Dhenkanal Municipal Council and Anr. Vs. A. Raja Rao & Ors.
EmailAppeal: Civil Appeal No.1751 of 1975
(From the Judgment and Order dated 29.1.1975 of the Orissa High Court in OJC No. 447 of 1974)
(From the Judgment and Order dated 29.1.1975 of the Orissa High Court in OJC No. 447 of 1974)
Petitioner: Dhenkanal Municipal Council and Anr.
Respondent: A. Raja Rao & Ors.
Apeal: Civil Appeal No.1751 of 1975
(From the Judgment and Order dated 29.1.1975 of the Orissa High Court in OJC No. 447 of 1974)
(From the Judgment and Order dated 29.1.1975 of the Orissa High Court in OJC No. 447 of 1974)
Judges: KULDIP SINGH, N.M. KASLIWAL & R.M. SAHAI, JJ.
Date of Judgment: Mar 18, 1993
Appearances:
Mr.Harish N. Salve, Sr. Advocate and Mr.G.S. Chatterjee, Advocate with him for the Appellants.
Mr.R.K. Mehta, Advocate for the Respondents.
Head Note:
MUNICIPALITIES
Orissa Municipal Act, 1950:
Section 295(2) – Levy of fee on traders who attended weekly market (Hat) – Whether unjustified for non-compliance of the principle of quid pro quo? – Applying 1983 (2) SCR 999, held no.
FEE OR TAX
Fee or tax – Distinction – Quid pro quo is not the one and only true index of a fee; nor is it necessarily absent in a tax.
Held:
“there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payments for services rendered, benefit provided or privilege conferred. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct : a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.”
Cases Reffered:
1. Municipal Corporation of Delhi and others v. Mohd. Yasin etc. 1983 2 S.C.R. 999 – Applied. (Para 7)
2. Southern Pharmaceuticals and Chemicals, Trichur and other etc. v. State of Kerala and others, 1982 1 SCR 519. (Para 7)
3. H.H. Swamiji v. Commissioner Hindu Religious & Charitable Endowments Dept. and others, 1980 1 SCR 268. (Para 7)
4. H.H. Sudhundra v. Commissioner For Hindu Religious and Charitable Endowments, 1963 Supp. 2 SCR 302. (Para 7)
5. Hingir-Rampur Coal Co. Ltd. and others v. The State of Orissa and others, 1961 2 SCR 537. (Para 7)
6. Commissioner of H.R. & C.E. Madras v. Shri Lakshmindra Thritha Swamiyar, 1954 SCR 1005. (Para 7)
2. Southern Pharmaceuticals and Chemicals, Trichur and other etc. v. State of Kerala and others, 1982 1 SCR 519. (Para 7)
3. H.H. Swamiji v. Commissioner Hindu Religious & Charitable Endowments Dept. and others, 1980 1 SCR 268. (Para 7)
4. H.H. Sudhundra v. Commissioner For Hindu Religious and Charitable Endowments, 1963 Supp. 2 SCR 302. (Para 7)
5. Hingir-Rampur Coal Co. Ltd. and others v. The State of Orissa and others, 1961 2 SCR 537. (Para 7)
6. Commissioner of H.R. & C.E. Madras v. Shri Lakshmindra Thritha Swamiyar, 1954 SCR 1005. (Para 7)
JUDGEMENT:
KULDIP SINGH, J. :
1. The question before the High Court was whether the levy of fee under Section 295 (2) of Orissa Municipal Act, 1950 (the Act) was unjustified for non-compliance of the principle of quid pro quo. The High Court answered the question in the affirmative and quashed the collection of the fee and restrained the Municipal Council from enforcing the demand. This appeal by way of special leave is against the judgment of the High Court by Dhenkanal Municipal Council.
2. There is a Hat (weekly market) known as “Darbar Hat” within the jurisdiction of Dhenkanal Municipal Council. Market is held in the said Hat every Sunday. Large number of people congregate for sale/purchase of various articles like cattle, food stuffs and groceries etc. During the financial year 1973-74 sum of Rs.36,000/- was recovered by the Municipal Council as fee from the traders who attended the market. In the year 1974-75 the fee collected by the Municipal Council was Rs.46,600/-.
