1. These cases raise an interesting and somewhat difficult question of the constitutional validity of the High Court-Fees Rules, 1956, which came into force on the 1st day of January, 1957. Known as the High Court-Fees Rules, 1956, it incorporates the provisions of the Madras Court-fees and Suits Valuation Act, XIV of 1955, which has been statutorily made applicable for suits and proceedings instituted in the High Court in its Original Jurisdiction also, and the attack is directed against the validity of Article I, Schedule I of the said Act, which provides for an uniform ad valorem fee without limit at 71/2 per cent, on all plaints or written statements pleading a set-off or counter-claim or memoranda of appeal. Except W.P. No. 3891 of 1965 the other cases were heard by our learned brother Srinivasan, J., and the matter referred to a Bench, as the questions involved have posed a variety of opinion and are of considerable importance.
2. The circumstances under which the question gets posed may first be briefly set out. By W.P. No. 1743 of 1964 the petitioner, who has to file a suit for reliefs valued at Rs. 2,06,552 and would be affected by the levy, seeks the issue of a writ of mandamus or other direction or order, declaring the relevant rules relating to the levy of fees on ad valorem scale invalid and ultra vires and for a direction to the Registrar of the High Court to levy fees in suits and appeals in the Original Side of the High Court in accordance with the Court-fees Act, 1870, as amended in 1922, and applicable to proceedings in the High Court in its Original Jurisdiction before the High Court-Fees Rules, 1956, came into force. The petitioner in W.P. No. 3891 of 1965 is an applicant for probate in O.P. No. 124 of 1965 in the Original Jurisdiction of this Court and caveat has been entered in the matter. As under the rules regarding Court-fees, as they now stand, if caveat is entered and the application for probate registered as a suit, one half of the scale of fees on ad valorem scale on the market value of the estate, less the fee already paid on the application for probate, is levied, the petitioner has come out with the application for relief similar to the one claimed in W.P. No. 1743 of 1964. By application No. 2445 of 1964, the plaintiff in C.S. No. 43 of 1961, who had to pay a Court-fee of Rs. 26,000-75 claims refund of the Court-fee paid, as an illegal exaction. Similar relief is prayed for in Application No. 2486 of 1964 by the plaintiff in C.S. No. 7 of 1959 who had to pay a Court-fee of about Rs. 19,500. It is stated for these petitioners that they limit their claims for refund to the excess over and above what they would have paid under the Court-fees Rules prior to the introduction of the new Rules in 1956 and the application of the Madras Court-fees and Suits Valuation Act, 1955.
3. It is needless to refer in greater detail to the facts. The power of the High Court to levy fees on suits and proceedings presented in its Original Jurisdiction is not questioned. What is stressed before us is the scope and content of that power and the limitations on its exercise. In suits On the Original Side previously only a very light institution fee was payable, and further fees were collected for subsequent proceedings in the matter, and also hearing fees for the time taken by the High Court in adjudging causes. For the first hearing of every suit the fee payable was Rs. 10 and for every day subsequent to the first, a fee of Rs. 20 was payable. The initial levy was gradually raised, and under the High Court Fees Rules, 1933, the institution fee, where the value of the subject-matter of the suit did not exceed Rs. 2,500 was Rs. 225 and for every thousand rupees or part thereof in excess of Rs. 2,500 a fee of Rs. 5 had to be paid. Of course, fees on the further proceedings in the suit and hearing fees had to be paid, the hearing fee being as before Rs. 10 for the first day and Rs. 20 for the subsequent days. In 1949 the fee payable in the High Court in its Original Jurisdiction was brought in line with the fees payable in the other civil Courts, by R.O.C. No. 2219 of 1949, which added to Order 2, Rule 1 of the High Court-Fees Rules, 1933, the following:
To other documents including Memoranda of appeals the Registrar shall apply so far as may be the law for the time being in force relating to Court-fees, as regards the scale of such fees, the manner of levy of such fees, the refund of such fees and in every other respect, in the manner and to the extent that it is applicable to similar documents filed in original proceedings in a District Court and in appeals from decrees and orders of a District Court.
