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Dhaniram and anr. Vs. the Janapad Sabha and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 358 of 1962
Judge
Reported inAIR1965MP219a; 1965MPLJ408
ActsCentral Provinces and Berar Local Government Act, 1948 - Sections 89 and 94; Central Provinces and Berar Local Self Government Act, 1920 - Sections 24; Government of India Act, 1915 - Sections 80A
AppellantDhaniram and anr.
RespondentThe Janapad Sabha and ors.
Appellant AdvocateR.S. Dabir and ;Ram Panjwani
Respondent AdvocateA.P. Sen, Adv. (For No. 1) and ;R.J. Bhave, Govt. Adv. (For Nos. 2 to 4)
DispositionPetition dismissed
Cases ReferredNarbadaprasad v. Municipal Committee
Excerpt:
.....it says that it is levied upon the registration of cattle, we are not satisfied that it is exacted as a fee and not as a tax. the short answer to this question is that if, as pointed out by us earlier, under section 94 it is only if a fee imposed is within the power of the sabha and has been validly imposed by it that a sum due from a contractor on account of the sale of the right to levy that fee can be recovered as if it were arrears of land revenue, then clearly the petitioners, who question the legality of the recovery of rs......tolls, taxes and rates, fines and sums due from a contractor on account of the sale of right to levy fees and tolls, which are within the powers of the sabha and can validly be imposed by it. it follows, therefore, that if the fee on the registration of animals sold in a public market imposed by the janapad sabha, janjgir, at the rate of three pies per rupee per head on the purchase money payable by the purchaser is not a 'tee' but a 'tax' and the sabha has no power under the act to levy such a lax, then any sum due from a contractor on account of the sale of the right to levy an illegal imposition cannot be recovered as if it were arrears of land revenue. in these proceedings where the petitioners seek a writ of certiorari for quashing recovery of the amount said to be due from them.....
Judgment:

Dixit, C.J.

1. This is an application under Article 226 of the Constitution for the issue of a writ of certiorari for quashing proceedings initiated against the petitioners for recovery of an amount of Rs. 16,000/- said to be clue from them to the Janpad Sahha, Janjgir, on account of a contract for recovery of 'cattle sale registration fees' us if it were arrears of land revenue.

2. By a notification issued on 31st March 1947 in exercise of the powers conferred on it by the Central Provinces and Berar Local Self Government Act, 1920, and the rales made thereunder, ihe District Council of Bilaspur imposed 'cattle sale registration fees' at the rate of 'three pies per rupee per head on the purchase money payable by the purchaser''. On the enactment of the Central Provinces and Berar Local Government Act, 1948, repealing the C.P and Berar Local Self Government Act, 1920, the Janapad Sabha, Janjgir, came into existence and that body continued the levy of the catile sale registration fees imposed by the notification dated 31st March 1947. The Jan-pad Sahha sold by public auction the right of collection of this fee for the period from 1st April 1957 to 31st March 1958 to the petitioner Dhaniram for a consideration of Rs. 32000/-. The other applicant Dhajaram furnished a surely bond for the payment of the amount of Rs. 32,000 by Dhaniram to the Janpad Sabha. When the petitioner Dhaniram failed to pay to the Janpad Sabha an amount of Rs. 16,000/- said to be due from him in respect of the contract, proceedings for recovery of the amount as if it were arrears of land revenue were started against both Dhaniram and Dhajaram.

3. The petitioners contend that under Section 89(d) of the Act of 1948 the Janapad Sabha could impose only a fee and not a tax on the registration of animals sold in any public market; that the imposition made by the notification dated ihe 31st March 1947 was one of a tax and not of fees and was in excess of the powers conferred on the Janpad Sabha by the statute and thus illegal; that Sections 98 and 94 of the Act permitted the teasing out of the right to collect only those tolls or fees, which the Sabha could validly impose and not of those impositions which were in excess of or in contravention of the powers conferred on it by the Act, and likewise Section 94 enabled the Janpad Sabha to recover, as if it were arrears of land revenue, the amount of only those cesses, fees, tolls and rates which if had the power to levy; that as the imposition by the Sabha of cattle sale registration fee with reference to the sale price of the animal sold was illegal and beyond the powers of the Sabha, the lease to the petitioner Dhaniram of the right to collect the cattle sale registration lee was void and there was no liability on the petitioners to pay any amount under that lease to the Sabha; and that even if under the contract of lease the petitioners were liable to pay any amount to the Sabha, in any case it could not be recovered as if it were arrears of land revenue.

