The State of Kerala Vs. K. P. Govindan
Tapioca Exporter  INSC 234 (7 November 1974)
RAY, A.N. (CJ) MATHEW, KUTTYIL KURIEN
CITATION: 1975 AIR 152 1975 SCR (2) 635 1975
SCC (1) 281
E 1976 SC2243 (20)
Essential Commodities Act 1955-The Kerala
Tapioca Manufacture and Export (Control) Order 1966-Administrative surcharged
levied under a scheme formulated by the State Government-Scheme not under any
provision of the Act, if surcharge could be levied.
The Kerala Tapioca Manufacture and Export
(Control) Order, 1966 was made by the State Government under the Essential Commodities
Act 1955. Even before the promulgation of that order the State Government
levied an. administrative surcharge under a scheme formulated by it. The,
respondents plea that the levy of administrative surcharge was ultra vires the
State Government and unwarranted by law had been accepted by the High Court and
their writ petitions were allowed.
On an appeal by the State it was contended
that the administrative surcharge on the export of tapioca wag in effect and
substance a licence fee charged irk! exercise of the police powers of the State
for granting permission to export Tapioca.
Dismissing the appeal,
HELD : The administrative surcharge levied by
the State Government on the export of tapioca was bad. The realisations were
without the authority of law.
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 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.
For the appellants 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 fees is still an order
under Sec. 3(1).
An order of the nature mentioned in Sec. 3
(2) (ii) is an order for maintaining or increasing supplies of essential
commodities and for securing their equitable distribution and availability at
fair prices. it is manifestly not an order for 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. 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.
For the respondents :
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 impose. 'the Central Government
has limited the powers to delegate by Resolution No. GSR 906 dated 9-6-1966. It
delegates the powers under Section 3(1) 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.
636 Second clause in the delegation provides
that in matters which affect transport etc. of the commodity would require the
sanction of the Central Government. Since imposition of export duty restricts
the transport of the commodity, sanction would be required, which is absent in
This also would in-validate the levy.
The levy is really not a licence fees but is
on export as it clearly purports to be and is a tax. Under regulating 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 regulatory impost,
it is clearly a tax for levying which Article 265 requires a legislative
enactment. All taxing statutes must in clear language authorise the levy, and
if authorised it must be within the legislative competence of the State. Admittedly
there is no legislation. The Central Government alone would have the power to
levy the tax and not the State Government.
What is delegated to the State Government is
merely a power to levy fee for licence, permits, etc. In such a case that must
be a quid pro quo, which is admittedly absent here.
The impost is clearly bad.
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 Government 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.
Section 3(2)(ii) does not empower the
Government to levy any charge it likes and its powers in levying are
circumscribed by the very words employed in Section 3 (2) (ii) the fees in
relation to the permit or any other document which in the nature of things
should only be nominal. It is therefore submitted that Section 3(2)(ii) has no
application and cannot justify the levy.
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 incurred on behalf of those who engage themselves in
the export 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 return for the services
rendered. 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.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 729 to 757 of 1972.
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 only), and CIVIL APPEAL Nos.
514 of 1973 and 515 of 1973.
Appeals from the Judgments and Order dated
the 28th March, 1972 and 11th February, 1972 of the Kerala High Court in Writ
Petition No. 33 of 1972 and W. Appeal No. 466 of 1971 respectively.
637 M. Sinha Solicitor General for India and
A. G. Pudissery for the appellants, (In, all the appeals).
Y. S. Chitale, D. V. Patel K. S. Ramamurthy,
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
The Judgment of the Court was delivered by
UNTWALIA, J.-All these Civil appeals filed on grant of certificates of fitness
by the High Court of Kerala have been heard together ,and. are being disposed
of by a common judgment as their facts and the points involved in them are
identical. The respondents filed various writ petitions questioning the
validity of the orders of the State Government of Kerala levying administrative
surcharge on the export of tapioca. Respondents are dealers in tapioca and do
the business of exporting it also outside the State of Kerala. In their writ
petition, they also claimed refund of the amounts realised by the State
Government on the basis of the impugned orders. Writ petitions were allowed by
a bench of the Kerala-High Court and Civil 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 out. of the Appellate order of the Kerala
High Court dismissing the appeals from the orders allowing the writ petitions.
In exercise of the powers conferred by
sub-section (1) and subsection (2) of Section 3 of the Essential Commodities
Act, 1955 (Central Act 10 of 1955), hereinafter referred to as the Act, read
with the order of the Government 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 person could export tapioca except under and in accordance
with a permit issued by the Commissioner or any officer authorised by him in
this behalf. Clause 6 of the order provides for the filling of applications for
the grant of permits for tapioca in Form III and the permit for the export of
tapioca shall be in form IV. Even before the promulgation of the Kerala Tapioca
Manufacture and Export (Control) 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 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 by the Kerala High Court. Learned Solicitor General appearing for the
appellant State submitted that the orders levying administrative charge on the
tapioca, was, in effect and substance a
licence fee charged in the exercise of the police powers of the State for
permitting the 638 respondents by grant of permits to export tapioca. Such a
levy counsel submitted, can very well be supported with reference 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 5 of the Act is empowered
to regulate the transport or export of tapioca, and essential foodstuffs.
Learned Solicitor General strenuously
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
the service rendered by the State, the most was bad.
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.
The Tapioca Export Control Order was made by the State Government on being
authorised by the Central Government in its notification dated the 9th June,
1966. A copy of the said notification was placed before us at the time of
hearing of these appeals. It purported to authorise the State Government to
make orders under section 3 of the Act to provide for some of the matters
mentioned in the various clauses. of sub-section (2) Learned counsel for the
respondents submitted that it was not a general authorisation to make an order
under sub-section(1). It is not necessary for us to go into this question
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 purpose 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 an order under any of the provisions of
section is 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 substance and in effect it was an impost 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 under the said Order. It was completely
independent of it. The Tapioca Export Control Order did not provide for
imposition of any licence fee for the grant of permit for export of tapioca.
Argument put forward on behalf of the appellant that the order dated the 15th
April, 1966 was in substance and in effect an order under section 3 of the Act
runs counter to its case in the' petitions of appeal wherein it has been stated
"That the deterioration in food position in the State of Kerala started
from 1963 onwards and to avert the further won seeing of the food position, the
Government, under Rule 125 of the 639 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. clarified the manner and mode
of selection of the dealer, the details regarding the submission 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 the State Government on the export of tapioca, as it was
bad. The realisations there under 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 law and if permissible under it, for
permitting the respondents to export tapioca outside the State of Kerala. The
debatable question as to the nature of impost, its constitutional validity and
legal justifiability will have to be gone into then.
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 fee.