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Issues Involved:
1. Whether the fee to be charged under the impugned GO amounts to a tax or a fee. 2. Whether the fee levied has any quid pro quo. 3. Whether it is exproprietory or exorbitant and if so whether it amounts to a tax, but not a fee. 4. Whether the impugned GO is arbitrary and discriminatory as no guidelines are provided in the Act. 5. Whether there is a delegation of power by Parliament to the State Government and if the same is excessive, unguided, and in violation of the provisions of the Constitution of India. Summary: 1. Tax or Fee: The High Court observed and concluded that the distinction between a 'tax' and a 'fee' lies primarily in the fact that a 'tax' is imposed for public purposes and does not require a consideration of service rendered in return, whereas a fee is levied for services rendered and involves an element of quid pro quo. Testing the facts, the High Court found that the major part of the amount received as licence fee is spent on services rendered to the factories and their workers, establishing a nexus between the licence fee and the services rendered. Thus, the levy is a fee and not a tax. 2. Quid Pro Quo: The High Court determined that the facts and circumstances mentioned in the counter-affidavit establish that the Government is rendering services to the factories as provided under the Act and other Acts. Therefore, the contention that there is no quid pro quo in the fee collected was found untenable. The Supreme Court concurred, noting that the impugned licence fee is regulatory in character and the element of quid pro quo does not strictly apply, but there is a reasonable correlation between the levy and the purpose for which the provisions of the Act and the Rules have been enacted. 3. Exproprietory or Exorbitant: The appellants argued that the enhancement of the licence fee from Rs. 10,000 to Rs. 18,00,000 was arbitrary and grossly high. The Supreme Court initially found no material on record justifying the enhancement. However, upon inquiry, the Government of Andhra Pradesh indicated a willingness to reconsider the fee structure and limit the maximum licence fee to Rs. 2.5 lakhs per annum. Despite this, the Supreme Court found the information insufficient for a conclusive decision and ultimately quashed the revision of the licence fee. 4. Arbitrary and Discriminatory: The High Court rejected the contention that the impugned Government Order is arbitrary and discriminatory due to the lack of guidelines under Section 6 of the Act. The classification of factories based on installed horsepower and the number of workers was deemed non-arbitrary and reasonable. 5. Delegation of Power: The issue of excessive, unguided delegation of power by Parliament to the State Government was not specifically addressed as the primary contention revolved around the principle of quid pro quo and the nature of the fee. Conclusion: The appeals were allowed, and the judgment under challenge was set aside. The revision of the licence fee introduced by GOMs No. 154, E and F Department, dated 26-7-1994, was quashed. The judgment was made to have prospective operation, and no amount collected under the impugned Government Order was to be refunded.
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