Secretary, Government of Madras, Home
Department & ANR Vs. Zenith Lamp & Electrical Ltd.  INSC 275 (10
SIKRI, S.M. (CJ) SIKRI, S.M. (CJ) RAY, A.N.
BEG, M. HAMEEDULLAH DWIVEDI, S.N.
CITATION: 1973 AIR 724 1973 SCR (2) 973 1973
SCC (1) 162
CITATOR INFO :
RF 1975 SC 706 (40) RF 1975 SC 846 (17) REI
1980 SC 1 (13) R 1980 SC1008 (18) RF 1981 SC1863 (29) R 1989 SC 100 (16,21,32)
RF 1992 SC 165 (50) RF 1992 SC1256 (13)
Madras Court Fees and Suits Valuation Act 14
of 1955-High Court Fees Rules 1956, Rule 1-Enhancement of Court-fee on ad
valorem, basis-Validity of-Court fees whether fees or tax, factors to be taken
into consideration for determiningPhrase "Fees taken in Court" in
List 1 Entry 77 and List 11 Entry 3 of Seventh Schedule to Constitution of
India, meaning of.
The respondent petitioners intended to file a
suit in the Madras High Court on the original side valued at Rs. 2,06,552,
against the Revenue. The petitioner filed a writ petition in the High Court on
the question of court-fee payable in the intended suit praying that the High
Court may be pleased to issue a writ of mandamus or other direction or order
declaring Rule 1 of the High Court Fee Rules 1956 and the provisions of the
Madras High Court Fees and Suits Valuation Act 14 of 1955 to be invalid and
ultra vires insofar as they related to the levy of fees on ad valorem scale. It
was urged that the increase made in 1955 and 1956 in the court fees payable was
unjustifiable in the light of the expenditure actually incurred in the
administration of civil justice. In its counter affidavit the State urged that
the rates of fee prescribed under the Court Fees Act of 1955 were not excessive
and that the levy did not amount to a tax on litigation. A supplemental
affidavit was filed on behalf of the State on October 11, 1966 in which various
statements were given to show that the expenditure on the administration of
justice was higher than the receipts. The petitioner objected that there were
several inadmissible items which had been taken into account. The High Court
struck down the levy found in Art. 1 of Schedule 1 of the Madras Court Fees and
Suits Valuation Act 1955 in its application to the High Court. With
certificate,. appeal was filed in this Court. The Court had to consider whether
the "fees taken 'in court" in Entry 3 List 11 Schedule VII of the
Constitution are taxes or fees or whether they are sui generis.
Allowing the appeal, Held : (i) The history
of court fees in England as well as in India, shows that fees taken in court
were not levied as taxes and the costs of administration was always one of the
factors that was present.
(ii) It seems plain that "fees taken in,
court" are not taxes, for, if it were so, the word 'taxes' would have been
used or some other indication given. This conclusion is strengthened by two
considerations. First, taxes that can be levied by the Union are mentioned in
List I from Entry 82 in List II taxes that can be imposed start from Entry 45.
Secondly the very use of the words 'not
including fees taken in any court' in Entry 96 List I and Entry 66 List 11
shows that they would otherwise have fallen within these Entries.
It follows that "fees taken in
court" cannot be equated to 'Taxes'. There is no essential difference
between fees taken in Court and other fees. It is difficult to appreciate why
the word 'fees' bears a different meaning in Entries 77 List I and Entry 96
List 1 or Entry 3 List 11 and Entry 66 List II. [982 A-C] 974 (iii) But even if
the meaning is the same, what is 'fees' in a particular ,case depends on the
subject-matter in relation to which the fees are imposed. The present case
related to the administration of civil justice in a State.
The fees must have relation to the
administration of civil justice. While levying fees the appropriate legislature
is competent to take into account all relevant factors, the value of the
subject matter of the ,dispute, the various steps necessary in the prosecution
of a suit or matter, the entire cost of the upkeep of courts and officers
administering civil justice, the vexatious nature of certain types of
litigation and other relevant matters. It is free to levy a small fee in some
cases, a large fee in others, subject of course to the provisions of Art. 14.
But one thing the legislature is not competent to do, and that is to make
litigants contribute to the increase of general public revenue. In other words,
it cannot tax litigation and make litigations pay, say for road building or
education ,or other beneficial schemes that a State may have. There must be a
correlation ship between the fees collected and the cost of administration of
civil justice. [982 F-H] (iv) The phrase 'fees taken in court' cannot be
interpreted to mean that it described fees which were actually being taken
before the Constitution ,came into force. If that was the meaning, no fees
could be levied in the Supreme Court because the Supreme Court did not exist
before the Constitution came into force and no fees were being taken therein.
