# DELHI RACE CLUB LTD v. UNION OF INDIA AND ORS - **Citation:** [2012] 8 S.C.R. 1 - **Court:** Supreme Court of India - **Decided:** 2012-07-13 - **Case number:** Civil Appeal No.6461 of 2003 - **Bench:** D.K. Jain, Anil R. Dave - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/delhi-race-club-ltd-v-union-of-india-and-ors-28505 - **Pages:** 34 ## Headnote Mysore Race Courses Licensing Act, 1952 (as extended to the Union Territory of Delhi in 1984) - s. 11 - Horse racing A B - Licence fee leviab/e in terms of the 1985 Rules framed u/ C s. 11 of the 1952 Act - Delegation of legislative power u/s. 11 of the 1952 Act - Challenged as unconstitutional and ultra vires for allegedly conferring unguided, uncontrolled and unfettered power on the Administrator to fix the licence fee - Held: Delegation of non-essential legislative function of D fixation of rate of imposts is a necessity to meet the multifarious demands of a welfare state - Such delegation is permissible as long as legislative policy is defined in clear terms, which provides guidance to the delegate - In the instant case, challenge to constitutionality of s. 11 (2) of the 1952 Act E was based on the premise that no guidance, check, control or safeguard is specified in the 1952 Act - This principle, however, applies only to the cases of delegation of the function of fixation of rate of tax and not a fee - Since the levy involved in the present case is a fee and not tax, and the scheme of F the 1952 Act clearly spells out the object, policy and the intention with which it has been enacted, therefore, the 1952 Act does not warrant any interference as being an instance of excessive delegation - Constitution of India, 1950 - Delegation of legislative power - Delegation of non-essential G legislative function. Delhi Race Course Licensing Rules, 1985 - r. 6 - Horse racing - Licence fee /eviable in terms of the 1985 Rules framed uls. 11 of the 1952 Act - Nature of the impost - Tax 1 H 2 SUPREME COURT REPORTS (2012] 8 S.C.R. A or fee - Held: The true test to determine the character of a levy, is the primary object of the levy and the essential purpose intended to be achieved - In the instant case, the nature of the impost is not merely compulsory exaction of money to augment the revenue of the State but its true object B is to regulate, control, manage and encourage the sport of horse racing as is distinctly spelled out in the ·1952 Act and the 1985 Rules - Wide powers have been conferred on various authonties to enable them to supeNise, regulate and monitor the activities relating to the race course with a view to secure c proper enforcement of the provisions - Therefore, the levy involved in the present case is a 'fee' and not 'tax' - Mysore Race Courses Licensing Act, 1952 (as extended to the Union Territory of Delhi in 1984) - s. 11 - Delhi Race Course Licensing (Amendment) Rules, 2001. D Delhi Race Course Licensing Rules, 1985 - r.6 - Delhi Race Course Licensing (Amendment) Rules, 2001 - Horse racing - Licence fee leviab/e in terms of the 1985 Rules (as amended in 2001) challenged on the ground that it Jacked any element of 'quid pro quo' - Held: The licence fee imposed E in the present case is a regulatory fee and is, thus, not conditioned by the fact that there must be a quid pro quo for the seNices rendered - The Government need not render some defined or specific seNices in return as long as the licence fee satisfies the limitation of being reasonable - If F there is a broad correlation between the expenditure which the State incurs and the fees charged, the fees can be sustained as reasonable - Taxation - 'Quid pro quo'. Delhi Race Course Licensing Rules, 1985 - r. 6 - Delhi G Race Course Licensing (Amendment) Rules, 2001 - Licence fee prescribed in the 1985 Rules framed u/s. 11 of the 1952 Act - Ten-fold enhancement of the licence fee in view of amendment in terms of the 2011 Rules - Propriety - Validity of the 2001 Rules and of the charging section i.e. s.11(2) of the 1952 Act - Challenge to - Held: The challenge to validity H DELHI RACE CLUB LTD. v. UNION OF INDIA AND 3 ORS. of s. 11 (2) of the 1952 Act was raised after almost 15 years of A the commencement of the 1952 Act - The appellant Race Course had been regularly paying the licence fee and the present challenge was made only when quantum of licence fee was increa ## Text _Characters 0–39,707 of 65,680. This is a partial read: ask again with offset=39707 for what follows._ [2012] 8 S.C.R. 1 DELHI RACE CLUB LTD. v. UNION OF INDIA AND ORS. (Civil Appeal No.6461 of 2003) JULY 13, 2012 [D.K. JAIN AND ANIL R. DAVE, JJ.] Mysore Race Courses Licensing Act, 1952 (as extended to the Union Territory of Delhi in 1984) - s. 11 - Horse racing A B - Licence fee leviab/e in terms of the 1985 Rules framed u/ C s. 11 of the 1952 Act - Delegation of legislative power u/s. 11 of the 1952 Act - Challenged as unconstitutional and ultra vires for allegedly conferring unguided, uncontrolled and unfettered power on the Administrator to fix the licence