S.B. Kishore Vs. Union of India and Others - Court Judgment

Excerpt:
- [ a.k. sarkar,; j.r. mudholkar,; k. subbarao,; n. rajgopala ayyangar and; raghubar dayal, jj.] under a. 413 of the calcutta municipal act, 1951, no person shall without a licence granted by the corporation of calcutta, keep open any cinema house for public amusement in calcutta. under s. 548(2), for every licence under the act, a fee may be charged at such rate as may from time to time be fixed by the corporation. in 1948, the appellant (corporation) fixed fees on the basis of annual valuation of the cinema house. the respondent, who was the owner and licensee of a cinema theatre, had been paying a licence fee of rs. 400 per year on that basis. in 1958, the appellant, by a resolution, changed the basis of assessment of the fee. under the new method the fee was to be assessed at rates prescribed per show according to the sanctioned seating capacity of the cinema house; and the respondent had to pay a fee of rs. 6,000 per year. the respondent, therefore moved the high court for the issue of a writ quashing the resolution and the application was allowed. in the appeal to the supreme court the appellant contended that (i) the levy was a tax and not a fee in return for services and (ii) s. 548(2) does not suffer from the vice of excessive delegation; while the respondent contended that (i) the levy was a fee in return for services to be rendered and not a tax, and as it was not commensurate with the costs incurred by the corporation in providing the services, the levy was invalid; (ii) if s. 548 authorised the levy of a tax, as distinct from a fee in return for service rendered, it was invalid, as it amounted to an illegal delegation of legislative functions to the appellant to fix the amount of a tax without any guidance for the purpose and (iii) the levy was invalid as violating art. 19(1) (f) and (g) of the constitute. held (per sarkar, raghubar dayal and mudholkar jj) : (i) the was not a fee but a tax. [490 f] the act does not intend to use the word "fee" as referring only to a levy in return for services, for, the levies authorised by some other sections of the act are really "taxes", though called "fees". besides, the words used are "fee for the licence" and these words do not necessarily mean a "fee in return for services" as is apparent from arts. 110(2) and 199(2) of the constitution, where both expressions are used indicating that they are not the same. [483 g-h] the word "fee" in s. 548 must be read as referring to a tax as any other reading would make the section invalid, and in interpreting a statute, it ought to be made valid if possible. [484 b-c] the decisions of this court establish that in order to make a levy a fee for services rendered, the levy must confer special benefit on the persons on whom it is imposed. the levy under s. 548 (2) is not a "fee in return for services" as the act does not provide for any services of a special kind being rendered, resulting in benefits to the person on whom it is imposed. s. 527(43) permits by laws to be framed for regulating the inspection, supervision and control, among others, of cinema houses; but it is not obligatory to make such by laws and therefore, there may be no services to render. even the by law made provides only for inspection, and the work of inspection done by the appellant was only to see that the terms of the licence were observed by the licensee. it was not a service to him, and so, no question arises of correlating the amount of levy to the costs of any service. the levy therefore is not a fee and must be tax. [485 b-c, f; 488 e; 490 e-f] the commissioner, hindu religious endowments, madras v. shri lakshmindra thirtha swamiar of sirur mutt, [1954] s.c.r. 1005, h. h. sudhindra thirtha swamiar v. commissioner for hindu religious and charitable endowments, [1963] supp. 2 s.c.r. 302 and the hingir rampur coal co. ltd. v. the state of orissa and ors. [1961] 2 s.c.r. 537, referred to. whether a particular levy is a fee or a tax has to be decided only by reference to the terms of the section. its position in the act cannot determine its nature ; an imposition which is by its terms a tax and not a fee, cannot become a fee by reason of its having been placed in a certain part of the statute. [489 b] it is not right to say that s. 443 does not impose any duty on the appellant and that therefore, the licence fee leviable under s. 548, should be fixed only with reference to rendering of services. the corporation has been set up only to perform municipal duties and its powers are for enabling it to perform those duties. but, since there is no provision for service being rendered, the levy cannot be a fee and would indisputably be a tax. [490 b, c, d] (ii) the fixing of the rate of a tax is not of the essence of legislative power and the fixing of rates may be left to a non legislative body. when it is so left to another body the legislature must provide guidance for such fixation. since there is sufficient guidance in the act as to how the rate of the levy under s. 548 is to be fixed, the section is valid. [492 d, f; 493 g-h; 497 b] the appellant is an autonomous body. it has to perform various statutory functions. it is given power to decide when and in what manner the functions are to be performed. for all this it needs money and its needs will vary from time to time with the prevailing exigencies. its power to collect tax is necessarily limited by the expenses required to discharge the functions. it has, therefore, where rates have not been specified in the statute, to fix such rates as may be necessary to meet its needs, and that would be sufficient guidance to make the exercise of its power to fix the rate, valid. [496 d-f] case law reviewed. (iii) the challenge to the levy on the ground that it amounts to expropriation is wholly unfounded. no doubt the increase in the rate of fee was large but considering the available seating