TMI Blog2004 (9) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... of Himachal Pradesh under section 78 of the Registration Act be declared void and ultra vires and for recovery of ₹ 27,771/- paid by them as registration fee for registering the mortgage deed dated 30.10.1978. The case of the plaintiffs, in brief, was that they were allotted an industrial plot in Parwanoo by the Himachal Pradesh Housing Board for establishing an industrial unit. They were sanctioned two loans of ₹ 30 lacs and ₹ 27.76 lacs by Himachal Pradesh Financial Corporation and Himachal Pradesh Mineral and Industrial Development Corporation respectively and in order to secure the loan, they were required to mortgage and hypothecate the fixed assets of their leasehold rights in the industrial plot and the machinery installed therein with the aforesaid Corporations for which a deed of simple mortgage was required to be executed. At the time of the execution of the mortgage deed, the plaintiffs were required to pay stamp duty of ₹ 45,804/- and registration charges amounting to ₹ 27,760/- in accordance with the notification issued under sections 78 and 79 of the Registration Act by the State of Himachal Pradesh. The plaintiffs challenged the vires of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a tax and not a fee and consequently the impugned notification is ultra vires the Registration Act. 4. The principal question which requires consideration in the present appeal is whether the notification issued by the State Government on 14.4.1969 prescribing the registration fee on a graduated form on the basis of value of subject matter of the instrument is in accordance with the spirit of section 78 of the Registration Act and is valid in law. 5. By the very nature of things recognition of rights or title over immovable property and transactions therein give rise to manifold problems. Movable property, depending upon its size or dimension, can be kept in absolute control in possession of its owner and a third party may not be in a position even to know where the same has been kept. But this is not so for an immovable property which lies in the open attached to the earth at a particular place and the owner may be residing at a far away place. The owner may give the property on lease or licence to someone else who may get physical possession thereof and enjoy the usufruct thereof. In order to get over this difficulty, a system of registration of title to immovable prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty legislation of 1925. The result of that legislation, as respects registered land, is to produce on first registration a state insured record of entitlement to legal estates in land, open to public inspection, which is to be kept up to date in respect of subsequent transactions in accordance with the conveyancing technique for which the legislation provides. Indirect reference to the earlier legislation is found at the commencement of the Land Registration Act 1925 in the provision that requires the Chief Land Registrar to continue to keep a register of title to freehold and leasehold land. 705. The Land Registry Act 1862. The Land Registry Act 1862 marked the first attempt to introduce registration of title as distinct from registration of deeds by memorial. Registration was on a voluntary basis and subject to conditions, which included conditions (1) that a marketable title should be shown; (2) that the boundaries of the land should be officially determined and defined as against adjoining owners; and (3) that partial interests should be disclosed and registered. The Act continues to apply to estates registered under it as if the Land Registration Act 1925 had not been pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... styled the office of the Registrar and in every sub-district an office or offices to be styled the office of the Sub-Registrar. Section 6 enjoins the State Government to appoint Registrars and Sub-Registrars. Section 16 enjoins the State Government to provide for every registering officer the books necessary for the purposes of the Act and further in each district suitable provision for the safe custody of the records connected with the registration of documents in such districts. By amending Act No. 48 of 2001, section 16A (1) has been inserted in the Act. This section provides that notwithstanding anything contained in section 16, the books provided under sub-section (1) of that section may also be kept in computer floppies or diskettes or in any other electronic form in the manner and subject to the safeguards as may be prescribed by the Inspector General with the sanction of the State Government. The office of Sub-Registrar has naturally to be provided with other staff like clerks and other persons for carrying on various kinds of works which are associated with the registration of documents, which involve recording the contents thereof in the register maintained for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees and taxes. Since a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that a levy of fee should, on the face of the legislative provision, be correlated to the expenses incurred by Government in rendering the services. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax. 9. After independence of the country the Governmental functions increased manifold and various legislations were enacted and schemes were introduced for upliftment of the society. Many measures were introduced which contained provisions for imposing compensatory and regulatory fees. It was realized that the indicia of fee indicated in Shirur Mutt case was too technical and rigid and was not in tune with the requirement of the prevailing social conditions. The characteristics of tax and fee were then examined in considerable detail by a three Judge Bench in Sreenivasa General Traders. vs. State of Andhra Pradesh AIR 1983 SC 1246 and in paragraphs 30 and 31 of the judgment, the Court held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by that Government in repayment of loans shall form one consolidated fund to be entitled the Consolidated Fund of the State . In view of this specific provision any amount realized by way of fee by the Central Government or State Government has to be credited to Consolidated Fund of India or of the concerned State, as the case may be, and will thus necessarily get merged in the public revenues and cannot be set apart. 10. In Sreeniwasa General Traders (supra) the Court took note of the fact that presumably the attention of the Bench hearing Shirur Mutt case was not drawn to Article 266 of the Constitution. It was further observed therein that the Constitution nowhere contemplates it to be an essential element of fee that it should be credited to a separate fund and not to a consolidated fund. 11. In Municipal Corporation of Delhi and others vs. Mohd. Yasin AIR 1983 SC 617, it was held that compulsion is not the hallmark 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 advantag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in encompassing a large area of activity. The State has not only to maintain a system of administration of justice, but also the maintenance of law and order. It has also to provide a system to enable its citizen to canvass their rights against the wrong done to them as well as to the State itself. It is for these reasons that the State came forward to levy fee by legislative amendments in order to cover up the expenses towards pay, allowances and pensions of judicial officers and establishment staff, their residential accommodations, court buildings, repairs and maintenance as well as other expenses under various heads mainly engaged and employed for the administration of justice. After taking note of the observation in Om Prakash Agarwal vs. Giri Raj Kishori 1986 (1) SCC 722, 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, it was held that if 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the totality of the expenses of the services on the other, will be sufficient to justify the levy. The levy will not fail only on the ground that the measure of its distribution on the persons or incidence is disproportionate to the actual services rendered by them. The true test being the comprehensive level of the value of the totality of the services set off against the totality of the receipts. The character of the fee is thus established. The vagaries in its distribution amongst the class do not detract from the concept of a fee as such. 16. The subject matter of challenge in the present case is registration fee which has been fixed by the State Government in exercise of power conferred by Section 78 of the Registration Act. The said provision reads as under: 78. Fees to be fixed by State Government. The State Government shall prepare a table of fees payable -- (a) for the registration of documents; (b) for searching the registers; (c) for making or granting copies of reasons, entries or documents, before, on or after registration; and of extra or additional fees payable -- (d) for every registration under section 30; (e) for the issue of commissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1181 (which is a decision by a bench of two learned Judges in appeal preferred against the judgment reported in AIR 1964 Punjab 442) in support of his contention that the notification issued by the State Government prescribing the registration fee in tabulated form is illegal. It is not necessary to examine these cases in detail as in all these cases reliance has been placed upon Shirur Mutt case (supra) for holding that there must be an element of quid pro quo and that the fee realized must be correlated and must be spent for the purposes of imposition. As discussed above, the view taken in Shirur Mutt case (supra) has undergone a considerable change by subsequent decisions of this Court. Moreover, having regard to the express language used in Article 266 of the Constitution, it is not possible for the State Government to keep the fee realized in a separate fund other than the Consolidated Fund of the State. In view of the subsequent decisions of this Court, the view taken in the decisions relied upon by learned counsel for the plaintiff-respondents cannot be considered to be good law and they are hereby overruled. 20. For the reasons discussed above, the appeal is allowed wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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