K. Veeraswami, C.J.
1. This appeal arises from an order of Kailasam, J., allowing the first respondent's petition under Article 226 of the Constitution and directing the appellant, which is the Corporation of Madras, to apply for sanction of the State Government as provided for in Section 102, proviso (a) of the Madras City Municipal Corporation Act, 1919, for exemption of the whole of water and drainage tax and the lighting tax in the West Mambalam area. The first respondent is a landlord residing in West Mambalam and is said to own four houses in different roads in the area. He complained that the West Mambalam area had been neglected and uncared for by the Corporation in providing water and drainage amenities, which has caused great inconvenience to the residents in the area. The demand notices served on the first respondent showed that the property tax was levied at a certain percentage of the annual value of the buildings and the tax included levy for water, drainage and lighting. The first respondent addressed the Corporation several letters about the neglect of the area and paid tax for general purposes, lighting and cess; but the portion of the tax relating to water and drainage he deducted and did not pay. In the circumstances, the Corporation, said the petitioner, was not entitled to collect property tax comprising of charges for water and drainage purposes and that Section 99 itself was clear read with Section 102, proviso (a) that the owners of property in the area would be entitled to exemption of tax in respect of non-provision of water and drainage facilities. On these premises, this Court was moved for a direction to the Corporation to exempt the 96th division, namely, the area of West Mambalam, from liability to pay water and drainage tax till these facilities were extended to the area. The petition was resisted by the Corporation. It referred to the fact that drainage schemes for the area Were being executed in stages and the council of the Corporation had not considered the area for exemption and actually no proposal had been sent up by it for sanction of any such exemption. According to the Commissioner for the Corporation, if there was no water and drainage system provided in the area, alternate arrangements had been provided to render such services like water lorries to store street located tanks at important places and that such lorries fitted with pump system were also daily sent to remove the drainage and sullage water. On this account it was stated that the Corporation was incurring a huge expenditure. The Commissioner further maintained that the property tax was not related to the services rendered, but to meet the general cost of the Municipal services rendered in and to the city and therefore the demand of property tax in full was not illegal. Kailasam, J., on a consideration of the relative sections in the Madras City Municipal Corporation Act, was of opinion that the Corporation Was in law bound to apply to the State Government for exemption from payment of the whole of the water and drainage tax. The learned Judge accordingly gave the direction we mentioned earlier.
2. There is no dispute before us that as a matter of fact there is no water or drainage system provided so far by the Corporation in the West Mambalam area. But Mr. Chengalvaroyan, who appears for the appellant, contends that though the council has the power to apply to the State Government for exemption, there is no compulsion or obligation that it should do so, notwithstanding the fact that a particular area is not provided with water or drainage system. He says that the property tax is levied inter alia for general purpose of maintaining the Water and drainage system in the city in its entirety and any question of exemption for any particular area will have to be viewed only from that standpoint. On other hand, for the first respondent the contention is that the Corporation in spite of several communications from him has not even cared to consider the matter, bring it before the council and come to a decision whether exemption should be granted and if so the State Government should be approached for their consent. Strong reliance is placed on proviso (a) to Section 102 of the Madras City Municipal Corporation Act and it is urged that the proviso makes it explicit that, when a particular area is not served with water or drainage system, it is the duty of the council to take steps for exempting the area from tax proportionate to the water and drainage facilities not provided for.
3. Part III of the Act is devoted to taxation and finance. In Chapter V, Section 98 enumerates the kinds of taxes the council may levy and among them property tax is one. The section does not refer to a water tax or drainage tax as such. But Section 99(1) does speak of such a tax. It says that the property-tax may comprise of a tax for general purposes, a water and drainage tax for the purpose of defraying the expenses connected with the water and drainage system of the city and a lighting tax for the purpose of defraying the expenses connected with the lighting of the city. Section 99(1) authorises the Council by a resolution to levy tax on all buildings and lands within the city except those exempted by or under the Act or any other law. The charge is at such percentages of the annual value of the buildings and lands as may be fixed by the council. Elaborate provisions have been made prescribing the procedure and the method by which the annual value of a building may be ascertained. After providing for the levy of property tax, a few provisions follow providing for exemptions. Section 101 deals with general exemptions with which we are not at the moment concerned; and the next with special exemptions and alternative bases of property tax. This section at the opening prescribes as to how the rates of property tax are to be fixed. Proviso (a) to that part of the section reads:
(a) the council may, with the sanction of the State Government, exempt any local area from the whole or a portion of the water and drainage tax or of the lighting tax on the ground that such area is not deriving any or the full benefit from the water supply and drainage or from the lighting system.
