Municipal Corporation of Delhi&
Ors Vs. Mohd. Yasin [1983] INSC 54 (28 April 1983)
REDDY, O. CHINNAPPA (J) REDDY, O. CHINNAPPA
(J) DESAI, D.A.
CITATION: 1983 SCR (2) 999 1983 SCC (3) 229
1983 SCALE (1)492
ACT:
Tax and fee, contradistinction-Fees for slaughtering
animals at slaughter houses enhanced by the Municipal Corporation, eightfold
Legality of the enhancement-Whether the enhanced fee for slaughtering animals
was wholly disproportionate to the cost of the services and supervision and
therefore, not a fee, but a tax.
HEADNOTE:
As per the rates fixed in the year 1953 by
the Municipal Corporation of Delhi, the slaughtering fees were 0.25 paise for
each animal, in the case of sheep, goats and pigs and rupees one for each
animal in the case of buffaloes. By a Notification dated 31.1.1968, the
Corporation purported to enhance the slaughtering fee in both the categories
eightfold, with effect from February 1 1968. Some butchers of the city
questioned the revision of rates on the ground that the proposed enhanced fee
was wholly disproportionate to the cost of the services and supervision and was
in fact not a fee, but a tax.
During the pendency of the writ petitions in
the High Court, by virtue of an interim arrangement, the appellant, was
permitted to collect slaughtering fees at double the rates fixed in 1953 and as
a result thereof the Corporation realised a sum of Rs. 4,24,494/-. The budget
of the Corporation under item XIV-B showed a sum of Rs. 2,56,000 as the
expenditure involved in connection with the slaughter houses. Comparing the
amount of actual realisation of fee at the rates permitted by the court with
the amount of expenditure as revealed by the budget and excluding from
consideration all expenditure not shown in the budget from item XIV B, the High
Court came to the conclusion that even if the original fee was doubled the
amount realised would be more than sufficient to meet the expenditure involved
and, therefore, there was no reason at all for increasing the fee eightfold and
so the proposed fee was no fee but a tax for which there is no legislative
mandate. Hence the appeal by special leave.
Allowing the appeal, the Court
HELD: 1;1 The increase of the slaughtering
fee from 0.25 P to Rs. 2.00 per animal in the case of small animals and from
rupee 1.00 to Rs. 8.00 in the case of large animals was wholly justified, in
the Circumstances of the case.
[1008 C-D] 1:2 True, the Municipal
Corporation has realised a sum of Rs. 4,24,494 way of fees at the rate of Re.
00.50 per animal in the case of sheep, goats 1000 and pigs and Rs. 2 per animal
in the case of buffaloes, whereas the budget of the M.C.D. showed under item
XIV-B that an amount of Rs. 2,56,000 was expended in connection with slaughter
houses. The Items of expenditure covered by item XIV-B of the Municipal Budget
are evidently those items of expenditure which are incurred directly and
exclusively in connection with slaughter houses. There are several other items
of expenditure the whole or part of which is attributable to slaughter houses like
the expenditure involved in the purchase, maintenance and the use of trucks and
other vehicles for the removal of filth from slaughter houses, conservancy,
petrol oil etc., the expenditure incurred in connection with the maintenance of
supervisory staff like a fulltime Veterinary officer, Municipal Health officer,
Deputy Health officer and Zonal Head officers, the cost of depreciation of the
buildings and fittings in slaughter houses, expansion and improvement of
slaughter houses for utilities etc. but actually debited to other heads of
account under the Municipal budget. Apparently, the High Court was under an
erroneous impression that the fees collected should be shown to be related to
expenditure incurred directly and exclusively in connection with the
slaughtering of animals in its slaughter houses and also, shown as such in the
Municipal budget. [1007 B-H, 1008 A-B]
2. Vicissitudes of time and necessitudes of
history contribute to changes of philosophical attitudes, concepts, ideas and
ideals and, with them, the meanings of words and phrases and the language
itself. The philosophy and the language of the law are no exceptions. Words and
phrases take colour and character from the context and the times and speak
differently in different contexts and times. Words and phrases have not only a
meaning but also a content, a living content, which breathes, and so, expands
and contracts. This is particularly so where the words and phrases properly
belong to other disciplines. "Tax" and "Pee" are such
words.