4. The result was to apply the Court-Fees Act VII of 1870 as amended in Madras in 1922, to proceedings in the High Court in its Original Jurisdiction also. Under the Court-Fees Act, 1870, current till it was amended in Madras in 1922, the fee was levied at 71/2 per cent, on the value of the subject-matter of claims upto Rs. 1,000; between Rs. 1,001 and Rs. 5,000 the rate was 5 per cent.; between Rs. 10,000 and Rs. 20,000 it was 3 per cent.; between Rs. 20,000 and Rs. 30,000 it was 2 per cent.; and thereafter upto Rs. 50,000 it was 1 per cent. For all claims above Rs. 50,000 the rate was 71/2 per cent, of the claim in excess of Rs. 50,000, and the maximum fee leviable was also fixed, namely, Rs. 3,000. The Madras Court-Fees Act, 1922, while raising the percentage and levy, retained the slab system, the rate tapering off as the value of the subject-matter went up. The fee on a claim for Rs. 50,000 was Rs. 1,762-7-0 and above Rs. 50,000 for every Rs. 5,000 or part thereof in excess a Court-fee of Rs. 30 was payable. The levy now impugned under the High Court-Fees Rules, 1956, which came into operation on the first day of January, 1957, is found under Order 2, Rule 1 of the High Court Fees Rules, 1956, which runs:
The fee in all suits and proceedings instituted on or after the 19th day of May, 1955, and all proceedings by way of appeal of otherwise arising therefrom shall be levied by the Registrar, Sheriff and the Reserve Bank of India, as the case may be, according to the provisions of the Madras Court-fees and Suits Valuation Act XIV of 1955, and the rules framed thereunder, and according to the scale of fees set out in Appendix II hereto, upon the several documents, matters and transactions specified as chargeable thereon. The fees chargeable to Government shall be charged by the Reserve Bank of India and credited to Government.
The Madras Court-Fees and Suits Valuation Act, 1955, made applicable to proceedings on the Original Side has completely recast the basis of levy of court-fees. The slab system and the tapering scale on the slabs has been given up and a uniform levy of 74 per cent, ad valorem on the subject-matter of the claim without limit has been introduced. No maximum is fixed on the court-fee payable and the result is, whereas previously on a claim for Rs. 50,000, the court-fee payable was Rs. 1,762-7-0, the court-fee payable under the new rule is Rs. 3,750; and while, previously on a claim of rupees one lakh, the court-fee payable was Rs. 2,062-7-0 now a court-fee of Rs. 7,500 has to be paid. In probate matters previously in proceedings in the High Court on the application for probate, a fee of Rs. 25 was payable, and when it was converted on entry of caveat into a testamentary suit, a hearing fee of Rs. 10 was payable for the first day, and thereafter Rs. 20 for every succeeding day. Under the new rules, on the entry of caveat and the application getting converted into a testamentary suit, court-fee is payable on the value of the estate at one half of the scale of fees prescribed in Article I, Schedule I of the Court-Fees and Suits Valuation Act, 1955, less the fee paid on the application for probate. It is in these circumstances that the several suitors in the above matters, who have been either compelled to pay or called upon to pay heavy amounts as court-fees are challenging the levy as a highly arbitrary and oppressive exaction, not authorised by law. The contention is that what can be levied and may be levied is only a fee and not a tax, while what is levied though termed fee, in fact, is a tax.
5. Prior to the Court-Fees Act of 1955 the source of the High Court's power to settle a table of Court-Fees in proceedings before the Court was traced to Section 15 of the Charter Act (1861) 24 and 25 Vict. 104, Clause 37 of the Letters Patent of this Court, and Sections 106 (1) and 107(e) of the Government of India Act, 1915, corresponding to Sections 223 and 224 of the Government of India Act, 1935. The matter is not res integra and is covered by decisions, to refer to the more recent: Seshadri v. Province of Madras (1954) 1 M.L.J. 206 : I.L.R. (1954) Mad. 643, Satyanarayanamurthi v. Income-tax Appellate Tribunal (1957) 1 A.W.R. 360 : A.I.R. 1957 A.P. 123. Article 225 of the Constitution preserved the pre-existing power of the High Court to make rules of Court and prescribe court-fees. Under this Article any rule made by the High Court will not have legal authority if the Legislature made a law on the same subject, and now the Legislature of the State while not exempting Under Section 2 of the Court-Fees Act, 1955, proceedings in the original jurisdiction of the High Court from the applicability of the Act, by Section 4 has enacted that no document which is chargeable under the Art shall be find, exhibited or recorded in or be acted upon or furnished by any Court including the High Court unless in respect of such document, there be paid a fee of an amount not less than that indicated as chargeable under this Act. But the power to levy the court-fee whether it is exercised by the High Court or by the Legislature is subject to the provisions of the Constitution and the head of legislation under which the levy of fees in Courts may be and is sought far the State to be sustained is Entry 3 in List JI of the Seventh Schedule of the Constitution. It would be convenient here to set out the said Entry in the State List.