fee - Held: Delegation of non-essential legislative function of D fixation of rate of imposts is a necessity to meet the multifarious demands of a welfare state - Such delegation is permissible as long as legislative policy is defined in clear terms, which provides guidance to the delegate - In the instant case, challenge to constitutionality of s. 11 (2) of the 1952 Act E was based on the premise that no guidance, check, control or safeguard is specified in the 1952 Act - This principle, however, applies only to the cases of delegation of the function of fixation of rate of tax and not a fee - Since the levy involved in the present case is a fee and not tax, and the scheme of F the 1952 Act clearly spells out the object, policy and the intention with which it has been enacted, therefore, the 1952 Act does not warrant any interference as being an instance of excessive delegation - Constitution of India, 1950 - Delegation of legislative power - Delegation of non-essential G legislative function. Delhi Race Course Licensing Rules, 1985 - r. 6 - Horse racing - Licence fee /eviable in terms of the 1985 Rules framed uls. 11 of the 1952 Act - Nature of the impost - Tax 1 H 2 SUPREME COURT REPORTS (2012] 8 S.C.R. A or fee - Held: The true test to determine the character of a levy, is the primary object of the levy and the essential purpose intended to be achieved - In the instant case, the nature of the impost is not merely compulsory exaction of money to augment the revenue of the State but its true object B is to regulate, control, manage and encourage the sport of horse racing as is distinctly spelled out in the ·1952 Act and the 1985 Rules - Wide powers have been conferred on various authonties to enable them to supeNise, regulate and monitor the activities relating to the race course with a view to secure c proper enforcement of the provisions - Therefore, the levy involved in the present case is a 'fee' and not 'tax' - Mysore Race Courses Licensing Act, 1952 (as extended to the Union Territory of Delhi in 1984) - s. 11 - Delhi Race Course Licensing (Amendment) Rules, 2001. D Delhi Race Course Licensing Rules, 1985 - r.6 - Delhi Race Course Licensing (Amendment) Rules, 2001 - Horse racing - Licence fee leviab/e in terms of the 1985 Rules (as amended in 2001) challenged on the ground that it Jacked any element of 'quid pro quo' - Held: The licence fee imposed E in the present case is a regulatory fee and is, thus, not conditioned by the fact that there must be a quid pro quo for the seNices rendered - The Government need not render some defined or specific seNices in return as long as the licence fee satisfies the limitation of being reasonable - If F there is a broad correlation between the expenditure which the State incurs and the fees charged, the fees can be sustained as reasonable - Taxation - 'Quid pro quo'. Delhi Race Course Licensing Rules, 1985 - r. 6 - Delhi G Race Course Licensing (Amendment) Rules, 2001 - Licence fee prescribed in the 1985 Rules framed u/s. 11 of the 1952 Act - Ten-fold enhancement of the licence fee in view of amendment in terms of the 2011 Rules - Propriety - Validity of the 2001 Rules and of the charging section i.e. s.11(2) of the 1952 Act - Challenge to - Held: The challenge to validity H DELHI RACE CLUB LTD. v. UNION OF INDIA AND 3 ORS. of s. 11 (2) of the 1952 Act was raised after almost 15 years of A the commencement of the 1952 Act - The appellant Race Course had been regularly paying the licence fee and the present challenge was made only when quantum of licence fee was increased by the Government on account of nonrevision of the same since the commencement of the 1952 B Act - Evidently, inflation during this period was taken as the criterion for increasing the quantum of the fee - The increase was reasonable keeping in view the fact that the expenditure incurred by the Government in carrying out the regulatory activities for attaining the object of the 1952 Act would have c proportionately increased - Also, an institution of the size of the appellant Race Course should not cloak its objection to increase in the rate of licence fee and present them as a challenge to the constitutionality of the charging section - The licence fee has a broad co-relation with the object and D purpose for which the 1952 Act and the 2001 Rules have been enacted - Both s.11(2) of the 1952 Act as well as the 2001 Rules do not suffer from any legal infirmity - Mysore Race Courses Licensing Act, 1952 (as extended to the Union Territory of Dellli in J 984) - s. 11. Constitution of India, 1950 - Delegation of legislative power - For fixation of rate of tax - Scope - Held: While delegating the power of fixation of rate of tax, there must be in existence, inter-alia, some guidance, control, safeguards E and checks in the concerned Act - Taxation. F On 19th October, 1984, the Central Government had extended the Mysore Race Courses Licensing Act, 1952 to the Union Territory of Delhi, as it existed then, with certain amendments. In exercise