Commissioner, Agra v. Durgesh Prasad Bhargava — 1973 DIGILAW 311 (ALL)

JUDGMENT C.D. Parekh, J. - Zila Parishad, Aligarh, under the bye-law requires that within its territorial jurisdiction any person desirous of running a brick-kiln should take out a licence for the purpose which licence could be issued by its licencing Authority on the payment of the licence fee. The fee for taking out a licence for running a brick-kiln having a chimney is prescribed at Rs. 250/- . Respondent Durgesh Prasad filed a writ petition claiming that he owns a brick-kiln situate in village Madrak, Tahsil Koal, district Aligarh and is running the aforesaid brick-kiln and the requirement of the Board was illegal. 2. His case was that in the year 1950 the erstwhile District Board, Aligarh, framed bye-law purporting to be under the District Board Act to regulate the running of the brick-kilns it the rural area of the District of Aligarh, The aforesaid bye-law was duly published and the copy of the same was attached to the writ petition. It was also alleged that bye-law No. 2, required the obtaining of the licence for running the brick-kiln in the rural area of district Aligarh, Bye-law No. 8 prescribed the fee for licence for running brick-kiln. These bye-laws were framed by the District Board but after coming into force of the U. P. Kshettra Samitis and Zila Parishads Adhiniyan certain amendments were necessary to be made for the adoption of the aforesaid bye-laws framed by the District Board, Aligarh. The Kshettra Samiti and Zila Parishad, Aligarh, made thin amendments in the bye-laws and substituted the words "Zila Parishad" instead of "District Board" wherever they occurred in the said bye-law. These bye-laws according to the respondent were against the Constitutional of India or were in the nature of tax for which there was no sanction of law. 3. The case of the respondent has been that although he is running a brick-kiln with a chimney he was neither required to obtain any licence nor under the law he could be required to pay the fee and obtain the licence [or running the said brick-kiln. His case further had been that bye-law No. 2 and bye-law No. 8 of the Bye-Laws which is Annexure A to the writ petition are in the nature of tax and the fee required to be paid is a misnomer. In fact the imposition is in the nature of a tax. His case further had been that bye-law No. 2 and bye-law No. 8 of the Bye-Laws which is Annexure A to the writ petition are in the nature of tax and the fee required to be paid is a misnomer. In fact the imposition is in the nature of a tax. His further allegation was that no service was rendered by the Zila Parishad, Aligarh, towards regulating the running of the brick-kiln in the rural area of the district of Aligarh and there was no quid pro quo in charging the amount of Rs. 250/- as licence fee for the services required to be rendered by the Zila Parishad. According to the petitioner-respondent, Zila Parishad was bound to render equal amount of services for the money realised by way of licence fee and the impost under the cover of licence fee was, therefore, a tax which the Zila Parishad, Aligarh, was not entitled to realise. According to the petitioner no service was rendered by the Zila Parishad towards regulating or running of the brick-kiln and there was no corelation between the alleged fee imposed and the expenses incurred by the Zila Parishad, Aligarh. Respondent Durgesh Prasad also asserted that the amount realised as licence fee goes to the general revenue of the Zila Parishad and is utilised by the Zila Prishad for general purposes and the licence fee is not ear-marked to meet the expenses in tendering the services towards regulating the running of the brick-kilns. 4. The Zila Parishad, Aligarh, respondent No. 2 in this Appeal, avered in the counter affidavit that the total income and expenditure includes the income recovered as licence fee and the consolidated amount of expenditure is shown in the accounts. The specific averment was that the money realised as the licensee fee is spent on the maintenance of the roads and on general sanitation. The Zila Parishad through its employees looks after and secures cleanliness therein or to minimise any injurious, offensive or dangerous effect arising or likely to arise therefrom. The Parishad specifically denied that the nature of the impost was a tax. The learned Single Judge who decided the writ petition held that the licence fee imposed by the Zila Parishad, Aligarh, and demanded from Durgesh Prasad respondent is in the nature of a tax and not fee. The Parishad specifically denied that the nature of the impost was a tax. The learned Single Judge who decided the writ petition held that the licence fee imposed by the Zila Parishad, Aligarh, and demanded from Durgesh Prasad respondent is in the nature of a tax and not fee. The Zila Parishad did not impose a tax and did not follow the procedure prescribed by law for imposition of tax. In his opinion, therefore, the levy was illegal and could not be collected from Durgesh Prasad. He therefore, held that the condition precedent to the grant of fee was illegal and void. He allowed the writ petition and issued mandamus directing Zila Parishad, Aligarh, not to impose the condition laid down in bye-law No. 8, i.e., payment of licence fee for the grant of the licence to Durgesh Prasad respondent for the running of the brick-kiln. He, however, held that bye-law No. 2, which required the taking out of the licence for the running of the brick-kiln was intra vines. 