Full Judgment Text
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PETITIONER:
NAGAR MAHAPALIKA VARANASI
Vs.
RESPONDENT:
DURGA DAS BHATTACHARYA & ORS.
DATE OF JUDGMENT:
04/03/1968
BENCH:
RAMASWAMI, V.
BENCH:
RAMASWAMI, V.
SHAH, J.C.
MITTER, G.K.
CITATION:
1968 AIR 1119 1968 SCR (3) 374
CITATOR INFO :
RF 1975 SC 846 (15,19)
R 1980 SC1008 (17,21)
ACT:
U.P. Municipalities Act (II of 1916) Chapters V, VIII and
IX-Licence fees from owners of rickshaws and rickshaw
drivers-If in the nature of tax-Whether quid pro quo in the
form of services by municipality necessary,
HEADNOTE:
Under s. 294 of the U.P. Municipalities Act, 1916 a
Municipal Board may charge a fee, to be fixed by bye law,
for any licence, and, s. 298 enables the Board to make the
bye-laws. Purporting to act under s. 298(2) and List I-H,
of the Act, the appellant (Municipal Boa Varanasi) framed
certain bye-laws relating to the plying of rickshaws, under
which, the owner of each rickshaws had to pay an annual
licence fee of Rs. 30/and each rickshaw driver an annual
licence fee of Rs. 51-. The rickshaw owners and drivers
challenged the validity of the bye-laws in a suit on the
ground that the licence fees were not commensurate with the
services and advantages rendered or provided by the
appellant.
The trial court dismissed the suit. The High Court, on
appeal. held that the imposition of licence fees at the
rates of Rs. 30/- and Rs. 51- was ultra vires and illegal,
because, after excluding certain items of expenditure the
balance did not constitute sufficient quid pro quo for the
amount of licence fees charged.
In appeal to this Court, it was contended : (1) that the fee
charged was not for rendering any services but was in the
nature of a tax; (2) that s. 294 of the Act contemplates the
charge of a fee not only in the restricted sense of a fee
for which a quid pro quo is provided but also in the sense
of a fee in which the taxation element is predominant, that
such a licence fee could be imposed by enacting a bye-law
for that purpose under s. 298, and that the licence fee in
the present case was of that category and (3) that even if
it was held to be a fee in the restricted sense for services
rendered by the appellant, there was sufficient quid pro
quo.
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HELD : (1) The fees mentioned in Chapter VIII, which
contains s,,_ 294, are meant for the purpose of regulation
of certain trades and professions, for rendering services
and for the maintenance of public safety and convenience of
the inhabitants of the municipality, and, it is not contem-
plated that they should be merged in the public revenues of
the municipality or should go for the upkeep of the roads
and other matters of general public utility. Therefore, the
fees imposed under s.’294, are only fees in the restricted
sense of a fee for which a quid pro quo is provided and
cannot be considered to be an impost in the nature of a tax.
[384 E-G]
The Commissioner, Hindu Religious Endowments, Madras v. Sri
Lakshmindra Thirtha Swamiar of Sri Sirur Mutt, [1954] S.C.R.
1005, 1042, followed.
(2) The Act contemplates only two categories of impost,
that is, taxes enumerated in Chapter V and fees mentioned in
ss. 293, 293-A and 294 of Chapter VIII. If a levy is a tax
the imposition could be lawfully made only after following
the mandatory procedure prescribed under ss. 131 to 135.