This would render part of the Entry of List I
nugatory. [983 A-B] (v) The contention that fees taken in court are taxes
because by virtue of Art. 266 all fees, being revenues of the State will be
credited to the Consolidated Fund, could not be accepted. This Court has held
that the fact that an item of revenue is credited to the Consolidated Fund is
not conclusive to show that it is an item of tax. As Art. 266 requires that all
revenues received by the State have to go to the Consolidated Fund, not much
stress can be laid on this point. Fees and taxes are both revenue for the
[983 C; 984 H] (vi) The High Court rightly
held in the present case that the fees taken in Courts are not a category by
themselves and must contain the essential elements of the fees as laid down by
this Court. The High Court was also right in holding that it is for the State
to establish that what has been levied is court-fees properly so-called and if
there is any enhancement the State must justify the enhancement., [988 D; 989
D] (vii) The State had claimed in its supplementary affidavit that the State
was not making any profit out of the administration of civil justice. Since
this had been questioned by the respondents the case must be remanded to the
High Court for determination of the question. Various items both on the
receipts side and the expenditure side must be carefully analysed to see what
items or portion of items should be credited or debited to the administration
of civil justice. [989 C,-D] Case law considered.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 993 of 1967.
Appeal by certificate from the judgment and
order dated March 31, 1967 of the Madras High Court in Writ Petition No. 1743
97 5 S. Govind Swaminandan, Advocate-General
of Tamil Nadu, S. Moha n, N. S. Sivan, K. Rajendra Choudhry and K. R. Choudhry,
for the appellant.
R. Thiagarajan, for respondent No. 1.
K. R. Choudhry, for respondent No. 2.
A. R. Somnatha Iyer and S. Lakshminarasu, for
interveners Nos. 1-3.
V. M. Tarkunde and B. D. Sharma, for
interveners Nos. 1-3.
S. N. Choudhry, for intervener No. 5.
Syed Mahamud, and A. G. Pudisssery, for
intervener No. 5.
K. K. Sinha, S. K. Sinha and B. P. Sinha, for
intervener No. 7.
V. S. Raman and Vineet Kumar, for intervener
S. V. Gupte, A; V. Diwan, P. C. Bhartari, J.
Dadachanji, O. C. Mathur and Ravinder Narain,
for intervener No. 9.
A. Subba Rao, for intervener No. 10.
The Judgment of the Court was delivered by
SIKRI, C. J.-This appeal, by certificate granted by the High Court, is directed
against tin judgment dated March 31, 1967 of the High Court of Madras, in
Zenith Lamps and Electricals Ltd. v. The Registrar, High Court, Madras() given
in Writ Petition No. 1743 of 1964 (and Writ Petition No. 3891 of 1965). Messrs
Zenith Lamps and Electrical Limited, respondent before us and hereinafter
referred to as the petitioner, intended to file a suit in the Madras High
Court, on the original side, claiming a relief valued at Rs.2,06,552, against
the Revenue. The petitioner filed Writ Petition No. 1743 of 1964 on the question
of court-fee payable on the intended suit, praying that the High Court may be
pleased to issue a writ of mandamus or other direction order declaring Rule I
of the High Court Fees Rules, 1956, and the provisions of the Madras Court Fees
and Suits Valuation Act (Madras Act XIV of 1955) to be invalid and ultra vires
insofar as they relate to the levy of fees on ad valorous scale. It was
contended that Rule 1 of the High Court Fees Rules, 1956, was void and ultra
vires because the Madras Court Fees and Suits Valuation Act (XIV of 1955) which
had been applied in these Rules was void and ultra vires. Various reasons were
given in the petition for alleging that the impugned Rule was void. It was
stated inter alia that there was no justification at all for the increase of
court-fees in 1955 and 1956 on the basis of civil (1) I.L.R.  1 Mad. 247
9 7 6 litigants being made to pay fees covering the expenditure on civil
litigation. It was alleged that 'whenever an increase is contemplated, it is
for the authority to justify by facts and figures such increase by showing that
actual expenditure at the time exceeds the fee income. The petitioner alleged
that judged by this test, the increases of 1955 were without any legal or
actual jurisdiction." It was further alleged that the State was proceeding
on the basis that the court fees had to compensate the Government both for the
cost of civil as well as criminal administration, which was unwarranted. In
ground D it was alleged:
"From the figures of 1963-64 available from
the budget for 1964-65, it is seen that the fees levied exceeds the cost of
administration of civil justice. The figures have further to be scrutinised and
amended so that inadmissible items such as fees of Government's Law Officers
are eliminated as it is not the duty of litigant public generally to bear the
expense of the, State's Law Officers." In ground E it was alleged that it
was ultra viresand inequitable to levy an ad valorem fee without lit from the
petitioner in a single proceeding.