5. Against the judgment of the learned Single Judge the Commissioner, Agra Division, Agra, and the State of U. P. have preferred this appeal. 6. The short question for decision in this appeal is whether the licencee" fee of Rs. 250/- required to be paid for taking out a licence for running a brick-kiln with the aid of the chimney is illegal ? The learned Single Judge has relied upon a case in Jagannath Ramanuj Das v. State of Orissa, A.I.R. 1954 S. C. 400. The Supreme Court in that case was considering Orissa Hindu Religious Endowments Act (Act 4 of 1939). While considering Section 49 of that Act, under which every Math or temple having an annual income exceeding Rs. 250/- was required to make an annual contribution for meeting the expenses of the Commissioner and his office and the servants working under him. The Supreme Court in that case held that the question was elaborately discussed in the Madras appeal in The Commissioner, Hindu Religious Endowments v. Lakshmindra Thirtha Swamiar, A.I.R. 1954 S. C. 282 and, therefore, they did not repeat the discussions over again and adopted the view expressed in the Madras appeal. In the Madras case Section 76 of the Madras Hindu Religious and Charitable Endowments Act (19 of 1951) was considered. In the Madras case Section 76 of the Madras Hindu Religious and Charitable Endowments Act (19 of 1951) was considered. The relevant provision of that section which was considered by the Supreme Court may be of some help in this case. It runs thus :- "76. (1) In respect of the services by the Government and their officers, every religious institution shall, from the income derived by it, pay to the Government annually such contribution not exceeding five percent tum of its income as may be prescribed. (2) Every religious institution, the annual income of which for the lash year immediately preceding as calculated for the purposes of the levy of contribution u/Sub-Section (I), is not less than one thousand rupees, shall pay to the Government annually, for meeting the cost of auditing its accounts, such further sum not exceeding one and a half per ccntum of the income as the Commissioner may determine. (3) The annual payments referred to in Sub-secs. (1) and (2) shall be made, notwithstanding anything to the contrary contained in any scheme ,settled or deemed to be settled under this Act for the religious institution concerned. (4) The Government shall pay the salaries, pensions and other beneficial remuneration of the Commissioner, Deputy Commissioners, Assistant Com-missioners and other officers and servants (other than executive officers of religious institutions) employed for the purposes of this Act and the other expenses incurred for such purposes, including the expenses of Area Committees and the costs of auditing the accounts of religious institutions." In this connection before the Supreme Court it was challenged that Section 76 was constitutionally not valid. The Supreme Court held that the contribution levied under Section 76 was a tax and not a fee and consequently it held tacit it was beyond the powers of the State Legislature to enact that provision. While discussing the question of tax and fee the Supreme Court expressed its opinion that the levy of fee is only a particular form of the exercise of the taxing power of the State. Our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular Legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. Our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular Legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. Some idea as to what fees are may be gathered frown cl. (2) of Arts. 110 and 119 which speak of fees for licences and for services rendered. The Supreme Court also considered the indication or special characteristics that distinguish a fee from a tax. On this neat question as to what `tax' means and what is the meaning of `fee', the Supreme Court held that the essential characteristics of Li tax as distinguished from ether forms of imposition which in a general sense, are included within it. The court observed that the essence of taxation is compulsion that is to say, it is imposed under statutory power without the tax payer's consent and the payment is enforced by law. They have also stated that the second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the paved of the tax. As for the fee, the Supreme Court has held that it is generally defined to be a charge for a special service rendered to individuals by some Governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. They have, therefore, said that undoubtedly some of the general characteristics are given but there may be various kinds of fees and the Supreme Court, therefore, indicated that it was not possible to formulate a definition that would be applicable to all cases. 