TMI Blog2003 (11) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... by a fee as specified below: (a) Where the total turnover is less than three lakh rupees One hundred rupees (b) Where the total turnover is three lakh rupees and above but is less than ten lakh rupees Two hundred and fifty rupees (c) Where the total turnover is ten lakhs rupees and above but less than fifty lakh rupees Seven hundred and fifty rupees plus twenty-five rupees for each lakh or part thereof above ten lakh rupees (d) Where the total turnover is fifty lakhs rupees and above One thousand seven hundred and fifty rupees plus fifty rupees for each lakh or part thereof above fifty lakhs rupees however that the total registration fee payable shall not exceed twenty thousand rupees." The rates were further enhanced with effect from April 1, 2000. Before the amendment by Act 17 of 1988 the registration fee was as follows: The registration fee was originally ten rupees. Afterwards it was amended as under: from 1-4-1963 to 31-3-1984 (Act 15 of 1963) Rs. 10 from 1-4-1984 to 30-6-1987 (Act 3 of 1983) Rs. 50 from 1-7-1987 to 31-3-1998 (Act 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal and unconstitutional. It is also stated that sub-section (5) does not require the procedure required to be followed under sub-section (2) for the purpose of registration to be granted to a dealer for the first time. It is also submitted that there is no necessity for further levy as certificates and registration number are received by the assessees on registration and in any event, fees charged at every year for renewal of registration are exorbitant and are liable to be set aside. 3.. We shall consider the nature of registration fees charged before going into the merits of the case. It is true that there is no generic difference between tax and fee, though broadly tax is a compulsory exaction as part of a common burden, without promise of any special advantage to classes of tax-payers whereas fee is a payment for services rendered, benefit provided or privilege conferred. Even though services rendered need not be uniform, tax is levied for public purpose and not for payment of services rendered. But with regard to the fees, there is an element of quid pro quo between the persons paying fee and the authority imposing it. In Commissioner, Hindu Religious Endowments, Madras v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered, etc., against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax." 4.. In this case there is no dispute between the parties that what is levied in the form of licence fee is a fee and not a tax. The Government Pleader submitted that what is collected is a fee. In the counter-affidavit also Government justifies the imposition of licence fees as a fee and not as tax. Therefore, we need not go at length whether the levy is tax or fee. 5. The second question to be considered is whether there is legislative competence in imposing levy of this fees. The Preamble of the Act itself wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and purchases, Parliament has already enacted the Central Sales Tax Act, 1956. Section 7 of the Central Act deals with registration of dealers. Section 7(1) reads as follows: "7. Registration of dealers.-(1) Every dealer liable to pay tax under this Act, shall within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed." Section 13(1)(a) and (b) of the Central Act make it clear that only the Central Government can, by notification, make Rules regarding the manner in which the application should be made under the Act and prescribe the fees payable for registration. It is not a matter for the State Government to impose registration fees from dealers under the Central Sales Tax Act. The Central Government, in exercise of the powers conferred by section 13(1) has made Rules. The Central Sales Tax (Registration and Turnover) Rules, 1957 deals with granting of registration, cancellation of registration, fees for registration, etc. Rule 4(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of dealers who deal in goods which are completely exempted from tax, like salt, or who have only export sales, certain services have to be rendered by the department, like supplying forms, completion of assessments, better facilities provided in the offices, especially in the new offices constructed or under construction at different parts of the State, etc., for which expenses have to be incurred by the State. The administration expenses are also going up........." Learned Government Pleader also points out that in P.R.S. Hospital v. State of Kerala (2003) 1 KLT 633 it was held that increase in the registration fee was correct. It was also held in that case that the court cannot look as a cost accountant to see whether entire fees collected are used in providing service. So long as there is services, the expenses for services need not be tallied with the amount collected. But in those cases only increase in the rate of registration fee was challenged on the contention that it was arbitrary and unreasonable and that registration fee depending upon the turnover is also arbitrary and irrational. The learned single Reported as Malankara Orthodox Syrian Church v. Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for checking whether tax is evaded. It is part of the sales tax collection machinery, it cannot be stated that by establishing check-post service is done to the assessees. It is further submitted that declaration forms and various other forms, records, Reported as Malankara Orthodox Syrian Church v. Sales Tax Officer in [2004] 135 STC 224 (Ker). etc., are supplied by the department. The declaration forms, etc., are supplied on payment of a price. The assessees are doing a service to the department by collecting tax from the customers and merely because return forms are given to submit return, it cannot be stated that a service is rendered as quid pro quo for paying registration fee. Thirdly, it is submitted that administrative expenses are incurred and it is on the increase every year. The Sales Tax Act itself is enacted for charging tax on sales and purchases of goods. For establishing machineries for collection of sales tax, administrative expenses are incurred. Incurring of administrative expenses, paying salary to the Sales Tax Officials, maintaining of vehicles of the department establishing various offices, etc., cannot be stated to be a service done to the assessees in ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices among other users of the premises. In Kishan Lal Lakshmi Chand v. State of Haryana (1993) 4 JT SC 426 the apex Court held as follows: " The broad correlationship between the imposition of fee and the nature of the service rendered to the entire textiles industry satisfied the test of quid pro quo, though no specific service was rendered to the payer of the fee........." But in all other cases cited before us including Kewal Krishan Puri v. State of Punjab (1980) 1 SCC 416, etc., it was only held that even though an arithmetical corelationship is not necessary, by and large, there should be quid pro quo. 10.. In Agriculture Market Committee v. Rajam Jute Oil Millers Association [2003] 131 STC 472; (2003) 4 SCC 187 the Supreme Court observed as follows: "............ 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, correlationship between the levy and the services rendered (sic or) expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a 'reasonable relationship' between the levy of the fee and the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for services rendered. There is no quid pro quo between the tax-payer and the public authority. It is a part of the common burden and the quantum of imposition upon the tax-payer depends generally upon his capacity to pay. (3) Fee is a charge for a special service rendered to individuals or a class by some Governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service though in some cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are various kinds of fees and it is not possible to formulate a definition that would be applicable to all cases. (4) The element of compulsion or coerciveness is present in all kinds of impositions though in different degrees and it is not totally absent in fees. Hence it cannot be the sole or even a material criterion for distinguishing a tax from fee........ Here italicised. (5) The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of the common burden while a fee is a payment for a special benefit or privilege. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, it is immaterial that the general public may also be benefited from some of the services if the primary service intended is for the payers of the fees........" (underlining by us) Here italicised. 11.. We have already seen that actually no services are rendered by the Government in return for charging registration fees. The services said to have been rendered as quid pro quo for the fees levied are only for incurring of expenses for assessment and collection of sales tax and purchase tax which is part of assessment expenses. No separate benefit is conferred on the assessees which has a direct and reasonable corelation to the fee. In paragraph 5 of the counteraffidavit filed by the State in O.P. No. 11071 of 1993 it is stated that in 1987 Government introduced turnover tax. But it was objected to by the public. Therefore, turnover tax was withdrawn except for petroleum products and foreign liquor. In order to make good the revenue loss, registration fee was enhanced. These averments will show that the fees were imposed not for rendering services or conferring privileges to the assessees. We cannot equate registration fee to the licence fee charged by local authorities or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary as we have already seen that there is no quid pro quo. Absolutely no services are rendered either for assessee or public for charging renewal fees as renewal is automatic unless it is cancelled after following the procedure prescribed. Under the Central Act and Rules apart from the initial registration fee of Rs. 25 no renewal fee is charged. It is also submitted by the petitioners that in the neighbouring States also no exorbitant fees are charged as fee for renewal of registration. Therefore, section 14(5) of the KGST Act in so far as it requires registered assessees to pay renewal fee payable from year to year at the same rate of initial registration fee payable under sub-section (1) is clearly unreasonable. Such fees charged without any quid pro quo and nothing in return is clearly unconstitutional. There is nothing wrong in the provisions incorporated for renewing licence as yearwise registration can be given. State also will free to charge nominal fees for covering up expenses, if any, incurred for renewal of registration. 14.. The learned Government Pleader submitted that renewal fees are collected from all the dealers from 1988 onwards and consequent to the dictum t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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