DR DHANANJAYA Y CHANDRACHUD, J. - (1.) This judgment has been divided into the following sections to facilitate analysis: A. Factual Background B. Issues C. Rival Submissions D. Analysis D.1 Statutory Provisions D.2 Nature of levy under Section 52 of the UP Water Supply and Sewerage Act D.3 Entry 49 List II: Taxes on Lands and Buildings D.4 Tax and fee D.5 The 'Railways' judgment E. Conclusion A. Factual Background 1. By its judgment dated 7 March 2014, a Division Bench at the Lucknow Bench of the High Court of Judicature at Allahabad allowed a petition under Article 226 of the Constitution of India instituted by the first respondent and directed the appellants to refund water and sewerage taxes levied and collected under the provisions of the Uttar Pradesh Water Supply and Sewerage Act 1975("UP Water Supply and Sewerage Act"). In coming to the conclusion that the levy was contrary to law, the High Court relied upon a decision of this Court in Union of India v. State of U.P. and others (2007) 11 SCC 324.
(2.) The first respondent commenced construction of a building at Vibhuti Khand, Gomti Nagar, Lucknow in 1986 under the auspices of the U.P. Rajkiya Nirman Nigam Limited. Construction of the building was completed in 1991 and its possession was handed over on 31 May 1991. The building was thereafter known as 'PICUP Bhawan'. On 5 January 1995 a demand was raised by the appellants by Bill No. 12/26 for an amount of Rs. 46,63,312.50/- towards water tax for the period from October 1986 to March 1995. By its letter dated 25 January 1995, the first respondent sought a clarification on the location of the sewer and water standpost and other water pipelines; distance from PICUP Bhawan and a copy of the relevant notification or order prescribing the 'radius' under Section 55(b)(i) of the UP Water Supply and Sewerage Act.
(3.) The bill was rectified on 28 January 1995 by which a demand of water tax for the amount of Rs.16,45,875.00/- was raised in terms of the provisions of Section 52(1). The respondent by its communication of 31 January 1995, once again, sought certain clarifications. The appellant clarified the queries and reiterated its demand. The first respondent deposited an amount of Rs. 3,46,500.00/- under protest on 15 March 1995, and a further sum of Rs. 9,41,942.77/- on 29 April 1995. On 7 September 1995 a writ petition was instituted by the first respondent under Article 226 of the Constitution of India for challenging the levy of water tax and sewerage tax on the premise that the first respondent had, during the construction of the building, not obtained any water from the pipeline laid down by the appellants within the area nor had it made a request for a fresh water connection. A challenge was raised to the validity of Sections 52(a), 55(b)(i) and 56(b) of the UP Water Supply and Sewerage Act on the ground that they are ultra vires the provisions of Article 265 of the Constitution. The petition was contested by the appellants, who filed a counter affidavit. By its judgment dated 7 March 2014, the Division Bench of the High Court allowed the writ petition and directed the appellants to refund the water and sewerage taxes levied and collected. The review petition against this judgment was also dismissed by the High Court by order dated 9 August 2014. On 7 August 2015, while entertaining the special leave petition and issuing notice, this Court stayed the operation of the impugned judgments of the High Court. B. Issues ;