Under s. 128(1)(iii) and (iv), which are in Chapter V, it is
375
competent to a municipality to impose, a tax on rickshaw
drivers and rickshaw owners. If it is assumed that the tax
element was predominant in the present case and that
therefore the licence fee was in the nature of a tax, the
imposition would be ultra vires because the procedure under
ss. 131 to 135 was not followed. There is no third category
of impost of licence fee which is in the nature of a tax for
which the procedure prescribed by ss. 131 to 135 is not
applicable, but the procedure contemplated by Chapter IX,
which contains s. 298, is applicable. [383 G-H; 384 D-E]
(3) The items disallowed by the High Court could not be
considered as having been spent in rendering any services to
rickshaw owners and drivers, because they were spent over
paving bye-lanes suitable for rickshaws and for the lighting
of streets and lanes; and, under s. 7(a) and (h) of the Act,
it was the statutory duty of the municipal board to light
public streets and places and to construct and maintain
public streets, culverts etc. A licence fee cannot be
imposed for reimbursing the cost of ordinary municipal
services performed in the discharge of its statutory duty to
provide for the general public. Since the balance of
expenditure constituted only 44% of the total income of the
appellant from the licence, the High Court was right in
holding that sufficient quid pro quo was not established in
the circumstances of this case. [385 G-H; 386 A-c]
India Sugar and Refineries Ltd. v. The Municipal Council,
Hospital, I.L.R. [1943] Mad. 521, approved.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 558 of 1967.
Appeal from the judgment and decree dated November 23, 1961
of the Allahabad High Court in First Appeal No. 315 of 1958.
C. B. Agarwala, Ravindra Rana and 0. P. Rana, for the
appellant.
S. Y. Gupta, Jai Shankar Lal, Yogevhwar Prasad and Mohan
Behari Lal, for the respondents.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought, by certificate, from
the judgment of the Allahabad High Court dated November 23,
1961 in First Appeal No. 315 of 1958 by which the appeal of
the respondents was allowed and the suit was decreed with
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costs throughout.
On March 26, 1956, the plaintiff respondents who are rick-
shaw owners and rickshaw drivers filed a representative suit
in the court of Civil Judge, Varanasi praying for a decree
against the, appellant to restrain it by means of a
permanent injunction from charging any license fee or
preventing the respondents from plying rickshaws for hire
without paying license fee within the municipal limits of
Varanasi. Purporting to act under’s. 298(2), List I-H of
the U.P. Municipalities Act, 1916 (Act No. IT, of 1916),
hereinafter referred to as the ’Act’, the Municipal Board
L6SLip. C.1/68-11
376
of Varanasi framed certain bye-laws relating, to the plying
of rickshaws. The bye-laws were first published by
Government order No. 3471/XXIII-9994 dated March 10, 1941
and were subsequently amended by two notifications No.
4022/XXIII-445 dated February 2, 1950 and No. 5834-XXIII-745
dated September 6, 1951. Under these bye-laws, as they
stood amended, the owner of each rickshaw had to pay an
annual licence fee of Rs. 30/1- and each driver of a
rickshaw had to pay an annual fee of Rs. 5/-. The
respondents challenged the validity of these byelaws mainly
on the ground that considering the amount that was being
levied what should have ’been only a fee was really a tax
which the Municipal Board had no authority to levy. It was,
contended on their behalf that a licence fee could be levied
only for services rendered or advantages provided and the
imposition must be commensurate with the services and
advantages so rendered.or provided. It was urged that so
far as the rickshaws that were being plied within the
municipal limits of Varanasi were concerned no advantages or
services were provided which could justify the levy of a fee
at such a rate. The suit was contested ’by the appellant
Municipal Board on the ground that services and advantages
were, in fact, provided and their cost was much more than
the total amount that was being realised from the rickshaw
owners and drivers. By his judgment dated March 26, 1958
the 1st Additional Civil Judge, Varanasi dismissed the suit
of the respondents, holding that the bye-laws in question
were not invalid. The respondents took the matter in appeal
to the, Allahabad High Court being- First Appeal No. 315 of
1958. The appeal was first placed before Gurtu and
Srivastava, JJ. who referred it for consideration by a
larger Bench. The appeal was finally heard by the Chief
Justice, Jagdish Sahai and Bishambhar Dayal, JJ. By a
majority _judgment dated November 23, 196 1. the appeal of
the respondents was allowed, the judgment of the trial court
was set aside and the suit of the respondents decreed. It
was held by Sahai and Dayal, JJ. who delivered the majority
judgment that the imposition of the license fee- at the rate
of Rs. 30/- on each of the rickshaw owners and Rs. 5/- on
each of the rickshaw drivers was ultra vires and a permanent
in_junction was accordingly granted restraining the
appellant from realising the license fees at this rate for
the period in question. It was however, made clear that it
was open to the Municipal Board to reduce the fee to a
reasonable figure and co-relate it to the services rendered
by the Municipal Board.
