Bishambar v. Town Area Committee — 1971 DIGILAW 259 (ALL)

JUDGMENT K.N. Srivastava, J. - This is an appeal against the judgment and decree passed by the II Additional Civil Judge, Meerut, allowing an appeal against the judgment and decree passed by the Munsif Hawali, Meerut and dismissing the plaintiff's suit with costs. 2. The facts giving rise to this appeal are as follows:- The plaintiffs reside within the limits of Town Area, Kharkhauda. The Town Area Committee issued a notice to the plaintiffs and demanded a certain sum as Tahbazari from them. The plaintiffs brought the suit for retraining the defendant Town Area Committee from realising the Tahbazari tax as it was illegal and the defendant Town Area Committee was not entitled to realise the same from the plaintiffs. The Town Area Committee defended the suit and contended that the tax was lawfully imposed on the plaintiffs and under the bye-laws, the Town Area Committee was empowered to levy Tahbazari dues and to realise the same from the plaintiffs. 3. The learned Munsif held that the Tahbazari dues were not levied in accordance with law and restrained the defendant permanently from realising Tahbazari dues from the plaintiffs. On an appeal filed by the Town Area Committee, the learned Civil Judge held that the Town Area Committee had power to levy the Tahbazari does and that it was levied in accordance with law and as such the plaintiffs were not entitled to the relief claimed. Being dissatisfied, the plaintiffs have filed this appeal. 4. The first point which was argued in this appeal was that the provisions of Secs. 15-A and 15-B of the Town Areas Act (hereinafter referred to as `the Act') were not complied with by the Town Area Committee and therefore the levying of this Tahbazari tax by the Town Area was illegal. 4. The first point which was argued in this appeal was that the provisions of Secs. 15-A and 15-B of the Town Areas Act (hereinafter referred to as `the Act') were not complied with by the Town Area Committee and therefore the levying of this Tahbazari tax by the Town Area was illegal. "15-A. Preliminary proposals for taxes- (1) Subject to any rule made in the behalf by the State Government, the Committee, established for any town area, shall, by resolution, frame proposals specifying- (a) the tax, being one of the taxes described in Section 14, which it desires to impose; (b) the amount or rate leviable from any person or class of persons liable or to be made liable for the tax except where and in so far as any such amount or rate has not already been provided for in Sec. 14; (c) Any other matter which the State Government may by rule require to be specified. (2) The committee shall also prepare a draft of the rules which it desire, the State Government to make in respect of the matter referred to in Sec. 39. (3) The Committee shall, thereafter, publish in the manner prescribed, the proposal framed under sub-sec. (1) and the draft rules framed under sub-section (2). (4) Any inhabitant of the Town Area may, in the prescribed manner, file an objection in writing on such proposal and the Committee shall take into consideration the objections so filed and finally settle its proposals. (5) The proposals so settled along with the draft rules shall be submitted to the prescribed authority or if none is appointed to the District Magistrate." Section 15-B reads as below :- "15-B. Imposition of tax- (1) The prescribed authority or if none is appointed the District Magistrate may either reject the proposals or sanction them whether with or without modifications. (2) Where the proposals are sanctioned with or without modification by the prescribed authority or if none is appointed the District Magistrate, shall forward a copy of the draft rules on the subject to the State Government. (2) Where the proposals are sanctioned with or without modification by the prescribed authority or if none is appointed the District Magistrate, shall forward a copy of the draft rules on the subject to the State Government. (3) After the rules have been framed by the State Government, a copy, thereof shall be forwarded to the prescribed authority or if none is appointed to the District Magistrate and the Committee, and then the Committee shall as soon as may be, by a resolution direct the imposition of the tax with effect from the date to be specified and forward a copy of the resolution to the prescribed authority or if none is appointed the District Magistrate, who shall notify in the same manner prescribed." 5. A perusal of the aforesaid section, therefore, clearly indicates that all the provisions of these two sections are not mandatory. Some of them are directory and the others are mandatory. The mandatory provision is the passing of the resolution for framing the proposal for imposition of tax and then passing another resolution for imposition of the same. The other mandatory provision is about the publication of the draft rules. The mode of publication of the draft rules is directory. It has, therefore, to be seen as to how far the mandatory provisions of the aforesaid two sections have been complied with in this case. 6. Under Sec. 15-A, the Town Area Committee was to pass a resolution regarding framing of the proposal of tax. The proposal had to be submitted to the prescribed authority and if there was no such prescribed authority then the District Magistrate. The prescribed authority or the District Magistrate could reject the proposal or sanction it with or without modification. The proposal then had to be notified according to law and it was then that the Town Area Committee had to pass a resolution imposing the tax. 7. The learned counsel for the appellants contended that the two resolutions mentioned in Secs. 15-A and 15-B of the Act were not passed and therefore the imposition of the tax was illegal. In support of the above contention, the learned counsel for the appellants relied on a Supreme Court decision The Municipal Board, Hapur Appellant v. Raghuvendra Kripal Respondents, A.I.R. 1966 S.C. 693. 