Krishna Das Vs. Town Area Committee, Chirgaon  INSC 97 (20 March 1990)
K.N. (J) Saikia, K.N. (J) Sawant, P.B.
1991 AIR 2096 1990 SCR (2) 13 1990 SCC (3) 645 JT 1990 (2) 68 1990 SCALE (1)550
Areas Act 1914-Section 38 and Bye Laws of the Town Area Committee Chirgaon-Weighing
dues--Payment of--User of market committee--Validity of weighing dues--Whether
'tax' or 'fee'
appellant is a commission agent, engaged in the business of sale and purchase
of grains, rice, oil-seeds etc. in Chirgaon, District Jhansi. By a notification
issued under s. 38(1) of the United Provinces Town Areas Act, 1914, the
provisions of Section 298(2)(F)(d) of the U.P. Munici- palities Act, 1916 were
extended to the Town Area of Chirg- aon, as a result of which, the Panchayat of
Chirgaon was empowered to make bye-laws for the establishment, regulation 'and
inspection of market and 1or the proper and cleanly conduct of business
therein. Later by Section 4 of the U.P.
Provinces Town Area (Amendment) Act, the word "Panchayat"
wherever it occurred in the Principal' Act was substituted by the word
'Committee'. In pursuance of the powers con- ferred on him the District
Magistrate, Jhansi framed bye- laws dated 18.11.1934 for the regulation of the market.in
Chirgaon which inter alia provided that weighing dues shall be charged at
different rates on various articles that came to the Town Area for sale at
rates specified therein. Since the appellant was a dealer in some of these
commodities, he was served with a notice calling upon him to pay Rs.1892/26 as
weighing dues for the period from 1.5.1962 to 30.6.1962.
appellant challenged the notice by means of a writ petition in the Allahabad
High Court. A learned single Judge of the High Court dismissed the writ
petition taking the view that the demand made by the respondent was purely a
measure of taxation. Special Appeal against the said order was also dismissed
by the High Court. Hence this appeal by special leave.
main contentions of the appellant, as urged before the High Court, as have been
repeated before this Court are;
that the bye-laws were invalid; (ii) that the Town Area Committee had no power
to impose such tax; as the Act did not empower the TAC to levy and collect
weighing dues; (iii) that the weighing dues were discriminatory because of the
exemptions; (iv) that the weighing dues were not a tax but a fee which could
not be charged without quid pro quo and (v) that there was 14 double taxation.
It was also urged that the imposition of weighing dues is tantamount to illegal
extraction without the authority of law. The respondent, on the other hand,
supported the judgment of the High Court;
the appeal, this Court,
Under the Indian Constitution the State Govern- ment's power to levy a tax is
not identical with that of its power to levy a fee. While the powers to levy
taxes is conferred on the State Legislatures by the various entries in List 11,
in it there is Entry 66 relating to fees, empow- ring the State Government to
levy fees 'in respect of any of the matters in this List, but not including
fees taken in any Court'. The result is that each State Legislature has the
power, to levy fees, which is co-extensive with its powers to legislate with
respect to substantive matters and it may levy a fee with reference to the
services that would be rendered by the State under such law. The State may also
delegate such a power to local authority. [21C-D] A fee is a payment levied by
an authority in respect of services performed by it for the benefit of the
payer, while a tax is payable for the common benefits conferred by the
authority on all tax payers. [21F] 'While there is no quid pro quo between a
tax payer and the authority in case of a tax, there is a necessary co- relation
between fee collected and the service intended to be rendered. Of course the
quid pro quo need not be under- stood in mathematical equivalence but only in a
fair corre- spondence between the two, a broad co-relationship is all that is
necessary. [21G] Courts cannot review the wisdom or advisability or expediency
of a tax as the court has no concern with the policy of legislation, so long
they are not inconsistent with the provisions of the Constitution. It is only
where there is abuse of its powers and transgression of the legis- lative
function in leving a tax, it may be corrected by the judiciary and not
otherwise. [24B] Taxes may be and often are oppressive, unjust and even
unnecessary but this can constitute no reason for judicial interference. When
taxes are levied on certain articles or services and not on others it cannot be
said to be discrimi- natory. [24C] Avinder Singh v. State of Punjab,  1 SCR 845, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 748 of 1975.
the Judgment and Order dated 3.12.1971 of the Allahabad High Court in Special
Appeal No. 289 of 1963.
for the Appellant.
