TMI Blog1956 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent. The Petitioner filed the petition under Article 226 of the Constitution of India, contending inter alia that the Municipality was hot authorised to levy tax on persons vending their articles on the margins of public roads and that even if the tax was deemed to be a licence fee they had no right to collect the same as they were not spending any sum whatsoever for discharging any obligation under the resolution. He further pleaded that he was entitled to the free use of the roads of the Municipality without any restriction under Article 19 (1)(d) of the Constitution, and that the restriction imposed by the resolution that a person should not use the same except on payment of a fee to the Municipality was unreasonable and void. 4. In the counter filed to the said petition the Municipality pleaded that the levy was neither a tax nor a licence fee but was only rent to be collected from those who occupy any road margin. They also denied that the Petitioner had any fundamental right to use the road margins without any restriction by the Municipality. In the rejoinder the Petitioner reiterated the plea that the levy was essentially a tax which the Municipality ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of lessor and lessee and that the levy was rent whereas before us it is contended that the payment is either a tax or a fee. We cannot therefore, allow the Advocate-General to raise this plea for the first time before us. But more to respect the arguments advanced rather than any necessity to decide the point raised, we shall express our opinion, Further as the point now raised by the Advocate-General is definitely raised in Anr. Writ Petition which is posted along with this appeal, a discussion on the question will not be merely of academic interest but would be useful in the connected petition. 7. The argument of the -learned Advocate-General may be summarised thus: Under the Government of India Act, 1915, the Madras Legislature had plenary powers and therefore they had ample powers to authorise the Municipality to levy taxes in respect of the vending of articles on road margins. By enacting Section 270 of the Act they authorised the Municipality to levy a tax in respect of such vending. Under the Constitution also the Legislature has the right to make such law as item 5 of List II of the 7th Schedule, namely, Local Government etc. is comprehensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In view of the line of argument pursued by the learned Counsel for the 1st Respondent, it is not necessary to express our view on the question whether under the Government of India Act or under the Constitution of India the Legislature has the powers to authorise a Municipality to levy a tax for the purpose of regulating the sale of articles in or on a public street. As the said power is assumed the only question is whether Section 270 of the Act enables the Municipality to levy such a tax. 10. Before we consider the said question, it may be convenient at this stage to notice the essential characteristics of a tax and a fee and the difference between the two. There is a long catena of Madras decisions wherein this question was considered. It would suffice for the present purpose to refer to the latest of those decisions as the learned Judges therein have reviewed all the earlier decisions. That is the decision of a Division Bench of the Madras High Court consisting of the Chief Justice and Venkataramana Avyar, j., in Varadachari v. State of Madras 1952 2 Mad LJ 410: (AIR 1952 Mad 764) (A), at p. 412 (of Mad I.,J): (at p. 765 of AIR), the learned Judges summari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of Australia, in Matthess v. Chicory Marketing Board, 60 CL R 263 276 (C), that a tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. In regard to fee the learned Judge observes: A fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The learned Judge rejects the distinction sought to be made between a tax and a fee and states that a fee is something voluntary whereas a tax is compulsory. The learned Judge also notices the well-settled characteristics of a fee when he says: If, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision, be co-related to the expenses incurred by Government in rendering the services. 13. Then the learned Judge proceeds to state: As indicated in Article 110 of the Constitution, ordinarily there are two classes of cases where Government imposes fees upon persons. In the first class of cases Government simply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein. A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential tiring in a tax is that tire imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax. The taxes collected are all merged in. the general revenue of tire State to be applied for general public purposes. Thus a tax is a common burden and the only return which the tax payer gets is the participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded.- Thus in lees there is always an eleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of a pilgrim tax. Sections 117 to 124A make general provisions regarding taxation and finance. The said sections lay down a preliminary procedure for levying a tax, the method of assessment, the conditions under which exemptions can be given and the manner in which the tax could be recovered. The Municipality is not authorised expressly-to levy taxes other than those provided for in Chapter VI. A tax on a person's right to vend articles on a road margin may with a stretch of the language be brought under the heading profession tax. But it is not contended that the tax was levied under Ch. VI of Part III. It is not also augured that the conditions laid down for the imposition of a tax or those for recovering it have been complied wider by the Municipality. It follows that the levy in question cannot be sustained on the basis of the express powers of taxation conferred on the Municipality. Therefore the Advocate-General is forced to argue that the levy of tax was made under Section 270 the Act. Section 270 runs: The executive authority may, with the sanction of the Council, prohibit by public notice or licence, or regulate the sale or exposure for sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 20. Section 270 is inserted in Chapter XII in the context of the provisions made for the control of private markets and the vending of specific articles. If Section 270 was intended to cover a case of general taxation it would have found a place in Chapter VI of Part III,' under the heading Taxation and Finance whereas it is found in Part IV, Chapter 12, dealing with Licences and Fees. It cannot be disputed that before Madras Act v. of 1920 was passed, there was a clear distinction between a tax and a fee and that distinction was recognised by Courts. Presumably with that knowledge the Legislature made Act v. of 1920 maintaining that clear distinction between the two categories of imposition and allocating them to different chapters prescribing separate procedure. It is not ordinarily permissible to efface the distinction and to hold that the items enumerated under the heading Licences and Fees possess the same characteristics as those detailed under Chapter VI, Part III. Further the items in Chapter XII all relate to the regulation of particular subjects in regard to which a licence or a permit from the Municipality is required and the special se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the power of charging licence fees cannot be used for taxation, then we must say that as a whole the fees charged by the Corporation must not be very much in excess of what the duties cast upon them and their staff in connection with the licences cost them. There is the cost of issuing the licences; there is the cost of inspecting the premises to see whether they are suitable for the purpose proposed; and there is the subsequent cost of inspecting the premises to see that they are being used properly and that the conditions and restrictions imposed by the Commissioner are observed. But roughly speaking, if the fees are charged at so high rate that as a whole they bring in very much more than the cost of those operations to the corporation, then I think, we can rightly say that they are unreasonable. There is Anr. principle. Although it is almost impossible for the Corporation itself to ascertain, when they are issuing a number of licences to persons engaged in different trades and occupations, exactly what is the cost of any particular licence or of licences for persons engaged in particular trades or occupations - and certainly we could not attempt anything of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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