They properly belong to the world of public
finance but since the Constitution and the laws are also concerned with Public
Finance, these words have often been adjudicated upon in an effort to discern
their content. [1002 D-G]
3. From the decided cases beginning from
Commissioner of Hindu Religious Endowments, Madras v. Shri Lakshmindra Thirtha
Swamiyar [1954] S.C.R. 1005 till date, it is clear that: (i) There is no
generic difference between a tax and fee, though broadly a tax is a compulsory
exaction as part of a common burden, without promise of any special advantages
to classes of tax payers whereas a fee is a payment for services rendered;
benefit provided or privilege conferred; (ii) Compulsion is not the hall mark
of the distinction between a tax and fee; (iii) That the money collected does
not go into a separate fund but goes into the Consolidated Fund does not also
necessarily make a levy tax;
(iv) Though a fee must have relation to the
services rendered, or the advantage conferred, such relation need not be
direct; a mere casual relation may be enough; (v) Further neither the incidence
of the fee nor the service rendered need be uniform, (vi) That others besides
those paying the fees are also benefited does not detract from the character of
the fee; (vii) In fact the special benefit or advantage to the payers of the
fees may even be secondary as compared with the primary motive of regulation in
the public interest; (viii) Nor is the court to assume the role of a Cost
Accountant. It is neither necessary nor expedient to weigh too meticulously the
cost, of the services rendered 1001 etc. against the amount of fees collected
so as to evenly balance the two and (ix) A correlationship is all that is
necessary. Quid pro quo in the strict sense is not the only true index of a
fee; nor is it necessarily absent in a tax.
[1006 E-H, 1007 A-B] Commissioner of H.R.
& C.E., Madras v. Shri Lakshmindra Thritha Swamiyar, [1954] S.C.R. 1005; H.
H. Sudhundra v. Commissioner for Hindu Religious and Charitable Endowments,
[1963] Supp. 2 S.C.R. 302; Hingir-Rampur Coal Co. Ltd. and others v. The State
of Orissa and others, [196] 2 S.C.R. 537; H. H. Swamiji v. Commissioner Hindu
Religious & Chariiable Endowments Dept. and others, [1980] 1 S.C.R. 268;
Southern Pharmaceuticals & Chemicals,
Trichur and others etc. v. State of Kerala and others, [1982] 1 S.C.R. 519
referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 2120 & 2125 of 1970.
From the Judgment and order dated the 17th
April, 1970 of the Delhi High Court in Civil Writ Petitions Nos. 133 & 134
of 1968 Kapil Sibal, Rameshwar Dial, Adarsh Dial and S. Mittar for the
Appellants.
K. B. Rohtagi for the Respondents.
The following Judgment of the Court was
delivered by CHINNAPPA REDDY, J. BY a notification dated 31.1.68, the Delhi
Municipal Corporation purported to enhance the fee for slaughtering animals in
its slaughter houses from Re. 00.25p to Rs. 2.00 for each animal, in the case
of sheep, goats and pigs, and li from Re. 1.00 to Rs. 8.00 for each animal, in the
case of buffaloes. The notification was quashed by the High Court of Delhi on
the ground that the Corporation was really proposing to levy a tax under the
guise of enhancing the fee. The original rates were fixed in March 1953 and the
revised rates were to take effect from February 1, 1968. Some butchers of the
city questioned the revision of rates on the ground that the proposed enhanced
fee was wholly disproportionate to the cost of the services and supervision and
was in fact not a fee, but a tax. The High Court accepted the contention of the
butchers on what appears to us a superficial view of the facts and principles.
Fortunately, the High Court has certified the case as a fit one for appeal
under Art. 133 (1)(c) of the Constitution and the matter is now before us.
1002 During the pendency of the writ
petitions in the High Court, by virtue of an interim arrangement, the Municipal
Corporation was permitted to collect fee at the rate of Re. 00.50p. per animal
in the case of sheep, goats and pigs and Rs. 2.00 per animal in the case of
buffaloes. As a result, the Municipal Corporation realised a sum of Rs.
