Allahabad High Court
General Insurance Indian Oil ... vs State Of U.P. And 3 Others on 28 March, 2023
Author: Rajendra Kumar-Iv
Bench: Surya Prakash Kesarwani, Rajendra Kumar-Iv
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR (Judgment reserved on 25.11.2022) (Judgment delivered on 28.03.2023) Court No. - 3 1. Case :- WRIT - C No. - 52674 of 2016 Petitioner :- General Insurance Indian Oil Corporation Ltd. And Anr. Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari,Devi Shanker Shukla Counsel for Respondent :- C.S.C. With 2. Case :- WRIT - C No. - 33571 of 2018 Petitioner :- Bharat Petroleum Corporation Limited And Another Respondent :- State Of U P And 2 Others Counsel for Petitioner :- Vikas Budhwar Counsel for Respondent :- C.S.C. 3. Case :- WRIT - C No. - 54682 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Pramod Kumar Rai Counsel for Respondent :- C.S.C. 4. Case :- WRIT - C No. - 54685 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Devi Shanker Shukla Counsel for Respondent :- C.S.C. 5. Case :- WRIT - C No. - 54687 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia Counsel for Respondent :- C.S.C. 6. Case :- WRIT - C No. - 57179 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. 7. Case :- WRIT - C No. - 57180 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. 8. Case :- WRIT - C No. - 57203 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. 9. Case :- WRIT - C No. - 57208 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. 10. Case :- WRIT - C No. - 57210 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. 11. Case :- WRIT - C No. - 57766 of 2016 Petitioner :- M/S Indian Oil Corporation Ltd. And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Prakash Padia Counsel for Respondent :- C.S.C. 12. Case :- WRIT - C No. - 61624 of 2016 Petitioner :- Bharat Petroleum Corporation Limited And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Vikas Budhwar Counsel for Respondent :- C.S.C. 13. Case :- WRIT - C No. - 32799 of 2018 Petitioner :- Depot Manager, Bharat Petroleum Corporation Ltd And Another Respondent :- State Of U P And 2 Others Counsel for Petitioner :- Prakash Padia,Anand Tiwari Counsel for Respondent :- C.S.C. Hon'ble Surya Prakash Kesarwani,J.
Hon'ble Rajendra Kumar-IV,J.
(Per: Surya Prakash Kesarwani, J.)
1. Heard Sri Anil Kumar Sharma, learned Senior Advocate assisted by Sri Devi Shanker Shukla, Sri Pramod Kumar Rai, Sri Anand Tiwari, Sri Rakesh Kumar and Sri Komal Mehrotra, learned Counsel for the petitioners, and Sri M.C. Chaturvedi, learned Additional Advocate General assisted by Sri Pankaj Rai, B.B. Pandey and Suresh Singh, learned Additional Chief Standing Counsel for the State-respondents.
2. With the consent of learned counsels for the parties, the WRIT - C No. - 52674 of 2016 is treated as leading writ petition. However, relief sought in each of the writ petitions in this bunch of cases are briefly noted below.
WRIT - C No. - 33571 of 2018
3. In this writ petition, the notices dated 25.09.2018 and 29.09.2018 issued by the Senior Inspector, Legal Metrology Meerut, requiring the petitioner to get verification of storage tanks and flow meters, has been challenged.
WRIT - C No. - 52674 of 2016
4. In leading Writ - C No. - 52674 of 2016, the petitioners have prayed to quash the order dated 14.10.2013 demanding fee @ Rs.20,000/- per storage tank, stamping fee @ Rs.1,50,000/- per storage tank and late fees @ Rs.1,30,000/- per storage tank. By the impugned notice dated 16.12.2013, the Senior Inspector, Legal Metrology, Mughalsarai, Chandauli required the petitioners to deposit the arrears for certain period alongwith late fees. The petitioners have also prayed to quash the appellate order dated 23.08.2016, passed by the Controller of Legal Metrology Department, U.P., Lucknow dated 23.08.2016 whereby the appeal of the petitioners have been dismissed. Apart from above, the petitioners have also challenged the validity of Rule 17(3) of Uttar Pradesh Legal Metrology (Enforcement) Rules, 2011. (hereinafter referred to as the U.P. Rules, 2011) Writ - C Nos. -54682 of 2016, 54685 of 2016, 54687 of 2016, 57179 of 2016, 57180 of 2016, 57203 of 2016, 57208 of 2016, 57210 of 2016, 57766 of 2016, and Writ - C 61624 of 2016
5. In the above noted writ petitions the relief prayed is similar to the relief as prayed in Writ C No.52674 of 2016.
WRIT - C No. - 32799 of 2018
6. In Writ C 32799 of 2018, Seizure Memo date 24.09.2018 and notices dated 03.08.2018 and 15.09.2018 have been challenged apart from challenging the validity of the aforesaid Rules 17(3).
7. The relief sought in Writ C No.52674 of 2016 is reproduced below:
"(a) a writ, order or direction in the nature of certiorari quashing the order dated 23.8.2016 passed by the Controller, Legal Metrology Department, U.P, Lucknow, respondent no. 2 (Annexure-29 to the writ petition);
(b) a writ, order or direction in the nature of certiorari quashing the notices/orders dated 14.10.13 and 16.12.13 issued by respondent no.4 (Annexure-17 & 20 to the writ petition)
(c) a writ, order or direction in the nature of mandamus directing the respondents not to insist the petitioners- corporation for calibration of vertical storage tanks installed in the depot at Mughalsarai;
(d) a writ, order or direction in the nature of mandamus directing the respondents not to charge any penalty for non-calibration of storage tanks situated at the depot of the corporation;
(e) a writ, order or direction in the nature of mandamus declaring the provisions or additional fees as null, void, inoperative and unconstitutional as provided under Rule 17(3) of Uttar Pradesh Legal Metrology (Enforcement), Rules, 2011;
(f) any other writ, order or direction as this Hon'ble court may deem fit and proper in the Circumstances of the case; and
(g) award cost of the petition to be paid to the petitioners."
