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2011 DIGILAW 509 (RAJ)

National Advertising v. State of Rajasthan

2011-03-07

ARUN MISHRA, PRAKASH TATIA

body2011
Hon'ble TATIA, J.—Heard learned counsel for the parties finally. 2. The intra-Court appeal has been preferred questioning increase in license fees from Rs. 20/- to Rs. 35/- vide notification dated 12.8.2002 issued by the State Government. The same has been held to be regulatory by the single Bench and not compensatory and it cannot be termed as tax. The amendment made vide notification dated 12.8.2002 has been held to be constitutionally valid. 3. The petitioner filed writ application assailing increase of the license fees on the hoardings/signboards installed on private buildings/lands. It was submitted that in Jaipur Advertising Service vs. Municipal Council & Ors. (C.W.P. No. 346/1978), this Court on 10.8.1989 held that increase in the license fees was nothing, but in a form of tax and the same is not only illegal, but is unjustified and thereby increase of the rate was declared to be illegal. The Dy. Secretary, Local Self Department, Jaipur issued an order on 30.3.2000 directing the Municipal Corporation to fix the license fee for putting up hoardings/ signboards on private buildings, which should not be less than Rs. 30/- per sq. feet per annum. A writ petition was filed by the petitioner being CWP No. 1406/2000, which was pending. The petitioner has installed hoardings/ signboards against the provisions of Municipal Corporation, Jaipur (Advertisement) Bye-Laws, 1974 (hereinafter referred to as the 'bye-laws of 1974' for short). The case of the respondent was that the license fees was rightly increased by amending the bye-laws of 1974. No legal right of the petitioner has been infringed. The Corporation has to take care of the cleanliness of the city including sewerage and proper lighting on the streets, it has to incur expenditure for various services rendered by it. Thus, a reasonable fees has been levied, which cannot be said to be tax. 4. The Single Bench has held that the license fees realized is regulatory in nature. There need not be any element of quid pro quo. In such circumstances, reliance has been placed on the various Supreme Court decisions by the Single Bench. Writ application has been dismissed. Aggrieved thereby, the intra-court appeal has been preferred. 5. Shri M.S. Singhvi, learned Senior Counsel appearing on behalf of the appellant along with Shri Vinay Kothari submitted that this is a compensatory fees, which is recovered. There has to be quid pro quo. Writ application has been dismissed. Aggrieved thereby, the intra-court appeal has been preferred. 5. Shri M.S. Singhvi, learned Senior Counsel appearing on behalf of the appellant along with Shri Vinay Kothari submitted that this is a compensatory fees, which is recovered. There has to be quid pro quo. The Division Bench of this Court held that license fees recovered is compensatory one. Subsequently, increase from Rs. 20/- in the year 1984 to Rs. 35/- in the year 2002 could not be said to be permissible in the absence of quid pro quo. Learned counsel has further submitted that in Jindal Stainless Ltd. & Anr. vs. State of Haryana & Ors. ( (2006) 7 SCC 241 ), it was held that it is necessary to establish the quid pro quo, which has not been established in the instant case. The Single Bench has illegally held that it was not necessary to establish the aforesaid aspect. The fees could not be said to be regulatory one. 6. Shri R.L. Jangid, Addl. Advocate General - Sr. Advocate appearing for the respondent - State along with Shri H.S. Singh submitted that the decision rendered by the Single Bench is appropriate and is in accordance with the Bye-law of 1974. Therefore, no case is made out for interference in the intra-court appeal. 7. The main question for consideration is as to whether the fees can be said to be regulatory or compensatory? It is not in dispute that it is open for the Municipal Corporation to impose fees. Its enhancement has been questioned on the ground that it is compensatory. Thus it was necessary to establish quid pro quo. It was also submitted that enhancement made was illegal and in contravention of the decision rendered by the Division Bench of this Court in Jaipur Advertising Service (supra). 8. The fees of Rs. 20/- were prescribed in the year 1984. Pursuant to the directions issued by the State Government to enhance the fees on the hoardings put on private buildings and lands, the decision was taken to enhance the fees in 2002. The bye-laws of 1974 issued by the Municipal Corporation, Jaipur provides for issuance of license for putting up the hoardings. Advertisement has also been defined, which may be put up including on any house or wall. The bye-laws of 1974 issued by the Municipal Corporation, Jaipur provides for issuance of license for putting up the hoardings. Advertisement has also been defined, which may be put up including on any house or wall. Meaning thereby, it covers the advertisement or hoardings put on private building, land and wall as provided by bye-law No. 2 (Chha). Certain bye-laws have been provided for advertisements/hoardings, which cannot be displayed. Licensing system has also been provided in bye-law No.5. The constitution of committee has also been provided therein. The method of considering the applications and appeal is also provided. The bye-law No.13 provides that in case any owner of the house, which is visible from the public road, want to put up advertisement or hoardings, has to file an application and has to deposit the fees as prescribed i.e., Rs. 35/- by way of enhancement made in the year 2002. Other formalities have also to be completed. The written permission of the owner has also to be submitted by the applicant. The size, colour etc. of hoardings/advertisements have also to be ensured. The advertisement has to be maintained in proper manner as provided in bye-law No.13. The other restrictions have also been provided. the distances etc. have also been ensured under bye-law No.14. Thus, the bye-laws in substance provides for various measures under which hoardings can be displayed even on the private house/land, compliance of which is to be regulated and controlled by the Corporation. 