Daily Late Fee on Fitness Certificate Struck Down: Raj HC

Brief Facts

Transport operators challenged the Central Motor Vehicles (Twenty Third Amendment) Rules, 2021, notified on 04.10.2021 and in force from 01.04.2022, in Article 226 writ petitions heard together (paras 1, 2, 9). Serial No. 11A of Rule 81 fixed the fee for granting or renewing fitness certificates of transport vehicles older than 15 years, and its note added fifty rupees for each day of delay after the certificate expired (paras 9-10). The petitioners said this was a fine the Act did not authorise (paras 3-4). The Union and the State replied that the levy was part of the fee structure, traceable to Sections 64, 210C(c) and 211, and a deterrent encouraging timely renewal (paras 5-7).

Court's Findings

The Bench accepted that Section 64(o) authorises a fee for fitness certificates, and that this fee reasonably correlates with the certification service (paras 13, 33-34). Neither Section 56 nor Rules 62 to 73 oblige an owner to renew before expiry or call for extra work on a late application, and Chapter XIII attaches no penalty to the delay (para 37). The contravention arises only when a vehicle without a valid fitness certificate is plied, which Sections 39 and 56 prohibit and Section 192 penalises (paras 38, 48). The charge therefore punishes late renewal and partakes of the nature of a fine or penalty (paras 39-40, 43). The Union's own reply called the levy a deterrent, which made it punitive (paras 44-45). Section 211 is a residuary power to levy fees only (paras 36, 47). Chapter XIII lets governments revise fines under Section 199B or apply multipliers under Section 210A, but not create new fines, so Section 210C(c) did not help (para 48). Following Gaurav Kumar, it held that a delegate cannot introduce a policy of fines absent from the parent Act (para 49). It agreed with the Madras High Court and declined to follow the Bombay High Court (paras 50-51).

Legal Principle

A delegate empowered to levy fees cannot impose a fine or penalty under the label of a fee. A charge that bears no correlation with any service or regulatory cost and is designed to deter or punish is a penalty, and it needs express authority in the parent Act (paras 24, 39-42, 49).

Precedents Relied Upon

Gaurav Kumar v. Union of India & Ors. 2024 SCC OnLine SC 1841
Followed Discussed at ¶ 4, 20, 21, 22, 23, 24, 29, 41, 49
Delegated legislation may be challenged for failure to conform to the parent statute or for exceeding the authority it confers; a fee is a compulsory exaction, so a delegate's power to levy fees cannot be implied and must be specifically conferred and strictly exercised; a delegate cannot alter the legislative policy or create rights, obligations or disabilities not contemplated by the parent Act. Also cited by the petitioners.
State of M.P. & Ors. v. Rakesh Sethi & Anr. AIR 2020 SC 4156
Relied Upon Discussed at ¶ 4, 35, 47
Section 211 of the Motor Vehicles Act is a residuary power to levy fees for contingencies not covered by a specific power that entail some activity or service by the State; the Bench read it to mean that the impost must be in the nature of a fee. Also cited by the petitioners.
Union of India v. Association of Unified Telecom Service Providers of India & Ors. (2020) 3 SCC 525
Relied Upon Discussed at ¶ 4, 43
A late fee charged when a customer fails to pay within the due date is a penalty; applied to hold the daily additional fee punitive. Also cited by the petitioners.

View all precedents (27)