Seventh Schedule - List II - State List: Entry 3. - Administration of Justice; constitution and organisation of all Courts, except, the Supreme Court and the High Court; officers and servants of the High Court; procedure in rent and revenue Courts; fees taken in all Courts except the Supreme Court.
6. The precise head of power under which the levy could be sustained being Entry 3 above set out, the argument of learned Counsel appearing for the suitors based thereon may first be briefly indicated. Learned Counsel contends that the demand of court-fee to be legal must be a fee and not a tax and what is to be looked for to scrutinise its validity is its substance and not the form or the nomenclature under which it is made. A fee properly so called, learned Counsel point out, is a levy for special services required by or given to the assessee and must bear reasonable relation to the cost of the services, while a tax is a levy for raising revenues for the general purposes of the State. It is submitted that the Court-fee now demanded is really a tax on litigation for the general purpose of the State and that Court-fee has ceased to be the fee it was intended to be. It is stated that administration of justice is one of the principal functions of the State and that while the suitors in general may not grudge to bear any reasonable fee that may be charged when they approach the Court, the present levy when the Value of the subject-matter of the litigation is fairly high becomes wholly incommensurate with the requirements of the occasion. Court-fee according to Counsel has become a tax on litigation and litigants, not the subject of any particular legislative head under the Lists; Parliament alone would have the power to impose such a levy under Article 248(2) and Entry 97 of List I. Learned Counsel contend that as the demand assumes staggering proportions as the value of the claim goes up, it is regressive in its effect and keeps out bona fide suitors from seeking justice through Courts and vindicating their rights. It has become a weapon in the hands of defendants to coerce settlement of lawful claims at low figures. A suitor may not be able to find the exorbitant court-fees though he would be considered a man of means if it comes to a question of his seeking leave to sue in forma pauperis. The ad valorem scale without an upper limit is wholly unreasonable and could not be justified. It can have no relation to the time taken in Court or the services rendered to the suitor. The claim may be on a hundi or negotiable instrument for one lakh of rupees and it may be disposed of ex parte, of it may be a commercial cause for a like amount where the defence is nominal, and the whole matter is over in little or no time. Still the suitor will have to pay a Court-fee of Rs. 7,500 and there may be another claim by the same suitor for one thousand rupees and the hearing of the suit may go on for days with innumerable witnesses and scores of documents all on a court-fee of Rs. 75. It will be no answer to the disproportionate incidence that the plaintiff could recover his costs from the defendant. The demand is on the suitor, be it plaintiff or defendant; it is the cause that brings them before the Court and the question is whether any rational basis could be found for a flat rate ad valorem levy without limit. The pattern of levy for nearly a century has been to provide a regulated scale of fees the percentage of levy getting lower and lower as the value of the claim went up, ultimately becoming nominal. That was the best that could be done as a practical way of equitably distributing the cost of administration of justice. Learned Counsel attack the ad valorem scale of fees under the Court-Fees Act, 1955, as irrational, wholly unjust field and not called for by any increase in the cost of administration of civil justice. It is stated that the State appears to have proceeded in the view that the suitor in the civil Court will have to compensate the Government for its expenses incurred not only in the administration of civil justice, but also expenses incurred by the State in the administration of justice in the criminal Courts. The State would further have the litigant pay the expenses of the State's own law officers.
