K.N. Seth, J.
1. The petitioner M/s. Shervani Sugar Syndicate Limited manufactures crystal sugar at its sugar factory situate at Neoli, district Etah. It has challenged the legality of the imposition and realisation of toll tax (Vahan Kar) by the Municipal Boards of Ujhanai and Budaun on trucks and other vehicles carrying sugarcane transported from sugarcane purchasing centres to the petitioner's factory at Neoli, district Etah. The prayer made in these writ petitions is for a writ, order or direction in the nature of mandamus commanding the respondent Municipal Boards to refrain and forbear from realising any toll tax on trucks or any other vehicles carrying sugarcane from sugarcane purchasing centres to the petitioner's factory while passing through the limits of the Municipal Boards.
2. The case set up by the petitioner is that all sugarcane purchasing centres as well as the sugar factory are situate outside the limits of the Municipal Boards. The vehicles carrying sugarcane from the purchasing centres to the petitioner's factory only pass through the limits of the Municipal Boards. The Municipal Board, Ujhanai imposed the impugned tax by a notification dated 6-3-1972, which was published in the U. P. Gazette dated 18-3-1972. Amendments in the Rules and the rate of taxwere made from time to time. The last amendment was made by notification dated 29-11-1976 which came into effect from 1-12-1976 and was in force. The Municipal Board, Budaun imposed the impugned tax by a notification dated 31 5-1975.
3. According to the petitioner the trucks carrying sugarcane for the petitioner pass through Moradabad--Farru--khabad Road, Budaun-Datagani Road and Bareilly-Mathura Road which are public highways maintained by the Public Works Department of the Government. The Municipal Boards of Ujhanai and Budaun do not render any service to the petitioner Or to the vehicles transporting sugarcane from the sugarcane purchasing centres situate outside the limits of the Municipal Boards to the petitioner's factory which is also situate outside the Municipal limits.
4. At the hearing of the petition the legality of the imposition has been challenged on the ground (1) that the Municipal Boards have no authority to impose toll tax on vehicles in transit passing through the limits of the Municipal Board and (2) that the toll tax being compensatory in nature the principle of quid pro quo is attracted and since the Municipal Boards do not render any service the imposition of toll tax is illegal.
5. The stand taken by the respondents Municipal Boards was that toll tax on laden vehicles passing through the limits of the Municipal Boards has been validly imposed after following the procedure prescribed under the Act. It has also been asserted that although Moradabad-Farruakhabad Road, Budaun-Datagani Road and Bareilly-Mathura Road are public highways constructed by the State and repair work is done by the Public Works Department but the cleaning of the road, the lighting on the road and looking after of the road is done by the Municipal Board and in that manner the Board renders services to the petitioner. In the counter affidavit filed on behalf of the Municipal Board, Ujhanai the circumstances in which impugned toll tax was imposed have also been set out but for the disposal of the case it is not necessary to refer to them in detail. The Municipal Board Ujhani took an alternativestand that what was being charged from the petitioner was transit-fee or tax and not toll tax simpliciter but at the time of hearing this stand was not pressed.
6. Section 128 (1) of the U. P. Municipalities Act empowers the Municipal Board to impose certain taxes in the whole or any part of the Municipality subject to any general rules or special orders of the State Government, in this behalf. Under Clause (vii) of Sub-section (1) of Section 128 the Board is authorised to impose a toll on vehicles and other conveyances, animals, and laden coolies entering the municipality. It is in exercise of this power that the impugned toll tax has been imposed by the respondent Municipal Boards.