9. Since it is not dispute before us that it is a fees, which is realized, in P. Kannadasan & Ors. vs. State of T.N. & Ors. ( (1996) 5 SCC 670 ) the Hon'ble Supreme Court held that what is levied under the impugned enactment is a tax/cess and not a fee. The Hon'ble Supreme Court observed that even in the matter of fees, it is not necessary that element of quid pro quo should be established in each and every case, for it is well settled that fees can be both regulatory and compensatory and that in the case of regulatory fees, the element of quid pro quo is totally irrelevant. The Hon'ble Apex Court held thus: "36. The Hon'ble Apex Court held thus: "36. The Sixth contention of the learned counsel for appellants-petitioners is premised upon the supposition that Parliament is bound to utilize the taxes realized under the impugned Act only for the purpose of regulation of mines and mineral development. It is on this suppositions, it is argued that inasmuch as the Union has not established that the impugned levy is required for the purpose of the said regulation and developments, the imposition is incompetent. In our opinion, the very supposition is misplaced what is levied under the impugned enactment is a tax/cess and not a fee. Even in the matter of fees, it is not necessary that element of quid pro quo should be established in each and every case, for it is well-settled that fees can be both regulatory and compensatory and that in the case of regulatory fees, the element of quid pro quo is totally irrelevant. (See Corpn. of Calcutta vs. Liberty Cinema). Taxes are raised for augmenting the general revenues of the State and not for any particular purpose - much less for rendering a particular service." 10. The Hon'ble Apex Court in State of Tripura & Ors. vs. Sudhir Ranjan Nath ( (1997) 3 SCC 665 ) considered the Rule 3(3) and (4) relating to movement of forest produce. The application fees of Rs. 1000/- under sub-rule (3) and license fee for Rs. 2000 under sub-rule (4) of the Forest Act, 1927 and held that fees which re in the nature of regulatory fees for which no quid pro quo was necessary to be established. The Hon'ble Apex Court has held thus : "14. We next take up the validity of the levy of application fee and licence fee of rupees one thousand and Rupees two thousand respectively. In our opinion, the High Court was not right in holding that the said fee amounts to tax on the ground that it has not been proved to be compensatory in nature. In our opinion, the fee imposed by sub-rules (3) and (4) is a fee within the meaning of clause (c) of sub-section (2) of Section 41. It is regulatory fee and not compensatory fee. The distinction between compensatory fee and regulatory fee is well established by several decisions of this Court. Reference may be made to the decision of the Constitution Bench in Corpn. of Calcutta vs. Liberty Cinema. It is regulatory fee and not compensatory fee. The distinction between compensatory fee and regulatory fee is well established by several decisions of this Court. Reference may be made to the decision of the Constitution Bench in Corpn. of Calcutta vs. Liberty Cinema. It has been held in the said decision that the expression "licence fee" does not necessarily mean a fee in lieu of services and that in the case of regulatory fees, no quid pro quo need be established. The following observations may usefully be quoted; 'This contention is not really open to the respondent for Section 548 does not use the word 'fee'; it uses the words 'licence fee' and those words do not necessarily mean a fee in return for services. In fact in our Constitution fee for licence and fee for services rendered are contemplated as different kinds of levy. The former is not intended to be a fee for services rendered. This is apparent from a consideration of Article 110(2) and Article 199(2) where both the expressions are used indicating thereby that they are not the same. In George Walkem Shannon vs. Lower Mainland Dairy Products Board it was observed (at pp. 721-722 of AC: at pp.38-39 of AIR) : 'If licences are granted, it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the Province or for both purposes.....It cannot, as their Lordships think, be an objection to a licence plus a fee that it is directed both to the regulation of trade and to the provision of revenue.' It would, therefore, appear that a provision for the imposition of a licence fee does not necessarily lead to the conclusion that the fee must be only for services rendered. 15. This decision has been followed in several decisions, including the recent decisions of this Court in Vam Organic Chemical Ltd. vs. State of U.P. and Bihar Distillery vs. Union of India. The High Court was, therefore, not right in proceeding on the assumption that every fee must necessarily satisfy the test of quid pro quo and in declaring the fee levied by sub-rules (3) and (4) of Rule 3 as bad on that basis. The High Court was, therefore, not right in proceeding on the assumption that every fee must necessarily satisfy the test of quid pro quo and in declaring the fee levied by sub-rules (3) and (4) of Rule 3 as bad on that basis. Since we hold that the fees levied by the said sub-rules is regulatory in nature, the said levy must be held to be valid and competent, being fully warranted by Section 41." 