4,24,494 by way of fee for slaughtering animals in its slaughter houses.
Now, the budget of the Municipal Corporation
under item XIV- B showed a sum of Rs. 2,56,000 as the expenditure involved in
connection with the slaughter houses. Comparing the amount of actual
realisation of fee at the rates permitted by the Court with the amount of
expenditure as revealed by the budget and excluding from consideration all
expenditure not show in the budget under item XIV-B, the High Court came to the
conclusion that even if the original fee was doubled the amount realised would
be more than sufficient to meet the expenditure involved and there was,
therefore, no warrant at all for increasing the fee eight-fold. So, it was
said, the proposed fee was no fee but a tax for which there was no legislative
mandate. We shall presently point out the error into which the High Court fell
on facts as well as principle.
A word on interpretation. Vicissitudes of
time and necessitude, of history contribute to changes of philosophical
attitudes, concepts, ideas and ideals and, with them, the meanings of words and
phrases and the language itself. The philosophy and the language of the law are
no exceptions. Words and phrases take colour and character from the context and
the times and speak differently in different contexts and times. And, it is
worthwhile remembering that word, and phrases have not only a meaning but also
a content, a living content which breathes, and so, expands and contracts. This
is particularly so where the words and phrases properly belong to other
disciplines. 'Tax' and 'Fee' are such words. They properly belong to the world
of Public Finance but since the Constitution and the laws are also concerned
with Public Finance, these words have often been adjudicated upon in an effect
to discover their content.
Commissioner of Hindu Religious Endowments,
Madras v. Shri Lakshmindra Thirtha Swamiyar(1) is considered the locus
classicus on the subject of the contradistinction between 'tax' and fee?. The
definition of 'tax' given by Latham, C.J. as "a compulsory exaction 1003
of money by public authority for public purposes enforceable by law and not
payment for services rendered" was accepted, by the Court as stating the
essential characteristics of a tax. Turning to fees, it was said "a fee is
generally defined to be a charge for a special service rendered to individuals
by some governmental agency", but it was confessed, "as there may be
various kinds of fee, it is not possible to formulate a definition that would
be applicable to all cases". As regards the distinction between a tax and
a fee, it was noticed that compulsion could not be made the sole or even a
material criterion for distinguishing a tax from fee. It was observed that the
distinction between a tax and fee lay primarily in the fact that tax was levied
as a part of a common burden, while a fee was a payment for a special benefit
or privilege. But it was noticed that the special benefit or advantage might be
secondary to the primary motive of regulation in the public interest, as for
instance in the case of registration fees for documents or marriage licences.
It was further noticed that Article 110 of the Constitution appeared to
indicate two classes of cases where 'fees' could be imposed: (1) where the
government simply granted a permission on privilege to a person to do
something-which otherwise that person would not be competent to do and
extracted from him, in return, heavy or moderate fees (ii) where the government
did some positive work for the benefit of the person and money was taken as a
return for the work done or services rendered, such money not being merged in
the public revenues for the benefit of the general public. It was however made
clear that the circumstance that all the collections went to the Consolidated
Fund of the State and not to a separate fund may not be conclusive. The Court
finally observed that there was really no generic difference between the tax
fees though the Constitution had, for legislative purposes, made a distinction
between a tax and a fee. While there were entries in the legislative lists with
regard to various forms of taxes, there was an entry at the end of each one of
the three lists as regards fees which could be levied in respect of any of
matters that was included in it. The implication seemed to be that fee had
special reference to governmental action undertaken in respect to any of those
matters.
In HH Sudhandra v. Commissioner for Hindu
Religious & Charitable Endowments(1), the Court reiterated the principle
that a levy in 1004 the nature of a fee did not cease to be of that character
merely because there was any element of compulsion or coerciveness present in it,
and aided.