Chapter V of the Act deals with Municipal Taxation. Section
128 falls within that Chapter and reads as follows :
"(1) Subject to any general rules or special
orders of the State Government in this behalf,
the taxes which
377
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a board may impose in the whole or any part of
a municipality are-
..........................................
(iii) a tax on trades, callings and vocations
including all employments remunerated by
salary or fees ’
(iv) a tax on vehicles and other conveyances
plying for hire or kept within the
municipality or on boats moored therein;
..........................................
Section 131 deals with framing of preliminary
proposals and reads as follows :
"131. (1) When a ’board desires to impose a
tax, it shall by special resolution frame
proposals specifying,-
(a) the tax, being one of the taxes
described in subsection (1 ) of section 128,
which it desires to impose; .
(b) the persons or class of persons to be
made liable, and the description of property
or other taxable thing or circumstances in
respect of which they are to be made liable,
except where and in so far as any such class
or description is already sufficiently
defined under clause (a) or by this Act,
(c) the amount or rate leviable from each
such person or class of persons;
(d) any other matter referred to in section
153, which the State Government requires by
rule to be specified.
(2) The board shall also prepare a draft of
the rules which it desires the State
Government to make in respect of the matters
referred to in section 153.
(3) The board shall, thereupon, publish in
the manner prescribed in section 94 the
proposals framed under sub-section (1) and the
draft rules framed under sub-section (2)
along- with a notice in the form set forth in
Schedule Ill."
Section 132 provides for filing objections by inhabitants of
the, municipality and the procedure for dealing with such
objections. It reads
378
"132. (1) Any inhabitant of the municipality
may, within a fortnight from the publication
of the said notice, submit to the board an
objection in writing to all or any of the
proposals framed under the preceding section,
and the board shall take any objection so sub-
mitted into consideration and pass orders
thereon by special resolution.
(2) If the board decides to modify its
proposals or any of them, it shall publish
modified proposals and (if necessary) revised
draft rules along with a notice indicating
that the proposals and rules (if any) are in
modification of proposals and rules previously
published for objections.
(3) Any objections which may be received to
the modified proposals shall be dealt with in
the manner prescribed in sub-section (1).
(4) When the board has finally settled its
proposals, it shall submit them along with the
objections (if any) made in connection
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therewith to the (Prescribed Authority)."
Section 133 relates to the power of State Government to
reject sanction or modify the proposals of the Municipal
Board. Section 134 states :
"(1) When the proposals have been sanctioned
by the Prescribed Authority or the State
Government, the State Covernment, after taking
into consideration the draft rules submitted
by the board, shall proceed forthwith to make
under section 296, such rules in respect of
the tax as for the time being it considers
necessary.
(2) When the rules have been made the order
of sanction and a copy of the rules shall be
sent to the board, and thereupon the board
shall by special resolution direct the
imposition of the tax with effect from a date
to be specified in the resolution."
Section 135(1) & (2) provide as follows :
"(1) A copy of the resolution passed under
section 134 shall be submitted to the State
Government, if the tax has been sanctioned by
the State Government and to the Prescribed
Authority, in any other case.
(2) Upon receipt of the copy of the
resolution the State Government or Prescribed
Authority as the case may be, shall notify in
the Official Gazette, the imposi-
379
tion of the tax from the appointed date, and
the imposition of a tax shall in all cases be
subject to the condition that it has been so
notified."