FACTS:-
8. Since factual and legal position in this batch of writ petitions are similar, therefore, we proceed to note the facts of leading writ petition i.e. Writ C No.52674 of 2016, as under :
(a) The petitioners have storage tanks to store their petroleum products received from various refineries in the country by railway tank wagons/pipe lines. According the petitioners, the railway tank wagons through which the products are received in the tank at the depot/terminal are duly calibrated by the competent authority and sales are executed by the corporation for supply of petroleum products through different retail outlets as well as the bulk consumers by tank mounted trucks (tankers) which are duly calibrated by the competent authorities of Weights and Measures departments. The storage tanks of the petitioners have been alleged to be merely receptional and except for storing petroleum products, it is not used for any other purpose i.e. neither for transaction nor for any measurement assistance. Therefore, calibration as defined in Section 2(a) of the Standard of Weights and Measures Act, 1976 (hereinafter referred to as "the Act, 1976") is not required. It has been alleged in the writ petition that these storage tanks are just receptical means for storage and are not under any provision of law required to be calibrated. Petroleum products received in the tanks are also sold through calibrated means. However, since various orders were passed by Senior Inspectors, legal metrology of various districts, therefore, the petitioners filed Writ Petition No.34383 of 1996 (IOCL Vs. State of U.P. and others) challenging the orders for compulsory calibration of storage tanks and to deposit the requisite fee.
(b) Initially interim orders were granted by a Division Bench of this Court on 31.10.1996 but ultimately the aforesaid writ petition was dismissed by judgment and order dated 12.04.2007 holding the Government Order dated 10.04.1996 to be valid. Against the aforesaid judgment and order, a SLP was preferred by the Indian Oil Corporation Ltd. before Hon'ble the Supreme Court being SLP(Civil) No.17393 of 2007.
(c) It appears that large number of writ petitions in various High Courts were filed by the petitioners herein. Subsequently the petitioners filed a Transfer Petition before Hon'ble Supreme Court being leading Transfer Petition (Civil) No.874 of 2004 (Indian Oil Corporation and another Vs. Inspector Legal Metrology and another). By order dated 10.03.2006, Hon'ble Supreme Court exercising the powers under Article 139 A(1) of the Constitution of India, transferred all the writ petitions pending in High Courts to Supreme Court for hearing. The aforesaid SLP (Civil) No.17393 of 2007 was also clubbed with the aforesaid Transfer Petitions. Ultimately, all the Transfer Petitions were dismissed by Hon'ble Supreme Court (leading Transfer Case (Civil) No.99 of 2006) by order dated 26.02.2013.
(d) Thus, the challenge of the petitioners to the action of the respondents for bringing the storage tanks within the purview of the Act 1976, ultimately failed. The aforesaid order of Hon'ble Supreme Court has attained finality.
(e) After dismissal of the aforesaid cases by Hon'ble Supreme Court, a letter was written to the Legal Metrology Department, Bihar, dated 21.03.2013 for calibration of storage tank situated in depots. The calibration was made by the Legal Metrology Inspector and the calibration fees @ of Rs.5000/- per tank per year was demanded from January 1992 to April 2013. Consequently, the petitioners filed I. As. before Hon'ble Supreme Court challenging the demand notices issued by the authorities of the State of Bihar. All the I.As. were disposed of by Hon'ble Supreme Court by order dated 30.08.2013 as under :
"If the applicant-petitioner is aggrieved by the notice demanding fees and penalties for stamping 11 tanks amounting to Rs. 24.20 lakhs, then we feel that this has given rise to a fresh cause of action for which the petitioner may pursue appropriate legal remedy available to it in law. We, accordingly, observe that if the petitioner pursues remedy for redressal of grievance concerning above demand in appropriate forum, the same shall be considered in accordance with law. In that event, the orders passed by this Court shall have no bearing for the consideration of the matter.
I.As. stand disposed of accordingly."
(f) Thus, the Indian Oil Corporation Ltd. was relegated to avail statutory remedy against the orders creating demand of fees and late fees.
(g) The impugned notices were issued by the Office of the Senior Inspector, Legal Metrology Department of concerned districts and thereafter demands were created. Aggrieved, the petitioner filed Writ C No.8356 of 2014 (Deputy General Manager I.O.C. Ltd. & another Vs. State Of U.P. & 3 Others) which was dismissed on the ground of alternative remedy giving liberty to the petitioners to approach the appropriate appellate forum in terms of the provisions of Legal Metrology (General) Act, 2009 read with the Rules, 2011. The petitioners filed Appeal No.6 of 2014 before the Controller of Legal Metrology Department, Uttar Pradesh, Lucknow, which was dismissed by order dated 25.09.2014.
(h) Aggrieved with the aforesaid appellate order, the petitioners filed Writ - C No.50603 of 2014 which was allowed by this Court by judgment and order dated 03.12.2015 providing as under :
"Therefore, this writ petition is allowed to the extent and in the manner indicated above. The impugned order dated 14.08.2014 is set aside and Appeal No.6 of 2014 is restored for reconsideration of the Appellate Authority, strictly in accordance with law. The parties through their respective counsel shall stand at notice to appear before the Appellate Authority in the first place on 08.01.2016.
