The State of Kerala etc. Etc, versus K. P. Govindan Tapioca Exporter etc. etc.

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635

¶2

A

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THE STATE OF KERALA ETC. ETC,

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v.

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K. P. GOVINDAN TAPIOCA EXPORTER ETC. ETC.

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November 7, 1974

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[A. N. RAv, C.J., K. K. MATHEW, N. L. UNTWALIA JJ.]

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B Essential Commodities Act 1955-The Kera/a Tapioca Manufacture and Export (Control) Order 1966-Administrative surcharged levied under a scheme formulated by the State Go1•ernment-Scheme not under any provisio11 of the Act, if surcharge could be levied.

¶9

The Kerala Tapioca Manufacture and Export '(Control) Order, 1966 was made by the State Government under the Essential CQmmodities Act 1955. Even before the promulgation of that order the State Government levied an administrative surcharge under a scheme formulated· by it. The respondents' c plea that the levy of administrative surcharge was ultra vfres the State Government and unwarranted by law had been accepted by the High Court and their writ petitions were allowed.

¶10

On an .appeal by the State it was contended that the administrative surcharge on the export of tapioca was in effect and substance a liccmce fee charged in exercise of the police powers of the State for granting permission to export Tapioca.

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D Dismissing the appeal,

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HELD : The .administrative surcharge levied by the State Government on the export of tapioca was bad. The realisations were without the authority of law.

¶13

Assuming that the State has got the police power to charge licence fee, the levies were bad as they were not levies of licence fee for regulating the. trade or for grant of permits. The scheme was not an 'order under any of the provisions E of the Essential Commodities Act. In substance and in effect it was an impost on export which indisputably the State had no power to do. The Kerala Tapioca Manufacture Export (Control) Order 1966 did not provide for imposition of any licence fee for the grant of permits for export of tapioca.

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For the appellants :

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Examining the Act and the provisions of the Section as a whole it is manifest that an order providing for the granting of a licence or permit and charging for F fees is still an order under Sec. 3 (I).

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An order of the nature mentioned in Sec. 3 (2) (ii) is an order for maintaining -0r increasing supplies of essential commodities and for securing their equitable distribution and availability at fair prices. It is manifestly n~t an order f rendering any services and admittedly no service is rendered under the provisions of Sec. 3. The power itself is simply for the benefit of the community at large. Thus Sec. 3(2)(ii). does not provide for a fee for services rendered. It is manifest from the scheme as a whole that export is banned except under a permit. G The imposition is connected and is for the purposes of permission to export; is precisely what the licence fee may mean. The ground, therefore on which the High Court has acted is erroneous.

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For th"· respondents :

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Power under the Essential Commodities Act to make orders under Section 3(1) and (2) vested in the Central Government. Under Section 5 of the Central Government can delegate its powers to State Government subject to such conditions as it may choose to imoose. The Central Government has limited the H powers to delegate by Resolution No. GSR 906 dated 9-6-1966. It delegates the powers under Section 3 ( l) for the purposes stated in the different clauses of Section 3(2). The general power of regulation claimed by the appellant is therefore not available.

¶19

[1975] 2 S.C.R.

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SUPREME COURT REPORTS

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636

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Sec.ond clause in : the delegation •provides that in matters which affect transport etc. of the commodity wc1uld require the sanction of the Central Government. Since imposition of export duty restricts the transport of tile commodity, sanciion would be required, which is absent in this case. T)lis also would in· validate the lew.

¶23

The levy is really not a licence fees but is on export as it clearly purports to be and is a tax. Under rcgUlating powers no such .tax can be _imposed. Article 366(28) defines a tax in wide terms and all imposts would be tax. Viewed from the point of view of even reiUfatory Impost, it is clearly a tax for levyin~ which Article 26S requires a legislative enctmcnt. All taxing statutes must in clear language authorise the levy, and if authorised it must be within the legislatiYe (;Ompetence of the State. Admittedly there ls no legislation. The Central Gov· ernment alono would have tlc power to levy the tax and not the State Govern· ment. What is delegated to the State Government is merely a p0wer to levy fee for licence, permits, etc. In such a case that must be a quid pro quo, which is admittedly abRent here. The impost rs clearly bad.

¶24

The levy made in connection with the export of Tapioca is not a tax. It is in the nature •of a fee and it could be sustained only if there is correlation and legitimate connection between the quantum of the levy and the expenses incurred by the Government. But in the instant case. the Govern. mcnt have not furnished any data, i.e; any particulars about the total collections made, the nature of the services rendered and the actual expenses incurred by the Government in the matter of services rendered. No particulars whatever have been given by the Government.