Gupta, (NP) and Mrs. Rani Chhabra for the Re- spondent.
Judgment of the Court was delivered by K.N. SAIKIA, J. This appeal by special
leave is from the Judgment and order dated 3.12.1971 of the Allahabad High
Court in Special Appeal No. 289 of 1963 dismissing the appeal and consequently
the writ petition.
appellant is a (Pacca Arahatiya) commission agent engaged in the sale and
purchase of grains, rice, oil-seeds and jaggery in the town of Chirgaon, District Jhansi.
On March 4, 1933, the Government of U.P. published a
Notification purported to have been issued under section 38(1) of the United
Provinces Town Areas Act 1914 (Act-II of 1914), hereinafter referred to as 'the
Town Areas Act', which read as under:
090/XI-158-T. It is hereby notified that the Governor acting with his
Ministers, in exercise of the powers con- ferred by s. 38(1) of the United
Provinces Town Areas Act 1914 (II of 1914) is pleased to extend the provisions
of s. 298(2)(F)(d) of the United Provinces Municipalities Act 19 16 to the Town
Area of Chirgaon in the Jhansi District in the modified form set forth below:
section of the United Provinces Munici- palities Act, 1916 (II of 1916) s.
298(2)(F)(d) "The Pan- chayat may make bye-laws for the establishment,
regulation and inspection of market and for the proper and cleanly Conduct of
business therein." Later by section 4 of the United Provinces Town Area
(Amendment) Act, 1934 (U.P. Act II of 1934) the word 'Pan- chayat' wherever 16
it occurred in the Principal Act was substituted by the word 'Committee'.
be noted that the Town Area Panchayat was super- seded for a period of one year
with effect from 20.10.1933 to 19.10.1934 and was revived thereafter.
District Magistrate, Jhansi promulgated a set of bye-laws dated
18.11.1934 for the establishment, regulation and inspection of the market in
the Town Area of Chirgaon and for the proper and cleanly conduct of business
Bye-law (1), sellers and purchasers of the commodities mentioned thereunder
were required to pay weighing dues. It said:
Weighing dues shall be charged at the rate of 1/4/6 per cent (eight-/8/-annas per cent from the sellers and twelve and a
half annas per cent from the purchaser) on the following articles which comes
to the Town Area for sale:
oil seeds, oil cakes, cotton, vegetables for whole- sale, Dhania for wholesale
and gur etc.
Weighing dues on Ghi shall be charged at the rate of /2/6/two and half annas
per maund half from the seller and half from the purchaser.
In recovery of weighing dues fraction of a pie shall be omitted and more the
figure adjusted to the nearest price.
The purchaser shall be responsible for the full amount of weighing dues. He
shall deduct the seller's share from the price.
weighing dues shall be charged on any article import- ed by rail nor on rice,
salt, gur and sugar imported from Jhansi and Moth by rail or road.
refusal to pay the weighing dues it shall be recover- able as arrears of tax on
circumstances and property." Since the appellant was a dealer in some of
these commodities, was served with a notice dated 27.7.1962 de- manding Rs.