7. Arts. They have, therefore, said that undoubtedly some of the general characteristics are given but there may be various kinds of fees and the Supreme Court, therefore, indicated that it was not possible to formulate a definition that would be applicable to all cases. 7. Arts. 110 and 119 of the Constitution, which deal with "Money Bills" lay down expressly that a bill will not be deemed to be a "Money Bill" by reason only that it provides for the imposition of fines.......or for the demand or payment of fees for licences or fees for services rendered, whereas a bill dealing with imposition or regulation of a tax will always be a Money Bill. Art. 277 also mentions taxes, cesses, and fees separately. The Supreme Court expressed that it is not clear whether the word "tax" as used in Art. 265 has not been used in the wider sense as including all other impositions like cesses and fees; and that at least seems to be the implication of cl. 28. Art. 366 which defines taxation as including the imposition of any tax or impost, whether general, local or special. The Supreme Court, therefore, held that though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular Legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. 8. In another Case in Ratilal v. State of Bombay, A.I.R. 1954 S. C. 388, the Supreme Court observed that too much stress should not be laid on the presence or absence of what has been called the "coercive" element. It is not correct to say that as distinguished from taxation which is compulsory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid. 9. It is not correct to say that as distinguished from taxation which is compulsory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid. 9. The Madras Hindu Religious and Charitable Endowments Act, after the pronouncement of the Supreme Court in the case aforesaid, was amended and certain defects pointed out by the Supreme Court in Section 76 of the Act, which was held to be invalid, were removed by Act No. 27 of 1954. It was held that the State Legislature has power to levy a fee under the Constitution of India, Seventh Schedule, List III, Entry 28 read with 47. The Legislature was, therefore, competent to levy a fee for rendering services in connection with the maintenance, supervision and control over the religious institutions and it was competent to levy the fee retrospectively. The Supreme Court further held that a levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coercive ness present in it, nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to each individual who obtains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. The Supreme Court also held that it is true that ordinarily a fee is uniform and no account is taken of the varying abilities of different recipients, but absence of uniformity is not a criterion on which alone it can be said that it is of the nature of a tax. The Supreme Court also held that it is true that ordinarily a fee is uniform and no account is taken of the varying abilities of different recipients, but absence of uniformity is not a criterion on which alone it can be said that it is of the nature of a tax. A fee being a levy in consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence, or because of compulsion in the collection thereof, nor because some of the contributors do not obtain the same degree of service as others may (Ref. S. T. Swamia v. Commissioner for Hindu Religious and Charitable Endowments, Mysore and another, A.I.R. 1963 S. C. 966). 10. In the case of Corporation of Calcutta v. Liberty Cinema, A.I.R. 1965 S. C. 1107. See. 548 (2) of the Calcutta Municipal Act was considered by the Supreme Court and in that connection it was held that if the special service rendered is distinctly and primarily meant for the benefit of a specified class or area, the fact that in benefiting the specified class area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. The Corporation of Calcutta in that case had increased the licence fee of Cinema exhibition from Rs. 400/- to Rs. 6,000/- per annum. The liberty Cinema challenged the imposition. The majority of the judges of that Bench which decided the case held that the increase in the rate of fee is no doubt there but it cannot be challenged as invalid. They justified the charging of the fee and held that the levy authorised by Section 548 of the Calcutta Municipal Act was the provision for the imposition of the licence fee and does not necessarily lead to the conclusion that the fee must be only for services rendered. They have also held that in order to make a levy a fee for services rendered the levy must confer special benefit on the persons on whom it is imposed. 11. They have also held that in order to make a levy a fee for services rendered the levy must confer special benefit on the persons on whom it is imposed. 