Full Judgment Text
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PETITIONER:
MUNICIPAL CORPORATION OF DELHIAND OTHERS
Vs.
RESPONDENT:
MOHD. YASIN ETC.
DATE OF JUDGMENT28/04/1983
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
DESAI, D.A.
CITATION:
1983 SCR (2) 999 1983 SCC (3) 229
1983 SCALE (1)492
ACT:
Tax and fee, contradistinction-Fees for slaughtering
animals at slaughter houses enhanced by the Municipal
Corporation, eightfold Legality of the enhancement-Whether
the enhanced fee for slaughtering animals was wholly
disproportionate to the cost of the services and supervision
and therefore, not a fee, but a tax.
HEADNOTE:
As per the rates fixed in the year 1953 by the
Municipal Corporation of Delhi, the slaughtering fees were
0.25 paise for each animal, in the case of sheep, goats and
pigs and rupees one for each animal in the case of
buffaloes. By a Notification dated 31.1.1968, the
Corporation purported to enhance the slaughtering fee in
both the categories eightfold, with effect from February 1
1968. Some butchers of the city questioned the revision of
rates on the ground that the proposed enhanced fee was
wholly disproportionate to the cost of the services and
supervision and was in fact not a fee, but a tax.
During the pendency of the writ petitions in the High
Court, by virtue of an interim arrangement, the appellant,
was permitted to collect slaughtering fees at double the
rates fixed in 1953 and as a result thereof the Corporation
realised a sum of Rs. 4,24,494/-. The budget of the
Corporation under item XIV-B showed a sum of Rs. 2,56,000 as
the expenditure involved in connection with the slaughter
houses. Comparing the amount of actual realisation of fee at
the rates permitted by the court with the amount of
expenditure as revealed by the budget and excluding from
consideration all expenditure not shown in the budget from
item XIV B, the High Court came to the conclusion that even
if the original fee was doubled the amount realised would be
more than sufficient to meet the expenditure involved and,
therefore, there was no reason at all for increasing the fee
eightfold and so the proposed fee was no fee but a tax for
which there is no legislative mandate. Hence the appeal by
special leave.
Allowing the appeal, the Court
^
HELD: 1;1 The increase of the slaughtering fee from
0.25 P to Rs. 2.00 per animal in the case of small animals
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and from rupee 1.00 to Rs. 8.00 in the case of large animals
was wholly justified, in the Circumstances of the case.
[1008 C-D]
1:2 True, the Municipal Corporation has realised a sum
of Rs. 4,24,494 way of fees at the rate of Re. 00.50 per
animal in the case of sheep, goats
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and pigs and Rs. 2 per animal in the case of buffaloes,
whereas the budget of the M.C.D. showed under item XIV-B
that an amount of Rs. 2,56,000 was expended in connection
with slaughter houses. The Items of expenditure covered by
item XIV-B of the Municipal Budget are evidently those items
of expenditure which are incurred directly and exclusively
in connection with slaughter houses. There are several other
items of expenditure the whole or part of which is
attributable to slaughter houses like the expenditure
involved in the purchase, maintenance and the use of trucks
and other vehicles for the removal of filth from slaughter
houses, conservancy, petrol oil etc., the expenditure
incurred in connection with the maintenance of supervisory
staff like a fulltime Veterinary officer, Municipal Health
officer, Deputy Health officer and Zonal Head officers, the
cost of depreciation of the buildings and fittings in
slaughter houses, expansion and improvement of slaughter
houses for utilities etc. but actually debited to other
heads of account under the Municipal budget. Apparently, the
High Court was under an erroneous impression that the fees
collected should be shown to be related to expenditure
incurred directly and exclusively in connection with the
slaughtering of animals in its slaughter houses and also,
shown as such in the Municipal budget. [1007 B-H, 1008 A-B]
2. Vicissitudes of time and necessitudes of history
contribute to changes of philosophical attitudes, concepts,
ideas and ideals and, with them, the meanings of words and
phrases and the language itself. The philosophy and the
language of the law are no exceptions. Words and phrases
take colour and character from the context and the times and
speak differently in different contexts and times. Words and
phrases have not only a meaning but also a content, a living
content, which breathes, and so, expands and contracts. This
is particularly so where the words and phrases properly
belong to other disciplines. "Tax" and "Pee" are such words.
