Licence fee for commercial establishments was fixed in 1995

The Dangerous and Offensive (D&O) licence fees collected from commercial establishments is one of the main external sources of revenue for the City Corporation. The Kerala Municipality Act, 1994, stipulates that all commercial establishments pay an annual D&O licence fee. But a failure to update the licence fee schedule is costing the civic body dear, as it is losing lakhs in revenue annually.

The local fund audit report for the year 2011-12, set to be released this week, has taken note of this issue and suggested urgent changes to the bylaw to improve fund collection. The licence fee schedule for the shops in the city was fixed in 1995, when the number and even the character of commercial establishments were different.

The D&O licence fee for textiles has been fixed at Rs.500 annually. The neighbourhood cloth shops and the new-age showrooms spread over several floors pay this same amount.

Small jewellery shops pay Rs.500 whereas the larger ones pay Rs.2,000. But this schedule does not specify the requirements or limits for large jewellery shops. Also, only gold and silver were in vogue when the schedule was prepared. It fails to consider the sales of diamond, platinum, and other precious stones.

For petrol pumps, the licence fee is Rs.200 for storing 250 litres of any fuel and Rs.25 for every extra 100 litres. The report says that the capacity of tanks has changed over the years and most pumps now have several tanks of 10,000-litre, 15,000-litre, and 20,000-litre capacity. By fixing the extra fuel amount as Rs.25, there is considerable loss of income for the Corporation.

The losses are huge in the case of multi-brand retail giants. These shopping centres still pay the licence fee fixed for provision stores that used to dot the city in the 1990s. The licence fee should be fixed with respect to the annual rent of the respective building. But the audit report says that this rule has not been followed in most cases. The drastic change in rentals has also not been considered.

For many establishments, the licence fee was never fixed. This includes internet cafes, many of which have already closed down, post their boom period. There are shops that never came in the D&O radar. Forty-three such cases were found under the Attipra zonal office and 92 under the Vattiyurkavu zonal office. The auditors have recommended an urgent intervention to update the bylaw regarding D&O licence fee.