Having regard to the circumstances of the case, it is also provided in the interest of justice that until final decision by the Appellate Authority in Appeal No.6 of 2014, the interim order passed by this Court on 25.09.2014 shall remain in operation.It would, of course, be required of the Appellate Authority to take final decision in the appeal at the earliest, preferably within two months from the date of appearance of parties."
(i) Pursuant to the aforequoted judgment and order of this Court, the aforesaid appeal No.6 of 2014 was again decided by order dated 23.08.2016 and the appeal was dismissed holding that the petitioners are liable to pay the fees for calibration and also the late fees.
(j) Aggrieved with the aforesaid appellate order/demand notices, the petitioners have filed the present writ petition challenging the validity of Rules 17(3) of the Uttar Pradesh Legal Metrology (Enforcement) Rules, 2011 (hereinafter referred to as the U.P. Rules, 2011).
9. Learned counsel for the petitioners states that the Writ C No.33571 of 2018 has been filed merely against notices and the petitioners submit reply to it. In view of this statement, the Writ C No.33571 of 2018 deserves to be dismissed.
10. In rest of the writ petitions only the question of legality of the impugned demand notices/appellate orders and the validity of Rule 17(3) of the Rules 2011 remains to be tested.
11. The Standard of Weights and Measures Act, 1976 and the Standard of Weights and Measures (Enforcement) Act, 1985 (hereinafter referred to as "the Act, 1985") were repealed by Section 57 of the Legal Metrology Act, 2009 (hereinafter referred to as "the Act, 2009") with a saving clause. The Act 2009 came into force w.e.f. 1.4.2011.
12. From the impugned appellate order dated 23.08.2016 it is evident that earlier the petitioners got their storage tanks calibrated. The notices were issued to the petitioners by the senior inspectors for reason that the petitioners did not get reverification even after expiry of the validity of the stamp. Therefore, for verification and stamping of weights or measures, the fees as provided under Sub Rule 1/sub Rule 2 of Rule 17 of the Rules 2011 was demanded.
13. The appellate authority came to the conclusion that since calibration was not done within the prescribed time, therefore, the petitioners are liable to pay verification fees as well as late fees.
14. Hence, the petitioners have filed the present writ petitions.
15. In our order dated 19.011.2022 passed in the leading Writ C No.52674 of 2016 with the consent of the learned counsels for the parties, we have framed the following questions for determination in the present writ petitions except in Writ-C No.33571 of 2018, which is dismissed in view of the statement of learned counsel for the petitioners as noted in Paragraph-9 of the aforesaid order dated 19.11.2022. The questions as framed in the order dated 19.11.2022; are as under:
(i) Whether Rule 17(3) of the Rules 2011 is a valid piece of legislation ?
(ii) Whether the demand of fees, late fees or additional fees under the The Standard of Weights and Measures Act, 1976 / The Legal Metrology Act, 2009 read with the Uttar Pradesh Legal Metrology (Enforcement) Rules 2011, is a commercial dispute covered by office memorandum F.No.4(1)/2013-DPE(GM)/FTS-1835, Government of India Ministry of Heavy Industries & Public Enterprises, Department of Public Enterprises dated 22.05.2018 and Consequently the dispute of payment of late fees by the petitioners deserves to be resolved through permanent machinery of Arbitration mechanism (P.M.A. mechanism) ?
(iii) Whether the petitioners are liable to pay fees and late fees ?
Submissions:-
16. Sri Anil Kumar Sharma, learned Senior Advocate for the petitioners submits as under:-
(i) Fee for verification under the Act, 2009 and Rules framed thereunder cannot be charged over and above Rs.5,000/- for the specified period i.e., 60 months.
(ii) Since there is no provisions under the Act, 2009 for levy of additional fee or late fee, therefore, Rules 17(3) of the U.P. Rules, 2011 is ultra vires being beyond the power conferred under the Principal Act.
(iii) No fee can be recovered from the petitioners for the period prior to the coming into force of the Act, 2009 inasmuch as all proceedings under the repealed Act, 1976 have lapsed.
(iv) Fee for verification or reverification for the period covered by the Act, 1985 and the U.P. Rules, 1990 cannot be charged.
17. Sri M.C. Chaturvedi, learned Additional Advocate General for the State has carried us to various provisions of the Act, 1976, the Rules, 1985, the Act, 1985, the Rules, 1990, the Act, 2009, the General Rules, 2011, the Model Draft Legal Metrology (Enforcement) Rules, 2010 and the U.P. Rules, 2011. He specifically drawn our attention to the provisions of Section 52 and 53 of the Act, 2009 and the General Rules, 2011 and the U.P. Rules, 2011 and submits as under:
(i) There is no rider in the Principal Act with regard to the quantum of fee and the matter has been left for subordinate legislation. The scale of fee has been provided by subordinate legislation. The State Government in exercise of those powers, framed the U.P. Rules, 2011 adopting the scale of fee as prescribed under the General Rules, 2011 and the Model Rules for the State framed by the Central Government. It adopted the additional fee prescribed under the power conferred under the Act, 2009 which is inconsequence to the Model Rules framed by the Central Government i.e. Model Rules, 2010. Thus the Rules 17(3) of the Rules, 1990 is well within the legislative powers, conferred upon the State Government.