11. In Nagar Mahapalika, Varanasi v. Durga Das Bhattacharaya, A.I.R. 1968 S. C. 1119 the Supreme Court considered Section 128 (1) (iii) and (iv) and has held that it is competent to the Municipality to impose a tax on vehicles plying for hire or kept within the municipality and also on trades, calling and vocations including rickshaw drivers and rickshaw owners. But the imposition of such a tax can only be lawfully made by the Municipal Board after following the procedure prescribed under Secs. 131 to 135 of the Act. It has been held that Section 294 of the Act must be interpreted in such a manner as to prevent the circumvention of the safe-guards of the provisions of Secs. 131 to 135 of the Act which relate to procedure required to be followed for imposition of the tax. 12. Madras Hindu Religious and Charitable Endowments Act (19 of 1951) once again came up for consideration with its rules and necessary amendments in Commissioner of Hindu Religious and Charitable Endowments v. U. Krishna Rao, A.I.R. 1970 S. C. 1114. In this case the Assistant Commissioner of Religious Endowments, Mysore issued on September 30, 1959 directing the respondent to pay the arrears of contributions and audit fee under the Commissioner's demand notice dated June 25, 1957. The respondents were the trustees of the Venkataramana Temple at Mulki, District South Kanara. The High Court of Mysore held that the audit fee demanded by the Commissioner was without determination under Section 76(2) of the Act and was on that account without competence or authority of law. In that case the principle laid down in A.I.R. 1963 S. C p. 966 (Supra) was reiterated and it was held that under the Act a fee though levied for rendering services of a particular type is not to be correlated to the services performed for each individual who is intended to obtain the benefit of the services. The correlation must be between the expenses incurred by authority levying the fee for generally providing the service and the aggregate of the levy from persons who are to be made subject thereto. The correlation must be between the expenses incurred by authority levying the fee for generally providing the service and the aggregate of the levy from persons who are to be made subject thereto. It is a necessary corollary that under the Act general rules prescribing the levy of fee from religious endowments have to be made, and not rules governing individual endowments. It was further held that the Act does not contemplate separate rules to be made in respect of each religious institution likely to obtain the benefit of services rendered by the State for which the contribution is to be levied. It was further held that if services are provided, assuming that the Venkataramana temple either does not need the services, or does not obtain the benefit of the services, the contribution would still be recoverable. In this view of the matter the Supreme Court set aside the order passed by the Mysore High Court upholding the claim of U., Krishna Rao, the respondent in that case. 13. The view expressed in the Corporation of Calcutta v. Liberty Cinema, A.I.R. 1965 S. C. 1107 was also considered by a Division Bench of this Court in State of U. P. v. Bharat Nath Seth, 1973 A. L. J. 34. In this case the Mirzapur Stone Mahal Act, 1886, was considered. It was held that under the licence which the respondent acquired, by virtue of Section 6 of the Mirzapur Stone Mahal Act 1886 exclusive right of opening quary or quarying stone within the local limits of the District of Mirzapur. If the State Charges some fee for granting this privilege the levy cannot be held to be unconstitutional on the ground that it was not in the nature of fee, and there was quid pro quo with the fee charged and the services rendered. The learned judges held that the imposition of a licence fee does not necessarily lead to the conclusion that the fee must be for the services rendered. A distinction was drawn between the word "fee" and the words "licence fee" and reference was made to Art. 110(2) of the Constitution of India where in both these expressions are used indicating that they are not one and the same. 14. A distinction was drawn between the word "fee" and the words "licence fee" and reference was made to Art. 110(2) of the Constitution of India where in both these expressions are used indicating that they are not one and the same. 14. The case of the Zila Parishad, Aligarh, as it gave cut in the counter-affidavit, in this case was that bye-law No. 2 and bye-law No. 8 of the Zila Parishad are in accordance with the law and the licence fee chargeable by the Parishad and prescribed under the bye-law amounting to Rs. 250/- is justifiable because the fee is for providing amenities such as sanitation, roads, etc. The roads are the main amenities which are needed by the heavy vehicles for transporting bricks. It was further indicated in the counter-affidavit that in the year 1966-67 the Zila Parishad of Aligarh earned a net income of Rs. 61,82,737.00 and the expenditure in the said year was Rs. 60,13,847.00. For the upkeep and maintenance of the roads and for providing sanitation in the area, the Zila Parishad