15-A and 15-B of the Act were not passed and therefore the imposition of the tax was illegal. In support of the above contention, the learned counsel for the appellants relied on a Supreme Court decision The Municipal Board, Hapur Appellant v. Raghuvendra Kripal Respondents, A.I.R. 1966 S.C. 693. In this case, the Supreme Court laid down the law that if there was violation of the procedural matter, the imposition of the tax cannot be struck down, but if there was the violation of some fundamental condition then the imposition of the tax would be illegal. It should be noted here that the Supreme Court was considering Section 135 (3) of the U.P. Municipalities Act which is equivalent to Sec. 15-B (4) of the Act. The words mentioned in both the sections are almost identical. Therefore, the principal laid down in this Supreme Court case will equally apply to the present case for determining as to whether due compliance of the essential conditions in imposing the tax had been complied with. As said above, the two proposed resolutions one for framing the proposal and the other for levying the tax were absolutely necessary for the levy of the tax. In this connection, the Supreme Court observed as below :- "The question arises : Is this rule of conclusive evidence such as to shut out all enquiry by courts ? We have no hesitation in answering the question in the negative. There are certain matters which, of course cannot be established conclusively by a notification can issue unless there is a special resolution. The special resolution is the sine qua non of the notification. The State Government cannot impose a tax all by itself by notifying the imposition of the tax without a resolution by the Board. Again, the notification cannot authorise the imposition of a tax included in Section 218 of the Municipalities Act. Neither a Municipal Board nor a State Government can exercise such a power. A tax can only be said to be imposed in accordance with the provisions of the Municipalities Act, if it is not contemplated by the Act. There is a difference between a tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. A tax can only be said to be imposed in accordance with the provisions of the Municipalities Act, if it is not contemplated by the Act. There is a difference between a tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the Sub-section does is to put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it. A tax not authorised can never be within the protection afforded to the procedure for imposing taxes. Such a tax may be challenged, not with reference to the manner of the imposition but as an illegal impost." 8. The question as to whether the publication of the rules was directory or mandatory came up for decision before the Supreme Court in Raza Buland Sugar Co. Ltd. Rampur, Appellant v. The Municipal Board, Rampur, Respondent, A.I.R. 1965 S.C. 895. In this case, it was observed as below: "This brings us to the examination of the facts and circumstances of the present statute in the light of what we have said above as to the criteria for determining whether a provision in a statute is mandatory or directory. The provision with which we are concerned namely, Sec. 131(3), can be divided into two parts. The first part lays down that the Board shall publish proposal and draft rules along with a notice inviting objections to the proposal or the draft rules so published within a fortnight from the publication of the notice. The second part provides for the manner of publication and that manner is according to Sec. 94(3) . We shall first deal with what we have called the first part of Section 131 (3). This provision deals with taxation. The object of providing for publication of proposal and draft rules is to invite objections from the inhabitants of the Municipality, who have to pay the tax. The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them. The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them. It is true that finally it is the Board itself which settles the proposals with respect to taxation and submits them to Government or the prescribed authority, as the case may be, for approval. Even so we have no doubt that the object behind this publication is to find out the reaction of tax-payers generally to the taxation proposals, and it may very well be in a particular case that the Board may drop the proposals altogether and may not proceed further with them, if the reaction of the tax-payers in general is of disapprobation. Further the purpose served by publication of the proposal being to invite objections, in particular from the tax-payers, to the tax proposed to be levied on them, the legislature in its wisdom thought