capacity of the respondent, it cannot be said to be unreasonably high. [482 e-f] the contention of the appellant that even if no guidance for taxation has been prescribed the section would still be valid, because, the act may be said to have been passed under entry 5 of list ii of the seventh schedule to the constitution and that entry authorises the passing of a law concerning the powers of a municipal corporation and that such powers must necessarily include the power to levy a tax, was left open. [497 d-e, h] per subba rao and ayyangar, jj (dissenting) (i) if on a proper construction of the act one reached the conclusion that part iv of the act was not exhaustive of the range of levies permitted by the act, and the fees permitted to be levied by s. 548(2) were also taxes, there would be nothing in s. 127(3) or (4) to militate against that construction. but, an examination of the provisions of the act makes three matters abundantly clear; (a) that the act draws a sharp and clear distinction between taxes properly so called and fees; (b) that the division into parts and chapters is logical and clear cut and no matter which properly falls under a subject set out under a part or chanter heading, is dealt with in any other; and (c) that taxes, by whatever designation they might be called, are all comprehended and dealt with by part iv and by part iv alone, and that what is permitted to be imposed by s. 548(2) is only a fee as distinguished from a tax. as admittedly there is no correlation between the fee charged and the service rendered, the impugned levy was not authorised and the high court was right in granting relief to the respondent. [525 b-c; 526 d-g] to say that to enable a fee strictly so called to be levied, an immediate advantage measurable in terms of money should be conferred on the payer is to take too narrow a view of the concept of a fee. the word "services" in the context has to be understood in a wide sense, as including supervision and control over the activities for the excess of which the fee is charged. the judgements of this court in the shirur mutt case, [1954] s.c.r. 1005, and the cases following it, do not lay down that where an activity is regulated by licenses, the imposition of charges for the inspection, supervision and control of the activity to ensure compliance with the regulation is not a benefit conferred on the licensee, so as to render the amount charged for such a licence not a fee in the real sense, but a tax, whose constitutional validity could be sustained by reference to the taxation entries in lists i and ii. [508 a; 515 f-g; 517 h; 518 a] case law considered. also, art. 110(2) of the constitution far from supporting the appellant's contention, negatives it. if pure taxation measures, employing the machinery of licences and fees, would be money-bills, then the fees for licences which are outside the definition, would be those fees which are imposed to meet the cost of regulation and supervision of an activity which is controlled by the requirements of a licence and compliance with its terms. besides, if the levy of such licence fees on various activities which form the subject of legislative control or regulation under the various non-taxation entries in the lists were treated as tax, entries 96 and 66 in the respective lists would have to be read as taxation entries, because, such a levy is permitted only by those entries. this however would be con- trary to the entire scheme on which the several entries in the lists are made, namely, setting out the exclusive general legislative powers the enumeration of taxes which could be imposed and finally the power to, impose fees in respect of any of the matters in the list. [502 c; 519 b-c, e, g] (ii) viewed as a tax the delegation in s. 548(2) is unconstitutional, as essential legislative functions are parted with to the municipality, a subordinate law making body, and therefore the provision is unconstitutional. [546 b] essential legislative functions cannot be delegated but where the law lays down the principles and affords guidance to the subordinate lawmaking authority details may be left for being filled up by the executive or by other authorities vested with quasi-legislative power. the power to fix a rate of tax is an essential legislative function and therefore, unless the subordinate law-making authority is afforded guidance by the policies being formulated, principles enunciated and standards laid down, the legislation will suffer from the vice of excessive delegation and would be void as arbitrary and unconstitutional. the _provisions of the act do not afford any guidance to the municipal corporation to fix the rate of levy. no doubt, the municipal government of calcutta was vested in the corporation under s. 24 of the act, but the expression "government" does not gather within its fold all powers necessary for administration nor does it create an independent sovereign body entitled to legislate in any manner it likes for the purpose of carrying on civic government. the corporation is still a subordinate body which is the creation of the legislature and can only function within the framework of the powers conferred upon it by the act. no assistance is derived in this regard from the powers of supervision which the state government has over the municipal affairs under a. 42 and 47. if no standards have been laid down by the act for the corporation to afford it a guidance for the fixation of a rate, the fact that supervisory power is conferred upon the executive would not obviate that objection, for the government itself would have no guidance from the legislature as to the policy to be adopted in exercising the supervision. [541 e--g; 542 c-g; 545 a] it cannot be said that as a result of as. 115, 117 and 126 no taxes could be raised except such as were needed for the expenditure for which provision had been made in the budget and the rate of tax was, therefore, determined