had spent a sum of Rs. 2,98,800/- . The Zila Parishad further averred in the counter-affidavit that it had employed on permanent basis four Licence Inspectors to inspect the various brick-kilns situate in its territorial jurisdiction and these Licence Inspectors have to check the height of the chimnies and ,see that no nuisance is caused by these kilns or damage is caused to the standing crop" and groves in the vicinity of the kiln. It was also averred that besides these Licence Inspectors there are Sanitary Inspectors to look after the sanitation in the area and a sum of Rs. 24,800/-per annum is being spent over their salary. According to the petitioner respondent there were 300 brick-kilns in the district while according to the Zila Parishad there are only 120 brick kilns within its territorial jurisdiction. 24,800/-per annum is being spent over their salary. According to the petitioner respondent there were 300 brick-kilns in the district while according to the Zila Parishad there are only 120 brick kilns within its territorial jurisdiction. From the averment aforesaid it is clear that although the licence fee is not earmarked to meet the expenses but there is correlation between the expenses incurred by the authority levying the fee for providing general set vices and such circumstances the aggreate of the levy from the persons who are made subject thereto is to be spent for extending the benefit and the benefits are meant and intended for those persons who volunteer to obtain the licence for running the brick-kiln with chimney within the territorial jurisdiction of the Zila Parishad, Aligarh, and if the respondent-petitioner intended to obtain benefit of the general services he should have obtained the licence on payment of the requisite fee. Although the correlation to the services specifically may not be obtainable by the petitioner-respondent yet the authority in levying the fee for providing general services cannot be said to have transgressed the power in levying the fee on persons who are to be made subject thereto Bye-law No. 8 prescribes a licence fee and not fee simpliciter. Section 239 of the Kshettra Samitis Zila Parishad Adhiniyam, 1961, under the heading "E-Offensive Trades' provides (a) Except where and so far as is inconsistent with anything contained in the Petroleum Act, 1934 (Art XXX of 1934) or in rules made thereunder, prohibiting the use of any place, in default of a licence granted by the Parishad or otherwise than in accordance with the conditions of licence so granted, as a factory or other places of business......(iv) for burning or making bricks, tiles, pottery or lime,......(c) providing for the inspection and regulation of the conduct of business in a place used as aforesaid, so as to secure cleanliness therein or to minimise any injurious, offensive, or dangerous effect arising or likely to arise therefrom Section 143 of this Adhiniyam provides that a Zila Parishad of a Kshettra Samiti may charge a fee to be fixed by bye-law for any licence, sanction or permission which it is entitled or required to grant by or under this Act. Under the law, therefore, the Zila Parishad could require a person who wants to work a brick-kiln to obtain a license and that too on payment of a fee which may be prescribed by the Zila Parishad under the bye-laws framed by it. The learned Single Judge without adverting to this aspect of the matter that the sections quoted aforesaid are legal or illegal, are violative of the Constitution or not, has hold that bye-law No. 8 is illegal. Bye Law No. 8 is not independent of the powers aforesaid as enjoyed by the Kshettra Samitis and Zila Parishad in framing bye-laws and for the charging of the licence fee and if that is not illegal or void, bye-law No. 8 of the Zila Parishad, Aligarh, which has been framed under the authority of law, cannot be said to be illegal or void. The Supreme Courts' view quoted by the learned Single Judge was expressed in relation to the matters which were extraneous for the consideration in the instant case. In our opinion the case is concluded by the later Supreme Court pronouncements reported in A.I.R. 1965 S. C. p. 1107 and A.I.R. 1970 S. C. 1114 (supra) and also in 1973 A. L. J. p. 34 where distinction has been drawn between `Licence fee' and `fee'. The `licence fee' mentioned in bye-law No. 8 is a `licence fee' and is payable by a person who volunteers to obtain a licence for running brick-kiln with chimney. The respondent admittedly was running a brick-kiln with chimney and in such circumstances before starting or running the brick-kiln in the year 1966-67 he should have taken out a licence after payment of licence fee of Rs. 250/- as envisaged by bye-law No. 8. It was not a fee simpliciter as contemplated by the Supreme Court in the case reported in A.I.R. 1954 S. C. p. 400 relied on by the learned Single Judge. 15. In the result the appeal succeeds and is allowed. The writ petition is dismissed. The order of the learned Single Judge is set aside. We make no order as to costs as no one has appeared on behalf of respondent Durgesh Prasad.