7. The word 'toll' is described in Webster New' International Dictionary as a tax or due paid for some liberty or privilege particularly for the privilege of passing over a highway, as a road or bridge, for that of keeping a booth, vending goods, etc., in a fair market or other limited space as a manner, for importing or exporting goods, and compensation taken for services rendered. The nature of toll tax came up for consideration before this Court in Hindustan Vanaspati . v. Municipal Board, Ghaziabad : AIR1962All25 . The imposition of toll tax by the Ghaziabad Municipal Board was challenged by the petitioner company which had a factory at Ghaziabad for manufacturing Vanaspati at Ghaziabad. The Factory premises were connected with the main railway line bv a branch line which terminated within the factory premises situate within the Municipal limits. The Board claimed to be entitled to levy a toll under Section 128 of the U. P. Municipalities Act on the railway wagons bringing supplies to the petitioner's factory. Mootham, C. J. took the view that since the Board had not constructed and was not concerned with the maintenance and operation of the siding over which the wagons going to the petitioner's factory pass, it was not providing any consideration for which it could levy a toll on the wagons. The learned C. J. took the view that the benefit which could form the consideration for a toll must have a specific reference to the object on which the toll was to be levied and that general amenities could not be considered to be adequate consideration for the imposition of the tolls. Raghubar Dayal, J., on the other hand was of opinion that it was not necessary that there should be any consideration before a toll could be imposed and this was particularly so if the toll was imposed under a statute and in any case even if some consideration was necessary the general amenities provided by the Municipal Board could be considered to be sufficient consideration and it was not required that the Municipal Board should provide some particular service or benefit utilisable by the wagons in order to be entitled to impose a toll on railway wagons. In view of the difference of opinion between the two Hon'ble Judges constituting the Bench the matter was referred to A. P. Srivastava J. who took the view that toll is a tax with certain special features. But when the statute authorises a municipal corporation to levy tolls without specifying that it is to be levied in respect of a particular service rendered on benefit provided it cannot be said that for every toll sought to be levied some specific benefit or advantage must be provided. With regard to the toll in question the learned Judge observed that consideration was certainly necessary for it but that consideration was in the first place to be presumed because the Legislature would not have granted the authority to levy the toll unless there was consideration and in any case the consideration was to be found in the general conveniences, advantages and amenities which the company enjoyed on account of having its factory within the municipal limits.
8. This reasoning was followed by a learned single Judge in Punjab Lime and Lime-stone Co., Dehradun v. Cantonment Board, Dehradun : AIR1967All15 upholding the validity of toll levied and collected by the Cantonment Board of Dehradun.
9. The nature and characteristics of toll tax came up for scrutiny before the Supreme Court in Municipal Board of Hardwar v. Raghubir Singh : [1966]2SCR891 :--
'There were many kinds of tolls and all, of course, must be taken to be comprehended by the entry relating to tolls in the Government of India Act 1935 or the Constitution. There were for example toll-thorough and toll-traverse which were the two main sub-divisions andthere was toll-stallage. The first was a levy prescribed by towns for animals or men that went over through highways of a town or over ferries, bridges, etc., belonging to it. Toll-traverse was charged for passing over a private person's ground. Toll-stallage was a charge for occupation of land by pitching stalls in fairs and markets. A toll was thus a tribute or custom paid for a privilege, generally for passage over or for using a bridge, road, ferry, railway and sometimes for occupation of market, port anchorage, etc. The justification for tolls was that the person charged enjoyed a privilege and the amount went towards the construction, improvement or upkeep of these things.'
On this interpretation of the nature of the toll tax it cannot be contended that there need be no consideration in iusti-fication of the toll-tax. It is also clear that the privilege must be enjoyed by the person charged and the amount realised by way of toll-tax should be utilized towards the construction, improvement or upkeep of the things like roads, ferries, stalls etc., over which the privilege is enjoyed. On this interpretation toll-tax becomes compensatory in nature.
10. The next question is whether the general amenities like lighting and cleaning of the roads done by a Municipal Board can be treated to be sufficient consideration for imposition of the toll tax in question levied on vehicles where tax is imposed on vehicles in transit using State highways constructed, repaired and maintained by the State Government but passing through the Municipal limits. This question came up for consideration before the Supreme Court in the Govt. of Andhra Pradesh v. Hindustan Machine Tools Ltd. : AIR1975SC2037 in connection with the levy of fee imposed by a Gram Panchayat. The Supreme Court observed (Para 20) :
'One cannot take into account the sum total of the activities of a public body like a Gram Panchayat to seek justification for the fees imposed by it. The expenses incurred by a Gram Panchayat or a Municipality in discharging its obligatory functions are usually met by the imposition of a variety of taxes. For justifying the imposition of fees public authority has to show what services are rendered or intended to berendered individually to the particular person on whom the fee is imposed.'
A similar view was expressed by the Supreme Court earlier in Nagar Maha-palika Varanasi v. Durga Das Bhatta-charya : [1968]3SCR374 .