that compliance with this part of Section 31 (3) would essentially carry out that purpose. In the circumstances if we are to hold that this part of Section 131 (3) was merely directory, the whole purpose of the levy elaborate procedure provided in Secs. 131 to 135 for the imposition of tax would become meaningless, for the main basis of that procedure is the consideration of objections of tax-payers on the proposals of the Board. If such publication is merely directory, the Board can proceed to levy the tax without complying with them and that would make the entire elaborate procedure provided in the Act before a tax is imposed, negatory. We are therefore of opinion that this part of Section 131 (3) is mandatory and it is necessary to comply with it strictly before any tax can be imposed. We shall consider the interpretation of Section 135 (3) later; but we have no doubt that in the present case, inspite of Section 135 (3) , the legislature intended that there must be publication as provided in what we have called the first part of Section 131 (3) . We shall consider the interpretation of Section 135 (3) later; but we have no doubt that in the present case, inspite of Section 135 (3) , the legislature intended that there must be publication as provided in what we have called the first part of Section 131 (3) . We therefore hold that this part of Section 131 (3) is mandatory considering its language, the purpose for which it has been enacted, the setting in which it appears and the intention of the legislature which obviously is that no tax should be imposed without hearing tax payers. Lastly we see no serious general inconvenience or injustice to any one if this part of the provision is held to be mandatory on the other hand it will be unjust to tax-payers if this part of the provision is held to be directory, inasmuch as the disregard of it would deprive them of the opportunity to make objections to the proposals, and the draft rules. We therefore hold that this part of Section 131 (3) is mandatory. 9. In this view of the matter, it cannot be said that the Tahbazari in question was levied in accordance with the mandatory provisions of the Act and as such the matter does not relate to directory provisions but offends the fundamental provisions of the Act and as such it cannot be said that the tax was lawfully imposed. 10. The learned counsel for the respondent raised a ground that the Tahbazari tax was not a tax but was a fee and therefore it was not necessary for the Town Area Committee to have complied with the aforesaid provisions of Sec. 15-A and 15-B of the Act. It is therefore necessary to find out as to whether the imposition of this levy is it tax or is a fee. 11. The learned counsel for the respondent contended that the Talbazari dues were realised as ground rent for use and occupation of the land and therefore this levy is not a tax. The ground rent is realised on the basis of a contract between the owner of the land and the person who uses the land. In order to appreciate this argument, it has first to be seen as to what a Tahbazari levy is. Tahbazari has not been defined in the Town Areas Act. The ground rent is realised on the basis of a contract between the owner of the land and the person who uses the land. In order to appreciate this argument, it has first to be seen as to what a Tahbazari levy is. Tahbazari has not been defined in the Town Areas Act. Sec. 2 (6) of the Act lays down that if any phrase or a word is not defined in the Town Areas Act, the same meaning should be given to that word and phrase as is given in the U.P. Municipalities Act. Even in the U.P. Municipalities Act, Tahbazari has not been defined. Sec. 298 of the U.P. Municipalities Act authorises the Board to make bye-laws for promoting or maintaining the health, safety and convenience of the inhabitants of the municipality and for the furtherance of municipal administration. List E clause (b) authorises the Board to make bye-laws about streets which reads as follows :- "(b) permitting, prohibiting or regulating the use of occupation of any or all public streets or all places by itinerant vendors, or by any person for the sale of articles, or for the exercise of any calling or for the setting up of any booth or stall, and providing for the levy of fees for such use and occupation." 12. The State Government framed certain bye-laws regarding realisation of Tahbazari. These model bye-laws were framed under Sec. 298-E(b) of the U.P. Municipalities Act. In these model rules the payment realised for Tahbazari has been described as fee. Even in Sec. 298-E (b) the words used are "levy of fees." The learned counsel for the respondent therefore contended that the use of the word `fee' in Sec. 298-E (b) of the U.P. Municipalities Act and the model rules referred to above clearly indicated that the levy of Tahbazari was a fee and not a tax. In this very connection, the learned counsel for the respondent contended that under Sec. 298-E (b) of the U.P. Municipalities Act Tahbazari has been defined and includes the levying of fees for the use of road etc. and the same meaning should be given to Tahbazari under the Town Areas Act. 13. Before proceeding further, it has, therefore, to be seen as to what the word `Tahbazari' actually means. and the same meaning should be given to Tahbazari under the Town Areas Act. 13. Before proceeding further, it has, therefore, to be seen as to what the word `Tahbazari' actually means. In the Law of Lexicon, Tahbazari has been defined as below :- "Tahbazari (P) Ground-rent of a stall in a market." In Wilson's "Glossary of judicial and Revenue Terms", Tahbazari has been defined as below :- "A tax or charge levied on the sellers of articles in a bazar, either in money or kind, as the rent of the ground on which their shops or stalls are placed." 