With reference to Section 138, Part III in the Fourth Schedule, by Clause 30, it is provided that the Commissioner shall keep separate accounts of all moneys received and expended in connection, with the water tax, the drainage tax and the lighting tax.
4. A general survey of these provisions leaves us with the impression that they appear to make no distinction between a tax and a fee. But no argument has been addressed to us as to what precisely is the nature and effect of the water and drainage tax spoken of by proviso (a) to Section 102. But it is clear from Section 98 that the tax levied is property tax and its character remains to be that whatever be its components. The effect of Section 99(1), to our minds, is that levy of property tax by the council is permissible if it comprises of a charge for any one or more of the three purposes mentioned therein. In quantifying property tax subject to the rate thereof being in accordance with Sub-section (2) of Section 99 the council, We are inclined to think, may be expected to keep in view the water drainage and lighting systems provided and the expenses which would have to be met on account of providing those amenities. But there is no indication in Chapter V of Part III of the Act that property tax, if it includes water, drainage and lighting tax, even where any one or more of these amenities have not been provided for, is for that reason, and to that extent unauthorised or illegal or invalid. If that were not so, there would be no need to provide for an exemption. The exemption in proviso (a) to Section 102 presupposes a levy which is valid, but from which exemption may be granted in particular circumstances. In our opinion, proviso (a) to Section 102 should be read and understood in the context of the rest of the provisions in Chapter V of Part III. We are inclined to think, therefore, that merely because property tax is levied inclusive of water and drainage tax, though no facilities have been provided for, it cannot be regarded as illegal and no owner of property can, on that assumption, withhold any part of the tax, as if it were attributable to water and drainage not provided for in the area in which the property is situate. The tax so levied can legitimately be collected and the council is entitled to do it.
5. But that does not conclude the matter in favour of the appellant. The council which is vested with a power under proviso (a) to Section 102 has got a duty to exercise it, more especially when the statute conceives it for the benefit of an area or section of the city. The law requires that the Council in exercise of that power should consider whether, because a particular area is not provided with water and drainage system, it should be exempt from water and drainage tax so to speak. If the Council resolves in favour of exemption of the area, it has, before it gives effect to the exemption, to seek and secure the sanction of the State Government. The complaint of the first respondent is that the Council has failed even to respond to his several letters inviting its attention to the failure to provide for water and drainage system in West Mambalam area and to consider in the context whether the area should not be exempted from property tax corresponding to the extent of such failure. We are inclined to think that there is substance in the contention and that is what the learned Judge felt and quite rightly. It is a well settled principle that where a public body is vested with a power or discretion, it is for exercise and not for inaction and it is especially so, when the power or discretion has been vested for the benefit of those who will be affected by its non-exercise. But whether, on the merits, the exemption should be extended to a particular area will be a matter of detail and will depend on several circumstances. If the Council thought that, having regard to the expenses the Corporation has to incur for providing in general a water, drainage and lighting system for the city as a whole, it would not be possible, without affecting its financial position to grant exemption, it would be within its discretion to deny exemption. We do not understand proviso (a) to Section 102 as implying that the fact of non-provision of any of the facilities comprehended by it will by itself necessarily compel the Council to grant exemption and that the area affected will be entitled as a matter of right to such an exemption. If exemption should follow as a matter of right, the proviso should have been differently worded and not in the present form, which seems to leave the judgment to the Council.
6. It follows from what we have said that the duty of the Council is to consider with reference to all the relevant facts and circumstances whether exemption to a particular area to any extent under proviso (a) to Section 102 is called for, and if so, whether the consent of the Government therefore should not be obtained. That duty the Council has failed to discharge so far as the West Mambalam area is concerned.
7. On that view of the matter, the appeal is dismissed with costs. Counsel's fee Rs. 100.