11. We are conscious of the distinction between fee and tax. Generally speaking, law does not require rendition of any service to support imposition of taxes but where the nature of the imposition is such that some privilage must be conferred on the person charged, as in the case of toll tax, general amenities provided by the local authorities like Nagar Mahapalikas, Municipal Boards, Town Areas etc. in discharge of their statutory obligations to the public in general could not be put forward in justification of the imposition of a tax which by its very nature requires some service to be rendered to the person who is made liable for the tax. The strict principle of quid pro quo may not be attracted to such a case and the services rendered or the privileges conferred may not be fully commensurate with the amount of tax imposed but the tax cannot be justified where no service at all is rendered to the person saddled with the liability of tax. In view of the principles laid down by the Supreme Court in the cases referred to above the decision of this Court in the case of Hindustan Vanaspati . : AIR1962All25 (supra) ceases to be good law.
12. Learned counsel for the petitioner further contended that the language of Clause (vii) of Section 128 of the Act did not cover the case of vehicles and other conveyances in transit, i. e., on journey from one place or point to another. It was urged that the words 'entering the Municipality are indicative of an element of repose and rest of the vehicles within the municipal limits. If the vehicles merely pass through the municipal limits without halting or stopping there for loading or unloading that would not be a case of entering the Municipality. Reliance was placed on the Town Municipal Council v. Urmilla Kothari : [1977]2SCR660 . In that case, the words 'any article or animal brought into the municipal limits for the purpose of immediate exportation' came up for interpretation. The Supreme Court held that these words imply processes of 'importing into' and 'exporting from' the municipal limits of goods or animals and are indicative of an element of repose and rest of the goods within the municipal limits and do not comprehend within their sweep the continuous process of transit of goods by vehicles which merely use the State highways passing through the areas which lie within the municipal limits. The words 'entering the municipality' do not have the same implication as the words 'brought into the Municipal limits.' The principle laid down in the aforesaid case is not of much assistance to the petitioner.
13. The decision in Man Mohan Tuli etc. etc. v. Municipal Corporation of Delhi : [1981]2SCR894 is also distinguishable. In that case the words that came up for consideration were 'goods carried by railway or road into the Union Territory of Delhi from any place outside Delhi' occurring in Section 178(1) of Delhi Municipal Corporation Act by which the Corporation levied terminal tax. On the interpretation of the language of Section 178 the Supreme Court held that terminal tax could not be imposed on goods which merely passed through the Territory of Delhi although their destination was not Delhi but places beyond Delhi. The decision also appears to have been influenced with the nature of the terminal tax as that tax is closely interlinked with the destination of the goods and the user in the local area on arrival of the goods. In our opinion, there is a marginal difference between the expression 'entering the municipality' and the language employed in Section 178 of the Delhi Municipal Corporation Act as also between the nature of terminal tax and toll.
14. The right to levy toll in vehicles and other conveyances has undergone a change as a result of the amendment introduced by the U. P. Urban Local Self-Government Laws (Second Amendment) Act, 1979 -- amending Clause (vii) of Section 128 (1) of the Act. Now, Clause (vii) reads as follows :--
'(vii) a toll on vehicles and other conveyances, animals and coolies laden with goods other than household goods of passengers, which enter the limits of the municipality and unload such laden goods or any part thereof within such limits.'
15. The purpose behind the amendment is set out in the statement of Objects and Reasons in the following words:--
'The imposition of toll by the various local bodies of the State affected the operational efficiency of the transports of goods by road and caused them much inconvenience and loss of their valuable time due to stoppage of trucks at numerous octroi posts and toll barriers. The State Government has, therefore, decided to abolish toll and octroi levied for the Notified Areas and Town Areas altogether and also the toll levied in the municipalities on vehicles which merely pass through them without unloading any goods.'
16. In view of the amendment introduced in Clause (vii) of Section 128 (1) which came into force on 6th June, 1979 toll cannot now be levied on vehicles and other conveyances which enter the limits of the municipality in the course of their journey to a point situate outside the municipal limits and do not unload laden goods or any part thereof within the municipal limits.
17. In the result, the petitions succeed and are allowed with costs. The respondent Municipal Boards are directed to refrain and forbear from realising any toll tax on trucks or any other vehicles carrying sugarcane from the purchasing centres to the petitioner's factory while passing through the limits of the Municipal Boards.