Decided on April 15,1963



- (1.)Latham, C. J., said in Mathews v. Chicory Marketing Board 60 CLR 263 at 276:
"A tax is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered."

(2.)The passage from the judgment of the learned Chief Justice has been relied on by the Supreme Court in Hingir Rampur Coal Co. Ltd. v. The State of Orissa AIR 1961 SC 459 for distinguishing a tax from a fee. Said Their Lordships of the Supreme Court:
"It is true that between a tax and a fee there is no generic difference. Both are compulsory exactions of money by public authorities; but whereas a tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes; whereas a cess levied by way of fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied. There is however' an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons, to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax payer and the public authority there is no option to the tax payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, co-relation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax, and in the case of such a colourable exercise of legislative power courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a pretence of fee and not a fee in reality. In other words whether or not a particular cess levied by a statute amounts to a fee or tax would always be a question of fact to be determined in the circumstances of each case."

This distinction between a tax and a fee has been strongly relied on by counsel for the petitioners in this batch of Original Petitions in support of his contention that what has been imposed by Ext. P 1, "Notification by the Vaikom Municipality, the second respondent in these petitions, is really the imposition of a tax and not the levy of a fee authorised by S.309 of the Kerala Municipalities Act, 1960 (Act 14 of 1961). That section runs thus:

"309. Provision of public cartstand, etc. (1) The Municipal Council may, subject to the provisions of sub-s.(4) construct or provide public landing places, halting places and cart stands and may levy fees for the use of the same.

(2) The Council may,

(a) place the collection of any such fees under the management of such person as may appear to it to be proper; or

(b) farm out the collection of any such fees for any period not exceeding three years at a time and on such terms and conditions as it may think fit.

(3) A statement in English and a language of the locality of the fees fixed by the council for the use of such place shall be put up in a conspicuous part thereof.

Explanation.-- A cart stand shall, for the purposes of this Act, include a stand for vehicles (including motor vehicles as defined in the Motor Vehicles Act, 1939) and animals.

(4) The power to construct or provide stands for motor vehicles under sub-s.(1) may be exercised notwithstanding anything to the contrary contained in the Motor Vehicles Act 1939, but shall be subject to any direction issued by the Government from time to time." Ext. P l Notification shows that the fee is one rupee per day per vehicle for vehicles starting from & arriving within the Vaikom Municipal limits and 50 nP. for vehicles passing through Vaikom Municipal limits. This levy, it is contended by the second respondent, is justified by the services rendered by the said Municipality in establishing a place within the Municipal limits as a stand for motor vehicles and in providing facilities and amenities by way of parking sheds for the vehicles, waiting shed for the passengers and comfort stations as well as canteens. There is no indication whatever in the affidavit filed in support of the petitions as to the extent of the total collections per day or as to how the collections relate to the services rendered or even as regards the costs incurred by the Municipality for providing the above facilities. It is therefore, not possible to accept the contention that the levy of the fees above mentioned is a colourable exercise of the power to levy fees. The Supreme Court pointed out in the passage extracted above from the decision in Hingir Rampur Coal Co. Ltd. v. The State of Orissa AIR 1961 SC 459 that the question whether a particular cess levied by a statute would or would not amount to a fee or tax would always be a question of fact to be determined in the circumstances of each case. There are no materials before me to determine this question. The levy imposed by Ext. P 1 is not patently or palpably arbitrary or unreasonable.

(3.)Counsel for the petitioners in these Original Petitions advanced a more fundamental argument that S.309 of the Kerala Municipalities Act, 1960, extracted above, is bad as amounting to excessive delegation. He relied on the ruling of the Supreme Court in Mohammad Hussain Gulam Mohammad v. The State of Bombay AIR 1962 SC 97 and urged that the section gives uncontrolled power to the Municipal Council to levy any fees that they like, that the power so granted is unchannelled and there are not even any indications or guidance regarding the limits of the exercise of that power. It is contended that not even a maximum has been indicated in the section or by any other provisions in the Act or the Rules framed under the Act. The power granted by S.309 is only to levy a fee. A fee must be related to the services rendered and cannot be excessive or unreasonable with reference to the services rendered. The very term "fee" has a particular significance and connotes a specific thing and therefore denotes a limited levy which from its very nature has fairly well defined boundaries. The power to impose such a limited levy too is thus a defined and controlled power. In other words, by the use of the word "fee" in the section it is not an unbridled or an uncontrolled power that has been conferred on the Municipal Council, but power which necessarily has limitations. These limitations have been indicated in the passage from the judgment of the Supreme Court which I have extracted above. The contention that in every case where a power has been granted to a Local Body or a State Government to impose a fee the granting of the power amounts to excessive delegation cannot, therefore, be accepted. There can, of course, be cases where such a power may be abused. Those abuses can certainly be corrected, if proved, but the mere possibility of abuse is not sufficient to strike down the section. In fact when there is abuse, the impost will be different from the impost of a fee -- perhaps a tax -- and, therefore, the exercise of a power not conferred by the section. This aspect I have already dealt with and I have come to the conclusion that it has not been made out that there has been any abuse of the power conferred by S.309. I also reject the contention that S.309 amounted to excessive delegation.

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