3. Raja Rao Dhanik, the respondent, challenged the levy of the fee by way of writ petition under Article 226 of the Constitution on the ground that no services were being rendered by the Municipal Council. According to him there were only three small size tin-sheds which were constructed many years back and at the time of the filing of the writ petition the sheds were in dilapidated condition. No amenities were provided in the area and the traders were forced to look after their own conservancy and convenience. There was no electricity in the market area. According to the petitioner the fee collected was put into the general funds of the municipality and no part of it was spent in providing amenities to the traders who met at the Hat on every Sunday. The only ground alleged before the High Court was that in the absence of quid pro quo the collection of fee was unauthorised and as such was liable to be struck down.
4. The additional counter affidavit filed by the Executive Officer of the Municipal Council specifically stated that the budget estimate for the year 1974-75 included Rs.55,000/- to be spent for providing amenities and services at the “Darbar Hat Market”. The affidavit gave further details as under :
“4. That in pursuance of the budget estimate, the office has made the following estimate :-
i Construction of compound wall around Hat area Rs.35,000/-.
ii To level the ground – Rs.15,000/-
iii Construction of Hat Road Rs.5,000/-.
5. That the following amenities have been provided by the Municipality till today. The Hat road leading from National High way to the Hat which is utilised only for the purpose of Hat has been electrified at huge cost. There was an existing well which is maintained. There are three existing tin shades for the purpose of the vendors displaying their articles for sale. There are two half constructed shades meant for the above purpose.
6. That besides the above amenities supplied the Hat is regularly cleaned and for sweeping that Hat average two sweepers are maintained. The pay of each sweeper is nearly Rs.150/- a month. Besides, during the rainy season to avoid epidemic, the hat is cleaned by use of disinfectant like bleaching powder.
7. That from out of the above expenditures, about Rs.5,000/- is to be received as grant from the Government. Thus, the balance of about Rs.47,000/- would be spent during the year for the purpose of the market to give facilities to the traders and the consumers of the market and accordingly the farming out collection towards the fees collected from the market is quite reasonable and justified. Compound wall to the market area was felt to be a great necessity for the facility of the traders.”
5. The High Court commented upon the affidavit reproduced above as under :
“According to Mr. Mohanty, the expenditures on various heads as indicated in the counter affidavit of the Municipal Council, such as raising a wall around the market, laying roads up to the market area of completing the sheds are in the nature of capital investment and cannot be construed as expenditures on services rendered to the fee-payers. We agree with the contention of Mr. Mohanty that these are indeed in the nature of capital investment and would not come within the principle of quid pro quo or as return for the fee paid in the strict sense.”
6. It is not necessary for us to go into the question as to whether the levy under Section 295 (2) of the Act is a “fee” or “tax”. Assuming the levy to be ‘fee’ we are of the view that the High Court fell into patent error in reaching the finding that no services were being rendered for the benefit of the traders in the market area of “Darbar Hat”. We are at a loss to understand how the laying of roads, leveling of ground, constructing boundary wall and providing electricity etc. are not the services rendered for the benefit of the traders.
7. This Court in Municipal Corporation of Delhi and others v. Mohd. Yasin etc. 1983 2 S.C.R. 999 referred to the earlier judgments of this Court in Commissioner of H.R. & C.E. Madras v. Shri Lakshmindra Thritha Swamiyar, 1954 SCR 1005; H.H. Sudhundra v. Commissioner For Hindu Religious and Charitable Endowments, 1963 Supp. 2 SCR 302; Hingir-Rampur Coal Co. Ltd. and others v. The State of Orissa and others, 1961 2 SCR 537; H.H. Swamiji v. Commissioner Hindu Religious & Charitable Endowments Dept. and others, 1980 1 SCR 268; Southern Pharmaceuticals and Chemicals, Trichur and other etc. v. State of Kerala and others, 1982 1 SCR 519 and held as under :
“What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payments for services rendered, benefit provided or privilege conferred. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct : a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.”
8. Applying the above quoted ratio to the facts of the present case we are of the view that the High Court fell into patent error in quashing the fee levied by the Municipal Council.
9. We, therefore, allow the appeal, set aside the judgment of the High Court and dismiss the writ petition filed by A. Raja Rao before the High Court. No costs.
1. The question before the High Court was whether the levy of fee under Section 295 (2) of Orissa Municipal Act, 1950 (the Act) was unjustified for non-compliance of the principle of quid pro quo. The High Court answered the question in the affirmative and quashed the collection of the fee and restrained the Municipal Council from enforcing the demand. This appeal by way of special leave is against the judgment of the High Court by Dhenkanal Municipal Council.