They properly belong to the world of public finance but
since the Constitution and the laws are also concerned with
Public Finance, these words have often been adjudicated upon
in an effort to discern their content. [1002 D-G]
3. From the decided cases beginning from Commissioner
of Hindu Religious Endowments, Madras v. Shri Lakshmindra
Thirtha Swamiyar [1954] S.C.R. 1005 till date, it is clear
that: (i) There is no generic difference between a tax and
fee, though broadly a tax is a compulsory exaction as part
of a common burden, without promise of any special
advantages to classes of tax payers whereas a fee is a
payment for services rendered; benefit provided or privilege
conferred; (ii) Compulsion is not the hall mark of the
distinction between a tax and fee; (iii) That the money
collected does not go into a separate fund but goes into the
Consolidated Fund does not also necessarily make a levy tax;
(iv) Though a fee must have relation to the services
rendered, or the advantage conferred, such relation need not
be direct; a mere casual relation may be enough; (v) Further
neither the incidence of the fee nor the service rendered
need be uniform, (vi) That others besides those paying the
fees are also benefited does not detract from the character
of the fee; (vii) In fact the special benefit or advantage
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to the payers of the fees may even be secondary as compared
with the primary motive of regulation in the public
interest; (viii) Nor is the court to assume the role of a
Cost Accountant. It is neither necessary nor expedient to
weigh too meticulously the cost, of the services rendered
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etc. against the amount of fees collected so as to evenly
balance the two and (ix) A correlationship is all that is
necessary. Quid pro quo in the strict sense is not the only
true index of a fee; nor is it necessarily absent in a tax.
[1006 E-H, 1007 A-B]
Commissioner of H.R. & C.E., Madras v. Shri Lakshmindra
Thritha Swamiyar, [1954] S.C.R. 1005; H. H. Sudhundra v.
Commissioner for Hindu Religious and Charitable Endowments,
[1963] Supp. 2 S.C.R. 302; Hingir-Rampur Coal Co. Ltd. and
others v. The State of Orissa and others, [196] 2 S.C.R.
537; H. H. Swamiji v. Commissioner Hindu Religious &
Chariiable Endowments Dept. and others, [1980] 1 S.C.R. 268;
Southern Pharmaceuticals & Chemicals, Trichur and others
etc. v. State of Kerala and others, [1982] 1 S.C.R. 519
referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2120 &
2125 of 1970.
From the Judgment and order dated the 17th April, 1970
of the Delhi High Court in Civil Writ Petitions Nos. 133 &
134 of 1968
Kapil Sibal, Rameshwar Dial, Adarsh Dial and S. Mittar
for the Appellants.
K. B. Rohtagi for the Respondents.
The following Judgment of the Court was delivered by
CHINNAPPA REDDY, J. BY a notification dated 31.1.68,
the Delhi Municipal Corporation purported to enhance the fee
for slaughtering animals in its slaughter houses from Re.
00.25p to Rs. 2.00 for each animal, in the case of sheep,
goats and pigs, and li from Re. 1.00 to Rs. 8.00 for each
animal, in the case of buffaloes. The notification was
quashed by the High Court of Delhi on the ground that the
Corporation was really proposing to levy a tax under the
guise of enhancing the fee. The original rates were fixed in
March 1953 and the revised rates were to take effect from
February 1, 1968. Some butchers of the city questioned the
revision of rates on the ground that the proposed enhanced
fee was wholly disproportionate to the cost of the services
and supervision and was in fact not a fee, but a tax. The
High Court accepted the contention of the butchers on what
appears to us a superficial view of the facts and
principles. Fortunately, the High Court has certified the
case as a fit one for appeal under Art. 133 (1)(c) of the
Constitution and the matter is now before us.
1002
During the pendency of the writ petitions in the High Court,
by virtue of an interim arrangement, the Municipal
Corporation was permitted to collect fee at the rate of Re.