7. On behalf of the State in the original counter affidavit filed by the Joint Secretary to the Revenue Department the attempt was to justify the increase of court-fees in 1955 under the Act of 1955 by reference to certain figures of receipts; from Courts and costs of the administration of justice. It was pleaded that the rates prescribed in the Court-Fees Act XIV of 1955 were not excessive, that there was justification for the increase in 1955 and that the levy was not a tax on litigants. However, after the matter was referred to a Bench, on behalf of the State, Counsel for the suitors were informed and notice given that in addition to the aforesaid defence, it would be argued that the levy of court-fees need not be in proportion to the services rendered and that, on the contrary a levy of court-fee for raising general revenue is permissible. The main contention of the learned Advocate-General, now appearing for the State, was that the fee levied in Courts does not belong to the class of fees which have to be commensurate with the services rendered, and to sustain whose validity they must be correlated with the services rendered. It was submitted that the fees levied in Courts are, and have always been, treated, on a different footing from all other fees, and that the element of quid pro quo should not be looked for in fees levied in Courts. It was further submitted that the fees collected under the Court-Fees Act had always been treated in the past as part of the public revenues. Before us further statements of receipts and expenditure in relation to administration of justice in the State have been filed at the instance of the Advocate-General, and we will be referring to the same in due course. The points raised require detailed and careful consideration.
8. To start with it is agreed on all sides that the only head of legislation in the State List, List II of the Seventh Schedule, under which the levy could be sustained, is Entry 3 already set out. It is necessary in this context to refer to Entry 77 of List I relating to fees taken in the Supreme Court. It runs thus:
List I, Entry 77 : Constitution, organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court), and the fees taken therein; persons entitled to practise before the Supreme Court.
Entry 3 of List II authorises laws with respect to 'fees taken in all Courts except the Supreme Court.' The expression is 'fees' and net 'taxes,' and the Constitution, under its several provisions makes a distinction between fees and taxes. In List I - Union List, Entries 1 to 81 mention the several matters over which Parliament has authority to legislate, and Entries 82 to 92-A enumerate the taxes which can be imposed by the Union Parliament. In the State List, Entries 1 to 44 form a group giving the State heads of general legislation, and Entries 45 to 62 deal with State taxes. While Entry 96 in the Union List provides for laws relating to fees in respect of any of the matters in the Union List, but not including fees taken in any Court, Entry 66 of the State List relates to fees in respect of any of the matters in the State List, but not including fees taken in any Court. When we come to the concurrent list, there is no provision for taxes, and Entry 47, provides for fees in respect of any of the matters in the concurrent list, but not including fees taken in any Court. Taxation, it will be seen, is not intended to be covered under the main heads of legislation, but is treated as a distinct matter for the purpose of legislative competence. Even so, specific power is given to impose fees in relation to matters in the several lists. There could be fee even in relation to a tax law.
9. The well-marked distinction which the Constitution makes between fee and tax found in the three legislative lists may be noticed also in Articles 110 and 199 of the Constitution. While Article 109 (1) provides that a Money Bill shall not be introduced in the Council of State, Article 110 (2) provides,
A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services tendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.
10. Similarly, in relation to the States, while Article 198(1) prohibits the introduction, of a Money Bill in a Legislative Council, Article 199(2) inter alia states that a Bill shall not be deemed to be a Money Bill by reason only that it provides for the demand or payment of fees for licences or fees for services rendered. Article 277 states:
Any taxes, duties, cesses or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
11. It may be that, generally speaking, the word 'fee' has no rigid meaning and it may be that it is occasionally found used, while the more appropriate word would be tax. But, as will be seen presently, in taxation parlance, the expression 'fee' has acquired a distinct concept, and the Constitution has made a clear distinction between fees and taxes when conferring legislative powers. It is, therefore necessary to examine first the content of the expression 'fee' and 'tax'. Cooley defines 'tax' as
burdens or charges imposed by legislative power upon persons or property, to raise money for public purposes.
12. Freely expressed, taxation is the raising of money for the purpose of Government by means of contributions from individual persons. The Supreme Court has adopted the definition of tax given by Latham, C.J., of the High Court of Australia in Matthesus v. Chicory Marketing Board 60 Com. L.R. 263:
A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered.
13. It is pointed out by Mukherjee, J. (as he then was) in Commissioner of Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Sirur Mutt (1954) S.C.J. 335 : (1954) 1 M.L.J. 596 : (1954) S.C.R. 1954 . (the first Sirur Mutt case):
This definition brings out, in our opinion, the essential characteristics of a. tax as distinguished from other forms of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the tax-payer's consent and the payment is enforced by law.