by the needs of the corporation. if the amount of money which a municipality needs for discharging its functions, affords any guidance, then the need of a state or the union ought to afford sufficient guidance to sustain the validity of any skeleton legislation. [545 a-c] the orissa ceramic industries ltd. v. executive officer, jharsuguda municipality a.l.r, 1963 orissa 171 disapproved. the quantum of power which a law could bestow upon an institution or body of its creation is determined, first, by the view of the legislature to what are necessary for achieving the purposes for which the institution or body is created and, secondly, by the overall limitations imposed by the constitution by the distribution of legislative power. nothing therefore turns on the use of the word "powers" in entry 5 of the list 11 which deals with the constitution and powers of municipal corporations for the purpose of local self-government. the state legislature cannot, therefore, authorise a municipal body which it creates, even though, it be for the purpose of local self-govemment, to exercise a power higher than what it itself possesses. any legislative practice prevailing before 1st april, 1937 when india was under a unitary form of government or prevailing before the constitution, does not serve as a guide for interpreting the legislative entries in the constitution and any such legislative practise cannot prevail over the limitations imposed by the distribution of legislative power in respect of post-constitution legislation. [527 f-g;530 d, g; 532 f-g ; 533 e-f; 534 c] the analogy of american decisions also cannot afford any guidance for the application of a different rule as to what constitutes excessive delegation in the case of legislation creating municipal bodies. the rule to limits of delegation by the legislatures constituted in india, by the consti- tution, has been the subject of elaborate consideration by this court and the decisions have not laid down that a different rule applies when the delegation of legislative power is in favour of a municipal corporation. [535 c-d, e] case law considered.  1. special leave granted.2. we have heard appellant in person and mr. r.b. dattar for the delhi administration and mr. v. b. saharya for the delhi development authority. the appellant was the owner of certain land which was subjected to acquisition for purposes of development and expansion of delhi under the preliminary notification of november, 1959 and award was made between 13-2-1962 and 7-2-1973 in instalments. under the scheme for acquisition then obtaining, the owner of the land, who was losing his property on. account of acquisition, was entitled to allotment of a plot of land. there is considerable difference between the appellant on one side, and counsel for the respondents on the other, as to what exactly was the ratio of the area between the land acquired and plot to be allotted.3. appellant did not lay claim for allotment within a reasonable time and no action was, therefore, taken by the respondents to fulfil their obligation under the scheme. in 1981, the additional compensation was paid to the appellant. it is only thereafter that he made an application for allotment of the land stipulated in the scheme and when that was not given, he approached the delhi high court by applying under article 226 of the constitution for a direction for allotment. the delhi high court went into the matter but found that the appellant approached the high court 19 years after the event, and therefore, dismissed his petition a barred by laches. that is how this appeal by special leave has been brought before this court.4. some time back when the matter was before us, we had heard the appellant in person and learned counsel for the respondents and had called upon mr. dattar to obtain instructions as to whether if delay was condoned, the appellant became entitled to allotment of any land. the appellant furnished some explanation about the delay in laying his claim and approaching the court. if the matter is strictly screened, possibly the explanation for condoning this long period of inaction may be difficult to be overlooked; but there are some instances which the appellant had brought to our notice where the respondents have entertained claims belatedly. this is not such a case where we should make comparative assessment of exact periods of delay and if justification for condonation has really been made out. taking a broad view of the matter and keeping the conduct of the respondent in view we are prepared to overlook the delay and entertain the appellant's claim. mr. dattar says that in 1962-63 which was the relevant period as indicated by the high court to be taken into consideration, plots of 250 sq. yds. were being provided in cases of this type. though the appellant has not agreed to this figure, in the absence of any other clear material we are prepared to proceed on the footing that the appellant would have been entitled to allotment of plot of 250 sq. yds.5. we direct the respondents to make allotment of a plot with that area to the appellant within ten weeks from today and the appellant has undertaken personally before us that he would comply with all the requirements that respondents 1 and 2 have provided under their scheme for such allotment. the preference for allotment should be in the area where the acquired land was located and we understand that it was south delhi. but in the event of land not being available for allotment in south delhi, some other area may be acceptable. the price to be realised shall be the price which the d.d.a. was charging in 1981 plus developmental charges. within four weeks from today the appellant has undertaken to satisfy the conditions.6. this order is confined to the facts of the present case and shall not be taken as a precedent. no claim shall be entertained in regard to preferences.7. the civil appeal is disposed of accordingly. no costs.