4. Shri Dabir, learned counsel for the petitioner, urged that the present case fell within the rule laid down by a Division Bench of this Court in Nagpur Kshatriya Khatlk Samaj v. Corporation of the City of Nagpur, ILR (1986) Nag. 102 :( (S) AIR 1956 Nag. 162) and was indistinguishable even on facts from that case; and that the imposition levied by the Janpad Sabha was a tax. On the other hand, Shri Sen, learned counsel for the Janpad Sabha, sought to support the validity of the imposition by relying on Manobar Vasudeo v. Gram Panchayat, Ratanpur, AIR 1962 Madh. Pra. 177, where a Division Bench of this Court distinguished the case of Nag-pur Kshatriya Khatlk Samaj ILR (1966) Nag. 102 : ((S) AIR 1956 Nag. 152) (supra) and held on facts and circumstanced similar to those in the present case that the charge made by the Gram Panchayat, Ratanpur, for registration of the cattle sold in the market established by the Gram Panchayat with reference to the 'price of the animal sold in the market' was a fee. The Division Bench, before whom this matter first came up for hearing, felt that the decision in the case of AIR 1962 Madh Pra 177 ran counter to the view expressed in ILR (1956) Nag. 102 : ( (S) AIR 1956 Nag. 152) and consequently this application under Article 226 has come up before us on a reference by the Division Bench for disposal.

5. The material provisions of the 1948-Aet are Sections 89, 93 and 94. Section 89 empowers the Sabha to impose, subject to rules made under Section 182, in any public market any one or more of the fees or tolls mentioned therein, one of them being 'fees on the registration of animals sold in such market''. The Janapad Sabha has not been given the power to impose any tax on the registration of animals. The Sabha, being a creature of the statute, can exercise only such powers of taxation and imposition of tolls or fees as are entrusted to it by the Legislature. If the Sabha, in excess or in contravention of the powers conferred on it by the statute, imposes a tax or a fee, then the levy would clearly be ultra vires. Section 98 provides that the Chief Executive Officer may, by public auction or private contract, lease the levy of lolls and fees which may be imposed under Clauses (b), (c) and Clause (d), which speaks of 'fees on the registration of animals sold in such market'', of Section 86. It will be altogether unreasonable to think that the Legislature, while permitting the leasing out of the levy of tolls and fees under Section 93, contemplated that the Sabha could lease out the right to levy any toll or fee which was not permitted under the Act. That provision deals with the leasing out of the levy of those tolls or fees which are intra vires the powers of the Sabha and are legal, and not ultra vires. So also Section 94. when ii provides that the moneys mentioned therein shall be recoverable as if they were arrears of land revenue, speaks of arrears of those cesses, fees, tolls, taxes and rates, fines and sums due from a contractor on account of the sale of right to levy fees and tolls, which are within the powers of the Sabha and can validly be imposed by it. It follows, therefore, that if the fee on the registration of animals sold in a public market imposed by the Janapad Sabha, Janjgir, at the rate of three pies per rupee per head on the purchase money payable by the purchaser is not a 'tee' but a 'tax' and the Sabha has no power under the Act to levy such a Lax, then any sum due from a contractor on account of the sale of the right to levy an illegal imposition cannot be recovered as if it were arrears of land revenue. In these proceedings where the petitioners seek a writ of certiorari for quashing recovery of the amount said to be due from them as if it were arrears of land revenue, the question whether under the general law there is any liability on the applicants to pay to the Sabha any amount actually recovered by them as registration fees under the contracts entered into by them with the Sabha even if the levy is illegal need not and cannot be considered.

