alia contending that the municipality, for storage and sale of jute, was levying fees at the rate of Rs.30/- per 20 Sq. Meters area till 1996-97 which was fixed as per the gazette notification No.3/93 dated 28.01.1993 of Vizainagaram District. As the Government vide G.O.Rt.No.21.M.A. dated 05.01.1996 directed the Special and Selection grade municipalities to enhance the rates of licence fees for storage and sale of jute at Rs.3,000/- minimum and Rs.5,000/- maximum irrespective of the capacity of the storage place, it had to issue the notification adopting the enhanced rates, as the municipal council vide its resolution 101 dated 25.09.1996 chose to fix that rate as per the direction given by the Government which is binding on the municipality. As the municipality, which has to lay roads, provide lighting, water supply and maintain sanitation, is incurring huge expenditure for that purpose, it had to enhance licence fees. That apart, as jute is being carried in heavy vehicles like lorries and bullock carts etc., which are causing damage to the roads, the municipality by incurring heavy expenditure is maintaining the roads. The licence fees that was being paid by the persons carrying on jute business owning godowns at different places was not sufficient to maintain the roads, which need constant repair. So it had to take recourse to enhance the licence fees and so petitioners are not entitled to any relief. 4 The main contention of Sri K. Somakonda Reddy, learned counsel for the petitioners, is that enhancing licence fees from less than Rs.100/- p.a. to Rs.5,000/- p.a. is unsustainable in view of the ratio in The Indian Mica And Micanite Industries Limited Vs. The State of Bihar[1] and Sri Krishna Das Vs. Town Area Committee, Chirgaon[2] where it is held that in order to uphold the levy as a fee it must be shown that the said levy has a reasonable correlationship with the services rendered by the levying authority, and as no such material is placed on record by the municipality the enhanced levy is liable to be struck down. The contention of the learned standing counsel for the municipality is that in view of G.O.Rt.No.21 M.A. Dated 05.01.1996 issued by the Government, the municipality had no other option but to enhance the rates of licence fees at the rates mentioned therein and in view of the said G.O. the municipality resolved to adopt the rate at Rs.5,000/- p.a. as licence fee for storage of jute through its resolution No.53 dated 29.06.1996 and consequently a notification was published in the District gazette of Vizainagaram District on 01.02.1997 calling for objections informing the public about the said fact and as no objections were received the municipality fixed the licence fees at that rate, and all other traders except the petitioners are paying the enhanced levy and in any event in view of the ratio in IDL Chemicals Limited Vs. Government of A.P., Energy & Forest (F&B) Department, Hyderabad and others[3] petitioners are not entitled to any relief. 5 In Indian Mica And Micanite Industries Limited case (1 supra) it is held that before any levy can be upheld as a fee, it must be shown that that levy has a reasonable correlation with the services rendered and for levy of any fees there must be quid pro quo and there must be correlation between the services rendered and the fee levied and in Sri Krishna Das case (2 supra) it is held “A fee is a payment levied by an authority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on all tax payers an that a fee is a payment made for some special benefit enjoyed by the payer and the payment is proportional to such benefit …… While there is no quid pro quo between a tax payer and the authority in a case of a tax, there is a necessary correlation between fee collected and the service intended to be rendered.” But the ratio in those cases does not apply to the facts of this case because the specific case of the municipality is that it enhanced the licence fees only as per the directions issued by the Government in G.O.Rt.No.21, M.A. Dated 05.01.1996 directing Commissioners of all the municipalities in the State to adopt the rates appended to that order scrupulously with effect from 01.04.1996. 6 The rates of licence fees fixed for storing and sale of jute in the said G.O. are, Rs.500/- to Rs.1,000/- in III grade municipalities, Rs.1,000/- to Rs.3,000/- in I and II grade municipalities and Rs.3,000/- to Rs.5,000/- in Special grade and selection grade municipalities. In view thereof, the Municipality, which comes under the third category has no other option except to adopt the rates of licence fees mentioned in the aforesaid G.O. by the Government in view of section 387(A) of the Municipalities Act, which empowers the Government to give directions to the municipalities. Inasmuch as the municipality carried out the directions issued by the Government, it cannot be found fault with. 7 Question whether the rates adopted by the Government in the said G.O. can be enforced or not can be decided only when the said G.O. is called in question. But petitioners, who should be imputed with knowledge of the said G.O. in view of its publication in the gazette and its reference in the resolution passed by the municipal council and the publication made by the municipality in the district Gazette, did not question the G.O. and did not even make the Government a party to the Writ Petition even after the Commissioner of the municipality filed his counter affidavit narrating the circumstances in which the municipality had to enhance the rates of levy. So the validity of the said G.O. cannot be gone into and decided in this Writ Petition. Respondent, which is duty bound to obey the instructions of and the directions given by the Government, had obeyed the instructions given to it by the Government and enhanced the rates of licence fees as directed by the Government, it cannot be said that the municipality acted beyond its authority in enhancing the licence fees. 8 Even otherwise also as the contention of the respondent is that it is rendering services by repairing and maintaining the roads being used by the dealers in jute and as the petitioners also are using the roads for transport of jute and as the apex court in City Corporation of Calicut Vs. T. Sadasivan[4] held “It is well settled, by numerous recent decisions of the Supreme Court that the traditional concept in a fee of quid pro quo is undergoing a transformation and that though the fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere casual relation may be enough. It is not necessary to establish that those who pay the fee must receive direct benefit of the services rendered for which the fee is being paid. If one who is liable to pay receives general benefit from the authority levying the fee the element of service required for collecting fee is satisfied. It is not necessary that the person liable to pay must receive some special benefit or advantage for payment of the fee.” And in P.M.Ashwathanarayana Setty Vs. State of Karnataka[5] held “…… The correlationship between the amount raised through the ‘fee’ and the expenses involved in providing the services need not be examined with a view to ascertaining any accurate, arithmetical equivalence or precision in the correlation; but it would be sufficient that there is a broad and general correlation… The benefit the class of payers of fee obtain in such a case is clearly not a benefit intended as special service to it but derived by it as part of the general public. Nor does the concept of a fee and this is important ……” it is clear that petitioners alone need not be the beneficiaries of the services being rendered by the municipality and the amount collected as fees can be used for the benefit of public at large. In view thereof petitioners are not entitled to any relief. 9 Hence the Writ Petition is dismissed. No costs. -------------------------- C.Y.Somayajulu, J. 28.01.2008 kvsn [1] AIR 1971 S.C.1182 [2] AIR 1991 S.C.2096 [3] 1997 (2) ALD 278 (D.B) [4] AIR 1985 SC 756 [5] AIR 1989 SC 100