A reference to Lutz on Public Finance would show that fees as opposed to taxes are distinguished by this that the ruling principle is special payment for special services. While the duty to pay taxes generally follows from the fact of membership in the State, the duty to pay fees arises only as a result of making a special demand. Generally speaking, it may be said that, where fees are charged for any service and are not intended to exceed the cost of the service, the fees charged for practical purposes, do not constitute taxation. No doubt, in its widest and broadest sense, taxation would include levy of fees. Article 366(28) of the Constitution defines 'taxation' as including the imposition of any tax or impost, whether general or local or special, and 'tax' shall be construed accordingly. But when the fees charged are raised to such an extent as to far exceed the value of the services, and to contribute substantially to the general revenues of the State, in effect it becomes a tax. In the first Sirur Mutt Case (1954) S.C.J. 335 : (1954) 1 M.L.J. 596 : (1954) S.C.R. 1954., where the validity of the levy of contribution under the Madras Hindu Religious and Charitable Endowments Act, by Section 76 of the Act, was questioned, the distinction between 'tax' and 'fee' is thus brought out:
It seems to us that though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular Legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. Some idea as to what fees are may be gathered from Clause (2) of Articles 110 and 199 referred to above which speak of fees for licences and for services rendered.
After pointing out that the characteristic of tax is that the levy is for the purpose of general revenue which, when collected, forms part of the public revenues of the State, that the object of the tax is not to confer any specific benefit upon any particular individual, that there is no element of quid pro quo between the tax-payer and the public authority, and that it is a feature of taxation that it is part of the common burden and the quantum of imposition upon the tax-payer depends generally upon his capacity to pay, it is stated:
Of course, in some cases whether a man would come within the category of a service receiver may be a matter of his choice, but that by itself would, not constitute a major test which can be taken as the criterion of this species of imposition (fee). The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for special benefit or privilege. Fees confer a special capacity, although the special advantage, as for example in the case of registration fees for documents or marriage licences, is secondary to the primary motive of regulation in the public interest. (Vide Findlay Shirras on Science f Public Finance, Volume I, page 202). Public interest seems to be at the basis of all impositions, but in a fee it is the special benefit which the individual receives. As Seligman says, it is the special benefit accruing to the individual which is the reason for payment in the case of fees; in the case of a tax, the particular advantage if it exists at all is an incidental result of State action. (Vide Seligman's Essays on Taxation, page 408.)
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, 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 fee either heavy or moderate from that person in return for the privilege that is conferred....
In 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 apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general 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 special assessments, fees and taxes. (Vide Seligman's Essays on Taxation, page 406.)
Our Constitution has, for legislative purposes, made a distinction between a tax and a fee and while there are various entries in the legislative lists with regard to various forms of taxes, there is an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of the matters that is included in it. The implication seems to be that fees have special reference to governmental action undertaken in respect to any of these matters.
14. In that case their Lordships affirmed the decision of this Court striking down he contribution levied under Section 76 of the Madras Hindu Religious and Charitable Endowments Act as a tax and not a fee and as beyond the legislative power of the State. Section 76 which was struck down authorised the levy of an annual contribution on all religious institutions, the maximum being fixed at 5 per cent, of the income derived by them. In striking down the levy as unconstitutional, the Supreme Court observed (page 296):
It may be noticed, however, that the contribution that has been levied under Section 76 of the Act has been made to depend upon the capacity of the payer and not upon the quantum of benefit that is supposed to be conferred on any particular religious institution. Further the institutions which come under the lower income group and have income less than Rs. 1,000 annually, are excluded from the liability to pay the additional charges under Clause (2) of the section. These are undoubtedly some of the characteristics of a 'tax' and the imposition bears a close analogy to income-tax. But the material fact which negatives the theory of fees in the present case is that the money raised by levy of the contribution is not earmarked on specified for defraying the expenses that the Government has to incur in performing the services. All the collections go to the Consolidated Fund of the State and all the expenses have to be met not out of these collections but out of the general revenues by a proper method of appropriation as is done in case of other Government expenses. That in itself might not be conclusive, but in this Case there is a total absence of any co-relation between the expenses incurred by the Government and the amount raised by contribution under the provision of Section 76 and in these circumstances the theory of a return or counter-payment of quid pro quo cannot have any possible application to this case.