of the powers conferred G under Section 11 of the 1952 Act, vide notification dated 1st March 1985, the Administration of the Union Territory of Delhi, notified the Delhi Race Course Licensing Rules, 1985, rule 6 whereof prescribed licence fee rates. Subsequently, on 7th March 2001, in exercise of the H 4 SUPREME COURT REPORTS [2012] 8 S.C.R. A powers conferred under Section 11 of the 1952 Act, the Lt. Governor of the National Capital Territory of Delhi enacted the Delhi Race Course Licensing (Amendment) Rules, 2001 and enhanced the licence fee rates by ten times. The appellant filed writ petitions challenging the B said two notifications dated 19th October, 1984 and 7th March, 2001 as illegal. The petitions were dismissed by the High Court. In the instant appeal, the appellant inter a/ia raised C the following contentions, viz. 1) that Section 11 (2) of the 1952 Act was ipso facto bad in law, unconstitutional and ultra-vires as it conferred unguided, uncontrolled and unfettered power on the Administrator to fix licence fee; and 2) that the licence fee could not be demanded inasmuch as it lacked any element of quid pro quo. D Dismissing the appeal with costs, the Court HELD:1. From the conspectus of the views on the question of nature and extent of delegation of legislative E functions by the Legislature, two· broad principles emerge, viz. (i) that delegation of non-essential legislative function of fixation of rate of imposts is a necessity to meet the multifarious demands of a welfare state, but while delegating such a function, laying down of a clear legislative policy is pre-requisite and (ii) while delegating F the power of fixation of rate of tax, there must be in existence, inter-alia, some guidance, control, safeguards and checks in the concerned Act. As long as the legislative policy is defined in clear terms, which provides guidance to the delegate, delegation of non-essential G legislative function is permissible. The question of application of the second principle will not arise unless the impost is a tax. [Para 16) [22-8-E] Corporation of Calcutta & Anr. v. Liberty Cinema AIR H (1965) SC 1107: 1965 SCR 477; Devi Das Gopal Krishnan DELHI RACE CLUB LTD. v. UNION OF INDIA AND 5 ORS. & Ors. v. State of Punjab & Ors. 1967 (3) SCR 557; The A Municipal Corporation of Delhi v. Bir/a Cotton, Spinning and Weaving Mills, Delhi & Anr. AIR (1968) SC 1232: 1968 SCR 251 and In re. Delhi Laws Act, 1912 AIR 1951 SC 332: 1951 SCR 747 - referred to. B Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. The Assistant Commissioner of Sales Tax & Ors. (1974) 4 SCC 98: 1974 (2) SCR 879 - cited. 2. The pivotal question to be determined in the present case is the nature of the impost. The true test to C determine the character of a levy, delineating 'tax' from 'fee' is the primary object of the levy and the essential purpose intended to be achieved. In the instant case, it is plain from the scheme of the 1952 Act that its sole aim is regulation, control and management of horse-racing. D Such a regulation. is necessary in public interest to control the act of betting and wagering as well as to promote the sport in the Indian context. To achieve this purpose, licences are issued subject to compliance with the conditions laid down therein, which inter a/ia include E maintenance of accounts and furnishing of periodical returns; amount of stakes which may be allotted for different kinds of horses; the measures to be taken for the training of the persons to become jockeys, to encourage Indian bred horses and Indian jockeys; the F inclusion and association of such persons as the government may nominate as stewards or members in the conduct and management of the horse-racing. The violation of the conditions of the licence or the 1952 Act is penalised under the 1952 Act besides a provision for G cognizance by a court not inferior to a Metropolitan Magistrate .. To ensure compliance with these conditions, the Delhi Race Course Licensing Rules, 1985 empower the District Officer or an Entertainment Tax Officer to conduct inspection of the race club at reasonable times. H 6 SUPREME COURT REPORTS [2012] 8 S.C.R. A Thus, the nature of the impost is not merely compulsory exaction of money to augment the revenue of the State but its true object is to regulate, control, manage and encourage the sport of horse racing as is distinctly spelled out in the 1952 Act and the 1985 Rules. For the B purpose of enforcement, wide powers are conferred on various authorities to enable them to supervise, regulate and monitor the activities relating to the race course with a view to secure proper enforcement of the provisions. Therefore, the levy involved in the present case is a 'fee' C and not 'tax'. [Paras 17, 19] [22-F; 25-A-G] Hingir Rampur Coal Co. Ltd. v. State of Orissa 1961 (2) SCR 537 and State of WB. v. Kesoram Industries Ltd. & Ors. (2004) 1 o sec 201: 2004 (1) SCR 564 - relied on. D The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt AIR 1954 SC 282: 1954 SCR 1005 - referred to. 3. The challenge to the constitutionality of Section 11(2) of the 1952 Act was based on the premise that no E guidance, check, control or safeguard is specified in the Act. This principle, however, applies only to the cases of delegation of the function of fixation of rate of tax and not a fee. Since the levy involved in the present case is a fee and not tax, and the scheme of the 1952 Act clearly F spells out the object, policy and the intention with which it has been enacted, therefore, the 1952 Act does not warrant any interference as being an instance of excessive delegation. [Para 28] [33-F-G] G 4.1. While it is true that 'quid pro quo' is one of the determining factors that sets apart 'tax' from a 'fee' but the concept of quid pro quo requires to be understood in its proper perspective. A licence fee imposed for regulatory purposes is not conditioned by the fact that H there must be a quid pro quo for the services rendered, DELHI RACE CLUB LTD. v. UNION OF INDIA AND 7 ORS. but that, such licence fee must be reasonable and not A excessive. It would again not be possible to work out with arithmetical equivalence the amount of fee which could be said to be reasonable or otherwise. If there is a broad correlation between the expenditure which the State incurs and the fees charged, the fees could be sustained B as reasonable. [Paras 20, 25] [26-A-B; 31-B-D] 4.2. In the present case, the object of the 1952 Act, as synthesized from its provisions, is to regulate, monitor, control and encourage the sport of horse-racing. For this purpose, licences are issued subject to certain C conditions. The compliance with the licence conditions is inevitable for renewal of the licences as well as significant to avoid any penalty under the 1952 Act. To ensure such compliance, district officers/ entertainment tax officers are entrusted with the duty of inspection. The D nature of inspection enjoined by the 1952 Act is not of a general nature but requires expertise and training and also constant vigil on the activities of the race course. The expenses incurred in carrying out such regular inspections have to be considerable. Hence, the licence E fee imposed in the present case is a regulatory fee and need not necessarily entail rendition of specific services in return but at the same time should not be excessive. In any case, the appellant has not challenged the amount of the levy as unreasonable and expropriatory or F excessive. [Para 26] [31-D-G] 4.3. The argument on behalf of the appellant that inspection does not constitute a service rendered in lieu of the fee charged, is equally fallacious. The scheme of the 1952 Act; its object as elucidated in its provisions and G Rules made therein; nature of conditions imposed in the licences; inspection to ensure its compliance and nonrenewal of the licence as well as penalty in case of contravention of the licence conditions, make the Act fall H 8 SUPREME COURT REPORTS [2012] 8 S.C.R. A in the category of imposts where contributions are required to be made for the purpose of maintaining an Authority and the staff for supervising and controlling a public activity viz. the horse racing. Besides, the presence of a large institution like the race course enjoins B additional burden on the civic authorities to maintain and develop the surrounding area for the convenience of the public at large. The licence fee levied in the present case, being regulatory in nature, the Government need not render some defined or specific services in return as long C as the fee satisfies the limitation of being reasonable. The licence fee charged has a broad co-relation with the object and purpose for which the 1952 Act and the Delhi Race Course Licensing (Amendment) Rules, 2001 have been enacted. [Paras 26, 27] [31-H, 32-A, E-G] D AP. Paper Mills Limited v. Government of A.P. & Anr (2000) 8 SCC 167; Delhi Cloth & General Mills Co. Ltd. v. The Chief Commissioner, Delhi (1969) 3 SCC 925 and Secunderabad Hyderabad Hotel Owners' Association & Ors. v. Hyderabad Municipal Corporation, Hyderabad & Anr. E (1999) 2 sec 274: 1999 (1) SCR 143 - relied on. Sreenivasa General Traders and Ors. v. State of Andhra Pradesh and Ors. (1983) 4 SCC 353: 1983 (3) SCR 843; Kewal Krishan Puri v. State of Punjab (1980) 1 SCC 416: F 1979 (3) SCR 1217; Corporation of Calcutta & Anr. v. Liberty Cinema AIR (1965) SC 1107: 1965 SCR 477; Vam Organic Chemicals Ltd. & Anr. v. State of U.P. & Ors. (1997) 2 SCC 715: 1997 (1) SCR 403; P. Kannadasan v. State of T.N. (1996) 5 SCC 670: 1996 (4) Suppl. SCR 92; State of Tripura G v. Sudhir Ranjan Nath (1997) 3 SCC 665: 1997 (2) SCR 29; B.S.E. Brokers' Forum, Bombay & Ors. v. Securities and Exchange Board of India & Ors. (2001) 3 SCC 482 - referred to. Shannon v. Lower Mainland Dairy Products Board AIR H 1939 PC 36 - referred to. DELHI RACE CLUB LTD. v. UNION OF INDIA AND 9 ORS. The Delhi Cloth & General Mills Co. Ltd. v. The Chief A Commissioner, Del/Ji & Ors. (1970) 2 SCC 172: 1970 (2) SCR 348 - cited. 