Various other reasons were given but it is
not necessary to set them out.
The State filed an affidavit in reply
maintaining that Rule 1 of the High Court Fees Rules, 1956, and the Madras
Court Fees and Suits Valuation Act, 1955 (Madras Act XIV of 1955) were legal
and valid. It was stated that the rates of fees prescribed under the Court Fees
Act of 1955 were not excessive and that the levy did not amount to a tax on
litigants. The State gave figures to show that the expenditure on the
administration of justice was higher during the year 1954-55 than the fees
realised. The State rebutted the contention that the cost of criminal
administration and the fees paid to Government law Officer should not be taken
into account in justifying court fees.
This affidavit was filed on March 6, 1965. It
appears that a supplemental counter-affidavit on behalf of respondents 2 and 3
was filed on October 11, 1966. In this affidavit various statements were given
to show that the expenditure on the administration of justice was higher than
The Petitioner took objection to the filing
of the supplemental counter-affidavit at that stage because it was filed after
the arguments had started. It was contended that the figures given in the
counter-affidavit would require drastic scrutiny. It was also 97 7 alleged that
various inadmissible items had been taken into account; for example, the
expenditure on law officers had been taken into consideration.
The High Court struck down the levy found in
Article I of Schedule 1 of the Madras High Court Fees and Suits Valuation Act,
1955, in its application to the High Court. As it was not contended before the
High Court 'that the result of striking down article 1 of schedule 1 in its
application to the High Court would necessitate the declaration of the
invalidity of the entire Court Fees Act, it refrained from examining the
The State having obtained certificate of
fitness filed the appeal which is now before us. We may mention that the
petitioner was not interested in pursuing the appeal and it prayed that if the
appeal is decided against it no order may be made against it for costs in the
circumstances of the case.
We issued notice to the Advocates-Goneral and
a number of States have appeared before us.
The first question that arises out of the
arguments addressed to us is : What is the nature of "fees taken in
court" in entry 3 List II Schedule VIII of the Constitution ? Are they
taxes or fees or are they sui generis ? It is necessary that there should not
correlation ship between 'fees taken in Court' and the cost of administration
of civil justice? Dr. Syed Mohammed has on behalf of the State of Kerala urged
that fees taken in Court are taxes simpliciter. The Advocate-General of Madras
had urged that they are sui generis, and that they are more in the nature of
taxes than in nature of fees. Mr. Tarkunde has urged that it would be wrong to
regard them as 'fees' of the same nature as fees in Entry 65 List II. The
answer depends on the correct interpretation of various entries in the three
Legislative Lists and several articles of the Constitution.
In the background must be kept the history of
fees taken in Courts in the past both in England and India.
Let us first look at the background.
According to Holdsworth(1) the Judges, from the first, were paid salaries by
the Crown which in the course of years were increased. "But from the
earliest times, the salaries of the Judges had not formed their only source of
income. Though they did not hold their offices as their freeholds, though they
could be dismissed by the Crown, they nevertheless drew a considerable part of
their income from fees". "When the income of the Judges from fees was
taken away in 1826 their salaries were raised from pound 2400 a year to pound
5500." (1) History of English Law-W.S. Holdsworth-seventh Edn. vol., 1,
978 As far as the officials of the courts
were concerned "the earliest information which we get about the officials
of the courts of common law shows that they were paid almost entirely by fees.
In fact it would be true to say that the official staff of all the central
courts (except the Lord Chancellor and the judges) was almost entirely self supporting."