Chapter VII deals with powers of the Municipal Board in
respect of buildings, public drains, streets, extinction of
fires, scavenging and water supply. Chapter VIII deals with
other powers in respect of markets, slaughter-houses, sale
of food, public safety, sanitation and prevention of
disease, inspection, entry, search, rent and charges etc.
Sections 293 and 294 fall within Ch. VIII. Section 293 of
the Act reads as follows :
"(1) The board may charge fees to be fixed by
byelaw or by public auction or by agreement,
for the use or occupation (otherwise than
under a lease) of any immovable property
vested in, or entrusted to the management of
the board, including, any public street or
place of which it allows the use or occupation
whether by allowing a projection thereon or
otherwise.
(2) Such fees may either be levied along
with the fee charged under section 294 for
’the sanction, licence or permission or may
’be recovered in the manner provided by
Chapter VI."
Section 293-A of the Act is to the following
effect
"A board may with the previous sanction of the
State Government impose and levy fees for use
of any place to which the public is allowed
access and at which the Board may provide
sanitary and other facilities to the public."
Section 294 of the Act enacts as follows
"The board may charge a fee to be fixed by
bye-law for any licence, sanction or
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permission which it is entitled or required to
grant by or under ,his Act."
Section 298 relates to the power of the Board
to make bye-laws and reads as follows :
"298. (1) A board by special resolution may,
and where required by the State Government
shall make bye-laws applicable to the whole or
any part of the municipality, consistent with
this Act and with any rule, for the purpose of
promoting or maintaining the health, safety,
and convenience of the inhabitants of the
municipality and for the furtherance of
municipal administration under this Ac
t.
(2) In particular, and without prejudice to
the generality of the power conferred by sub-
section (1 ),
380
the board of a municipality, wherever,
situated, may, in the exercise of the said
power, make any bye-law, described in List I
below and the board of a municipality-wholly
or in part situated in a hilly tract may fur-
ther make, in the exercise of the said power,
any byelaw described in List II below.
List I
............................................
H-Public safety and convenience
............................................
(c) Imposing the obligation of taking out
licences on the proprietors or drivers of
vehicles other than motor vehicles boxs or
animals kept or plying for hire, or on persons
hiring themselves out for the purpose of
carrying, loads within the limits of the
municipality, and fixing the fees payable for
such licences and the conditions on which they
are to be granted and may be revoked;
(d) Limiting the rates which may be demanded
for The hire of a carriage, cart, boat or
other conveyance, or of animals hired to carry
loads or for the services of persons hired to
carry loads, and the loads to be carried by
such conveyances, animals or persons when
hired within the municipality for a period not
exceeding twenty-four hours or for a service
which would ordinarily be performed within
twenty-four hours;
By Government Notification No. 3471/XXIII-994 dated March
10, 1941 the bye-laws framed by the Municipal Board under s.
298, List IL-H (c) and (d) of the Act and confirmed by the
Commissioner, were published. Paragraphs 12, 13 and 14 of
the bye-laws are to the following effect :
"12. For every licence granted under these
byelaws to the proprietor of the rickshaw, a
fee of Rs. 25 per annum shall ’be charged for
cycle rickshaw and Rs. 3 per annum for hand-
drawn rickshaws.
13. The licences shall be annual and shall
terminate on the 31st March, in each year.
14. A fee of Re. 1 shall be charged from
every person who desires to take out a licence
for driving a rickshaw and the licence shall
be issued to the applicant
381
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on receipt of the prescribed fee by the
licensing officer, after ascertaining that he
is strong, healthy and above the age of 18
years, provided that the Licensing Officer may
refuse the license if he is of opinion that it
would be inexpedient to grant it to the person
applying."