1892.26 as weighing dues for the period from 1.5.1962 to 30.6.1962.
appellant challenged the aforesaid notice filing a writ petition on 18.8.1962
in the Allahabad High Court being Civil Misc. Writ Petition No. 2400 of 1962. A
learned Single Judge by his order dated 29.4.1963, dismissed the same taking
the view that the demand made by the respondent was purely a measure of
taxation. The appellant filed therefrom Special Appeal No. 289 of 1963, which
was dismissed by the impugned judgment and order.
the High Court the appellant contended, inter alia, that the Bye-laws were
invalid as the Town Area Com- mittee, shortly 'the TAC', did not frame them;
that the TAC had no power to impose such tax; that the U.P. Town Areas
(Amendment) Act 1952 did not empower the TAC to levy and collect weighing dues;
that the weighing dues were discrimi- natory because of the exemptions; that
the weighing' dues were not a tax but a fee which could not be charged without
quid pro quo; that there was double taxation; and in the alternative, that the
weighing dues amounted to neither a fee nor a tax but an illegal extraction
without the authori- ty of law. All the arguments were rejected by the High
us Mr. R.K. Maheshwari, the learned counsel for the appellant, submits, inter alia,
that the Bye-laws were invalid at the time when those were framed and could not
have been validated by mere adoption by the TAC in 1935;
the weighing dues were merely in the nature of purchase tax and were illegal
inasmuch as the TAC had no right or authority to levy the same when it had
already been imposed by the State of Uttar Pradesh under section 128(1)(xiv) of
the U.P. Municipalities Act; that the TAC did not render any special service to
the 'Arhatias' or farmers who came to the town to conduct their business, nor
did it incur any expend- iture in this regard; that the charging of weighing
dues was discriminatory inasmuch as there were no weighing charges on some
articles imported from Jhansi or Moth Tehsil by rail and on rice, salt, jaggery
or sugar brought either by road or by rail; that goods coming from villages
situate between Chirgaon and Jhansi were not required to pay weighing dues
while goods from other places in the State of U.P. were being subjected to the
dues; that similar tax had already been imposed by the State Legislature under
the Provisions of the U.P. Sales-tax Act under Entries 52 and 54 of List II and
there was double taxation by the TAC; that the goods arriving by car have been
subjected to the weighing dues while goods arriving by rail from Jhansi and
Moth were exempted; that the levy of weighing dues by the Town Area Committee Chirgaon
is arbitrary and discriminatory and is grossly violative of Article 14 of the
that the levy, though called tax is actually a fee and is collected in the
disguise of tax; that double taxation in the form of sales tax by the State
Government and weighing dues by the TAC is unjustified and it imposes
unreasonable restriction on the rights guaranteed under Article 19(1)(g) of the
Constitution; and that the High Court erred in dis- missing the appeal and the
learned counsel for the respondent refutes all the submissions of the appellant
and supports the impugned judgment.
first question that needs examination is the validi- ty of the Bye-laws
promulgated by the District Magistrate on 18.11.1934 after the Notification
published by the Govern- ment of U.P. issued under section 38(1) of the Town
Areas Act. That section, as it stood at the relevant time, empow- ered the
Provincial Government to extend, by notification in the Gazette, to all town
areas or to any town area or to any part of a town area any enactment for the
time being in force in any municipality in the United Provinces subject to such
restrictions and modifications, if any, as it thought fit. By the instant
Notification dated March 4, 1933 the Provincial Government extended the
Provisions of section 298(2)(F)(d) of the United Provinces Municipalities Act,
1916, hereinafter referred to as the Municipalities Act, to the town area of Chirgaon
in the Jhansi District in the modified form set forth in the Notification
itself. The word 'Panchayat' was substituted by the word 'Committee' by section
4 of the United Provinces Town Areas (Amendment) Act. There could, therefore,
be no doubt that the TAC could make the Bye-laws.
question then is the nature and extent of the empo- werment under the above
Notification. The empowerment would naturally be what a Municipality could do
under that provi- sion, namely, section 298(2)(F)(d). Section 298 was includes
in Chapter IX of the Municipalities Act and it dealt with rules, regulations
and bye-laws. There could, therefore, be no doubt that the TAC was empowered to
make bye-laws "for the establishment, regulation and inspection of market
and for the proper and cleanly conduct of business therein." The Bye-laws
dated 18.11.1934 were promulgated by the District Magistrate. The contention
that the District Magis- trate had no power to promulgate the Bye-laws was
rightly rejected by the learned courts below holding that the Dis- trict
Magistrate was at that time functioning as TAC as it then remained suspended
and those were ratified on 9.1.1935 by the TAC after it was revived.