"But probably the largest part of the remuneration of the official staff
of the courts came from fees in connection with the very numerous acts that
must be done to set and keep in motion the complicated machinery of the
courts,, from the issue of the original writ to the execution of final
judgment." (Holdsworth-P. 256) In the Dictionary of English Law by Earl
Jowitt (Vol. 1 P. 791) it is stated;
"Fees, perquisites allowed to officers
in the administration of justice as a recompense for their labour and trouble,
ascertained either by Acts of Parliament, by rule or order of court, or by
ancient usage, in modern times frequently commuted for a salary, e.g. by the
Justice Clarks Act, 1877." "Although, however, the officers of a
court may be paid by salary instead of the fees, the obligation of suitors to
pay fees usually remains, these fees being paid into the fund out of which the
salaries of the officers are defrayed. In the Supreme Court they are collected
by means of stamps under the Judicature Act, 1875, s. 26, and order of 1884,
and the Supreme Court Fees Order, 1930 (as amended)." "The mode of collecting
fees in a public office is under the Public Office Fees Act, 1879 (repealing
and replacing, the Public Office Fees Act, 1866), by stamps or money, as the
Treasury may direct." At present "the Lord Chancellor has also power,
with the consent of at least three judges of the Supreme Court and the
concurrence of the Treasury, to fix fees to be, taken in the High Court and the
Court of Appeal or in any court created by the commission. Under the powers
referred to, the Rules of the Supreme Court, 1883 and the Supreme Court Fees
Order, 1.930, were made(1)." The English history shows that a very close
connection existed between fees and cost of administration of civil justice. In
the beginning, they were directly appropriated by the court officials. The existing
law shows that fees are not taxes. It is not usual to delegate taxing powers to
(1) vide Halsbury's Laws of England, Vol. 9
97 9 In India according to the Fifth Report
on East India Affairs Vol. 1 (1812), chapter, "The civil courts of
Justice',, "the chouthay or fourth part of the value of property recovered
in a court of judicature, seems to be considered in most parts of the Indian
Peninsula as the compensation or fee due to the ruling power for the
administration of justice." This was abolished on the accession of the
British power to the Government of Bengal, and in lieu of it, the introduction
of a small percentage on the institution of a suit has been noticed.
The first legislative measure which has been
brought to our notice is the Bengal Regulation XXXVIII of 1795. In the
preamble, it is stated that the establishing of fees on the institution and
trial of suits, and on petitions presented to the courts was considered the
best method of putting a stop to the abuse of bringing groundless and litigious
suits. There are various sections of theRegulation which allow fees to be
appropriated by the Judges.
In action II (4) it was laid down:
"The Munsiffs are to appropriate the
fees they may collect under this section, to their own use, as a compensation
for their trouble and an indemnification for the expense which they may incur
in the execution of the duties of their office".
Similarly under section 111(6), the
"Register" was entitled to appropriate the fees, collected under this
Similarly subsection (7) of section III
enabled the Commissioners to appropriate the fees. But fees under section IV to
be paid on the trial of suits, tried in the first instance by the Judges of the
Zillah and City Courts or by their Registers were to be carried to the account
of Government. Similarly various other fees were carried to the account of
In the preamble to Bengal Regulation VI of
1797, the object is stated to be to discourage litigations, complaints and the
filing of superfluous exhibits and the summoning of unnecessary witnesses on
the trial of suits and also to provide for deficiency which would be occasioned
in the public revenue by abolition of the police tax as well as to add
eventually public resources, without burdening individuals. The same object of
discouraging litigation is stated in clause 1 of the Bombay Regulation VIII of
In the Statement of Objects and Reasons for
the Court Fees Bill, 1869, it is stated that "the experience gained of
their (stamp fees) working during the two years in which they have been in
force, seems to be conclusive as to "their repressive effect on the
general litigation of the country".
"It is, therefore, thought expedient to
make a general reduction in the rates now chargeable on 11-L499Sup.C.I./73 98 0
the institution of Civil suits, and to revert to the principle of maximum fee
which obtained under the former law." Later it is stated :
"As some measure of compensation for the
loss of revenue which is expected to result from the general reduction of is
proposed to discontinue the refund of any portion of the amount levied on the
first institution of suits, and also to raise the heretofore chargeable on
probates and letters of administry granted under the Indian Succession Act, and
on certificates issued under Act XXVII of 1860, to the ad valorem rates
leviable under the English law in like cases".
The Bill was designed to contain in one
enactment they were of the existing law relative to fees leviable in all Courts
of Justice, whereas previously fees were, leviable under various acts.
This brief resume of the history shows that
the court fees was levied sometimes with the object of restricting litigations;
so times with the object of increasing revenue.
But there is material to show that when the
latter was the objective when the cost of administration of civil justice was
more than the fees levied and collected.
The constitutional question with which we are
concerned could not arise before the enactment of the Government of In Act, 1935,
because even if fees taken in courts were taxes litigation, there was no bar to
the levy of taxes on litigation.
Various judges have spoken about the nature
of court fees In the judgment under appeal(1), reference has been made their
observations but those Judges were not faced with the co titutional problem
with which we are concerned. Some described fees as one form of taxation, some
regarded it as taxes for s vices rendered by the court or work done by the
court or as price payable to Government for the trial of the suit.
