EPIAS AND COMPANY Vs. SALES TAX OFFICER
HIGH COURT OF KERALA
Epias And Company
SALES TAX OFFICER
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(1.) PETITIONERS in these cases challenge S.14(1), 14(1A) and 14(5) of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as 'The Act') as unconstitutional and
invalid. All the petitioners herein are dealers registered under the Kerala General Sales
Tax Act and under the Central Sales Tax Act (in short 'Central Act'). S.13 of the Act
requires compulsory registration of every dealer whose total turnover exceeds a
particular limit. At present, Rs.1 lakh is the limit prescribed under the Act. S.14(1)
prescribes the fees for registration. S.14(1) after the amendment of the Act by Act 17 of
1988 with effect from 1.4.1988 with enhancement of rates pending till Act 23 of 1996 is as follows:
"14. Procedure for registration : (1) An application for registration shall be made to such authority, in such manner and within such period as may be prescribed and shall be accompanied by a fee as specified below:- The rates were further enhanced with effect from 1.4.2000. Before the amendment by Act 17 of 1988 the registration fee was as follows: The registration fee was originally ten rupees. Afterwards it was amended as under:
(2.) THE contention of the petitioners is that charging of registration fee at such an exorbitant rate is unwarranted and illegal and that the said levy is opposed to all
constitutional requirements and conditions for levy of fees for registration. State cannot
impose such huge amounts in the guise of fee. In any event, the exorbitant increase in
the registration fee is arbitrary and illegal and violative of Art.14 of the Constitution of
India. S.14(1A) as inserted by Act 8 of 1992 reads as follows:
"14. ....... (1A) Notwithstanding anything contained in sub-s.(1) every dealer registered under sub-s.(3) of S.7 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall in addition to the fee specified in sub-s.(1) pay a fee of rupees one hundred." The contention of the petitioners is that since already registration fee was charged under the Central Act, imposition of fee by the State for registration under the Central Sales Tax Act is illegal and ultra vires the powers of the State. S.14(5) reads as follows: "14. ........ (5) A certificate issued under sub-s.(2) shall be valid for a year and shall be renewed from year to year on payment of the fee specified in sub-s.(1) and continues to be valid on such renewal." It is the contention of the petitioners that authorities have got power to cancel registration given to any dealer and detailed procedures are made under the Act and Rules. Otherwise the registration is automatic. Hence payment of registration fees at the same rate for renewal every year is clearly illegal. Further it is submitted that levy of registration fee at differential rates on slab rate is arbitrary, illegal and unconstitutional. It is also stated that sub-s.(5) does not require the procedure required to be followed under sub-s.(2) for the purpose of registration to be granted to a dealer for the first time. It is also submitted that there is no necessity for further levy as certificates and registration number are received by the assessees on registration and in any event, fees charged at every year for renewal of registration are exorbitant and are liable to be set aside.
We shall consider the nature of registration fees charged before going into the merits of the case. It is true that there is no generic difference between tax and fee, though
broadly tax is a compulsory exaction as part of a common burden, without promise of
any special advantage to classes of tax payers whereas fee is a payment for services
rendered, benefit provided or privilege conferred. Eventhough services rendered need
not be uniform, tax is levied for public purpose and not for payment of services
rendered. But with regard to the fees, there is an element of quid pro quo between the
persons paying fee and the authority imposing it. In Commissioner, Hindu Religious
Endowments, Madras v. Sri. Lakshmindra Thirtha Swamiar (AIR 1954 SC 282) the
Apex Court considered the contradistinction between 'tax' and 'fee'. The definition of
'tax' given by Latham, C.J. as "a compulsory exaction of money by public authority for
public purposes enforceable by law and not payment for services rendered" was
accepted by the Apex Court as stating the essential characteristics of a tax. Turning to
fees, it was said "a fee is generally defined to be a charge for a special service
rendered to individuals by some governmental agency", but it was confessed, "as there
may be various kinds of fee, it is not possible to formulate a definition that would be
applicable to all cases". As regards the distinction between a tax and a fee, it was
noticed that compulsion could not be made the sole or even a material criterion for
distinguishing a tax from fee. In Hingir-Rampur Coal Co. Ltd. v. State of Orissa (AIR
1961 SC 459) the Apex Court held that there was an element of quid pro quo between the person paying the fee and the authority imposing it. The Apex Court further held
"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."
After considering various decisions in Municipal Corporation of Delhi and Others v.
Mohd. Yasin (1983 (3) SCC 229) the Apex Court held as follows:
"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 tax payers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hallmark 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 casual 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 benefitted 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 corelationship 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."
(3.) IN this case there is no dispute between the parties that what is levied in the form of licence fee is a fee and not a tax. The Government Pleader submitted that what is
collected is a fee. In the counter affidavit also Government justifies the imposition of
licence fees as a fee and not as tax. Therefore, we need not go at length whether the
levy is tax or fee.;
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