"Nor is it a postulate of a fee that it
must have direct relation to the actual services rendered by the authority to
individual who obtains the benefit of the service. If with a view to provide a
specific service, levy is imposed by law and expenses for maintaining the
service are met out of the amounts collected there being a reasonable relation
between the levy and the expenses incurred for rendering services, the levy
would be in the nature of a fee and not in the nature of a tax ....... but a
levy will not be regarded as a tax merely because of the absence of unity in
its incidence, or because of compulsion in the collection thereof, nor because
some of the contributories do not obtain the same degree of service as others
may." In Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of Orissa and
Ors.(1) the Court while reiterating that there was an element of quid pro quo
between the person paying the fee and the authority imposing it, said:
"If specific services are rendered to a
specific area or to a specific class of persons or trade or business in any
local area, and as a condition precedent for the said services or in return for
them cess is levied against the said area or the said class of persons or trade
or business, the cess is distinguishable from a tax and is described as a
fee." Later it was said:
"It is true that when the legislature
levies a fee for rendering specific services to a specified area or to
specified, class of persons or trade or business, in the last analysis such services
may indirectly form part of services to the public in general. If the special
service rendered is distinctly and primarily meant for the benefit of a
specified class or area the fact that in ben fitting the specified class or
area the State as a whole may 1005 ultimately and indirectly be benefitted
would not detract from the character of the levy as a fee.
Where, however, the specific, service is
indistinguishable from public service, and in essence is directly a part of it,
different considerations may arise. In such a case, it is necessary to enquire
what is the primary object of the levy and the essential purpose which it is
intended to achieve. Its primary object and the essential purpose must be
distinguished from its ultimate or incidental results or consequences.
That is the true test in determining the
character of the levy," In H.H. Swamiji v. Commissioner, Hindu Religious
& Charitable Endowments Department and Ors.,(1) Chandrachud, CJ. speaking
for the Constitution Bench, emphasised the necessity as well as the sufficiency
of a broad correlationship between the services rendered and the fees charged
and discounted the attempts to go into minutiae to discover meticulously
whether or not there was mathematical equality. He said, "For the purpose
of finding whether there is a correlationship between the services rendered to
the fee payers and the fees charged to them, it is necessary to know the cost
incurred for organising and rendering the services. But matters involving
consideration of such a correlationship are not required to be proved by a
mathematical formula. What has to be seen is whether there is a fair
correspondence between the fee charged and the cost of services rendered to the
fee payers as a class. The further and better particulars asked for by the
appellants under VI, rule 5 of the Civil Procedure Code, would have driven the
Court, had the particulars been supplied, to a laborious and fruitless inquiry
into minute details of the Commissioner's departmental budget. A vivisection of
the amounts spent by the Commissioner's establishment at different places for
various purposes and the ad hoc allocation by the Court of different amounts to
different heads would at best have been speculative. It would have been no more
possible for the High Court if the information were before it, than it would be
possible for us if the information were before us. to find out what part of the
expenses incurred by the Commissioner's establishment at various places and
what part of the salary of his staff at those places should be allocated to the
functions 1006 discharged by the establishment in connection with the services
rendered to the appellants. We do not therefore think that any substantial
prejudice has been caused to the appellants by reason of the non-supply of the
information sought by them." In Southern Pharmaceuticals & Chemicals
Trichur & Ors. etc. v. State of Kerala & Ors. etc.,(1) A.P.Sen, J.
speaking for the Court noticed the broadening of the Court's attitude and
observed:
"It is now increasingly realised that
merely because the collections for the services rendered or grant of a
privilege or licence, are taken to the consolidated fund of the State and are
not separately appropriated towards the expenditure for rendering the services is
not by itself decisive. That is because the Constitution did not con template
it to be an essential element of- a fee that it should be credited to a
separate fund and not to the consolidated fund. It is also increasingly
realised that the element of quid pro quo stricto senso is not always a sine
qua non of a fee. It is needle to streess that the element of quid pro quo is
not necessarily absent in every tax............
The Traditional Concept of Quid Pro Quo Is
Undergoing. A Transformation." What do we learn from these precedents? We
learn that is no generic difference between a tax and a fee, though broadly a
tax is a compulsory exaction as part of a common burden, without promise of any
special advantages to classes of taxpayers whereas a fee is a payment for
services rendered, benefit provided or privilege conferred'.