5. Further, the challenge to the validity of Section 11(2) of the 1952 Act was raised after almost 15 years of 8 its coming into force. The appellant, since the commencement of the 1952 Act, had been regularly paying the licence fee and the present challenge was made only when quantum of the licence fee was increased by the Government on account of non-revision C of the same since the commencement of the 1952 Act. Evidently, the inflation during this period was taken as the criterion for increasing the quantum of the fee. It is a reasonable increase keeping in view the fact that the expenditure incurred by the Government in carrying out the regulatory activities for attaining the object of the 1952 D Act would have proportionately increased. Also, an institution of the size of the Race Course should not cloak their objection to an increase in the rate of licence fee and present them as a challenge to the constitutionality of the charging section. [Para 29) [34-A-D] E 6. In conclusion, it is held that Section 11 (2) of the 1952 Act as well as 2001 Rules do not suffer from any legal infirmity. [Para 30) [34-E] Case Law Reference: 1965 SCR 477 referred to Para 8 1967 (3) SCR 557 referred to Para 8 1968 SCR 251 referred to Para 8 1974 (2) SCR 879 cited Para 8 1970 (2) SCR 348 cited Para 9 1979 (3) SCR 1217 referred to Para 9 F G H 10 SUPREME COURT REPORTS (2012] 8 S.C.R. A 1999 (1) SCR 143 relied on Para 9 (2000) 8 sec 167 relied on Para 9 2001 (3) sec 482 referred to Para 9 B 1951 SCR 747 referred to Para 15 1954 SCR 1005 referred to Para 17 1961 (2) SCR 537 relied on Para 17 2004 (1) SCR 564 relied on Para 18 c 1983 (3) SCR 843 referred to Para 20 AIR 1939 PC 36 referred to Para 21 1997 (1) SCR 403 referred to Para 23 D 1996 (4) Suppl. SCR 92 referred to Para 23 1997 (2) SCR 29 referred to Para 23 (1969) 3 sec 925 relied on Para 26 E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6461 of 2003. From the Judgment & Order dated 5.2.2003 of the High Court of Delhi at New Delhi in Civil Writ Petition No. 2278 of F 2002. S.K. Gupta, Shagun Bhargava, B. Vijayalakshmi Menon for the Appellant. T.S. Doabia, Rekha Pandey, Rashmi Malhotra, Anil G Katiyar, D.S. Mahra for the Respondents. The Judgment of the Court was delivered by D.K. JAIN, J. 1. This is an appeal from a judgment, dated 5th February, 2003, rendered by the High Court of Delhi at New H Delhi in CWP No.2278/2002. By the impugned judgment, the DELHI RACE CLUB LTD. v. UNION OF INDIA AND 11 ORS. [D.K. JAIN, J.] High Court has upheld the validity of the Delhi Race Course A Licensing (Amendment) Rules, 2001. 2. On 19th October, 1984, the Central Government in exercise of its powers under Section ~ of the Union Territories (Laws) Act, 1950, extended the Mysore Race Courses 8 Licensing Act, 1952 (for short "the Act") to the Union Territory of Delhi, as it existed then, with certain amendments. The Preamble to the said Act reads thus: "Whereas it is expedient to make provision for the licensing regulation, control and management of horseC racing on race-course and all matters connected therewith in the Union Territory of Delhi" Further, Section 3 of the Act reads as follows: "3. Prohibition of horse-racing on unlicensed raceD courses- No horse-race shall be held save on a race course for which a licence for horse racing granted in accordance with the provisions of this Act, is in force." Section 4 which lays down the procedure for issuing the E licences for horse racing reads as follows: "4. Licences for horse-racing- (1) The owner, lessee or occupier of any race course may apply to the Government for horse-racing on such race-course or for arranging for F wagering or betting in such race-course on a horse, race run or some other race-course either within the Union territory of Delhi or Outside the Union territory of Delhi. (2) The Government may (if in its opinion public interest so requires) withhold such licence or grant it subject to G such conditions and for such period as they may think fit. (3) In particular and without prejudice to the generality of the foregoing power, such conditions may provide forH A B 12 SUPREME COURT REPORTS [2012] 8 S.C.R. (a) the payment of a licence fee; (b) the maintenance of such accounts and furnishing of such returns as are required by the United Provinces Entertainment and Betting Tax Act, 1937 as extended to the Union territory of Delhi; · (c) the amount of stakes which may be allotted for different kinds of horses; (d) the measures lo be taken for the training of persons to C become Jockeys; (e) the measures to be taken to encourage Indian bred horses and Indian Jockeys; (f) the inclusion or association of such persons as the D Government may nominate as Stewards or members in the conduct and management of horse-racing; E (g) the utilisation of the amount collected by the licensee in the conduct and management of horse-racing; (h) such other matters connected with horse-racing and the maintenance of the race-course for which in the opinion of Government it is necessary or