00.50p. per animal in the case of sheep, goats and pigs and
Rs. 2.00 per animal in the case of buffaloes. As a result,
the Municipal Corporation realised a sum of Rs. 4,24,494 by
way of fee for slaughtering animals in its slaughter houses.
Now, the budget of the Municipal Corporation under item XIV-
B showed a sum of Rs. 2,56,000 as the expenditure involved
in connection with the slaughter houses. Comparing the
amount of actual realisation of fee at the rates permitted
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by the Court with the amount of expenditure as revealed by
the budget and excluding from consideration all expenditure
not show in the budget under item XIV-B, the High Court came
to the conclusion that even if the original fee was doubled
the amount realised would be more than sufficient to meet
the expenditure involved and there was, therefore, no
warrant at all for increasing the fee eight-fold. So, it was
said, the proposed fee was no fee but a tax for which there
was no legislative mandate. We shall presently point out the
error into which the High Court fell on facts as well as
principle.
A word on interpretation. Vicissitudes of time and
necessitude, of history contribute to changes of
philosophical attitudes, concepts, ideas and ideals and,
with them, the meanings of words and phrases and the
language itself. The philosophy and the language of the law
are no exceptions. Words and phrases take colour and
character from the context and the times and speak
differently in different contexts and times. And, it is
worthwhile remembering that word, and phrases have not only
a meaning but also a content, a living content which
breathes, and so, expands and contracts. This is
particularly so where the words and phrases properly belong
to other disciplines. ’Tax’ and ’Fee’ are such words. They
properly belong to the world of Public Finance but since the
Constitution and the laws are also concerned with Public
Finance, these words have often been adjudicated upon in an
effect to discover their content.
Commissioner of Hindu Religious Endowments, Madras v.
Shri Lakshmindra Thirtha Swamiyar(1) is considered the locus
classicus on the subject of the contradistinction between
’tax’ and fee?. The definition of ’tax’ given by Latham,
C.J. as "a compulsory exaction
1003
of money by public authority for public purposes enforceable
by law and not payment for services rendered" was accepted,
by the Court as stating the essential characteristics of a
tax. Turning to fees, it was said "a fee is generally
defined to be a charge for a special service rendered to
individuals by some governmental agency", but it was
confessed, "as there may be various kinds of fee, it is not
possible to formulate a definition that would be applicable
to all cases". As regards the distinction between a tax and
a fee, it was noticed that compulsion could not be made the
sole or even a material criterion for distinguishing a tax
from fee. It was observed that the distinction between a tax
and fee lay primarily in the fact that tax was levied as a
part of a common burden, while a fee was a payment for a
special benefit or privilege. But it was noticed that the
special benefit or advantage might be secondary to the
primary motive of regulation in the public interest, as for
instance in the case of registration fees for documents or
marriage licences. It was further noticed that Article 110
of the Constitution appeared to indicate two classes of
cases where ’fees’ could be imposed: (1) where the
government simply granted a permission on privilege to a
person to do something-which otherwise that person would not
be competent to do and extracted from him, in return, heavy
or moderate fees (ii) where the government did some positive
work for the benefit of the person and money was taken as a
return for the work done or services rendered, such money
not being merged in the public revenues for the benefit of
the general public. It was however made clear that the
circumstance that all the collections went to the
Consolidated Fund of the State and not to a separate fund
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may not be conclusive. The Court finally observed that there
was really no generic difference between the tax fees though
the Constitution had, for legislative purposes, made a
distinction between a tax and a fee. While there were
entries in the legislative lists with regard to various
forms of taxes, there was an entry at the end of each one of
the three lists as regards fees which could be levied in
respect of any of matters that was included in it. The
implication seemed to be that fee had special reference to
governmental action undertaken in respect to any of those
matters.
In HH Sudhandra v. Commissioner for Hindu Religious &
Charitable Endowments(1), the Court reiterated the principle
that a levy in
1004
the nature of a fee did not cease to be of that character
merely because there was any element of compulsion or
coerciveness present in it, and aided.