11. In Secunderabad Hyderabad Hotel Owners' Association & Ors. vs. Hyderabad Municipal Corporation, Hyderabad & Anr. ( (1999) 2 SCC 274 ) the Hon'ble Apex Court considered the license fee may be either regulatory or compensatory. When a fee is charged for rendering specific services, a certain element of quid pro quo must be there between the service rendered and the fee charged so that the license fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. License fees can also be regulatory when the activities for which a license is given require to be regulated or controlled. The fee which is charged for regulation of such activity would be validly classified as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive. 12. In State of U.P. & Ors. vs. Sitapur Packing Wood Suppliers & Ors. ( (2002) 4 SCC 566 ) the Hon'ble Apex Court considered the Rules 3, 5 and 14 of the U.P. Transit of Timber and Other Forest Produce Rules, 1978 and held that transitory fee is regulatory in nature. The question of quid pro quo is necessary when a fee is compensatory. It is well established that for every fee quid pro quo is not necessary. The transit fee being regulatory, it is not necessary to establish the factum of rendering of service. Thus, there is no question of a levy of transit fee being invalidated on the ground that quid pro quo has not been established. The Hon'ble Apex Court has held thus : "8. The distinction between tax and fee is well settled and need not be restated herein. Thus, there is no question of a levy of transit fee being invalidated on the ground that quid pro quo has not been established. The Hon'ble Apex Court has held thus : "8. The distinction between tax and fee is well settled and need not be restated herein. It is clear from the afore-noticed provisions of the Act and the Rules that the transitory fee is regulatory in nature. The question of quid pro quo is necessary when a fee is compensatory. It is well established that for every fee quid pro quo is not necessary. The transit fee being regulatory, it is not necessary to establish the factum of rendering of service. Thus, there is no question of a levy of transit fee being invalidated on the ground that quid pro quo has not been established. 10. The transit fee under Rule 5 is clearly regulatory and, thus, it was not necessary for the State to establish quid pro quo. The High Court was in error in holding that transit fee is invalid in absence of quid pro quo. As a consequence the penalty would also be valid. The penalty was held to be invalid by the High Court in view of its conclusion about the invalidity of the transit fee. The penalty, however, cannot be beyond what is permissible in the Act. That aspect, however, is not under challenge in these appeals as the State Government after the impugned judgment of the High court realizing its mistake amended the Rule so as to bring the provision of penalty in accord with the provisions of the Act." 13. In Jindal Stainless Ld. (2) & Anr. vs. State of Haryana & Ors. ((2006) SCC 241), the Hon'ble Apex court has considered the question of difference between the taxing and regulatory power and in para No.38 of the report it has been observed that if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of condition or incidents of trade or manufacture then the levy is regulatory. Their Lordships have also considered the difference between the tax fees and compensatory tax. 14. Reliance has been placed upon the decision of the Division Bench of this Court in CWP No. 346/1987 decided on 10.8.1989 in which this Court quashed the levy of Rs. Their Lordships have also considered the difference between the tax fees and compensatory tax. 14. Reliance has been placed upon the decision of the Division Bench of this Court in CWP No. 346/1987 decided on 10.8.1989 in which this Court quashed the levy of Rs. 20/- holding to be compensatory, but the question was not raised whether the levy was compensatory or regulatory and whether in case levy was regulatory, quid pro quo was necessary to be established and the decision was based on unamended bye-law. Thus, the decision cannot be said to be an authority on the question whether the fees is regulatory or compensatory and whether the quid pro quo is necessary. 15. We are of the opinion that aforesaid levy in question is regulatory one considering the scheme and the bye-laws, which have been amended, hence, no quid pro quo was necessary to be established. Considering the various aforesaid rules, which came up for consideration in the aforesaid decisions before the Hon'ble Apex Court and provision in question, we are of the opinion that the provisions, which were considered by their Lordships of the Hon'ble Apex Court, are akin to the Bye-law 13 and the other Bye-laws of 1974, which are mainly regulatory in nature, therefore, there is no necessity to establish the quid pro quo. Even otherwise, the enhancement has been made from Rs. 20/- in the year 1984 to Rs. 35/- in the year 2002, which cannot be said to be illegal or arbitrary in any manner. 16. Thus, we do not find any ground for interference in this appeal and being devoid of merit, the same is hereby dismissed. The parties are left free to bear their own costs.