(ii) There is saving clause under the Act, 2011, and therefore, all the proceedings under the Act, 1976 stands saved, therefore, petitioners cannot deny the payment of verification fee or the additional fee.
(iii) The notices issued to the petitioners levying only Rs.5,000/- per each five years, is in accordance with provisions of the Central Rules 2011 and the U.P. Rules, 2011. The late fee was also re-framed, and late fee has been demanded in terms of the Model Rules, 2010 as adopted by the State Government being U.P. Rules, 2011, therefore, the petitioners are liable to pay the fee and the additional fee. The writ petition is frivolous and the impugned notices and orders are valid. Therefore, the writ petition deserves to be dismissed.
Discussion and Findings:-
18. Before we proceed to examine rival submissions of learned counsels for the parties, it would be appropriate to reproduce the Relevant Provisions having bearing on the controversy involved in the present writ petitions, as under:
Relevant Provisions:-
(a) The Standards of Weights and Measures (Enforcement) Act, 1985 "24. (1) ..........
(2) Every weight or measure referred to in sub-section (1) shall be re-verified at such periodical intervals as may be prescribed.
Explanation-- For the removal of doubts it is hereby declared that no periodical re-verification shall be necessary in relation to any weight or measure which is used exclusively for domestic purposes.
70. Levy of fees.- The State Government may, by rules made under section 72, levy such fees, not exceeding--
(a) ....
(b) ....
(c) .....
(d) five thousand rupees, on a graded scale, for the verification of any weight or measure, having regard to the time and labour which may be involved in making such verification,
72. (1) The State Government may, by notification and after consultation with the Central Government, make rules to carry out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :-
............................................
(m) the period within which weights or measures shall be verified or re-verified as required by sub-section (2) of section 24;
............................................
(u) the amount of fees which may be levied and collected for each of the matters specified in section 70;
(3) In making any rule under this section, the State Government may provide that a breach thereof shall be punishable with fine which may extend to one thousand rupees."
(b) The Uttar Pradesh Standards of Weights and Measures (Enforcement) Rules, 1990 ( hereinafter referred to as "the U.P. Rules, 1990") "14. Periodical interval for the verification of weights or measures.- (1) Every weight or measure including bullion, carat, weights, Beam scale, counter machine and liquid capacity measures (dipping measures, pouring measures and conical measures) used or intended to be used in any commercial transaction shall be verified or re-verified and stamped at lease once in a period of 24 months:
Provided that the fee payable for verification and stamping of above weights and measures shall be charged at the rate prescribed in schedule XII to be calculated on year basis per year:
Provided further that weights or measures used for industrial production or protection shall be verified or re-verified and stamped at lease once in a year:
Provided also that storage tanks including vats shall be verified or re-verified and calibrated or re-calibrated and stamped at lease once in a period of five years.
(2) Notwithstanding anything contained in sub-rule (1) every weight or measure which has been verified and stamped in situ shall, if it is dismantled and re-installed before the date on which the verification falls due be duly re-verified and stamped on payment of the prescribed fee, before being put into use.
(3) Notwithstanding anything contained in sub-rule(1) every weight or measure which has been verified and stamped shall if it is repaired before the date on which the verification falls due to be duly re-verified and stamped on payment of the prescribed fee, before being put into use.
17. Fee for verification and stamping.-(1) Fees payable for verification and stamping of weight or measure at the office or camp office of the Inspector shall be as specified in Schedule XII.
(2) If, at the request of the user of weight or measure, verification is done at any premises other than the office or camp office of the Inspector, an additional fee shall be charged at half the rates specified in the Schedule XII and the user of the weight or measure shall pay the expenses incurred by the Inspector for visiting the premises including the cost of transporting and handling the Working Standard and other equipment subject to a minimum of rupees ten:
Provided that no additional fee shall be charged for verification and stamping in situ, of,
(i) vehicle tanks dispensing pumps, weigh-bridges, dormant platform machines and such other weight or measure which cannot, and should not be moved from its location;
(ii) Weight or measures in the premises of manufacturer or stockist of such weight or measure.
(3) If a weight or measure is presented to the Inspector for re-verification after expiry of the validity of the stamp, an additional fee at half the rates specified in Schedule XII shall be payable for every quarter of the year or part thereof.
(4) No fee shall be payable for re-stamping any weight or measure held in stock with manufacturer or dealer within the period specified in Rule 14 from the date on which it was last stamped, provided that the original stamp was not obliterated under Section (3) of Section 28 of the Act.
(5) A weight or measure which on verification/inspection is found to be incorrect shall be returned to the person concerned for adjustment informing him, in a proforma specified by the Controller of the defects found in the weight or measure, and calling upon him to remove the defects within a period not exceeding seven days. When the necessary adjustment has been carried out, such weight or measure shall be verified on payment of the fees specified in Schedule XII and if found correct shall be stamped."
24. Penalty for contravention of rules- Whoever contravenes any provision of these rule for the contravention of which no punishment has been separately provided in the Act, shall be punished with fine which may extend to one thousand rupees.
SCHEDULE XII (Relevant clause-2 is reproduced) [See Rule 17(1)]
1............