15. The validity of the levy came up again for consideration after certain amendments were made by the Government to Section 76. The levy by the amendment was constituted into a separate fund and the amounts raised specifically earmarked for defraying rxpenses for rendering services. They did. not go into the consolidated fund of the State, but were included in a separate fund and the contributions were payable to the Commissioner under the Act. There was no reliable evidence of the absence of any correlation between the expenses incurred and the amounts collected as contributions. The validity of the amended, legislation was upheld by the Supreme Court in Sudhindra Thirtha Swamiar v. Commissioner, Hindu Religious and Charitable Endowments : AIR1963SC966 , the Supreme Court observing (at page 976):
The State Legislature has power to levy a fee under the Seventh Schedule, List III, Entry 28 read with Entry 47. The Legislature was, therefore, competent to levy a fee for rendering services in connection with the maintenance, supervision and control over the religious institutions and it was competent to levy the fee retrospectively.
Their Lordships again in this decision reiterated the several characteristics of 'fee' in the following terms (at page 975):
A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to each 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 reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of tax. It is true that ordinarily fee is uniform and no account is taken of the varying abilities of different recipients. But absence of uniformity is not a criterion-on which alone it can be said that it is of the nature of a tax. A fee being a levy in consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity 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.
16. The distinction maintained in the Constitution in relation to legislative power's between a tax and a fee was again emphasised by the Supreme Court when affirming the validity of the contribution levied on public trusts in. the State of Bombay Under the Bombay Public Trust Act, 1950. The contributions with certain other specified sums under the Act made up the Public Trusts Administration Fund to be applied for payment of charges incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. Speaking for the Court, Mukherjea, J. (as he then was), observed in that matter, Ratilal v. State of Bombay : 1SCR1055
We may start by saying that although there is no generic difference between a tax and a fee and in fact there are only different forms in which the taxing power of a State manifests itself, our Constitution has in fact, made a distinction between a tax and a fee for legislative purposes.... There is no doubt that a fee resembles a tax in many respects and the question which presents difficulty is what is the proper test by which one could be distinguished from the other? A tax is undoubtedly in the nature of a compulsory exation of money by a public authority for public purposes, the payment of which is enforced by law. But the other and equally important characteristic of a tax is that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax.... Fees an 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 the payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in performing any particular work for the benefit of certain individuals. But in order that the collections made by the Government can rank as fees, there must be co-relation between the levy imposed and the expenses incurred by the State for the purpose; of rendering such services. This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services.
Thus two elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and, in the second place the amount collected must be earmarked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes.
17. The classification by the Constitution for legislative purposes of impost as tax and fees, with their characteristics was again stated by the Supreme Court in Sri Jagannath v. State of Orissa : 1SCR1046 , the Court pointing out:
Thus in fees there is always an element of quid pro quo which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individual accepted either willingly or unwillingly. But this by itself is not enough to make the imposition a fee, if the payment demanded, for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State to be spent for general public purposes.
We would like to point out here that what would, make a levy cease to be a fee is not just its merger in the general revenues of the State, but the emphasis is on its merger for being spent for general public purposes, with no intention to appropriate it for purposes of the service to be rendered.
18. In State of Orissa v. Chakobhai Ghelabhai & Co. : 1SCR719 , the Supreme Court affirmed the distinction between a tax and, a fee considered in Commissioner, Hindu Religious and Charitable Endowments v. Sri Lakshmindra Thirtha Stoamair : 1SCR1005 , and upheld the levy that was in question in that case, fees for appeals and applications in Revision under the Orissa Sales Tax Act, as within the competence of the provincial Legislature pointing out that the fees imposed by the rule in question were for services rendered by the governmental agency and that though ordinarily fees were uniform, there would be various kinds of fees and it was not possible to formulate a definition that would be applicable to all cases. In that case, on every memoranda of appeal against an order of assessment or penalty or application for revision or review of such order, a fee calculated at 5 per cent, of the amount in dispute subject to a maximum of Rs. 100 and a minimum of Re. 1 was provided for.
19. In Hinger-Rampur Coal Co. v. State of Orisssa : 2SCR537 at 464, the validity of cases levied under the Orissa Mining Areas Development Fund Act had to be considered-whether it was a tax of a duty of excise or a fee. Gajendragadkar, J. (as he then was), who read the judgment for the majority of the Court, examining the prior decisions of the Court observed:
In regard to fees there is, and must always be, co-relation between the fee-collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to imposed a tax; and in the case of such a colourable exercise of legislative power Courts would have to scrutinise the scheme of the levy very carefully and determine whether in fact there is a co-relation between the service and the levy, or whether the levy is either not co-related with service or is levied to such an excessive extent as to be a pretence of a fee and not a fee in reality.... The distinction between a tax and a fee is however, important and it is recognised by the Constitution.