14. It is true Tahbazari is realised for the use and occupation of the ground belonging to the local body, but on this score alone, it cannot be held to be a ground rent because of absence of a bilateral contract between the parties. It should be noted here that no bilateral contract was even pleaded in this case. 15. The question as to whether a certain levy is a tax or a fee came up for discussion before the Supreme Court in Ratilal Panachand Gandhi Appellants v. State of Bombay Respondents, A.I.R. 1954 S.C. 388. The following test was laid down by the Supreme Court for the determination of this question :- "We may start by saying that although there is no generic difference between a tax and a fee and in fact they are only different forms in which the taxing power of a manifests itself, our Constitution has in fact made a distinction between a tax and a fee for legislative purposes. While there are various entries in the three legislative lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards `fees' which could be levied in respect of every one of the matters that are included therein : This distinction is further evidenced by the provisions of the Constitution relating to Money Bills which are embodied in Arts. 110 and 199." "............ There is no doubt that a fee resembles a tax in many respects and the question which presents difficulty is, what is the proper test by which the one could be distinguished from the other? 110 and 199." "............ There is no doubt that a fee resembles a tax in many respects and the question which presents difficulty is, what is the proper test by which the one could be distinguished from the other? A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by laws. But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax." "It follows, therefore, that although a tax may be levied upon particular classes of persons of particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied for general public purposes. Tax is a common burden and the only return which the tax payer gets is participation in the common benefits of the State." "Fees, on the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded. Thus, in fees there is always an element of `quid pro quo' which is absent in a tax. It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in performing any particular work for the benefit of certain individuals. But in order that the collections made by the Government can rank as fees, there must be correlation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. This,can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services." 16. In this context, it has therefore to be seen as to whether the levy is a tax or a fee. No special service is rendered to the plaintiffs nor any amount is spent for the same. In this context, it has therefore to be seen as to whether the levy is a tax or a fee. No special service is rendered to the plaintiffs nor any amount is spent for the same. The amount is not set apart and appropriated for rendering the service but is merged in the general fund of the Town Area Committee. The learned counsel for the respondent contended that the Town Area gets the land cleaned and uses money for the upkeep of the ground as a market place and therefore it cannot be said that no special service is rendered by the Town Area Committee to the plaintiffs who vend their wares on the land. It is the duty of the Town Area Committee to arrange for scavenging and to keep in clean the area under its control for the maintenance of health of the persons who reside within the limits of the Town Area. It therefore cannot be said that any amount is specially spent for the maintenance of this land and for keeping it fit for holding the market. Besides this, the levy so realised is not kept apart for this purpose alone. Therefore this levy does not come in the category of fees. 17. The learned counsel for the appellants contended that Sec. 14(2) of the Act empowers the Town Area Committee to impose certain fees and taxes which are given under four headings to that Sub-section and as the word `fees' has been used in three categories and the word `fees' has not been used about the levy of Tahbazari, therefore, this went a long way to show that the Legislature never intended that the realisation of Tahbazari was a fee. The Sub-section reads as follows :- "(2) The Committee may also impose the following taxes and fees :- (a) Fees for licensing hackney carriages. (b) Tahbazari leviable for the use of public land or public roads. (c) Fees for licensing carts. (d) Fees for licensing palledars." 18. According to the learned counsel, the word `fees' was used under sub-clauses (a) , (c) and (d) and the word `fees' was not used in clause (b) and therefore if the intention of the Legislature was to exclude Tahbazari dues from the category of fees, the words used should have been `fees and taxes'. (d) Fees for licensing palledars." 