2. Capacity Measure (including storage tank, vehicle tanks, Dispensing Measures and Peg Measures)-
Capacity Fee per piece 50 litres and above Rs.10.00 for the first 100 litres or part thereof plus Rs.3.00 for every additional 100 Litres or part thereof subject to a maximum of Rs.5,000 201 4.00 101 4.00 51 2.00 21 2.00 11 2.00 500 ml 1.00 200 ml 1.00 100 ml 1.00 50 ml 1.00 20 ml 1.00 10 ml 1.00 5 ml 1.00 2 ml 1.00 1 ml 1.00 18.5 ml 4.00 60 ml 1.00 30 ml 1.00
(c) The Legal Metrology Act, 2009 (This Act repealed the Act, 1985) Section 2 (v) "verification", with its grammatical variations and cognate expressions, includes, in relation to any weight or measure, the process of comparing, checking, testing or adjusting such weight or measure with a view to ensuring that such weight or measure conforms to the standards established by or under this Act and also includes re-verification and calibration;
Section 2(w) "weight or measure" means a weight or measure specified by or under this Act and includes a weighing or measuring instrument.
Section 16: Forfeiture.- (1) Every non-standard or unverified weight or measure, and every package made in contravention of section 18, used in the course of, or in relation to, any trade and commerce and seized under section 15, shall be liable to be forfeited to the State Government:
Provided that such unverified weight or measure shall not be forfeited to the State Government if the person from whom such weight or measure was seized gets the same verified and stamped within such time as may be prescribed.
(2) Every weight, measure or other goods seized under section 15 but not forfeited under sub-section (1), shall be disposed of by such authority and in such manner as may be prescribed.
Section 24. Verification and stamping of weight or measure.--(1) Every person having any weight or measure in his possession, custody or control in circumstances indicating that such weight or measure is being, or is intended or is likely to be, used by him in any transaction or for protection, shall, before putting such weight or measure into such use, have such weight or measure verified at such place and during such hours as the Controller may, by general or special order, specify in this behalf, on payment of such fees as may be prescribed.
(2) The Central Government may prescribe the kinds of weights and measures for which the verification is to be done through the Government approved Test Centre.
(3) The Government approved Test Centre shall be notified by the Central Government or the State Government, as the case may be, in such manner, on such terms and conditions and on payment of such fee as may be prescribed.
(4) The Government approved Test Centre shall appoint or engage persons having such qualifications and experience and collect such fee on such terms and conditions for the verification of weights and measures specified under sub-section (2) as may be prescribed.
CHAPTER V (SECTIONS 25 TO 57) Section 33: Penalty for use of unverified weight or measure.-Whoever, sells, distributes, delivers or otherwise transfers or uses any unverified weight or measure shall be punished with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees and, for the second or subsequent offence, with imprisonment for a term which may extend to one year and also with fine.
Section 52: Power of the Central Government to make rules.
(1) ....
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a)..
(b)...
(c) physical characteristics, configuration, constructional details, materials, equipment, performance, tolerances, period of re-verification, methods or procedures of tests under sub-section (4) of section 7;
Section 53. Power of State Government to make rules.--(1) The State Government may, by notification, and after consultation with the Central Government, make rules to carry out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a) the time within which the weight or measure may be got verified under proviso to sub-section (1) of section 16;
(b) registers and records to be maintained by persons referred to under sub-section (1) of section 17;
(c) the form, manner, conditions, period, area of jurisdiction and fees for issuance of licence under sub-section (2) of section 23;
(d) fee for verification and stamping of any weight or measure under sub-section (1) of section 24;
(e) manner of notifying Government approved Test Centre, terms and conditions and fee to be paid under sub-section (3) of section 24;
(f) fee for compounding of offences under sub-section (1) of section 48;
(3) In making any rule under this section, the State Government may provide that a breach thereof shall be punishable with fine which may extend to five thousand rupees.
(4) The power to make rules under this section shall be subject to the condition of the rules being made after previous publication in Official Gazette.
(5) Every rule made under this section shall, as soon as may be after it is made, be laid before each House of State Legislature, where there are two Houses and where there is one House of State Legislature, before that House.
Section 57. Repeal of the Standards of Weights and Measures Act, 1976 and Standards of Weights and Measures (Enforcement) Act, 1985.--(1) The Standards of Weights and Measures Act, 1976 (60 of 1976) and the Standards of Weights and Measures (Enforcement) Act, 1985 (54 of 1985), is hereby repealed.
(2) Without prejudice to the provisions contained in the General Clauses Act, 1897 (10 of 1897), with respect to repeals, any notification, rule or order made under the Standards of Weights and Measures Act, 1976 (60 of 1976) and the Standards of Weights and Measures (Enforcement) Act, 1985 (54 of 1985), shall, if in force, at the commencement of this Act, continue to be in force and have effect as if it was made under the corresponding provision of this Act.
(3) Notwithstanding such repeal, any appointment, notification, rule, order, registration, licence, certificate, notice, decision, approval, authorisation or consent made, issued or given under such law shall, if in force at the commencement of this Act, continue to be in force and have effect as if it were made, issued or given under the corresponding provisions of this Act.
(d) The Legal Metrology (General) Rules, 2011 ( hereinafter referred to as "the General Rules, 2011") (framed by Central Government in exercise of powers under Section 52(2)(c), (f), (h),(i) and (s) of the Act, 2009) Rule 25. Scale of fee.-- The scale of fees to be collected for the service specified in column (2) of Twelfth Schedule shall be at the rate specified in column 3 of the said Schedule.
Rule 27. Periodical verification of weights or measures.- (1) Every weight or measure used or intended to be used in any transaction or for protection of living beings or things in clause (k) of Section 2 shall be verified and stamped by the Legal Metrology Officer in the State in which such weight or measure is put to use and shall be re-verified and stamped at periodical Intervals.