· A

B

c

D

Section 3 ( 2) (ii) docs not empower the Government to levy any charge it likes and its powers in levyin~ are circumscribed by the very words employed in Section 3 (2) (ii) the fees m relation to the permit or any other document which in the nature of things shoufd only be nominal. It is therefore submitted that Section 3(2)(li) has no application and cannot justify the levy.

¶30

In the counter-affidavit filed by Government, the Government has taken the specific ground that the levy is made as a fee to meet the heavy expenditure incurre<I on behalf of those who engage themselves in the ex.port trade of tapioca. The Government's further stand is that unauthorised export will spoil the trade, diminish the profits of the authorised exporters and that to meet the expenditure incurred and to protect the interests of the authorised exporters and its re1urn for the services renderd. the Government is charging a fee as a. quid pro quo. In the face of this specific plea by the Government as a specific ground on which they are levying the charges, it will not be open to the Government to contend that it is not a fee for services rendered but a fee for the issue of a permit and that there is no necessity to establish any correlation between the expenses incurred and the quantum of the levy.

¶31

E

¶32

F

¶33

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 729 to 757 {Jf 1972.

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From the Judgment and Order dated the 27th September, 1971 of the Kerala High Court in O.P. Nos. 5103 and 5105/68 4261, 4329, 4369, 4518, 4580, 4618, 4657, 4769, 4829, 4837, 4870, 4948, 5919, and 5056/1969, 240-241, 433, 534, 536, 866, 869, 1559, 4982, 5050, and 5220, of 1970 and O.P. No. 3834 of 1969 (In CA No. 731/ '72 onliy), and

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G

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CIVIL APPEAL Nos. 514 of 1973 and 515 of 1973.

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Appeals from the Judgme11ts and Order dated the 28th March 19'.~ and 11th February, 1912 of the Kerala High Court in Writ Petition No. 33 of 1972 and W. Appeal No. 466 of 1971 respectively.

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H

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·KERALA v. K. 1>. OOVINDAN (Untwolja, J.) 637

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A L.:N. ·Sinha, Solicitor General jorlndia and A.G. Pudissery for the appellants (In all the appeals).

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B

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Y. S. Chitale, D. V. Patel .K. S. Ranwmurthy, V. J, Francis, V. Hassan. Koyan, P. Sankaran Kutty and A. S. Nambiar for 'respondent No. 1 (In CA No.· 746 and 748/72) respondent No. 2 (In CA 735/72, respondent .No. 3 (In CA No. 754/72) and for Respondents (In rest of the Appeals).

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The Judgment of the Court was ·delivered by

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UNTWALIA, J.--All these. Civil appeals filed on grant of certificates of fitnes~ by the High Court of Kerala hii.ve been heard together and are Jx:ing dispOsed of by a common judgment as their facts and the points invelved in them ·are identical. The respondents filed c various writ petitions questiooing the validity of th~ otders of the State Government. of Kerala levying administrative surcharge on the export of tapioca:. ·Respondents are dealers in tapioca and do the businesi: ·of exporting •it 'illso outside the State of Kerala. In their writ pe1ition, they also claimed ref;und ·of thel amounts realised by the S~ Gowmment Ollj the basis of the impugned orders. Writ petitions were al!owuVby a.bench:of the Kerala High Court and Civil D Appeals 729.-757 of 1972 are directed against the orders in the writ petitions. Two .of the Civil Appeals namely Civil Appeals 514 and 515 of 1973·arise qut ofthel Appellate·order of the Kerala High Court dismissing the appeals from the orders allowing the writ petitions.

¶45

In exercise of the powers conferred ~Y subilectio?. ( 1) and sub-

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section (2) .of Section 3· of the .Easential Commodities Act, 1955 (Central Act 10 of 1955) hereinafter referred to as the Act, read

¶47

E with the order of the Govement of India dated the 9th June, 1966 .and with the prior concurrence of the Central Government, the Govt. of.Kerala made the Kerala Tapioca Manufacture and Export (Control) Order 1966. Under. clause 5 of the said order no pers.on could export tapioca e_xcept under and in accor<!8ncc. wit a .pe~it issued by the Commissioner or any officer authorised by him m this behalf.

¶48

F Oause 6 of the . order provides for the filling of applitaJjons for the grant of permits for tapioca in Form Ill and the permit for the export of tapioca shall be in form IV. Even before the promulgation of the Kerala Tapioca Manufacture and Export (eontrol) Order, administrative surcharge was levied under a Scheme formulated by the State Government, on the 15th April, 1966 published in the Kerala Gazette dated 3-5-1966. The rates of administrative charge levied on tapioca

¶49

G in the Scheme dated 15th April, 1966 was varied from time to time and. a copy of the order .dated 20th October, 1967 specifying the revised.rates was Ext. ·P-1 in one of the writ petitions. A copy of the order dated 15th April, 1966 was given to us by the learned Solicitor General appearing for the appellant State. The respondents' plea that the levy· of administrative .charges was ultra vires the State Government and unwarranted by .law has:been accepted bv the Kerala

¶50

H High Court. . Learned Solicitor General amiearing for the appellant State submitted that the orderS levying administrative charge. on the export of tapioca was .in .effect .and substance a .licence fee charged in the exercise of the police powers of the State for permitting the .