expedient to make provision in the licence ..... ." F Sections 5, 6 and 7 respectively enumerate penalties for taking part in horse races on unlicensed race-course and for contravention of conditions of licence. Section 9 envisages that cognizance of the offences under the Act can be taken by a court not inferior to that of a Metropolitan Magistrate. Section G 11, the pivotal provision, which empowers the Government to make rules, reads as follows: H "11. Power to make rules-(1) The Government may, by notification in the Delhi Gazette, make rules for the purpose of carrying into effect the provisions of this Act. DELHI RACE CLUB LTD. v. UNION OF !NOIA AND 13 ORS. [D.K. JAIN, J] (2) In particular and without prejudice to the generality of A the foregoing powers; such rules may provide for all or any of the following matters, namely:- (i) the form and manner in which applications for licences are to be made; B (ii) the fees payable for such licences; (iii) the period for which licences are to be granted; (iv) the renewal, modification and cancellation of C licences." 3. In furtherance of the power conferred under Section 11 of the Act, by a notification dated 1st March 1985, the Administration of the Union Territory of Delhi, notified the Delhi Race Course Licensing Rules, 1985 [for short "1985 Rules"]. D Rules 4 and 5 of the 1985 Rules lay down the procedure for submission of application for grant of licence for horse racing and the validity period of such licence respectively. Rule 6 prescribes the rate of 'Licence fee'. It reads as follows : "6. Licence fee-The fee for the grant or renewal of a licence for horse racing on the race course shall be a sum of rupees two thousand (Rs.2000/-) per day on which race · is held. The fee for the grant or renewal of a licence for arranging for wagering or betting on a horse race run on any other race course, within or outside the Union Territory of Delhi, shall be rupees five hundred (Rs.500/-) per race day on which race is held." Rule 12 of the 1985 Rules, material for our purpose, confers power of inspection and states as under: "12. Inspection- The District Officer or any other officer E F G not below the rank of Entertainment Tax Inspector shall have access to the licensed race course at all reasonable times with a view to satisfy himself that the provisions of the Act H 14 SUPREME COURT REPORTS [2012) 8 S.C.R. A and these Rules are being complied with and that the conditions of the licence are duly observed." 4. On 7th March 2001, in exercise of the powers conferred under Section 11 of the Act, the Lt. Governor of the National 8 Capital Territory of Delhi enacted the Delhi Race Course Licensing (Amendment) Rules, 2001 (for short "2001 Rules") and enhanced the aforesaid licence fee rates to Rs.20,000/- and Rs.5,000/- respectively. 5. On 31st January, 2002, Commissioner of Excise, C Entertainment & Luxury Tax (respondent no.3 in this appeal) issued a demand letter to Delhi Race Club, a body corporate, the appellant in this appeal, informing them that the licence fee deposited by them was short by Rs.17 ,80,000/- for the year 2001-02 and by Rs.18 Lacs for the year 2002-03. Validity of D the demand notice was questioned by the appellant by way of a writ petition in the High Court of Delhi, on the grounds that both the notifications, dated 19th October, 1984 and 7th March, 2001 were illegal in as much as : (i) delegation of powers under Section 11 of the Act to the Lt. Governor, to fix the licence fee E without any guidelines is excessive delegation of legislative power and is therefore, ultra vires, (ii) in the absence of an element of quid pro quo, the licence fee charged was not in the nature of a fee but a tax and (iii) the ten fold increase in licence fee was highly excessive. However, it appears that F based on the arguments advanced by the learned counsel, the High Court framed two key questions viz. (i) Is the licence fee under Rule 6 of the 1985 Rules a "fee" or not ? and (ii) If it is a fee, is it excessive or not? 6. Answering both the questions against the appellant, the G High Court concluded that the licence fee in question is not a compensatory fee and consequently there was no requirement of a quid pro quo; the licence fee is in the nature of a regulatory fee and therefore, would not require any quid pro quo in the form of any social service and when the impost of Rs.2,000/- H and Rs.500/- in the year 1984 was not regarded by the DELHI RACE CLUB LTD. v. UNION OF INDIA AND 15 ORS. [D.K. JAIN, J.] appellant as being excessive, keeping in mind the high rate of A inflation between 1984 and 2001, the enhanced rates of Rs.20,000/- and Rs.5,000/- in the year 2001 could not be said to be excessive. Hence, the appellant's writ petition having been dismissed, they are before us in this appeal. B 7. At the outset, Mr. S. K. Bagaria, learned senior counsel appearing for the appellant, submitted that he would confine his submissions only to the two issues relating to the excessive delegation of power in the matter of fixation of licence fee and that the fee levied is in fact a tax and therefore, ultra-vires entry 66 of List II in the Seventh Schedule of the Constitution of India C and would not press the issue that the fee levied is excessive. 