Section 298(2)(F)(d) as modified in the Notification did not ex facie authorise
the imposition of any tax. The Munic- ipalities Act, Chapter V, (Sections 128
to 165) dealt with municipal taxation, imposition and alteration of taxes.
VII of that Act which included section 298(2)(F)(d) did not deal with taxation.
section 298(2)(F)(d) dealt with markets, slaughter houses, sale of food etc.
Clause (d) thereunder did not ex facie envisage imposition of any tax.
Town Areas Act, Chapter III (Sections 14 to 25) dealt with taxation and town
fund. Under section 14, subject to any general rules or special orders of the
Provincial Gov- ernment in that behalf, the taxes which a TAC could impose had
been stated. It did not mention weighing dues as such.
Bye-laws envisaged by section 298((2)(F)(d), there- fore, could not ex facie be
said to have empowered the TAC to impose a tax on the subject matter of that
clause. It was contended before the High Court that the U.P. Town Areas (Amendment)
Act, 1952 (U.P. Act 5 of 1953) cured the defects in the bye-laws, if any,
inasmuch as section 12 of that Amending Act added clause (g) to section 14(1)
of the Town Areas Act in the following terms:
other tax being one of the taxes mentioned in subsec- tion (1) of section 128
of the U.P. Municipalities Act, 19 16." Section 128(1) of the
Municipalities Act did not mention weighing dues as such. But Clause (xiv) of
that section provided:
other tax which the State Legislature has power to impose in the State under
the Constitution." At the relevant time, after the amendment of section
14(1)(g) of the Town Areas Act, the TAC was thus empowered to levy any other
tax, being one of the taxes mentioned in sub-section (1) of section 128 of the
U.P. Municipalities Act, 1916.
High Court on the basis of the above provision concluded that the TAC became
empowered to levy all those taxes which the State Government could levy under
sub-sec- tion (1) of section 128 of the Municipalities Act; and the TAC could
impose any tax which the State legislature could impose under the Constitution.
Further, it was concluded that Entry 52 of list II empowered the State
Government to impose tax on the entry of goods into local area for con- sumption,
use 20 or sale therein and Entry 54 of list II empowered the State Government
to impose a tax on the sale or purchase of goods and hence the TAC could impose
tax on the entry of goods as well as on the sale or purchase of goods in view
of the Entries 52 and 54 of list II. Referring to the Bye-law No. 1, the High
Court concluded that this imposition was upon the entry of the mentioned
articles into Town area for sale and it was clearly covered by entry 52 of list
II of the 7th schedule and hence it could not be said that the TAC did not
possess the requisite power to levy this tax. In other words, the weighing dues
were construed as entry tax and sale or purchase of goods tax combined.
High Court also held that the defect, if any, in this regard was cured by
section 13 of the U.P. Town Areas (Amendment) Act, 1952 as section 13 of that Act
anything contained in the principal Act, (1) where any tax of the nature
described in clause (g) of Sub-section (1) of Section 14 of the Principal Act
& by whatever name or description called has been imposed, levied or
assessed by any Town Area Committee prior to the com- mencement of this Act,
the same shall be and is hereby declared to be good and valid in law as if this
Act had been in force on all material dates and the tax had been imposed,
levied and assessed under and in accordance with the appro- priate provision in
that behalf." (Emphasis supplied by us) The High Court concluded, and we
think rightly, that the imposition of this tax (weighing dues) had been
validated retrospectively, as if the Amending Act had been in force even in
1934, when the bye-laws were framed. The validity of the provision having not
been challenged, it cannot be held that the imposition of this tax was without
authority of law if it could be brought within any of the taxation entries of
List II of the Seventh Schedule of the Constitution. Howev- er, if the weighing
dues did not amount to a tax but a fee, then the question would be whether the
TAC could levy such a fee. In fact one of the submissions of the appellant is
that it was a fee and not a tax as claimed by the respondent.
is paid for performing a function. A fee is not ordinarily considered to be a
tax. If the fee is merely to compensate an authority for services performed or
as compen- sation for the services rendered, it 21 can hardly be called a tax.