2. There is a Hat (weekly market) known as “Darbar Hat” within the jurisdiction of Dhenkanal Municipal Council. Market is held in the said Hat every Sunday. Large number of people congregate for sale/purchase of various articles like cattle, food stuffs and groceries etc. During the financial year 1973-74 sum of Rs.36,000/- was recovered by the Municipal Council as fee from the traders who attended the market. In the year 1974-75 the fee collected by the Municipal Council was Rs.46,600/-.
3. Raja Rao Dhanik, the respondent, challenged the levy of the fee by way of writ petition under Article 226 of the Constitution on the ground that no services were being rendered by the Municipal Council. According to him there were only three small size tin-sheds which were constructed many years back and at the time of the filing of the writ petition the sheds were in dilapidated condition. No amenities were provided in the area and the traders were forced to look after their own conservancy and convenience. There was no electricity in the market area. According to the petitioner the fee collected was put into the general funds of the municipality and no part of it was spent in providing amenities to the traders who met at the Hat on every Sunday. The only ground alleged before the High Court was that in the absence of quid pro quo the collection of fee was unauthorised and as such was liable to be struck down.
4. The additional counter affidavit filed by the Executive Officer of the Municipal Council specifically stated that the budget estimate for the year 1974-75 included Rs.55,000/- to be spent for providing amenities and services at the “Darbar Hat Market”. The affidavit gave further details as under :
“4. That in pursuance of the budget estimate, the office has made the following estimate :-
i Construction of compound wall around Hat area Rs.35,000/-.
ii To level the ground – Rs.15,000/-
iii Construction of Hat Road Rs.5,000/-.
5. That the following amenities have been provided by the Municipality till today. The Hat road leading from National High way to the Hat which is utilised only for the purpose of Hat has been electrified at huge cost. There was an existing well which is maintained. There are three existing tin shades for the purpose of the vendors displaying their articles for sale. There are two half constructed shades meant for the above purpose.
6. That besides the above amenities supplied the Hat is regularly cleaned and for sweeping that Hat average two sweepers are maintained. The pay of each sweeper is nearly Rs.150/- a month. Besides, during the rainy season to avoid epidemic, the hat is cleaned by use of disinfectant like bleaching powder.
7. That from out of the above expenditures, about Rs.5,000/- is to be received as grant from the Government. Thus, the balance of about Rs.47,000/- would be spent during the year for the purpose of the market to give facilities to the traders and the consumers of the market and accordingly the farming out collection towards the fees collected from the market is quite reasonable and justified. Compound wall to the market area was felt to be a great necessity for the facility of the traders.”
5. The High Court commented upon the affidavit reproduced above as under :
“According to Mr. Mohanty, the expenditures on various heads as indicated in the counter affidavit of the Municipal Council, such as raising a wall around the market, laying roads up to the market area of completing the sheds are in the nature of capital investment and cannot be construed as expenditures on services rendered to the fee-payers. We agree with the contention of Mr. Mohanty that these are indeed in the nature of capital investment and would not come within the principle of quid pro quo or as return for the fee paid in the strict sense.”
6. It is not necessary for us to go into the question as to whether the levy under Section 295 (2) of the Act is a “fee” or “tax”. Assuming the levy to be ‘fee’ we are of the view that the High Court fell into patent error in reaching the finding that no services were being rendered for the benefit of the traders in the market area of “Darbar Hat”. We are at a loss to understand how the laying of roads, leveling of ground, constructing boundary wall and providing electricity etc. are not the services rendered for the benefit of the traders.
7. This Court in Municipal Corporation of Delhi and others v. Mohd. Yasin etc. 1983 2 S.C.R. 999 referred to the earlier judgments of this Court in Commissioner of H.R. & C.E. Madras v. Shri Lakshmindra Thritha Swamiyar, 1954 SCR 1005; H.H. Sudhundra v. Commissioner For Hindu Religious and Charitable Endowments, 1963 Supp. 2 SCR 302; Hingir-Rampur Coal Co. Ltd. and others v. The State of Orissa and others, 1961 2 SCR 537; H.H. Swamiji v. Commissioner Hindu Religious & Charitable Endowments Dept. and others, 1980 1 SCR 268; Southern Pharmaceuticals and Chemicals, Trichur and other etc. v. State of Kerala and others, 1982 1 SCR 519 and held as under :
“What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payments for services rendered, benefit provided or privilege conferred. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct : a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.”
8. Applying the above quoted ratio to the facts of the present case we are of the view that the High Court fell into patent error in quashing the fee levied by the Municipal Council.
9. We, therefore, allow the appeal, set aside the judgment of the High Court and dismiss the writ petition filed by A. Raja Rao before the High Court. No costs.