6. Now, it is not disputed that under Section 89(d) of the Act of 1948, or under any other provision of that Act, the Janapad Sabha has not been empowered to levy a 'tax' on the registration of' animals sold in any public market. Section 89 authorises only the levy of a 'fee' on the registration of animals sold in such market. The distinction between a 'tax' and a 'fee' is well-recognised, and has been noticed by the Supreme Court in many cases: sec Commr., Hindu Religious Endowments v. Lakshmindra Thirtha Swamiar AIR 1954 SC 282 : 1954 SCK 1005; Ratilal v. State of Bombay AIR 1954 SC 388 : 1954 SCR 1055. Sri Jagannath Ramanuj Das v. State of Orissa. AIR 1954 SC 400 : 1954 SCR 1046; and Hinger-Rampur Coal Co. v. Stale of Orissa AIR 1961 SC 459' 1961-2 SCR 537. It is not necessary to note here all the distinguishing features of a 'tax1 and a 'fee'. It is sufficient to emphasize that in order to constitute an imposition a 'fee' one of the essential requisites is that there must be co-relation between the fee collected and the service intended to be rendered. This is because a fee is levied essentially for services 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. Here the imposition being on the basis of 'three pies per rupee per head on the purchase money payable by the purchaser', there is no co-relation whatsoever between the fee collected and the service intended to be rendered. The imposition in question is thus in substance not a fee at all, but a tax. It is on this reasoning that it was held in ILR (1956) Nag 102 (S) AIR 1956 Nag. 152) that the imposition made by the Corporation of City of Vagpur of a fee on the 'registration of animals and heads of cattle sold in the Corporation area', based not upon the kind of animal registered but upon the price paid in respect of the animals of the same class, was a tax rather than a fee. In that case, after referring to the relevant provisions of the City of Nagpnr Corporation Act, 1950, and various cases pointing out the distinction between a 'tax' and a 'fee' the Division Bench expressed its conclusion thus -

'The imposition in question is granted lo the corporation by Clause (d) of Sub-section (2). It speaks of 'a fee' on the registration of cattle' sold within the city. What we have to see is whether it is a fee for registration of cattle, and secondly whether it is levied on animals sold in the city.

'We are satisfied that the element of sale as well as the requirement that it is imposed on cattle is fully complied with. Though it says that it is levied upon the registration of cattle, we are not satisfied that it is exacted as a fee and not as a tax.

'An examination of the charging section (here the rule) shows that the impost in essence is not upon animals sold or their registration bill upon the price realized on sale. There is a significant difference between the two. As we have already shown above, between one goat and another which are sold, there can be no difference in the service and necessarily in the fee for registration.

'The services rendered are equal, and the impost must also be equal No doubt, a graduated fee could be levied if different categories of animals are charged. We do not expect that the fee on an elephant would be the same as the fee on a goat. But that is not the difference which is made.

'The difference operates between one goat and another according as one goal is sold for Rs. 10/-and the other for Rs. 20/-. Between the two there is a difference made based not on the difference in the services rendered or the burden incurred but upon the purchase or sale price of the goat concerned.' The co-relation necessary between the service rendered and the fee charged was further emphasized by the Division Bench by making the following observations-

'The imposition, being a graduated fee based, not upon the kind of animal that is registered, but upon the price which is paid in respect of animals of the same class, is a tax rather than a fee. It is clear that the proceeds are not co-related to the service rendered, because the imposition tends to become heavier if the price is greater even though the animal may belong to the same class.

'The co-relation of the services to the exaction is not evident, because the fee changes from one goat to another. Such an imposition cannot be said to be in the nature of a fee in which the proceeds are correlated to the services rendered Thus, in our opinion, the imposition, notwithstanding the name given to it, is not warranted by the terms of the Act under which it is imposed.'