¶51

[1975] 2 s.c.R.

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SU.PREME COURT. REPORTS

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638

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respondents by .grant of ~ts to export tapioea. Such. a . counsel subrnittea, can very well be su.Pported with refere to the provisions of sub-section (1) or sub-section(2) of 53 the Act, whereby the State as a result of the authorisation under section S of the Act is empowered to· regulate Ole transport or ~xport of tapioca, and essential foodstuffs. ·

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Learned Solicitor General strenuowly attached the. findings of the Kerala High Court that the administrative charge imposed on the export of tapioca was a fee and since it had no correlation with ate service rendered by the State, the most was bad.

¶56

B

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In the instant case it is not necessary for us to decide whether the view aforesaid of the Kerala · High Court or the submission made on behalf of the appellant in that regard is correct or not. Te Tapioca Export Control Order was made by the .ste Govrnmnt on being authorised by the Central Government m 1ts notification dated the 9th June, 1966. A copy of the said notification wu placed before us at the time of, hearing of these appeals. It puqiorted to authorise the State Governii1ent to make orders under section 3 of the Act to provide for some of the matters mentioncxi in· the various clauses of sub-section (2). Learned counsel for the respondents submitted that it was not a gene.ral authorisation to makr 'all order under sub-section (1) . It is not necessary for us to go into this question either.

¶58

c

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D

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We shall assume in favour of the appellant that while regulating or prohibiting the production, supply and distribution of tapioca and trade and commerce therein it has got the police power to charge licence fee for the purposo of regulating the tapioca trade or to charge fees for grant of issue of licences /permits or other documents in accordance with clause (ii.) of sub-section(2) of Section 3 of the Act. Still we find that the impugned levies have rightly been held to be bad as they were not levies of licence fees for regulating the trade or for grant of permits. The order dated 15th April, 1966 formulating the scheme was not ~ order under any of the provisions of section 3 of the Act. It did not impose any licence fee or fee for grant of permit. It merely provided for levying of administrative surcharge for the export of tapioca and its products at the specified rates which. varied from time to time. In substane« and in effect it was an inipost on export · which indisputably the State had no power to do. The orders levying the administrative charge which followed the Tapioca Export Control Order did not refer to the exercise of any power und~r the said Order. It was completely independent of it. The ap10ca Export Control Order di not provide for imposition· of any licence fee for the grant of pernnt for export of tapioca. Argument put forward on behalf of the apRCllant that the order dated the 15th April, 1966 was in substance and in eff<lct an order under section 3 ?f the Act runs. counter to its case in the petitions of appeal wherein 1t has been stated "That the deterioration in food position in the State of Kerala started from 1963 onwards and to avert the further woflsening of the food position, .the Government under Rule 125 of the

E

F

G

H

KER.Al.Av. K. P. GOVINl>AN (Untwa/Ja, J.)

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639

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A

¶68

Defence of India Rules, 1962 issued the Tapioca Control Order, 1964, whereby Government imposed certain restrictions in the export of tapioca and its prOducts from the State and permitted the export of limited quantity through selected dealers. The State, in accordance with this order framed a scheme known as "Scheme for the export of Tapioca and its products" on 15-4-1966 whereby the Govt. B clarified the manner and mode of selection of the dealer, the details regarding the submissio.n of applications of the intending . exporters, the issue of permits and the payments of Administrative Surcharge." The stand .taken in the petitions of appeal was not pursued at the time of the hearing. It is, therefore, clear that the administrative surcharge levied by th6 State Government on the export of tapioca, c as it was, was bad. The realisations thereunder were without the authority of law. It will, however, be open to the State Government to impose tax Or fee, as they may be advised to do in accordance with faw. and if permissible W!,der it, for permitting the respondents to export tapioca outside the State of Kerala~ The debat~ble que&tion as to the nature of impost, its CODStitutional validity and legal justifiability will have to be gone into the11.

¶69

On the facts as they stand in these appeals, we uphold the orders of the Kerala High Court for the reasons given by us. The appeals fail and are dismissed with costs. One hearing ~o.

D

!P.B.R.

Appeals dismissed

lO l,jtl)SupCI/75

The State of Kerala etc. Etc, v. K. P. Govindan Tapioca Exporter etc. etc.

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The State of Kerala etc. Etc, v. K. P. Govindan Tapioca Exporter etc. etc.

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