This background does not supply a sure
touchstone for the determination of the question posed in the beginning of
judgment, but it does show that fees taken in court were not levied as taxes
and the cost of administration was always one of factors that was present. In
its origin in England fees were meant for officers and judges. In India indeed
section 3 of the Court Fees' Act, 1870 mentions "fees payable for the time
being to the clerks and officers".
Section 15 of the Indian High Court Act,
1861, also spoke of fees to be allowed to sheriffs....... and all clerks and
officers of Court". We will therefore have interpret the relevant Entries
and various Articles of the Constitution in order to ascertain the true nature
of Court fees.
The relevant Entries of the Constitution are
"List I Entry 77 : Constitution,
organisation, jurisdiction and power of the Supreme Court (including contempt
of such Court), and the fees taken therein; persons entitled to practise before
the Supreme Court".
"List I Entry 96 : Fees in respect of
any of the matters in this List, but not including fees taken in any
"List II Entry 2 : Administration of
constitution. and organisation of all courts,
except the Supreme Court and the High Court, officers and servants of the High
procedure in rent and revenue courts; fees
taken in all courts except the Supreme Court." "List II Entry 66 :
Fees in respect of any of the matters in this List, but not including fees
taken in any court.
"List III Entry 13 : Civil procedure,
including, all matters included in the Code of Civil Procedure at the
commencement of this Constitution, limitation and arbitration.
"List III Entry 47 : Fees in respect of
any of the matters in this List, but not-including fees taken in any
It will be noticed that the 'fees taken
therein i.e. in Supreme Court' in List I Entry 77 have been excluded from List
I Entry 96. Similarly the 'fees taken in all courts' included in List 11 Entry
3 have been excluded from List 11 Entry 66. In List III Entry 47 'fees taken in
any court' have been excluded. What is the significance of this exclusion ?
Does the Constitution regard 'fees taken in court' as being different from
'fees leviable under List I Entry 96, List II Entry 66 and in List III Entry
47'? It seems to us that the, separate mention of 'fees taken in court' in the
Entries referred to above has no other significance than that they logically
come under Entries dealing with administration of justice and courts. The draftsman
has followed the scheme designed in the Court Fees Act, 1870 of dealing with
fees taken in court at one place.
If it was the intention to distinguish them
from fees in List 11 Entry 66, surely some indication would I have been given
by the language employed. If these words had not been separately mentioned in
List 1 Entry 77 and List 11 Entry 3, the court fees would still have been
levied under List I Entry 96 and List H Entry 66.
982 it seems plain that 'fees taken in court'
are not taxes, for if it were so, the word 'taxes' would have been used or some
other indication given. It seems to us that this conclusion is strengthened by
two considerations. First, taxes that cart be levied by the Union are mentioned
in List I from Entry 82; in List II taxes that can be imposed start from Entry
45. Secondly, the very use of the words 'not including fees taken in any court'
in Entry 96 List 1, and Entry 66 List 11' shows that they would otherwise have
fallen within these Entries. It follows that 'fees taken in Court' cannot be
equated to 'Taxes'. If this is so, is their any essential difference between
fees taken in Court and other fees.? We are unable to appreciate why the word
'fees' bears a different meaning in Entries 77 List 1 and Entry 96 List 1 or
Entry 3 List 11 and Entry 66 List 11. AR these relevant cases oil the nature of
'fees' were reviewed in The Indian Mica and Micanite Indus tries Ltd. v. The
State of Bihar and others(1) by Hegde, J. and the observed :"From the
above discussion, it is clear that before any levy can be upheld as a fee, it
must be shown that the levy has reasonable correlations with the services
rendered by the Government. In, other words. the levy must be proved to be a
quid pro quo for the services rendered. But in these matters it will be impossible
to have an exact correlationship.
The correlationship expected is one of a
general character and not as of arithmetical exactitude".
But even if the meaning is the same, what is
'fees' in a particular case depends on the subject-matter in relation to which
fee are imposed. In this case we are concerned with the administration lion of
civil justice in a State. The fees must have relation to the administration of
civil justice. While levying fees the appropriate legislature is competent to
take into account all relevant factors, the value of the subject matter of the
dispute, the various steps necessary in the prosecution of a suit or matter,
the entry cost of the upkeep of courts and officers administering civil justice
the vexatious nature of a certain type of litigation and other relevant
matters. It is free to levy a small fee in some cases, a large fee in others,
subject of course to the provisions of Art. 14. But one thing the Legislature
is not competent to do, and that is to make litigants contribute to the
increase of general public revenue In other words, it cannot tax litigation,
and make litigations pay say for road building or education or other beneficial
schemes that a State may have. There must be a broad correlationship wit the
fees collected and the cost of administration of civil justice.