(2) The re-verification shall be carried out on the completion of a period of,-
(a) twenty four months for all weights, capacity measures, length measures, tape, beam scale and counter machine,
(b) sixty months for storage tanks, and
(c) twelve months for all weight or measure including tank lorry other than that mentioned In clauses (a) & (b).
(3) Notwithstanding anything contained in sub-rule (2) every weight or measure which has been verified and stamped in situ shall, if it is dismantled and re-installed before the date on which the verification falls due shall be duly re-verified and stamped, before being put into use.
(4) Notwithstanding anything contained in sub-rule (1) every weight or measure which has been verified and stamped shall, if it is repaired before the date on which the verification falls due shall be duly re-verified and stamped before being put into use.
(e) The Uttar Pradesh Legal Metrology (Enforcement) Rules, 2011 (framed by State Government in exercise of powers under Section 53(1) of the Act, 2009) Rule 14. Periodical interval for the verification of weights or measures shall be as specified in Legal Metrology (General) Rules, 2011.
Rule 17. Fee for verification.-(1) Fees payable for verification and stamping of weight or measure at the office or camp office of the Legal Metrology Officer shall be as specified in Schedule IX.
(2) If, at the request of the user of weight or measure, verification is done at any premises other than the office or camp office of the Legal Metrology Officer, an additional fee shall be charged at half the rate specified in the Schedule IX and the user of the weight or measure shall pay the expenses incurred by the Legal Metrology Officer for visiting the premises including the cost of transporting and handling the Working Standard and other equipment subject to a minimum of Rupees One hundred:
Provided that no additional fee shall be charged for verification and stamping, in situ, of,
(i) Vehicle tanks for petroleum products and other liquids, Meter for Liquids other than water (Fuel Dispenser, Liquid Petroleum Gas, Milk Dispensers), Compressed Natural Gas Dispensers, Non-automatic Weighing Instruments like weighbridges, platform machines, crane scale, Automatic Gravimetric Filling Instruments, Automatic Rail-weighbridge, Discontinuous Totalizing Automatic Weighing Instruments, and such other weight or measure which cannot, and should not be moved from its location;
(ii) Weight or measure in the premises of manufacturer or dealer of such weight or measure.
(3) If a weight or measure is presented to the Legal Metrology Officer for re-verification after expiry of the validity of the stamp, an additional fee at half the rate specified in Schedule IX shall be payable for every quarter of the year or part thereof.
(4) No fee shall be payable for re-stamping any weight or measure held in stock with manufacturer or dealer within the period specified in Rule 14 from the date on which it was last stamped, provided that the original stamp was not obliterated.
(5) A weight or measure which on verification/inspection is found to be incorrect shall be returned to the person concerned for adjustment informing him, in a pro forma specified by the Controller, of the defects found in the weight or measure, and calling upon him to remove the defects within a period not exceeding seven days. When the necessary adjustment has been carried out, such weight or measure shall be verified on payment of the fees specified in Schedule IX and if found correct shall be stamped."
Rule 25: Whoever contraventions any provision of these rules, for the contraventions of which no punishment has been separately provided in the Act, shall be punished with fine, which may extend to five thousand rupees. Wherever the rules are in conflict with provisions of the Act, the Act will prevail upon the rules.
SCHEDULE IX (only relevant portion is reproduced) [See Rule 17(1)]
1............
2. Capacity Measures:
Denomination (1) Fee per piece (Rs.) (2) 100 litres and above Rs.50 for the Ist 100 litres plus Rs.7 for every additional 100 litre or part thereof subject to a maximum of Rs.5000 501 50.00 201 20.00 101 20.00 51 10.00 21 10.00 11 10.00 500 ml 10.00 200 ml 10.00 100 ml 10.00 50 ml 10.00 20 ml 10.00 10 ml 10.00 5 ml 10.00 2 ml 10.00 1 ml 10.00 Liability under the Act, 1985 AND The U.P. Rules, 1990:-
19. Section 24 (2) of the Act, 1985 provides that every weight or measure referred to in sub Section (1) shall be re-verified at such periodical intervals as may be prescribed. Third Proviso to Rule 14(1) of the U.P. Rules, 1990 prescribed for verification or re-verification and calibration or re-calibration of storage tanks and vats once in five years. Thus, storage tanks of the petitioners are required to be verified or re-verified or calibrated or re-calibrated once in five years under Section 24(2) of the Act, 1985 read with the Rules 14(1) of the U.P. Rules, 1990. Section 72 (1) of the Act, 1985 confers power upon the State Government to make rules after consultation with the Central Government. Clause (d) of Section 70 of the Act, 1985 provides that the State Government may levy such fee not exceeding Rs.5,000/-, on a graded scale, for the verification of the weight and measures, having regard to the time and labour which may be involved in making such verification. Thus the Principal Act, 1985 provides for levy of fee to a maximum amount of Rs.5,000/- and it does not provide for any additional fee. The U.P. Standards of Weights and Measures (Enforcement) Rules, 1990 has been framed in exercise of powers under Section 72 of the Act, 1985.