However, if the object of the fee is to provide general revenue of the
authority rather than to compensate it, and the amount of the fee has no
relation to the value of the services, the fee will amount to a tax. In the
words of Cooley, "A charge fixed by statute for the service to be
performed by an officer, where the.
has no relation to the value of the services per- formed and where the amount
collected eventually finds its way into the treasury of the branch of the
Government whose officer or officers collect the charge is not a fee but a
tax." Under the Indian Constitution the State Government's power to levy a
tax is not identical with that of its power to levy a fee. While the powers to
levy taxes is conferred on the State Legislatures by the various entries in
list II, in it there is Entry 66 relating to fees, empowering the State
Government to levy fees "in respect of any of the matters in this List,
but not including fees taken in any Court." The result is that each State
Legislature has the power, to levy fees, which is co-extensive with its powers
to legislate with respect to substantive matters and it may levy a fee with
reference to the services that would be rendered by the State under such law.
The State may also delegate such a power to a local authority. When a levy or
an imposition is questioned, the Court has to inquire into its real nature
inasmuch as though an imposition is labelled as a fee, in reality it may not be
a fee but a tax, and vice versa. The question to be determined is whether the
power to levy the tax or fee is conferred on that authority and if it falls
beyond, to declare it ultra rites.
have seen that a fee is a payment levied by an au- thority in respect of
services performed by it for the benefit of the payer, while a tax is payable
for the common benefits conferred by the authority on all tax payers. A fee is
a payment made for some special benefit enjoyed by the payer and the payment is
proportional to such benefit. Money raised by fee is appropriated for the
performance of the service and does not merge in the general revenue. Where,
however, the service is indistinguishable from the public services and forms
part of the latter it is necessary to inquire what is the primary object of the
levy and the essential purpose which it is intended to achieve. While there is
no quid pro quo between a tax payer and the author- ity in case of a tax, there
is a necessary co-relation between fee collected and the service intended to be
ren- dered. Of course the quid pro quo need not be understood in mathematical
equivalence but only in a fair correspondence between the two. A broad
co-relationship is all that is necessary.
Where it appears that under the guise of levying a fee the authority is
attempting to impose a tax, the Court has to scrutinise the scheme to find out
whether there is a real co-relation between the services and the levy whether
it is so co-extensive as to be a pretence of a fee but in reality a tax, and
whether a substantial portion of the fee collect- ed is spent in rendering the
instant case replying to paragraph 9 of the writ petition in paragraph 6 to 9
of the Counter Affidavit in the High Court the TAC stated that it used to realise
the amount of weighing dues as tax and not as a fee and that no ques- tion of
quid pro quo was involved in the matter. Most of the carts of the cultivators
who brought their produce were parked in the cart-park which was on the land of
the TAC 'and it maintained sanitary staff in order to keep the place clean as
bullocks and carts made the place dirty. Arrange- ment for lighting the patromax
lamps and for keeping the place clean was made by the TAC. To ensure correct weighment
and to prevent cheating and defrauding bakshis and peons of TAC were deputed to
supervise the daily weighing of the goods and the TAC maintained standard
weights and measures in case of any dispute which were to be settled. The
weights of persons were also checked and verified by the TAC and its seal was
affixed to those weights in order to prevent cheat- ing. In paragraph 12 it was
stated that TAC employed about 40 sweepers out of which about half were
especially deputed for keeping the places where the sale transactions took
place clean. One bakshi, one jamadar and one peon were also deputed to
supervise the selling in order to see that the bye-laws in respect of weighment
were carried out and that there was no cheating. Thus, the TAC justified the
charging of weighing dues, but conceded that the same was a tax as there was no
quid pro quo.
respondent having thus conceded that there was no quid pro quo, we have to
hold, as also was rightly held by the High Court, that the weighing dues constituted
a tax and not a fee.