In the case of Nagpur Kshatriya Khatik Samaj ILR (1956) Nag 102: ( (S) AIR 1956 Nag 152) (supra), it was no doubt admitted by the Corporation of the City of Nagpur that it had not levied the fee to get payment for any services rendered by it, but that the levy was as a subsidising measure for its general revenues. This admission left no room at all for any argument that there was a corelation between the fee imposed by the Corporation and any services rendered by it. But what is very significant, and what is important to note, is that the judgment in the case of Nagpur Kshatriya Khatik Samaj, ILR (1956) Nag 102: ( (S) AIR 1956 Nap 152) (supra) did not proceed on the assumption that if the Corporation had rendered some service for the fee collected by it. then the imposition, though related lo the price paid in respect of animals of the same class, would have been valid as a fee. II' such an assumption had been made by the learned Judges of the Division Bench deciding (he case, then it would have been entirely unnecessary for them to emphasize the essential element of co-relation between the fee collected and the service intended to be rendered, and to observe that the imposition being a graduated fee, based not upon the kind of animal registered but upon the price paid in respect of the animals of the same class, there was no co-relation between the fee imposed and the service rendered as the imposition tended to become heavier if the price was greater even though the animal belonged to the same class, and iherefore the imposition by the Corporation was a tax rather than a fee. Therefore, the ratio decidendi of the decision in the case of Nagpur Kshatriya Khalik Samaj, ILR (1956) Nag 102: ( (S) AIR 1956 Nag 152) (supra) is that in the levy of a fee on registration of cattle sold, based not upon the kind of animal registered but upon the price paid in respect of animals of the same class, there is no co-relation between the fee collected and the service rendered in the propositions laid down by the Division Bench in that case, no qualification was made so as to limit the decision only to cases where no service is at all rendered by the body levying the imposition for the fees collect ed by it The decision is casually applicable to cases where the body renders some service, but makes the imposition not upon the kind of animal registered but upon the price paid in respect of the animals of the same class. It does not appear to us to be necessary to go further into the question of the necessity for the existence of co-relation between a fee charged and the service rendered for it If is enough to say that we agree, with respect, with the view expressed in !LR (1956) Nag 102: ( (S) AIR 1956 Nag 152) (supra) for the reasons given in that decision, which it is not necessary for us to repeat. This decision was followed by Kotwal J. in Narbadaprasad v. Municipal Committee, Bilaspur. MP No 464 of 1955 dated 18-10-1956 (Nag) where a fee imposed by the Municipal Committee, Bilaspur, on the registration of cattle sold within its limits, based not upon the kind of animal but upon the price paid in respect of animals of the same class was held to be a tax and not a fee and thus beyond the powers of the Municipal Committee under Section 66(1) (g) of the C. P. and Berar Municipalities Act. 1922

7. In AIR 1962 Madh. Pra. 177, it was no doubt held that the imposition by the Gram Panchayat, Ratanpur, of a charge on the registration of animals sold in anv market or place belonging to or under the control of the Gram Panchayat according to the price fetched by sale of animals or heads of animal was a 'fee' and not a 'tax' and was not ultra vires the powers of the Panchayat under Section 42(i) (e) of the C.P. and Berar Panchayats Act, 1947. The learned Judges deciding the case of Mannhar Vasudeo AIR 1962 Madh. Pra. 177 distinguished the decision in Nagpur Kshatriya Khatik Samaj's case ILR (1956) Nag 102 : ( IS) AIR 1956 Nag 152) (supra) by observing that the Corporation of the City of Nagpur did not levy 'the so called fee for rendering any services,' In fact there it was conceded by the Corporation that it did not render, and was not going to render, any services in respect of the cattle which were sold within the Corporation limits. With all due deference to the learned Judges, in drawing this distinction they missed the ratio decidendi of the decision in Nagpur Kshatriya Khatik Samaj's case ILR (1956) Nag 102 : ( (S) AIR 1956 Nag 152) (supra), which was that in the levy of a charge on registration of cattle sold, based not upon kind of animals registered but upon the price paid in respect of animals of the same class, there could be no co-relation at all between the fee collected and the service rendered. As we have already stated earlier, the decision of the Division Bench in the case of Nagpur Kshatriya Khatik Samaj ILR (1956) Nag 102 : ( (S) AIR 1956 Nag 152) (supra) would not have been any different even if the Corporation had rendered some service while charging the registration fee on the footing of the price paid in respect of animals of the same class sold in the market. In our opinion, the position in Manohar Vasudeo's case AIR 1962 Madh. Pra. 177 was on all fours with that which was considered in the case of Nagpur Kshatriya Khatik Samaj ILR (1966) Nag 102 : ((S) AIR 1956 Nag 152) (supra) and the conclusion therein of the learned Judges that the charge imposed by the Gram Panchnyat on registration of cattle according to the price fetched by sale of animals or heads of animal was a fee and not a tax was not correct The argument. therefore, of Shri Sen, learned counsel for the Janapad Sabha, founded on the decision in Manohar Vasudeo's case AIR 1962 Madh. Pra. 177 (supra) that as the Sabha rendered some service the cattle sale registration fee imposed bv it 'at the rate of three pies per rupee per head on the purchase money payable bv the purchaser' was valid, cannot he accepted