8. Learned counsel strenuously urged that Section 11 (2) of the Act confers unguided, uncontrolled and unfettered power on the Administrator to fix licence fee and thus, ipso facto bad D in law, unconstitutional and ultra-vires. Learned counsel traced the evolution of law in this regard by referring to several decisions of this Court. The main thrust of his submissions was based on the decision of this Court in Corporation of Calcutta & Anr Vs. Liberty Cinema', wherein it was held that the function of fixing the rate of tax is not an essential function and can be delegated, but such delegation has to be under some guidance. He invited our attention to the case of Devi Das Gopal Krishnan & Ors. Vs. State of Punjab & Ors.2, wherein while explaining the ratio of the decision in Liberty Cinema (supra) and emphasising the necessity of some guidance while delegating the power to fix the rate of tax, it was observed that E F the doctrine of constitutional and statutory needs would not afford reasonable guidelines in the fixation of such rates of tax. Reliance was also placed on The Municipal Corporation of Delhi Vs. Bir/a Cotton, Spinning and Weaving Mills, Delhi & G Anr. 3 , wherein, the Constitution Bench of this Court, while 1. AIR (1965) SC 1107. 2. 1967 (3) SCR 557. 3. AIR (1968) SC 1232. H 16 SUPREME COURT REPORTS [2012) 8 S.C.R A observing that guidance and control must necessarily be present while delegating a legislative function, discussed various forms of such guidance depending upon the facts of each delegation, and held that the form of guidance to be given in a particular case, depends on a consideration of the s provisions of the particular Act in question includir.g the nature of the body to which the function has been delegated. Lastly, reference was made to the case of Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. Vs. The Assistant Commissioner of Sa/es Tax & Ors. 4 , wherein the above mentioned principles were C reiterated. According to the learned counsel, Section 4(3) of the Act merely provides for the conditions, subject to which a· licence may be granted but does not contain any guidance or policy relating to fixation of the licence fee. Similarly, Rule 13(2) of the 2001 Rules confer power of inspection of the licensed 0 race course and has nothing to do with the licence fee or its rates. Thus, the learned senior counsel asserted that in the present case, Section 11 (2) of the Act confers unguided, unfettered and arbitrary power on the Government to fix the licence fee without a minute shred of guidance of any manner and hence is beyond the limits of permissible delegatio11 and E therefore, deserves to be struck down as unconstitutional. 9. Mr. Bagaria also submitted that in the absence of any element of fee, as no services were being provided to the appellant against the fee charged, licence fee cannot be F demanded, in as much as it lacked any element of quid pro quo. Referring to the decisions of this Court in The Delhi Cloth & General Mills Co. Lid. Vs. The Chief Commissioner, Delhi & Ors. 5; Kewal Krishan Puri Vs. State of Punjab•; Secunderabad Hyderabad Hotel Owners' Association & Ors. G Vs. Hyderabad Municipal Corporation, Hyderabad & Anr. 7; 4. (1974) 4 sec 98. s. (1970) 2 sec 172. s. (1980) 2 sec 274. H 7. (1999) 2 sec 274. DELHI RACE CLUB LTD. v. UNION OF INDIA AND 17 ORS. [D.K. JAIN, J.] A.P. Paper Mills Limited Vs. Government of A.P. & Anr8; A B.S.E. Brokers' Forum, Bombay & Ors. Vs. Securities And Exchange Board of India & Ors. 9 and Liberty Cinema case (supra) learned counsel argued that even though quid pro quo may not be required if the fee is classified as regulatory fee, nevertheless there must be a broad co-relation between the fee B levied and the expenses incurred for rendition of services. It was contended that when a question arises whether the levy is in the nature of a fee, the duties and obligations imposed on the inspecting staff and the nature of the work done by them has to be examined for the purpose of determining the c rendering of the services, which would make the levy a fee. 10. Per contra, Mr. T.S. Doabia, learned senior counsel appearing on behalf of respondent nos.2 and 3, submitted that the Act does not suffer from the vice of excessive delegation as the scheme of the Act provides enough guidelines to fix the D rate of licence fee. To buttress his argument, he relied upon the Preamble and the text of Section 4 of the Act as also Rule 13(2) of the 1985 Rules. Drawing support from Liberty Cinema (supra) and Municipal Corporation of Delhi (supra) learned counsel contended that the nature and extent of guidance is to E be ascertained from the broad features and objects sought to be achieved by a particular statute and not on the touchstone of a rigid uniform rule. According to the learned counsel, Section 4(3) of the Act, relating to the conditions of licence, itself provides the parameters to be kept in view while fixing the F licence fee and are thus, sufficient guidelines in the matter of fixation of such licence fee. Rebutting the submissions of the appellant that the levy cannot be demanded as there was no quid pro quo involved, learned senior counsel submitted that there is an inherent distinction between the fee for services G rendered; i.e. compensatory fee and a license fee which is in the nature of a regulatory fee, where no quid pro quo was 8. (2000) 8 sec 167. 