M/S P.K. Caterers vs. The Union Of INDIA

Facts

The petitioner, M/s P.K. Caterers, a sole proprietorship, operates 8 catering stalls at Samastipur, Darbhanga, Madhubani, and Sitamarhi Railway Stations. The Railways, through an Assistant Commercial Manager's letter dated 20.09.2021, revised the license fee for these stalls effective from 01.05.2017, demanding a differential amount of Rs. 31,04,079/- towards license fee, GST, and Service Tax. The petitioner challenged this revision, seeking quashing of the impugned letter and consequential communications, and a direction to grant benefits as per a Railway Board letter dated 01.06.2020 concerning COVID-19 pandemic relief. The petitioner argued that the revision was arbitrary and illegal, violating Clause 18(3) of the Catering Policy, 2010, which mandates reassessment based on actual sales turnover and a minimum 10% increase upon renewal. The Railways contended that the petitioner, being a sole proprietorship holding multiple licenses, was on a different footing compared to associations like cooperative societies or partnership firms, whose multiple licenses were addressed by Supreme Court judgments.

Held

The Court held that the enhancement of the license fee for the petitioner's stalls was made without the requisite assessment of sales/revenue turnover as contemplated under Clause 18(3) of the Catering Policy, 2010. This was deemed a wrong exercise of power and unsustainable in law. The Court noted that the petitioner's categorical statement regarding the absence of assessment was not controverted by the Railways, except for a statement about the matter being sub-judice before the Delhi High Court. The Court found that the Railways' action of hiking the license fee without following the prescribed procedure under the Catering Policy, 2010, was arbitrary. Consequently, the impugned letters demanding the differential amount were set aside. The matter was remanded to the Railway Administration to conduct a fresh assessment as per Clause 18(3) of the Catering Policy, 2010, and thereafter fix the new license fee. The Court also directed that during this reassessment, the Railway Administration could consider whether the holding of 8 kiosks by a sole proprietorship firm would fall within the definition of beneficiaries as explained by the Supreme Court in its judgments. The entire exercise was to be completed within three months from the date of receipt of the order.

Key Issues

1. Whether the fixation of revised license fee with retrospective effect from 01.05.2017, and the demand for differential amounts including GST and Service Tax, is illegal and arbitrary, violating Clause 18(3) of the Catering Policy, 2010? 2. Whether the petitioner, as a sole proprietorship holding 8 catering stalls, is entitled to the benefits and considerations as interpreted by the Supreme Court in cases concerning associations like cooperative societies, partnership firms, and HUFs, particularly regarding the renewal of licenses and license fee fixation? Petitioner's Arguments: The petitioner argued that the Railways failed to adhere to Clause 18(3) of the Catering Policy, 2010, which requires reassessment of license fees based on actual sales turnover during peak and lean periods, with a minimum 10% increase. They contended that the impugned revision was made without any such assessment and was unreasonable. Furthermore, the petitioner relied on Supreme Court judgments, including Vendors Co-operative Society Limited & Ors. Vs. Union of India & Ors., to argue that their case should be considered in light of the policy and judicial pronouncements directing renewal of licenses. The petitioner asserted that the revision was made without considering the policy's stipulations and was contrary to the policy's effective date for renewal. Respondent's (Railways) Arguments: The Railways argued that the petitioner's case was distinct as it was a sole proprietorship owning multiple catering units, unlike associations where multiple licenses were held by different individuals within the firm or society. They referred to Supreme Court decisions, including Senior Divisional Manager, South Central Railway and Ors. Vs. S.C.R. Caterers, Dry Fruits, Fruit Juice Stalls Welfare and Another, to highlight the objective of promoting welfare and minimizing inequalities, but also noted disclaimers regarding individuals holding more than one shop or benami licenses. The Railways indicated that while the matter was sub-judice before the Delhi High Court, renewal was not done, but the license fee was hiked.