(1) A.T.R. 1971 S.C. 1182 at p. 1186.
983 We may now dispose of other arguments
addressed to us. We are not able to interpret the phrase 'fees taken in court'
to mean that it described fees which were actually being taken before the
Constitution came into force. If this was the meaning, no fees could be levied
in the Supreme Court because the Supreme Court did not exist before the
Constitution came into force and no fees were being taken therein. This would
render part of the Entry of List I nugatory.
It was urged that various Articles in the
Constitution show that fees taken in Courts are taxes. For instance, by virtue
of Article 266 all fees, being revenues of the State, will have to be credited
to the Consolidated Fund. But this Court has held that the, fact that one item
of revenue is credited to the Consolidated Fund is not conclusive to show that
the item is a Tax. In The Commissioner, Hindu Religious Endowments, Madras v
Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1), it was held "A tax
is a compulsory exaction of money by public authority for public purposes
enforceable by law and is not payment for services rendered.
It is not possible to formulate a definition
of fees that can apply to all cases as there are various kinds of fees. But a
fee may generally be defined as a charge for a special service rendered to
individuals by some governmental agency. The amount of fee levied is supposed
to be based on the expenses incurred by the Government in rendering the
service, though in many cases such expenses are arbitrarily assessed.
The distinction between a tax and a fee lies
primarily in the fact that a tax is levied as part of a common burden, while a
fee is a payment for special benefit or privilege".
Our attention was invited to Art. 199(2)
which provides that a bill shall not be deemed to be a Money Bill by reason
only that it provides for........ the demand or payment of fees for licence-,
or fees for services rendered. It was suggested that as Court fees were not for
services rendered they would have to be levied by means of a Money Bill. It
seems to us that this argument proceeds on an assumption that fees taken in
court are not for services rendered.
Reference to Art 277 and Art. 366(28) does
not throw any light on the problem before us.
In The Commissioner, Hindu Religious
Endowments, Madras v.Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1),
reference was made by Mukheriea, J. to Essays in Taxation by Selig9 84 man. We
may here, refer to some other passages which have reference to court fees.
"The distinction between fees and taxes,
although sometimes ascribed to Rau, is really much older. Adam Smith already
speaks of certain expenses "which are laid out for the benefit of the
whole society". "It is reasonable, therefore", he adds,
"that they should be defrayed by the general contribution of the whole
society, all the different members contributing as nearly as possible in
proportion to their respective abilities".
These, as he afterward explains, are taxes.
On the other hand,, he speaks of certain
outlays, as for justice, for "persons who give occasion to this
expense," and, who are, most immediately benefited by this expense."
The expenditure, therefore, he thinks, "m ay very properly be defrayed by
the particular contributions of these persons", that is, by fees of court.
And he extends this principle to tolls of roads and various other
expenses." "This point of view helps us out of a difficulty as to the
line of cleavage between fees and taxes. Thus, if a charge is made for the cost
of judicial process, the payment is a fee, because of the special benefit to
the litigant.' If no charge is made, the cost of the process must be defrayed
by general taxation; and the litigant pays his share in general taxes. If the
charge is so arranged as to bring in considerable net revenue to the
government, the payment by the litigant is a tax not a general tax on all
taxpayers, but a special tax on litigants, like the tax on law suits in some of
our Southern Commonwealths. The character of fees disappears only secondarily
because the principle of cost is deviated from, but primarily because the
special benefit to the litigant is converted in the first case into a common
benefit shared with the rest of the community, and in the second case into a
special burden. The failure to grasp the basis of this distinction, which is
equally true of other fees, has confused many writers." A great deal of
stress was laid by Mukherjea, J. at p. 1044 on the fact that the collections in
that case went to the Consolidated Fund. He, however, said that in itself might
not be conclusive. But as Art. 266 requires that all revenues received by the
State have to go to the Consolidated Fund, not much stress can be laid on this
Reliance was placed on two cases decided by
the Privy Council. In Attorney-General for British Columbia v. Esquimalt and
985 Nanaimo Railway Company & Ors.(1), a case from Canada, question (7) was
put thus :
"Is the Esquimalt and Nanaimo Railway
liable to tax (so-called) for forest protection imposed by s. 123 of the
'Forest Act' (later corrected to sec. 121) of (the Forest Act...... in
connection with its timber lands in the island railway belt acquired from
Canada in 1887 ? In particular does the said tax (so called) derogate from the
provisions of section 22 of the Act of 1883" ? The Privy Council observed:
"The question is a short on,--. The
exemption conferred by section 22 is given in the, words "the lands shall
not be liable to taxation".