9. (2001) 3 sec 482. H 18 SUPREME COURT REPORTS (2012] 8 S.C.R. A necessary. In support, reliance was placed on the decisions of this Court in Liberty Cinema (supra); Secunderabad Hyderabad Hotel Owners' Association (supra) and A.P. Paper Mills Ltd. (supra) wherein it was held that a licence fee is regulatory when the activities for which a licence is granted, B require to be regulated or controlled. The fee which is charged for regulation of such activity would be classifiable as a fee and not a tax, although no services are rendered. He thus, submitted that the present fee being a regulatory fee, charged for the purpose of monitoring the activities to ensure that the licencees C comply with the terms and conditions of licence, does not necessarily have to satisfy the test of quid pro quo and hence is valid. Although it was never the case of the respondents before the High Court, yet Mr. Doabia endeavoured to submit, in the alternative, that the impugned impost could be justified D as a tax. 11. Learned counsel also urged that the fact that the levy had been challenged after a long delay was by itself sufficient for the High Court to dismiss the writ petition. E 12. Before addressing and evaluating the rival submissions on the first issue, it'would be useful to first survey the decisions heavily relied upon by the learned counsel, wherein the question as to the limits of permissible delegation of legislative power by a legislature to an executive/another F body has been examined in extenso. 13. Liberty Cinema (supra), on which heavy reliance was placed by Mr. Bagaria, related to a levy imposed on cinema houses under the Calcutta Municipal Act, 1951. The levy was G quashed by a learned Single Judge on the grounds that : (i) the levy being in the nature of a licence fee and not a tax, did not pass the test of legality on account of there being no correlation between the amount charged from the theatre owners and the services rendered to them or the expenses H incurred by the Municipality in regard to the issue of licences DELHI RACE CLUB LTD. v. UNION OF INDIA AND 19 ORS. [D.K. JAIN, J.] and (ii) Section 548(2) of the said Act, which authorised the A Corporation to levy a tax, is unconstitutional as suffering from the vice of excessive delegation as it laid down no principle; indicated no policy and afforded no guidance for determining the basis or the rate on which the tax was to be levied and is, therefore, void. Corporation's appeal before the Division Bench B being unsuccessful, the matter reached this Court. By majority, Corporation's appeal was allowed and impost was upheld as a tax. However, while upholding the validity of levy, speaking for the majority, Sarkar, J. observed that when the power to fix rates of tax is left to another body, the legislature must provide c guidance for such fixation. Nevertheless, the validity of the guidance cannot be tested by a rigid uniform rule and must depend on the object of the Act which delegated the power to fix the rate. Thus, it was held that the power to fix the rate of tax can be delegated but some guidance has to be specified D in the Act. 14. A similar question arose in Devi Das (supra) where the Constitution Bench, while endorsing the opinion rendered in Liberty Cinema (supra), held that there can be no general principle that the doctrine of constitutional and statutory needs E would always afford reasonable guidelines in the fixation of rates of taxation. Each statute has to be examined to find out whether there are guidelines therein which prevent delegation from being excessive. The Constitution Bench summarised the law on the subject of excessive delegation as follows: F "The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obviously it cannot abdicate its functions in favour of another. But in view of G the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any H A B c D E 20 SUPREME COURT REPORTS [2012] 8 S.C.R. other agency. But there is a danger inherent in such a process of delegation. An overburdened legishture or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature." (Emphasis supplied by us) 15. Our attention was also invited to a seven Judge Bench decision in Municipal Corporation of Delhi (supra) where the F majority again took the view that the legislature can delegate non essential legislative functions, but while delegating such functions, the