State of U.P. & Ors. v. Vam Organic Chemicals Ltd. & Ors. AIR 2003 SC 4650
Relied Upon Discussed at ¶ 42
A levy with no connection to the cost of administering a regulation cannot be sustained as a regulatory fee.
Jalkal Vigbhag Nagar Nigam & Ors. v. Pradeshiya Industrial & Investment Corporation & Anr. (2021) 20 SCC 657
Relied Upon Discussed at ¶ 7, 34
Cited by the respondents; the Court accepted that the distinction between a tax and a fee has been substantially effaced, that only a broad correlation between the fee and the service or regulatory expense is needed, and that a fee may involve compulsion, upholding the fitness-certificate fee itself.
Chennai City Auto Ootunargal Sangam v. The Secretary, Ministry of Road Transport & Highways & Ors. W.P. No. 1598 of 2017 and connected matters, decided on 03.04.2017 (Madras High Court)
Relied Upon Discussed at ¶ 4, 50
The Madras High Court held the 2016 additional fee of fifty rupees a day after expiry of a fitness certificate punitive, on a committee's recommendation to levy a fine for non-renewal in time; the Bench found the same objective behind the impugned levy. Cited by the petitioners.
'K' Savakash Auto Rickshaw Sangha v. Union of India & Ors. 2024 SCC OnLine Bom 970 (Bombay High Court)
Not Followed Discussed at ¶ 7, 51
Cited by the respondents; the Bench was unable to subscribe to the view taken by the Bombay High Court.
Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1954) 1 SCC 412
Referred To Discussed at ¶ 25
A fee is money taken by the Government as the return for work done or services rendered; fees for licences and fees for services distinguished.
H H Sudhindra Thirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowments 1963 Supp (2) SCR 302
Referred To Discussed at ¶ 26
A levy does not cease to be a fee merely because of compulsion, nor must it relate directly to the service rendered to each individual; a reasonable relation between the levy and the expenses of the service suffices.
Corporation of Calcutta v. Liberty Cinema 1964 SCC OnLine SC 65
Referred To Discussed at ¶ 27
Licence fees are not necessarily charged in return for services and may defray the costs of administering local regulations.
Secunderabad Hyderabad Hotel Owners' Association & Ors. v. Hyderabad Municipal Corporation, Hyderabad & Anr. (1999) 2 SCC 274
Referred To Discussed at ¶ 7, 28
Licence fees are regulatory or compensatory; fees for regulating activities may be valid although no service is rendered. Also cited by the respondents.
Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India (1985) 1 SCC 641
Referred To Discussed at ¶ 20
Referred to as one of the decisions on the grounds on which delegated legislation may be challenged, as noted in Gaurav Kumar.
CIT v. McDowell & Co. Ltd. (2009) 10 SCC 755
Referred To Discussed at ¶ 21
Three-Judge Bench decision on the principles for interpreting Article 265, referred to as noted in Gaurav Kumar.
Kunj Behari Lal Butail v. State of H.P. (2000) 3 SCC 40
Referred To Discussed at ¶ 41
Relied on in Gaurav Kumar for the limits of rule-making power.
State of Andhra Pradesh v. K. Satyanarayana & Ors. AIR 1968 SC 825
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
Bimal Chandra Banerjee v. State of Madhya Pradesh Etc. (1970) 2 SCC 467
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
Jantia Hill Truck Owners Association v. Shailang Area Coal Dealer & Truck Owner Association & Ors. (2009) 8 SCC 492
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
B. Premanand & Ors. v. Mohan Koikal & Ors. (2011) 4 SCC 266
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
State of Goa v. Summit Online Trade Solutions Private Limited & Ors. (2023) 7 SCC 791
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
Union of India & Ors. v. K. Pushpavanam & Ors. AIR 2023 SC 3827
Referred To Discussed at ¶ 4
Cited by counsel for the petitioners.
Bharat Singh & Ors. v. State of Haryana & Ors. (1988) 4 SCC 534
Referred To Discussed at ¶ 7
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents.
Government of Andhra Pradesh & Ors. v. P. Laxmi Devi (Smt.) (2008) 4 SCC 720
Referred To Discussed at ¶ 7, 46, 48
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents. Relied on for a harmonious construction of Sections 64, 210C and 211; the argument was rejected.
M. Rathinaswami & Ors. v. State of Tamil Nadu & Ors. (2009) 5 SCC 625
Referred To Discussed at ¶ 7, 46, 48
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents. Relied on for a harmonious construction of Sections 64, 210C and 211; the argument was rejected.
Delhi Race Club Limited v. Union of India & Ors. (2012) 8 SCC 680
Referred To Discussed at ¶ 7
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents.
Dharmendra Kirthal v. State of Uttar Pradesh & Anr. (2013) 8 SCC 368
Referred To Discussed at ¶ 7, 46, 48
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents. Relied on for a harmonious construction of Sections 64, 210C and 211; the argument was rejected.
Shayara Bano v. Union of India & Ors. (2017) 9 SCC 1
Referred To Discussed at ¶ 7
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents.
Authorised Officer, Central Bank of India v. Shanmugavelu (2024) 6 SCC 641
Referred To Discussed at ¶ 7
Cited by the Additional Solicitor General and the Additional Advocate General for the respondents.

Rs 50-a-Day Late Fee on Expired Vehicle Fitness Certificates Is an Unauthorised Penalty: Rajasthan High Court

Judgment Intelligence

Key holdings

Brief Facts

Court's Findings

Legal Principle

Precedents Relied Upon

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