There is no context to give the word "
taxation" any special meaning and the question comes to this : "Is
the impost charged by s. 124 of the Forest Act 'taxation' within the ordinary
significance of that word ?" After examining the provisions of Pt. XI of
the Act, consisting of ss. 95 to 127, which dealt with what is described as
"Forest Protection, the Privy Council observed:
"The levy has what are, undoubtedly,
characteristics of taxation, in that it is imposed compulsorily by the State
and is recoverable at the suit of the Crown." This case is distinguishable
because the Privy Council did not have to deal-with fees and taxes but
interpreted the word 'taxation' in section 22 of the Act to mean a compulsory
'Levy by the State. Whether it was fees or taxes did not matter. The only
question was whether it was a compulsory levy.
In Bachappasubran v. Shidappa Vankatrao ( 2 )
before the Privy Council for the first time objection was raised that the suit,
out of which the appeal arose, was not triable by the First Class Subordinate
Judge. It was argued that this was the result of provisions contained in the
Court Fees Act 1870 and the Suits Valuaation Act,, which, it was said, imposed
notional value on the property as distinct from its real value and that this
notional value was less than Rs.
5000/-. It was in this context that the Privy
"Their Lordships are of opinion that
they would not be justified in assisting an objection of this type, but more
than that, they hold that even the technicality on which the defendant relies
The Court-Fees Act was passed not to arm a
litigant with a weapon of technicality against his opponent (1)  A.C.
(2) I.L.R. 43 Bom. 507.
986, but to secure revenue for the benefit of
the, State. This is evident from the character of the Act, and is brought gut
by section 12, which makes the decision of the First Court as to value final as
between the parties and enables a Court of appeal to correct any error as to
this, only where the First Court decided to the detriment of the revenue.
The defendant in this suit seeks to utilise
the provisions of the, Act, not to safeguard the interest of the State, but to
obstruct the plaintiff; he does not contend that the Court wrongly decided to
the detriment of the revenue, but that it dealt with the case without
We are unable to appreciate how this case
assists the appellant. Fees and taxes are both revenue for the benefit of the
State. At any rate the Privy Council was not concerned with the interpretation
of legislative Entries, where a sharp distinction is drawn between fees and
Two High Courts have upheld the levy of
increased court fees and the learned Advocate-General strongly relied on them.
In Khacharu Singh v. S.D.O. Khurja(1), a
petition under Art.
226 was presented with a fee of Rs. 5/-,
while by virtue of the Court fees (Uttar Pradesh Amendment) Act, 1959, the fee
leviable was Rs. 50/-. The latter fee was held to fall within Entry 3 List 11.
Mootham C. J. held that because court fees were not appropriated for any
specific purpose but formed part of the general revenues of the State, these
were neither tax nor fees as defined in The Commissioner, Hindu Religious
Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur MUtt(2 )
and Mahant Sri Jagannath Ramanuj Das v. The State of Orissa(3). He observed
"It is not an exaction imposed without reference to any special benefit
conferred on the payers, for it is imposed only on those persons who wish to
file documents, the filing of the document or the obtaining of the copy being
of direct benefit to the person concerned. It would appear therefore (not to be
a tax as so defined." He went on to observe, and here, with respect, he
made a mistake : "Nor clearly is it a fee as so defined if only for the,
reason that the moneys realized have not been set apart but have merged in the
public revenue of the State".
Mukherjea, J. in. The Commissioner, Hindu
Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur
Mutt(2) had said that this fact was not conclusive and in view of Art. 266 of
the (3)  S.C.R. 1046.
(2)  S.C.R. 1005.
987 in Constitution, it could not be
conclusive. Mootham, C.J.
Khacharu Singh v. S.D.O. Khurja(1) observed :
"It clearly follows, I think, from the,
fact that the fees or other money taken by the Supreme Court or a High Court
are to be credited to the Consolidated Fund that such fees cannot be fees of
the kind which the Supreme Court had under consideration; for an essential
characteristic of such a fee is that it shall be set apart and not merged in
the general revenue of the State. It accordingly appears that there exists
another class of imposition, also called a fee in the Constitution which differs
from the type of fee which the Supreme Court had under consideration and that
the definition of fee to he found in the three Supreme Court decisions of 1964
is not exhaustive".
