TMI Blog1995 (11) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 18 of the Land Requisition Act, at the instance of respondents No. 1 and 2, IVth Assistant City Civil Judge, Madras enhanced the compensation. The respondents being dis-satisfied preferred appeals to the High Court for further enhancement of the compensation. The Court Fee payable according to Madras Court Fees and Suits Valuation Act, 1955 on such appeals was an ad-valorem Court Fee at the rate of 7 1/2 per cent of the total claim without any upper limit for such levy irrespective of the amount. The respondents No. 1 and 2 challenged the validity of the aforesaid provisions of levy of Court Fees and Suits Valuation Act of 1955 with reference to levy of Court Fees ad-valorem working out at the rate of 7 1/2 per cent without upper limit by contending that the levy is not only exorbitant but wholly arbitrary, unreasonable and unjustified bearing no relationship to the cost of administration of justice and that in fact it was not a levy of Court Fee but really a levy of tax though purporting to be a levy of fee. The respondents took the stand that the Court Fees must be related to the cost of administration of justice and cannot be used as a means of taxation for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State to establish that what has been levied is court fee properly so called and if there is any enhancement the State must justify the enhancement: We are accordingly constrained to allow the appeal and set aside the judgment passed by the High Court and remit 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 the court fees or taxes on litigants or litigation. 4. After remand by this Court the respondents filed further affidavits traversing the supplemental counter affidavit dated October 11, 1966 filed by Mr. Shiv Kumar on behalf of the Government. After considering the affidavits filed on behalf of the parties and the material on record the High Court took the view in the impugned judgment that there is no idea of quid pro quo in the levy at the rate of 7 1/2 per cent flat rate without limit as there is no necessity to raise the Court fees as compensation for the cost of service rendered and to meet any increased cost in the administration of civil justice and that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party approaching the Court for redress of its grievance. As far as the memory goes during the Moghul rule and the period prior to that, there was no fee payable even on administration of civil justice and the administration of justice was totally free. It was only after the British rule that regulations imposing Court Fees were brought into existence. In the beginning the imposition of the fee was nominal but in the course of time it was enhanced gradually under the impression that it would prevent the institution of frivolous and groundless litigation and as an effective deterrent to the abuse of process of the Court without causing any impeciment in the institution of just claims. However insignificant this view may be that the levy of fees would have a tendency to put a restraint on frivolous litigation, that view at any rate had the merit of seeking to achieve a purpose which was believed to have some relevance to the administration of justice. Since about past two decades the levy of Court Fees on higher scales would seem to find its justification, not in any purpose related to the sound administration of justice, but in the need of the State Government for revenue as a mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f levying a fee because the levy is excessive to such an extent as to be a pretence of a fee but it is not a fee in reality ? 3) Whether the levy of Court Fees on ad-valorem basis, without an upper limit renders the impost a tax in as-much- as, having regard to the very nature of services, which consist of adjudication of disputes, a stage is inevitably reached wherein after and above an ad-valorem levy, the proportionate increase in the value of the subject matter ceases to be a fee and becomes a tax ? 4) Whether the impugned impositions are fees - there being no correlation between the services and the levy and because State makes a profit out of the administration of civil justice as it does not spend the entire money an administration of civil justice but also in administration of criminal justice and a large surplus is left out even after meeting the expenses of the administration of justice ? 9. We may state here that the aforementioned questions raised before us are not new but were raised and agitated earlier also and decided by this Court. In this connection a reference to some of the decisions may be made. In I.M. M Industries Vs. State of Bihar [AIR 1971 SC 118 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the levy, or whether the levy is excessive to such an extent as to be a pretence 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. 11. Again in Om Prakash Vs. Giri Raj Kishori [AIR 1986 SC 726] this Court observed in para 10 of the report that in determining a levy as fee the true test must be whether its primary and essential purpose is the rendering of specific services to a specified area or class, it being of no consequence that the State may ultimately and indirectly be benefited by it. 12. Apart from the aforementioned decisions the points in controversy and questions raised before us, as referred to above, are squarely covered by a decision of this Court in P.M. Ashwanatha Narayana Setty Vs. State of Karnataka [1989 Supple. (1) SCC 696. While dealing with the dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of the fee, on the other, is established, it would be no part of the legitimate exercise in the examination of the constitutionality of the concept of the impost to embark upon its effect in individual cases. Such a grievance would be one of disproportionate nature of the distribution of the fees amongst those liable to contribute and not one touching the conceptual nature of the fee. It has been further observed in para 72 (page 721) of the said report as under: What emerges from the foregoing discussion is that when a broad and general correlation between the totality of the fee on the one hand and the totality of the expenses of the services on the other is established, the levy will not fail in its essential character of a fee on the ground alone that the measure of its distribution on the persons or incidence is disproportionate to the actual services obtainable by