18. According to the learned counsel, the word `fees' was used under sub-clauses (a) , (c) and (d) and the word `fees' was not used in clause (b) and therefore if the intention of the Legislature was to exclude Tahbazari dues from the category of fees, the words used should have been `fees and taxes'. According to him, the use of `fees and taxes' in plural did not mean that the Tahbazari was excluded from the category of fees and as such this should not be a determined factor. No doubt, the word `taxes' was used in plural but if the Legislature intended to include Tahbazari dues also in plural, there is no reason why the word `fees' was not used in connection with Tahbazari dues. The mere fact that the word `fees' was used in clauses (a), (c) and (d) and was not used in clause (b) is also indicative of the fact that Tahbazari levy was not intended to be realised as a fee. A large number of vendors sell their goods on the land and as certain amount is recovered from them and tickets are issued to them, it cannot be accepted that all the persons who vend their goods pay some amount because the possibility of a man coming and vending his goods on the land without accepting the condition of rent cannot be ruled out. One may sell his goods there as a mere trespasser and in that man's case, the Town Area can only site him for damages for the use of the land. Therefore, it does not mean that any body using the land for vending his goods uses it under a bilateral agreement. 19. In Sri Babu Ram v. Town Area Committee Garhmukteshwar, Civil Misc. Writ No. 2652 of 1963, this very question came up for decision in this court. In this case, it was observed as below : "The word "fees" has been used in clauses (a), (c) and (d) of Section 14 (2) of the Act. The 'Tahbazari' is used in clause (b) of this section. It is there, fore clear that Tahbazari is different from fee. In this case, it was observed as below : "The word "fees" has been used in clauses (a), (c) and (d) of Section 14 (2) of the Act. The 'Tahbazari' is used in clause (b) of this section. It is there, fore clear that Tahbazari is different from fee. Since the words "taxes and fees" have been used in Section 14 (2) of the Act and since the word `fees' has -been used in clauses (a), (c) and (d) of that section, it is obvious that Tahbazari was intended by the Legislature to be taxes within the meaning of Section 14 (2) of the Act. If Tahbazari was meant to be `fees' the legislature could have used the word `fees' instead of Tahbazari." 20. In Mumtaz Ali (Petitioner) v. Sub-Divisional Magistrate, 1970 A.L.J. 114, the question was as to whether Tahbazari dues could be realised as arrears of land revenue. The learned Single Judge was of the opinion that Tahbazari taxes if fell due could be realised as arrears of tax but not in a case where the Tahbazari right is auctioned and the dues are to be realised by the contractor. 21. The learned counsel for the respondent contended that this case was decided on the assumption that Tahbazari was a tax and not a fee and the learned Single Judge was not called upon to decide the question as to whether Tahbazari was a fee or a tax. It should be noted here that under Section 21 of the Act, the arrears of tax imposed under the Act could be realised by a Magistrate having jurisdiction in that area on application being made to him by attachment and sale of movable and immovable property belonging to the defaulter situated within the jurisdiction of the Magistrate. The wordings of this section left no room for doubt that the attention of the learned Single Judge was diverted to this fact while deciding the question as to whether Tahbazari dues could be realised under Section 21 of the Act. In order to decide that Section 21 of the Act applied to Tahbazari dues, it has first to be decided that the same was a tax. In order to decide that Section 21 of the Act applied to Tahbazari dues, it has first to be decided that the same was a tax. The decision that Tahbazari could be realised as provided under Section 21 of the Act clearly showed that impliedly this Tahbazari was held to be a tax and not a fee otherwise Section 21 of the Act could not be applied in this case. 22. The learned counsel for the respondent draw my attention to a decision Ramji Lal Appellant v. Municipal Bord, Bhadra Respondent, A.I.R. 1955 N.U.C. (Rajasthan) 4637 (V. 42). In this case it was held that Tahbazari was not a tax but it was a ground rent for a stall or a site in a market. In this note, the reasons for coming to this conclusion have not been given. On the other hand, I was entirely in agreement with the view expressed by Seth, J. in Civil Misc. Writ No. 2652 of 1963 supra. The view taken by Seth. J. also finds support by the opinion of Satish Chandra, J. in Mumtaz Ali's case, 1970 A.L.J. 114. I am therefore of the view that Tahbazari levy is a tax and not a fee. 23. As already held, this tax was not levied in accordance with the provisions of Secs. 15-A and 15-B of the Act and as this defect was not procedural, but fundamental therefore, the imposition of tax on the plaintiffs was illegal. 24. The appeal therefore succeeds. It is hereby allowed. The judgment and decree passed by the lower appellate court are set aside and the one passed by the learned Munsif is restored. The parties to bear their respective costs of this appeal.