"Nor is it a postulate of a fee that it must
have direct relation to the actual services
rendered by the authority to individual who
obtains the benefit of the service. If with a view
to provide a specific service, levy is imposed by
law and expenses for maintaining the service are
met out of the amounts collected there being a
reasonable relation between the levy and the
expenses incurred for rendering services, the levy
would be in the nature of a fee and not in the
nature of a tax ....... but a levy will not be
regarded as a tax merely because of the absence of
unity in its incidence, or because of compulsion
in the collection thereof, nor because some of the
contributories do not obtain the same degree of
service as others may."
In Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of
Orissa and Ors.(1) the Court while reiterating that there
was an element of quid pro quo between the person paying the
fee and the authority imposing it, said:
"If specific services are rendered to a
specific area or to a specific class of persons or
trade or business in any local area, and as a
condition precedent for the said services or in
return for them cess is levied against the said
area or the said class of persons or trade or
business, the cess is distinguishable from a tax
and is described as a fee."
Later it was said:
"It is true that when the legislature levies
a fee for rendering specific services to a
specified area or to specified, class of persons
or trade or business, in the last analysis such
services may indirectly form part of services to
the public in general. If the special service
rendered is distinctly and primarily meant for the
benefit of a specified class or area the fact that
in ben fitting the specified class or area the
State as a whole may
1005
ultimately and indirectly be benefitted would not
detract from the character of the levy as a fee.
Where, however, the specific, service is
indistinguishable from public service, and in
essence is directly a part of it, different
considerations may arise. In such a case, it is
necessary to enquire what is the primary object of
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the levy and the essential purpose which it is
intended to achieve. Its primary object and the
essential purpose must be distinguished from its
ultimate or incidental results or consequences.
That is the true test in determining the character
of the levy,"
In H.H. Swamiji v. Commissioner, Hindu Religious &
Charitable Endowments Department and Ors.,(1) Chandrachud,
CJ. speaking for the Constitution Bench, emphasised the
necessity as well as the sufficiency of a broad
correlationship between the services rendered and the fees
charged and discounted the attempts to go into minutiae to
discover meticulously whether or not there was mathematical
equality. He said, "For the purpose of finding whether there
is a correlationship between the services rendered to the
fee payers and the fees charged to them, it is necessary to
know the cost incurred for organising and rendering the
services. But matters involving consideration of such a
correlationship are not required to be proved by a
mathematical formula. What has to be seen is whether there
is a fair correspondence between the fee charged and the
cost of services rendered to the fee payers as a class. The
further and better particulars asked for by the appellants
under VI, rule 5 of the Civil Procedure Code, would have
driven the Court, had the particulars been supplied, to a
laborious and fruitless inquiry into minute details of the
Commissioner’s departmental budget. A vivisection of the
amounts spent by the Commissioner’s establishment at
different places for various purposes and the ad hoc
allocation by the Court of different amounts to different
heads would at best have been speculative. It would have
been no more possible for the High Court if the information
were before it, than it would be possible for us if the
information were before us. to find out what part of the
expenses incurred by the Commissioner’s establishment at
various places and what part of the salary of his staff at
those places should be allocated to the functions
1006
discharged by the establishment in connection with the
services rendered to the appellants. We do not therefore
think that any substantial prejudice has been caused to the
appellants by reason of the non-supply of the information
sought by them."
In Southern Pharmaceuticals & Chemicals Trichur & Ors.
etc. v. State of Kerala & Ors. etc.,(1) A.P.Sen, J. speaking
for the Court noticed the broadening of the Court’s attitude
and observed:
"It is now increasingly realised that merely
because the collections for the services rendered
or grant of a privilege or licence, are taken to
the consolidated fund of the State and are not
separately appropriated towards the expenditure
for rendering the services is not by itself
decisive. That is because the Constitution did not
con template it to be an essential element of- a
fee that it should be credited to a separate fund
and not to the consolidated fund. It is also
increasingly realised that the element of quid pro
quo stricto senso is not always a sine qua non of
a fee. It is needle to streess that the element of
quid pro quo is not necessarily absent in every
tax............
The Traditional Concept of Quid Pro Quo Is
Undergoing. A Transformation."