them. The argument that where the levy, in an individual case, far exceeds the maximum value, in terms of money, of the services that could at all be possible, then, qua, that contributor, the correlation breaks down is a subtle and attractive argument. However, on a proper comprehension of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 955 Act recorded the findings that the levy at 7 1/2 per cent under Article 1 of Schedule 1 of the Madras Act of 1955 on an ad-valorem flat rate basis without any limit does not satisfy the pre- requisites of a valid levy of Court Fees as according to the High Court it has in itself more the element of tax rather than the idea of quid pro quo. In other words there is no correlation between the levy of the Court Fees and the services rendered to the litigants in administration of civil justice. The High Court also took the view that the levy at the aforesaid rate imposing on a particular section of litigants is grossly disproportionate part of the burden and, therefore, deserves to be struck down being unreasonable and arbitrary. Further, the High Court, after considering the affidavit filed by Mr. Kelu Eradi on behalf of the Government and also the statements appended to the supplemental counter affidavit for the years 1955 to 1965 found that except for the year 1954-55 the State was making yearly profit varying between 9 to 21 lacs. With regard to the year 1954-55 the High Court found that the total actual receipts for 1954-55 were ₹ 122.12 lacs as against the expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broad correlation between the totality of the expenses on the services rendered as a whole, on the one hand and the totality of the amount so raised by way of the fee, on the other is established, it would be no part of the legitimate exercise in the examination of the constitutionality of the concept of the amongst to embark upon its effect in the individual cases. If the aforesaid relation is found to exist in the levy of the fee, the levy cannot be said to be wanting in its essential character of a fee on the ground that the measure of its distribution on the persons or incidence is disproportionate to the actual services made available to them. In view of this position of law the view expressed by the High Court that ad-valorem levy of Court Fee in an individual case far exceeds the maximum value, in terms of money, dua that contributor and hence the concept of correlation fails and renders the levy invalid and illegal cannot be acceded for the simple reason that the correlation is not in the context of individual contributors, the test being its ascertainment on a comprehensive basis keeping in view the value of the totality of the service, qua, the totality of receipts. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit varying between 9 to 21 lacs during the period from 1955 to 1965, cannot be accepted to be correct as the said observations have been made ignoring the facts stated in the supplementary affidavit filed by Mr. J. Shiva Kumar, Deputy Secretary to the Government and other material on record. It may be noted that factually it is neither possible nor practicable to give the exact break up of figures in regard to the expenses incurred under different heads and other departments of the Government in relation to the administration of civil justice, Shri Shiva Kumar in his supplementary affidavit has also stated in para 6 that it is difficult to estimate accurately to the last rupee the expenditure incurred on a number of items relating to the administration of civil justice. He has, however, given various heads under which the levy of fees is made as also various heads of expenditure relating to the administration of justice of which details were not given by Shri Kelu Eradi in his affidavit which alone has been taken into account by the High Court while recording its conclusions which resulted into the error. Apart from the facts stated above it may also be taken note of that there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived from Court Fees after meeting the actual expenditure in administration of civil justice. It is for these reasons that the Deputy Secretary, Shiv Kumar in his affidavit also stated that it is difficult to estimate accurately to the last rupee the expenditure incurred on a number of items mentioned by him in his affidavit. It is expressed by this Court also, that it is difficult to estimate accurately the expenditure actually made by the Courts in administration of civil justice but it does not men that there does not exist a broad correlation between the expenses and the amount raised by way of levy. 18. While considering the reasonableness of the levy the High Court also took into account the vast difference in the rites of fee between the years 1922 to 1955. In this connection it may be pointed out that having regard to the changing social and economic conditions of the country and the threats of frequent inflationary trends hovering around, the levy of court fees cannot remain static and has to be amended according to the requirements of the times. The increase in the Court Fees has to be appreciated having regard to the increased need of the revenue by reason of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed displeasure with regard to the scheme and it is for this reason that certain successions were in para 95 of the said report in record to the rationalization of the Court Fees under the Rajasthan Act and the Karnataka Act where the rate of Court Fees was 10 per cent ad-valorem which is not the case here before us. 21. It may be appropriate here to mention that ultimately the the State of Madras amended its Court Fees rules with effect form 11.9.1968 whereby the uniform levy of 7 1/2 der cent ad-valorem Court Fees has been given up and the slab system with a tapering scale has been adopted. This fact is clear from the affidavit dated 1.11.1973 filed before the high Court by one S.P.Ambrose, Special Secretary to the Government of Tamilnadu, Home Department. 22. Before parting with these matters, we me may point out that it could not be disouted that the administration of justice is a service which the State is under an obligation to render to its subject. There can be no two opinions that the amount raised from the suitors by way of way of fee should not normally exceed the cost of the administration of justice because. possibly there could be no justification with the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