20. Section 72(2)(a) empowers the State Government to frame rules providing the amount of fees which may be levied and collected for each matters specified in Section 70. Clause (d) provides for maximum fees of Rs.5,000/-. Section 72(3) of the Act, 1985 empowers the State Government to frame Rules providing for maximum fine of Rs.1000/- for breach of any rule framed under Section 72 of the Act, 1985. Thus, Section 72 of the Principal Act, 1985 does not confer power upon the State Government to frame Rules to provide for any additional fee over and above the maximum amount of fees prescribed under Section 70 of the Act, 1985. Clause (2) of Schedule XII under Rules 17(1) of the U.P. Rules, 1990, prescribes fees for verification and stamping of weights and measures (capacity measure including storage tanks) subject to a maximum of Rs.5,000/-. However, sub-Rule (3) of Rule 17 of the U.P. Rules, 1990, beyond the rule making power; provides for additional fee at half of the rules specified in Schedule XII for every quarter of the year or part thereof where weight or measure is presented to the Inspector for re-verification after expiry of the validity of the stamp. Therefore, to save the sub-Rule (3) of Rule 17 of the U.P. Rules, 1990, this sub-Rule (3) has to be understood to mean that total fees including additional fee shall not exceed the maximum amount of fees provided under Section 70 of the Principal Act, 1985, which in the present set of facts is Rs.5000/- once in five years for each storage tank. Accordingly, the impugned orders levying fees including additional fees over and above Rs.5,000/- per storage tank once in five years, cannot be sustained and deserve to be quashed.
Fees and Additional Fee OR Penalty under the Act, 2009, the General Rules, 2011 AND the U.P. Rules, 2011:-
21. Section 24 read with sub-Section (v) and (w) of Section 2 of the Act, 2009 provides for verification and re-verification of weight or measure on payment of such fees as may be prescribed. Section 52(2)(c) empowers the Central Government to frame rules on certain subjects including "period of re-verification." Rule 27(2)(b) of the General Rules, 2011 provides for re-verification of storage tanks on the completion of a period of sixty months. Thus, the petitioner's storage tanks need to be re-verified under the Act, 2009 read with the General Rules, 2011, on completion of a period of sixty months.
22. Section 53(2)(d) of the Act, 2009 empowers State Government to make rules prescribing fee for verification and stamping of any weight or measure under sub-Section (1) of Section 24. Rule 17(1) of the U.P. Rules, 2011 provides fees payable for verification and stamping of weight or measure as specified in Schedule IX. Clause (2) of Schedule IX provides scale of fees for verification/ re-verification for capacity measures (storage tanks) subject to a maximum of Rs.5,000/-. Thus, the respondents may charge and realise verification or re-verification fees for each storage tanks once in sixty months as per scale of fees provided in clause (2) of Schedule IX to the U.P. Rules, 2011 subject to a maximum of Rs.5,000/- per storage tank and any amount of fees over and above it levied or recovered from the petitioners by the respondents is illegal and unauthorised.
Levy of Additional Fees under Rule 17(3) of the U.P. Rules, 2011:-
23. Thus, maximum amount of fees that can be levied for verification or re-verification of a storage tank is Rs.5,000/- once in sixty months. Verification or re-verification [reference: Section 2(v)] in relation to any weight or measure, is the process of comparing, checking, testing or adjusting such weight or measure with a view to ensure that such weight or measure conforms to the standards established under the Act, 2009. For rendering these services, fee is charged under Section 24 of the Act, 2009 at the rates prescribed by The U.P. Rules, 2011. Clause 4(f) of the Statement of Objects and Reasons of the Act, 2009 provides that levy of fee is for various services. Thus, fee for verification or re-verification and calibration under the Act, 2009 has a direct co-relation with the services defined in Section 2(v) read with Section 24 of the Act, 2009. Thus, an element of quid-pro-quo exists for fees chargeable for verification or re-verification of weights and measures under Section 24 of the Act, 2009 read with Rule 17(1) of the U.P. Rules, 2011.
24. Thus, the levy of fees under Section 24 read with Section 2(b) of the Act, 2009 and Rule 17(1) of the U.P. Rules, 2011 is in return of rendering of specified services. Fee for verification or reverification is not a duty or tax. Whereas a tax is imposed for public purpose and requires no consideration to support it, fee is generally levied essentially for services rendered and there must be an element of quid-pro-quo between the person who pays it and the public authority that imposes it. In the case of Commissioner, Hindu Religious Endowments, Madras vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt., 1954 SCR 1005 : AIR 1954 SC 282 (Paras 46 and 47), a Constitution Bench of Hon'ble Supreme Court held that a 'fee' is generally defined to be charged for a special service rendered to individuals by some governmental agencies. In the case of State of Uttarkhand vs. Kumaon Stone Crusher, (2018) 14 SCC 537 (Paras-153, 154, 161 to 186), Hon'ble Supreme Court considered the concept of fee, difference between tax and fee and when a fee can be said to be confiscatory and thereafter held transit fees provided by the Vth Amendment Rules to be confiscatory.
25. In the case of Khemka and Co. (Agencies) (P.) Ltd. vs. State of Maharshtra, (1975) 2 SCC 22 (Paras-25, 31, 37 and 39), a Constitution Bench of Hon'ble Supreme Court held that the imposition of penalty gives rise to a substantive liability, which can be viewed either as an additional tax or as a fine for infringement of the law. The imposition of a pecuniary liability which takes form of a penalty or fine for a breach of a legal obligation, cannot be relegated to the region of mere procedure and machinery for realisation.
26. In the case of State of Uttar Pradesh vs. Sitapur Packing Wood Suppliers, (2002) 4 SCC 566 (Para-10), Hon'ble Supreme Court laid down the law that "The penalty cannot be beyond what is permissible in the Act."
27. The U.P. Rules, 2011 is a delegated legislation. It is settled law that no rule can be validly framed, which has the effect of either enlarging or restricting the rule making power conferred under the principal Act. Being subordinate legislation, the Rules cannot make any provision, which may have the effect of curtailing or enlarging the content and scope of the substantive provision. Reference in this regard may be had to the judgment of Hon'ble Supreme Court in the case of Mahachandra Prasad Singh (Dr.) vs. Chairmnan, Bihar Legislative Council, (2004) 8 SCC 747 (Paras-13 and 16).