An amendment was made by the Municipal Board to the byelaws
by Government Notification No. 4022/XXIII-745 (45-49) dated
February 2, 1950 and No. 5834/’XXIII-745 dated September 6,
1951 which read thus :
"No. 4022IXXIII-745 (45-49) dated 2-2-1950:
The following amendment in the Rickshaw bye-
laws for the Banaras Municipality published
under notification No. 3471/XXIII-994 dated
March 10, 1941, which has been made by the
Banaras Municipal Board under section 298-H(c)
and (d) of the U.P. Municipalities Act 1916
and confirmed by the Commissioner, is hereby
published as required under Section 301 (2) of
the said Act.
AMENDMENT
In the 2nd line of rule 12 of the Rickshaw
bye-laws read ’Rs. 30’ instead of ’Rs. 25’ in
between the words ’a fee of’ and ’per annum’.
No. 58341’XXIII-745 dated September- 6, 1951
The following amendment in the bye-laws for
the regulation and control of Rickshaws plying
for hire or kept for private use in the
Banaras Municipality sanctioned under G.O. No.
3471/XXIII-994 dated March 10, 1941, which has
been made by the Municipal Board of Banaras,
under- Section 298-H(c) and (d) of the U.P.
Municipalities Act, 1961, as confirmed by the
Commissioner is hereby published as required
by Section 301 (2) of the said Act.
Amendment
In Rule 14 between the words ’A fee’ and
’shall be charged’ ’rupees five’ be
substituted in place of ’Re. I/-’ occurring
in the first line."
On behalf of the appellant Mr. Agarwala argued, in the first
place, that the impugned bye-laws under which the appellant
charged the license fee from the respondents were not ultra
vires the powers of the Board. It was maintained that the
impost was not a fee in the sense ,’bat the Municipal Board
had to give a quid
382
pro quo to the persons from whom the fee was charged. In
other words, the contention of the appellant was that the
fee charged Was not under the bye-laws a fee taken for
render in any services but it was a license fee which was in
the nature of a tax. I’( was contended that it was not
necessary to show that there was any co-relationship between
the amount of license fee and the services rendered by the
Municipal Board to rickshaw owners and rickslia" drivers
concerned. The question about the distinction between a tax
and a fee has been considered by this Court in The
Commissioner, Hindu Religious Endowments, Madras v. Sri
Lakshmindra Tirtha Swamiar of Sri Shirur Mutt(1) in which
the constitutional validity of the Madras Hindu Religious
and Charitable Endowments Act 1951 (Madras Act XIX of 1951)
came to be examined. Amongst the sections challenged war s.
76(1 ). Under this section every religious institution had
to pay to the Government annual contribution not exceeding 5
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per cent of its income for the services rendered to it by
the said Government; and the argument was that the con-
tribution thus exacted was not a fee but a tax and as such
outside the competence of the State Legislature. In dealing
with this argument Mukherjee, J., as he then was, cited the
definition of tax given by Latham, C.J., in the case of
Matthews(1) and has elaborately considered the distinction
between a tax and a fee. "A tax", said Latham, C.J., is a
compulsory exaction of monev by public authority for public
purposes enforceable by law and is not payment for services
rendered". In b,-in-ing out the essential features of a tax
this definition also assists in distinguishing a tax from a
fee. It is true that between a tax and a fee there is no
generic difference; both are compulsory exactions of money
by public authorities but whereas a tax is imposed for
public purposes and is not supported by any consideration of
service rendered in return, a fee is levied essentially for
servires rendered and as such there is an element of quid
pro quo between the person who pays the fee and the public
authority which imposes it. In The Commissioner, Hindu
Religious Endowments, Madras.v v. Sri Lakshmindi-a Tirtha
Swamiar of Sri Shirur Mutt(1) Mukherjee, J. examined the
scheme of the Act and observed as follows:
" 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. 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,
(1) [1954] S.C.R. 105, I-42. (2) 60
C.L.R. 263, 276.
383
Government simply grants a permission or
privilege to a person to do something, which
otherwise that person would not be competent
to do and extracts fees either heavy or
moderate from that person-in return for the
privilege that is conferred."