What do we learn from these precedents? We learn that
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is no generic difference between a tax and a fee, though
broadly a tax is a compulsory exaction as part of a common
burden, without promise of any special advantages to classes
of taxpayers whereas a fee is a payment for services
rendered, benefit provided or privilege conferred’.
Compulsion is not the hall-mark 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 advantages
conferred, such relation need not be direct . a mere causal
relation may be enough. Further, neither the incidence of
the fee nor the service rendered need be uniform. That
others besides those paying the fees are also benefited does
not detract from the character of the fee. In fact the
special benefit or advantage to the payers of the fees may
even be secondary as com-
1007
pared with the primary motive of regulation in the public
interest. Nor is the Court to assume the role of a cost
accountant. It is neither necessary nor expedient to weigh
too meticulously the cost of the services rendered etc.
against the amount of fees collected so as to evenly balance
the two. A broad correlationship is all that is necessary.
Quid pro quo in the strict sense is not the one and only
true index of a fee; nor is it necessarily absent in a tax.
What do we have in the present case ? True, the
Municipal Corporation has realised a sum of Rs. 4,24,494 by
way of fees at the rate of Re. 00.50p. per animal in the
case of sheep, goats and pigs and Rs. 2.00 per animal in the
case of buffaloes, whereas the budget of the Municipal
Corporation showed under item XIV-B that an amount of Rs.
2,56,000 was expended in connection with slaughter houses.
But as explained in the affidavit of Dr. A. C. Ajwani Deputy
Health officer (Public Health) of the Municipal Corporation
of Delhi, the amount of Rs. 2,56,000 covers only those items
of expenditure as are reflected in item XIV-B of the
Municipal Budget. The items of expenditure covered by item
XIV-B of the municipal budget are evidently those item of
expenditure which arc incurred directly and excessively in
connection with slaughter houses. In addition there are
several other items of expenditure connected with slaughter
houses but which are not included in item XIV-B. To name a
few, . there is the expenditure involved in the purchase,
maintainance and the use of trucks and other vehicles for
the removal of filth and refuse from slaughter houses. These
expenses, though attributable to slaughter houses, are
debited in the municipal budget under other heads such as
transport, conservancy, petrol and oil etc. There is also
the expenditure incurred in connection with the maintainance
of supervisory staff like a full time Veterinary officer,
and a Municipal Health officer, Deputy Health officer, Zonal
Health officer etc., a considerable part of those duties are
connected with slaughter houses. There is then the cost of
depreciation of the buildings and fittings in the slaughter
houses. There is also the provision for expansion and
improvement of slaughter house facilities. There are several
other items of expenditure the whole or part of which is
attributable to slaughter houses. Unfortunately, the High
Court refused to look at any of these formidable items of
expenditure on the ground that the Corporation could not ask
the Court to look at any figures other than the figure
mentioned under item XIV-B of the municipal budget.
Aparently the High Court was under the impression that the
fees collected should be shown to be related to
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1008
expenditure incurred directly and exclusively in connection
with the slaughtering of animals in its slaughter houses and
also, shown as such in the municipal budget. This was a
wholly erroneous approach, in the light of what we have said
earlier. We have explained earlier that the expenditure need
not be incurred directly nor even primarily in connection
with the special benefit or advantage conferred. We have
also explained that there need not be any fastidious
balancing of the cost of the services rendered with the fees
collected. It appears to have been common ground before the
High Court that the price of meat had gone up about 10 to 12
times since the rates were original fixed. If so, one
wonders how the Municipal Corporation could be expected to
effectively discharge its obligations in connection with the
supervision of the slaughtering of animals in the slaughter
houses maintained by it by merely raising the rates two-fold
and three-fold. The increase from Re. 00.25p to Rs. 2.00 per
animal in the case of small animals and from Re. 1.00 to Rs.
8.00 in the case of large animals appears to us to be wholly
justified in the circumstances of the case. The appeal is
therefore, allowed with costs the judgment of the High Court
set aside and the Writ Petition filed in the High Court
dismissed with costs.
S.R. Appeal allowed.
1009