With respect,. the fees taken in courts and
the fees mentioned in Entry 66 List I are of the same kind. They may differ
from each other only because they relate to different subject matters and the
subject matter may dictate what kind of fees can be levied conveniently, but
the overall limitation is that fees cannot be levied for the increase of
general revenue. For instance if a State were to double fees with the object of
providing money for road building or building schools, the enactment would be
held to be void.
Dayal J. correctly observed in Khacharu Singh
v. S.D.O.Khurja(1) "The expression "the fees taken therein" in
item No. 77 of List 1 and "fees taken in all courts except the Supreme
Court" in item No. 3 of List 11 need not be interpreted to refer to such
fees which must be credited to a separate fund and not to the general fund of
India or the State. It follows therefore that the Constitution did not
contemplate it to be an essential element of a fee-that it be credited to a
separate fund and not to the Consolidated, Fund." But the High Court in
Khacharu Singh v. S.D.O. Khurja(1) did not meet the argument of the learned
counsel that "as the State Government was already making a very large
profit out of court fees, the entire amending Act of 1959 increasing those fees
is ultra vires". It seems to us that whenever the State Legislature
generally increases fees it must establish that it is necessary to increase
court fees in order to meet the cost of administration of civil justice.
As soon as the broad correlationship between
the cost of administration of civil justice and the levy of court fees ceases,
the imposition becomes a tax and beyond the competence of the State
(1) I.L.R.  1 All. 429, 445.
988 The Bombay High Court in The Central
Province Sindicate (PR) Ltd. v. The Commissioner of Income-tax, Nagpur(1) also
fall into the same error. V. S. Desai, J. held that one of the essential
elements laid down by the Supreme Court was the requisite of a fee, namely,
that it must be appropriated to a separate fund earmarked to meet the expenses
of the services has never been true of the court fees at any time and is also
not true of the court fees levied after the constitution The learned Advocate
General, in our opinion, is right in saying that the levy of court fees for
general revenues has been authorised by the relevant Entries in the
Legislature." What impressed the High Court was that "there was
however no monetary measure of the fees charged for the services rendered and
the levy of the fees could also not be said to be in proportion to the services
We agree with the Madras High Court in the
present case that the fees taken in Courts are not a category by themselves and
must contain 'the essential elements of the fees as laid down by this Court. We
also agree with the following observation(2) "If the element of revenue
for the general purposes of the State predominates, then the taxing element
takes hold of the levy and it ceases to have any relation to the cost of
administration of the laws to which it relates; it becomes a tax. Its validity
has then to be determined with reference to its character as a tax and it has
to be seen whether the Legislature has the power to impose the particular tax.
When a levy is impugned as a colorable exercise of legislative power, the State
being charged with raising a tax under the guise of levying a fee, Courts have
to scrutinize the scheme of the levy carefully, and determine whether, in fact,
there is correlation between the services and the levy, or whether the levy is
excessive to such an extent as to be a presence of a fee and not a fee in reality.
If, in substance, the levy is not to raise
revenues also for the general purposes of the State, the mere absence of
uniformity or the fact that it has no direct relation to the actual services
rendered by the authority to each individual who obtains the benefit of the
service, or that some of the contributories do not obtain the same degree of
service as others may, will not change the essential character of the levy.
The next question that arises is whether the
impugned impositions are fees. The learned Advocate-General contended (2)
I.L.R.  1 Mad. 247 at p. 340-341.
989 that the State of Madras does not make a
profit out of the administration of civil justice. On the contrary it spends
money on the administration of civil justice out of general revenues.
He relied on the supplemental counter
affidavit filed on October 11, 1966. objection was taken on behalf of the respondent
in the connected civil appeals that this counter affidavit should not be taken
into consideration because it was filed in the course of arguments and they had
no opportunity to meet the affidavit.
It seems to us that we cannot dispose of this
appeal without giving opportunity to the respondents to file an affidavit or
affidavits in reply to the supplemental counter affidavit dated October 11,
1966 be-cause if we take the figures as given and explained by the
Advocate-General we cannot say that the State is making a profit out of the
administration of civil _justice. Various items both on the receipts side and
the expenditure side have to be carefully analysed to see what items or portion
of items should be credited or debited to the administration of civil justice.
It is true, as held by the High Court, that
it is for the State to establish that what has been levied is court-fees
properly socalled and if there is any enhancement the State must justify the
We are accordingly constrained to allow the
appeal and set aside the judgment passed by the High Court and remand the case
to it. We direct that the High Court should give an opportunity to the writ
petitioners to file an affidavit or affidavits in reply to the affidavit dated October 11, 1966.
The High Court shall then decide whether the
impugned fees are court fees or taxes on litigants or litigation.
G.C. Appeal allowed.