After giving an illustration of licence fees for motor
vehicles as coming under that class of cases, Mukherjee, J.
proceeds to state :
"In such cases, according to all the writers
on public finance, the tax element is
predominant, and if the money paid by licence
holders goes for the upkeep of roads and other
matters of general public utility, the licence
fee cannot but be regarded as a tax.
In the other class of cases, the Government
does some positive work for the benefit of
persons and the money is taken as the return
for the work done or services rendered. If the
money thus paid is set apartand
appropriatedspecifically for the performance
ofsuch work and isnot merged in the public
revenues forthe benefit of thegeneral public,
it could be counted as fees and not a tax.
There is really no generic difference between
the tax and fees and as said by Seligman, the
taxing power of a State may manifest itself in
three different forms known respectively as
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special assessments, fees and taxes."
On behalf of the appellant learned, Counsel relied upon this
passage and said that licence fee fell within the first
class of cases mentioned by Mukherjee, J. and it was not
necessary for the appellant to show that there was any co-
relationship between the levy of the fees and the expenses
incurred by the Municipal Board in rendering the services.
We shall assume in favour of the appellant that the tax cle-
ment is predominant in the imposition of the fee upon the
respondents under the impugned bye-laws and the license fee
is therefore in the nature of tax. Even upon that
assumption the imposition of the fee under the machinery
contemplated by s. 294 of the Act is ultra vires the powers
of the Municipal Board. The reason is that if the
imposition is in the nature of a tax the procedure
contemplated by ss. 131 to 135 of the Act should be followed
by the Municipal Board and in the absence of such procedure
being followed the imposition of this kind of fee would be
ultra virus. It is manifest from s. 128 ( 1 ) (iii) & (iv)
that it is competent to the Municipality to impose a tax on
vehicles plying for hire or kept within the municipality and
also on trades, calling and vocations including rickshaw
drivers and rickshaw owners.
384
But the imposition of such a tax can only be lawfully made
by the Municipal Board after following the procedure
prescribed under ss. 131 to 135 of the Act.
It was, however, contended for the appellant that under s.
294 of the Act the Municipal Board has authority to impose a
licence fee by enacting a bye-law for that purpose under s.
298 of the Act. It was said that s. 294 of the Act
contemplates the charge of a fee not only in the restricted
sense of a fee for which a quid pro quo is provided but also
in the sense of a fee in which the taxation element is
predominant. It was hence argued that the procedural
machinery for the imposition of tax contemplated under ss.
131 to 135 of the Act need not be followed in such a case.
We are unable to accept this argument as correct. According
to the scheme of the Act there is a sharp and clear
distinction between taxes properly so called and fees.
There is a logical and clear-cut division of the Act into
several Chapters, and taxes, by whatever designation they
may be called, are all comprehended and dealt with in Ch.
V. and by that Chapter alone. And what is permitted to be
imposed by S. 294 which occurs in Ch. VIII is only a fee in
the restricted sense as distinguished from a tax. To put it
differently, the Act contemplates only two categories of
impost, i.e., taxes enumerated in Ch. V and fees mentioned
in ss. 293, 293-A and 294 of Ch. VIII. It is not contem-
plated in the scheme of the Act that there should be a third
category of impost of licence fee which is in the nature of
a tax for which the procedure contemplated by Ch. IX is
applicable. In our opinion, the scheme of Ch. VIII of the
Act shows that the provisions contained therein are meant
for the purpose of regulation of certain trades and
professions and for maintenance of public safety and
convenience of the inhabitants of the municipality. The
fees mentioned in s. 294 are meant to be imposed for the
purpose of regulation of trade and professions and for
rendering services. It is not contemplated by the Act that
licence fees imposed by s. 294 should be merged in the
public revenues of the municipality and should go for the
upkeep of the roads and other matters of general public
utility. It is therefore not permissible for the Municipal
Board to impose a tax on the respondents under the guise of
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a license fee without following the mandatory procedure for
imposition of the taxes prescribed by ss. 131 to 135 of the
Act. Otherwise there will be a circumvention of the
provisions of ss. 131 to 135 of the Act. It is manifest
that s. 294 of the Act must be interpreted in such a manner
as to prevent the circumvention of the safeguards of the
provisions of ss. 131 to 135 of the Act.