8. It was also submitted by Shri Sen and Shri Bhave. learned Government Advocate, that the levy of this charge, which was first made by the District Council of Bilaspur, in the exercise of the powers conferred on it by the C P and Berar Local Self Government Act, 1920, was initially valid inasmuch as under Section 80A of the Government of India Act, 1915. and the Scheduled Taxes Rules made by the Governor-General-in-Council under that provision, a tax on animals included a fee on animals; that, therefore, the power given by Section 24 of the C P, and Berar Local Self Government Act, 1920, to impose a fee on the registration of animals sold included the power to impose a tax on registration of animals sold: and that this levy was continued by virtue of Section 143 of the Government of India Act, 1935. and Article 277 of the Constitution We are unable to accede lo this contention. Schedule II of the Scheduled Taxes Rules, framed under section 80A of the Government of India Act, 1915, no doubt mentioned that the word 'tax' as used in that Schedule included a 'fee'. But inclusion was of 'fee' in a 'tax' and not of a 'tax' in a 'fee'. That being so, the provision in Section 24(d) of the C. P. and Berar Local Self Government Act, 1920 Riving to the District Council the power to Impose 'fees on the registration of animals sold in such market' cannot be construed as authorising the District Council to levy a tax on the registration of animals sold. Neither Section 143 of the Government of India Act, 1935, nor Article 277 of the Constitution has any bearing in the case before us as in the continuance by the Janapad Sabha of the levy made by thee District Council, Bilaspur, under the notification dated 31st March 1947, no question of any change in the allocation of power to make the imposition in question as between the province* and the State under the Government of India Act, 1935, or between the Union and the States under the Constitution, is involved.

9. Shri Sen, learned counsel for the Sabha, also made the point that in these proceedings for the issue of a writ of certiorari for quashing proceedings initiated against them for recovery of Rs. 16,000/- said to be due from them under a contract entered into by the Janpad Sabha, the petitioners could not collaterally question the validity of the cattle sale registration fee. The short answer to this question is that if, as pointed out by us earlier, under Section 94 it is only if a fee imposed is within the power of the Sabha and has been validly imposed by it that a sum due from a contractor on account of the sale of the right to levy that fee can be recovered as if it were arrears of land revenue, then clearly the petitioners, who question the legality of the recovery of Rs. 16,000/- as if it were arrears of land revenue, are entitled to assail the validity of the imposition.

10. For the foregoing reasons, this petition is allowed and the proceedings initiatedagainst the applicants for recovery of Rupees 16,000/- from them in the manner laid downin Section 94 of the C. P. and Berar Local Government Act, 1948, are quashed. In thecircumstances of the case, we leave the parties to bear their own costs of this petition. Theoutstanding amount of security deposit shall be refunded to the petitioners.


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