28. In the case of V.V.S. Sugars vs. State of A.P. (1999) 4 SCC 192, Indian Carbon Ltd. vs. State of Assam, (1997) 6 SCC 479, J.K. Synthetic Ltd. vs. C.T.O., (1994) 4 SCC 276 and M/s Shree Steel Rolling Mills vs. Commissioner of Central Excise and another, (2016) 3 SCC 643 (Paras-30 and 31), Hon'ble Supreme Court laid down the law that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax, makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax, no interest could be levied.
29. The aforesaid judgments have been followed by Hon'ble Supreme Court in a recent judgment in the case of Indian Oil Corporation Ltd. vs. State of U.P., (2019) 16 SCC 482 (Paras-60 and 61). It is settled principle of law that a legislative Act shall prevail over the subordinate legislation, vide Veena Kumari Tandon vs. Neelam Bhalla and others, (2007) 12 SCC 764 (Para-11). In Vimal Chandra Banerjee vs. State of M.P., (1970) 2 SCC 467 (Para-14), Hon'ble Supreme Court has held, as under:
"No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule making authority. A rule making authority has no plenary power. It has to act within the limits of the power granted to it."
30. But Rule 17(3) of the U.P. Rules, 2011 provides for an additional fee at half the rate specified in Schedule IX to be payable for every quarter of the year or part thereof, if a weight or measure is presented to the Legal Metrology Officer for re-verification after expiry of the validity of the stamp. There is no element of quid-pro-quo in providing the aforesaid penal fee terming it as additional fee. Fee for five years is Rs.5,000/-, which comes to Rs.250/- per quarter. Additional fees per quarter for delay in verification would be Rs.2500/- per quarter or 1000% per quarter. Thus, the additional fee provided under Rule 17(3) of the U.P. Rules, 2011 being 1000% per quarter is, arbitrary, unreasonable, confiscatory and it being penal in nature is a penalty. Therefore, we hold that the fee provided under Rule 17(3) of the U.P. Rules, 2011 is a penalty for delay in presenting a weight or measure to the Legal Metrology Officer for re-verification after expiry of the validity of the stamp.
31. Sections 25 to 47 under Chapter V of the Act, 2009 provides for penalty. Section 33, which has been reproduced above; provides penalty for use of unverified weight or measure. Section 53 confers power upon State Government to make rules. Sub-Section (3) of Section 53 specifically provides that the State Government may provide that breach of the rules shall be punishable with fine which may extend to five thousand rupees. Therefore, for breach of any provision of the U.P. Rules, 2011, the State Government may provide by rules for imposition of fine which may extend to five thousand rupees.
32. Section 16 of the Act, 2009 provides for forfeiture of unverified weight or measure. Section 33 provides for penalty to a maximum of Rs.5,000/- for use of unverified weight or measure. Thus, in absence of a substantive provision in the Act, 2009 providing for penalty of the nature and for amount as provided in Rule 17(3), the penal provision of Rule 17(3) of the U.P. Rules, 2011 being beyond rule making power, is ultra vires to the Principal Act, i.e. the Act, 2009. That apart, Rule 25 of the U.P. Rules, 2011 itself provides that wherever the Rules are in conflict with the provisions of the Act, the Act will prevail upon the Rules.
33. For all the reasons aforestated, we hold that the respondents may levy stamp verification/re-verification fee only up to Rs.5,000/- for each storage tank once in 60 months. No additional fee in the form of penalty under Rule 17(3) can be levied since it is not permitted by the Principal Act. Therefore, the impugned orders are arbitrary and illegal and deserves to be quashed. Consequently, all the impugned appellate orders dated 23.08.2016 and also other orders/notices impugned in all the abovenoted writ petitions, except Writ Petition No.33571 of 2018, are hereby quashed. Sub-rule (3) of Rule 17 of the Uttar Pradesh Legal Metrology (Enforcement) Rules, 2011 is declared ultra vires. WRIT - C No. - 52674 of 2016, WRIT - C No. - 54682 of 2016, WRIT - C No. - 54685 of 2016, WRIT - C No. - 54687 of 2016, WRIT - C No. - 57179 of 2016, WRIT - C No. - 57180 of 2016, WRIT - C No. - 57203 of 2016, WRIT - C No. - 57208 of 2016, WRIT - C No. - 57210 of 2016, WRIT - C No. - 57766 of 2016, WRIT - C No. - 61624 of 2016, and WRIT - C No. - 32799 of 2018, are allowed.
34. Respondents are directed to determine fees payable by the petitioners under Rule 17(1) of the U.P. Rules, 2011 within three weeks from today in terms of this judgment and communicate it to the petitioners within next one week. Petitioners are directed to deposit the entire verification/reverification fees under Rule 17(1) of the U.P. Rules, 2011, within next one month and shall continue to get verified/reverified storage tanks in time as per provisions of the Act, 2009 and the U.P. Rules, 2011. Liberty is granted to the respondents for initiating action against the petitioners for penalty/fine for delayed verification/reverification of storage tanks in accordance with the relevant provisions of Chapter-V of the Act, 2009 and relevant provisions of the U.P. Rules, 2011.
35. The Writ Petition No.33571 of 2018 being merely against notice, is dismissed.
Order Date :- 28.03.2023 NLY