In this context it is important to notice that the power to
tax is not included in the police power in the American
Municipal
385
Law.-(Dillon on ’Municipal Corporations’ Vol. IV, 5th Edn.,
p. 2400). It has been held that the police and taxing
powers of the legislature though co-existent, are distinct
powers. Broadly speaking, the distinction is that the
taxing power is exercised for the purpose of raising revenue
and is subject to certain designated constitutional
limitations, while the police power is exercised for the
promotion of the public welfare by means of the regulation
of dangerous or potentially dangerous businesses,
occupations, or activities, and is not subject to the
constitutional restrictions applicable to the taxing power.
"It may consequently be said that if the primary purpose of
a statute or ordinance exacting an imposition of some kind
is to raise revenue, it represents an exercise of the taxing
power, while if the primary purpose of such an enactment is
the regulation of some particular occupation, calling or
activity, it is an exercise of the police power, even if it
incidentally produces revenue." (American Jurisprudence, 2nd
Edn. Vol. 16, p. 519).
We pass on to consider the next question raised in this
appeal, namely, whether there was a quid pro quo for the
licence fees realised by the appellant and whether the
impost was a fee in the strict sense as contemplated by s.
294 of the Act. A finding has been recorded in the present
case by the trial court that a sum of Rs. 1,43,741/7/0 was
spent by the Municipal Board for providing facilities and
amenities to owners and drivers of rickshaws. This sum of
Rs. 1,43,741/7/0 is made up of the following items :
"Rs. 68,000/- spent over the paving of bye-lanes, in these
the only conveyance that can operate is a rickshaw.
Rs. 20,000/- spent as expenses for lighting of streets and
lanes.
Rs. 47,741/7/0 spent in making provision for parking
grounds.
Rs. 8,000/- spent on payment of salary to the staff
maintained for issuing licences and inspecting rickshaws."
The High Court was of the opinion that the amount of Rs.
68,000/- spent for paving of bye-lanes and Rs. 20.000/- for
lighting of streets and lanes cannot be considered to have
been spent in rendering services to the rickshaw owners and
rickshaw drivers. The reason was that under s. 7 (a) of the
Act it was the statutory duty of the Municipal Board to
light public streets and places and under cl. (h) of the
same section to construct and maintain public streets,
culverts etc. The expenditure under
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these two items was incurred by the Municipal Board in the
discharge of its statutory duty and it is manifest that the
licence fee cannot be imposed for reimbursing the cost of
ordinary municipal services which the Municipal Board was
bound under the statute to provide to the general public
(See the decision of the Madras High Court in India Sugar
and Refineries Ltd. v. The Municipal Council Hospet(1). If
these two items are excluded from consideration the balance
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of expenditure incurred by the Municipal Board for the
benefit of the licensees is Rs. 55,741/7/0. In other words,
the expenditure constituted about 44% of the total income of
the Municipal Board from the licensees. In our opinion,
there is no sufficient quid pro quo established in the
circumstances of this case and the High Court was therefore
right in holding that the imposition of the, licence fees at
the rate of Rs. 30/- on each rickshaw owner and Rs. 51- on
each rickshaw driver was ultra vires and illegal.
For the reasons expressed we hold that the judgment anl
decree of the Allahabad High Court dated November 23, 1961
in First Appeal No. 315 of 1958 is correct and this appeal
is accordingly dismissed with costs.
V.P.S. Appeal dismissed.
(1) I.L.R. [1943] Mad. 521.
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