not find any merit in the appellant's submission that there was double taxation
in this case. The expression "double taxation" is often used in
different senses, namely, in its strict legal sense of direct double taxation
and in its popular sense of indirect double taxation. Double taxa- tion in the
strict legal sense means taxing the same proper- ty or subject matter twice,
for the same purpose, for the same period and in the same territory. To
constitute double taxation, the two or more taxes must have been (1) levied on
the same property or subject matter, (2) by the same Govern- ment or authority,
(3) during 23 the same taxing period, and (4) for the same purpose. "There
is no double taxation, strictly speaking" says Cooley, "where (a) the
taxes are imposed by different States, (b) one of the impositions is not a tax,
(c) one tax is against property and the other is not a property tax, or (d) the
double taxation is indirect rather than direct." In the instant case there
cannot be said to be double taxation as there is no such taxation imposed by
the TAC for the same period on the same goods at the same time and for the same
more than one legislative authority, such as the State Legislature and a local or
municipal body possess the power to levy a tax, there is nothing in the
Constitution to prevent the same person or property being subject to both the
State and municipal taxation or the same legislature exercising its power twice
for different purposes. In Avind- er Singh v. State of Punjab,  1 SCR
845, the State of Punjab in April, 1977 required the various municipal bodies
in the State to impose tax on the sale of India made foreign liquor @ Rs. 1 per
bottle w.e.f. 20.5.1977. The municipal authorities having failed to take action
pursuant to the directive the State of Punjab directly issued a Notification under section 90(5) of the Punjab
Municipal Corporation Act, 1976 and similar provision of the Municipal Act
1911. The petitioner challenged the Constitutional validity of the said
statutes and the levy on the, inter alia ground of double taxation. Krishna Iyer,
J. speaking for the Court held: "There is nothing in Article 265 of the
Constitution from which one can spin out the Constitutional vice called double
taxation. (Bad' economics may be good law and vice versa). Dealing with a
somewhat similar argument, the Bombay High Court gave short shrift to it in
Western India Theatres (AIR 1954 Bom. 261). Some undeserving contentions die
hard, rather survive after death. The only epitaph we may inscribe is: Rest in
peace and don't be re-born. If on the same sub- ject matter the legislature
chooses to levy tax twice over there is no inherent invalidity in the fiscal
adventure save where other prohibitions exist." We do not find materials
in this case to allow the contention to be re-born. The submis- sion is
contention that the tax is discriminatory in view of the exemptions granted to
some of the products and to those that enter the TAC by rail or motor transport
is equally untenable. It is for the legislature or the taxing authority to
determine the question of need, the policy and to select the goods or services
for taxation. The courts cannot review these decisions. In paragraph 16 of the
counter affidavit 24 the TAC tried to explain the reason of not taxing salt,
sugar and rice stating that they were not local produce but were imported from
distant places and that the tax was levied only on the local produce which came
from the neigh- bouring places. Courts cannot review the wisdom or advisa- bility
or expediency of a tax as the court has no concern with the policy of
legislation, so long they are not incon- sistent with the provisions of the
Constitution. It is only where there is abuse of its powers and transgression
of the legislative function in levying a tax, it may be corrected by the
judiciary and not otherwise. Taxes may be and often are oppressive, unjust, and
even unnecessary but this can constitute no reason for judicial interference.
When taxes are levied on certain articles or services and not on others it
cannot be said to be discriminatory. Cooley observes:
tax must discriminate; and only the authority that imposes it can determine how
and in what directions." The TAC having decided to impose weighing dues on
the goods mentioned in the Bye-Laws it is not for the court to ques- tion it on
the ground that some similar commodities or commodities arriving by rail or
road were not subjected to the tax.
tax having not been found to have been discriminato- ry or otherwise illegal we
do not find any force in the submission that it imposed any unreasonable
restriction on the appellants' rights guaranteed under Article 19(1)(g) of the
Constitution of India.
result, we find no merit in this appeal and it is accordingly dismissed.
Considering the facts and circum- stances of the case we, however, make no
order as to costs.
orders, if any, stand vacated.