Compulsion is not the hall-mark of the
distinction between a tax and a fee. That the money collected does not go into
a separate fund but goes into the consolidated fund does not also necessarily
make a levy a tax. Though a fee must have relation to the services rendered, or
the advantages conferred, such relation need not be direct. a mere causal
relation may be enough. Further, neither the incidence of the fee nor the
service rendered need be uniform. That others besides those paying the fees are
also benefited does not detract from the character of the fee. In fact the
special benefit or advantage to the payers of the fees may even be secondary as
com- 1007 pared with the primary motive of regulation in the public interest.
Nor is the Court to assume the role of a cost accountant. It is neither
necessary nor expedient to weigh too meticulously the cost of the services
rendered etc.
against the amount of fees collected so as to
evenly balance the two. A broad correlationship is all that is necessary.
Quid pro quo in the strict sense is not the
one and only true index of a fee; nor is it necessarily absent in a tax.
What do we have in the present case? True,
the Municipal Corporation has realised a sum of Rs. 4,24,494 by way of fees at
the rate of Re. 00.50p. per animal in the case of sheep, goats and pigs and Rs.
2.00 per animal in the case of buffaloes, whereas the budget of the Municipal
Corporation showed under item XIV-B that an amount of Rs.
2,56,000 was expended in connection with
slaughter houses.
But as explained in the affidavit of Dr. A.
C. Ajwani Deputy Health officer (Public Health) of the Municipal Corporation of
Delhi, the amount of Rs. 2,56,000 covers only those items of expenditure as are
reflected in item XIV-B of the Municipal Budget. The items of expenditure
covered by item XIV-B of the municipal budget are evidently those item of
expenditure which arc incurred directly and excessively in connection with
slaughter houses. In addition there are several other items of expenditure
connected with slaughter houses but which are not included in item XIV-B. To
name a few, . there is the expenditure involved in the purchase, maintainance
and the use of trucks and other vehicles for the removal of filth and refuse
from slaughter houses. These expenses, though attributable to slaughter houses,
are debited in the municipal budget under other heads such as transport,
conservancy, petrol and oil etc. There is also the expenditure incurred in
connection with the maintainance of supervisory staff like a full time
Veterinary officer, and a Municipal Health officer, Deputy Health officer,
Zonal Health officer etc., a considerable part of those duties are connected
with slaughter houses. There is then the cost of depreciation of the buildings
and fittings in the slaughter houses. There is also the provision for expansion
and improvement of slaughter house facilities. There are several other items of
expenditure the whole or part of which is attributable to slaughter houses.
Unfortunately, the High Court refused to look at any of these formidable items
of expenditure on the ground that the Corporation could not ask the Court to
look at any figures other than the figure mentioned under item XIV-B of the
municipal budget.
Aparently the High Court was under the
impression that the fees collected should be shown to be related to 1008
expenditure incurred directly and exclusively in connection with the
slaughtering of animals in its slaughter houses and also, shown as such in the
municipal budget. This was a wholly erroneous approach, in the light of what we
have said earlier. We have explained earlier that the expenditure need not be
incurred directly nor even primarily in connection with the special benefit or
advantage conferred. We have also explained that there need not be any
fastidious balancing of the cost of the services rendered with the fees
collected. It appears to have been common ground before the High Court that the
price of meat had gone up about 10 to 12 times since the rates were original
fixed. If so, one wonders how the Municipal Corporation could be expected to
effectively discharge its obligations in connection with the supervision of the
slaughtering of animals in the slaughter houses maintained by it by merely
raising the rates two-fold and three-fold. The increase from Re. 00.25p to Rs.
2.00 per animal in the case of small animals and from Re. 1.00 to Rs. 8.00 in
the case of large animals appears to us to be wholly justified in the
circumstances of the case. The appeal is therefore, allowed with costs the
judgment of the High Court set aside and the Writ Petition filed in the High
Court dismissed with costs.
S.R. Appeal allowed.
Back
