TMI Blog1975 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... stify the levy qua fee, must render some special services to the category from whom the amount is exacted and the total sum so collected must have a reasonable correlation to the cost of such services. Where these dual basic features are absent, you cannot legally claim from the licensee under the label 'fee'. D This Court has, as late as the Salvation Army Case(l) set out the tests beyond doubt. When the respondents (writ- petitioners) challenged the fee raise, the plea in defence first was that the impost was a fee strictly so called, that it was requited by adequate benefits and that the larger lay-out on the inspecting staff and allied items, both necessitated and validated the new increase. However, on later and better reflection, may be, the inspirational source for which was stated to be this Court's pronouncement in the Liberty Cinema Case(2), the Council rightly abandoned the fee-cum-quid pro quo formula and anchored itself on the right to exact the higher rate as a 'tax on land and building' under Entry 49 of List II, in the Seventh Schedule, read with s. 321(2) of the Madras District Municipalities Act, 1920 (for short, the Act). This volte face as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead to rejection of the plea of tax, though it is a relevant factor, since, to some extent, Liberty Cinema (supra) has whittled down the efficacy of this circumstance. This Court there observed, at p. 483: Now, on the first question, that is, whether the levy is in return for services, it is said that it is so because s. 548 (of Calcutta Municipal Act 33 of 1951) uses the word 'fee'. But, surely, nothing turns on the words used. The word 'fee' cannot be said to have acquired a rigid technical meaning in the English language indicating only a levy in return for services. No authority for such a meaning of the word was cited. However that may be, it is conceded by the respondent that the Act uses the word 'fee' indiscriminately. It is admitted that some of the levies authorised are taxes though called fees. Thus, for example, as Mitter J (in the High Court, Division Bench) pointed out, the levies authorised by ss. 218, 222 and 229 are really taxes though called fees, for no services are required to be rendered in respect of them. The Act, therefore, did not intend to use the word fee as referring only to a levy in return for services. (empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy tax or fee, which is significantly absent in the Madras Act (We are aware there is some obscurity here because cinema licensing is provided for earlier in s. 443). It is this provision of the Calcutta Act (s. 548) which fell for construction before this Court in Liberty Cinema (supra). While one may discern a broad scheme in that Act, there is some wobbling in the sense that a power to tax is oddly placed in a Chapter primarily concerned with licences and permissions. The Madras Act, on the other hand, speaks with more precision and relegates licences and licence fees to a Part different from Taxation and Finance. The procedure for each is also delineated separately. For these reasons we refuse to aceede to the contention that 'fee' in s. 321 (2) is a tax. Shri A. K. Sen has cited a catena of Madras cases, spread over several decades, where, under this very Act, fee has been interpreted as fee with a tag of special services in lieu of such payment. He has further pressed the drafting indifference while using the words 'fee' and 'tax' in s.548 of the Calcutta Act to repel the application of the observations in Liberty Cinema (earlier quoted) to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that the provisions in it were for conferring benefit on the public at large. The cinema house owners paying the levy would not as such owners be getting that benefit. We are not concerned with the benefit, if any, received by them as members of the public for that is not special benefit meant for them. We are clear in our mind that if looking at the terms of the provision authorising the levy, it appears that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statute. A consideration of where ss.443 and 548 are placed in the Act is irrelevant for determining whether the levy imposed by them is a fee or a tax. So we do not rest our conclusion solely on the location of s. 321 in a different Part from Taxation, while we recognise it as an indicator, among a variety of considerations of course, when drafting precision is absent, judicial caution has to be alerted. To recapitulate, in the Madras Act, Chapter VI of Part III is devoted to Taxation and Finance. Section 78(1)(a) authorizes levy of property tax. The section sets out the other taxes a Municipal Council may levy Section 78(3) togethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the land is put can be taken into account in imposing a tax (1) [1972] 1 S. C. R. 127. (2)Quoted in Liberty cinema: P. 484. on it within the meaning of entry 49 of List II, for the annual value of land which can certainly be taken into account in imposing a tax for the purpose of this entry would necessarily depend upon the use to which the land is put. (p. 49). x x x x x x It will be seen from the provisions of these three subsections (sub-ss. (1) to (3) of s. 62 of the Assam Local self Government Act l953-Act 25 of l953) that power of the board to impose the tax arises on its passing a resolution that no land within its jurisdiction shall be used as a market. Such resolution clearly affects land within the jurisdiction of the board and on the passing of such a resolution the board gets the further power to issue licences for holding of markets on lands within its jurisdiction by a resolution and also the power to impose an annual tax thereon. (p.49) x x . x x x x x ..s. 62(2) which used the words 'impose an annual tax thereon, clearly shows that the word 'thereon' refers to any land for which a licence is issued for used as a market and not to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has carefully provided in s.78 (3) for previous invitation and consideration of objections to enhancement of tax levies, resort to the device of tax disguised as fee, under s.321 (2), may not require any such procedural fairness and discipline and thus will frustrate the processual protection written into the law in regard to fiscal measures. Secondly, Schedule V, with which s.321 is directly linked, sets out a host of petty and lucrative ventures all of which, theoretically, cannot be carried on except on land or buildings. Can it be that some flimsy or casual connection with terra firma will furnish the legal nexus between the tax imposed and the land on which the work is done ? For example, washing soiled clothes is an item in Schedule V. It is straining judicial credulity to snapping point to say that such trivial user justifies a tax on the land when washing is done. Running a hotel or market or permanent circus or theatre may stand on a different footing. The com- monsense of the common man is the best legal consultant in many cases and eschewal of hyper-technical and over- sophisticated legal niceties helps the vision. We cannot list out what, in law, will serve as a nexus b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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