Dealing with the challenge to the levy in that case, based on the form in which the levy was imposed, it was stated (at page 469):
Therefore, in our opinion, the mere fact that the levy imposed by the impugned Act has adopted the method of determining the rate of the levy by reference to the minerals produced, by the mines would not by itself make the levy a duty of excise. The method thus adopted may be relevant in considering the character of the impost, but its effect must be weighed along with and in the light of the other relevant circumstances.
20. The distinction between a tax and a fee has again been the subject of consideration by the Supreme Court in Corporation of Calcutta v. Liberty Cinema : 2SCR477 . In that case the licence fee or a cinema house fixed in 1948 at Rs. 400 per year was increased to Rs. 6,000 in the year 1958 by changing the basis of assessment. The relevant provision of the Calcutta Municipal Act, 1951, which authorised the levy, was Section 548, and the Court (the majority) took the view that the levy authorised by Section 548 was a tax and not a fee in return for services to be rendered by the Corporation, and that, therefore, no question arose in the case of correlating the amount of the levy to the cost of the services. The legislative power was there whether the levy was a tax or a fee. It was observed in that case that the Act in question used the word. 'fee' indiscriminately, and that the provision for the imposition of licence fee did not necessarily lead to the conclusion that the fee must be only for services rendered, as the word 'fee' in the Act was held not conclusive of the character of the levy. The question whether the fee contemplated by the section was a fee in return for services was decided by reference to the terms of the section, and the absence of any provision for the rendering of any service by the Corporation (at page 1116):
Whether a particular levy is a fee or tax has to be decided only by reference to the terms of the section as we have earlier stated. Its position in the Act cannot determine its nature : an imposition which is by its terms a tax and. not a fee, which in our opinion the present imposition is, cannot become a fee by reason of its having been placed in a certain part of the statute.... We are clear in our mind that if looking at the terms of the provisions authorising the levy it appears-that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statute.
* * * * *The conclusion to which we then arrive is that the levy under Section 548 is not a fee as the Act does not provide for any services of special kind being rendered. resulting in benefits to the person on whom it is imposed.
21. In the light of the above decisions it is difficult to accept any argument that the word 'fees' Used in Entry 3 of List II should not be given its limited meaning as impost for services sought or rendered. We cannot ignore plain language in. heads of legislation, Entry 96 of List I, Entry 66 of List II, and Entry 47 of List III, excepting fees taken in any Court. In the context of the user, the fees excepted cannot be a different kind. The part separated may be presumed to be of the same brand as the whole. Reference may also be made here to Entry 44 of List III stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty. Tax is a genus of which fee is a species, and when we are on the content of legislative powers under the head 'fees' in a Constitution, where legislative powers are distributed between the Provinces and the Union, we cannot too readily ignore the accepted connotation of the expression 'fees'. The Constitution itself has indicated the scope of the expression 'fee' in Articles 110 and 199; fees may be for licences or for services rendered. When a power to tax is given it is practically unlimited, in force. When the power granted is just taxation, it would, cover every conceivable exaction which it is^ possible for a Government to make, whether in the name of a tax or any such names as rates, assessments, duties impost, excise, licences, fees or tolls. In our view, when the Constitution under a particular head does not grant a general power to tax, but limits and circumscribes the grant to the particular species, fees, and empowers only levy of fees, the power given cannot in its exercise be equated to the general power of taxation with all its consequences. The distinction between power of taxation in general and limited powers of taxation becomes material when legislative power gets distributed or is delegated. The separation in powers in regard to taxes and fees as now found is first brought out in the Government of India Act of 1935, when legislative powers, were divided between the Federal Legislature and the Provinces. The present Constitution has continued and, maintained the distinction. We shall presently be examining the argument for the State based on the separation of fees taken in Courts from the head of legislation for fees in general in respect of matters in the several lists. The further contention that the Court-Fees Act is a taxing statute, that the fees collected thereunder have always been for raising revenue for the State and that legislative history and judicial decisions relating to court-fees have always treated it as a source of general revenue, thereby giving the word 'fee' in the phrase 'fees taken in Courts' a meaning all its own, calls for examination of the question whether the distinction between fees and taxes, maintained in the Constitution, is without difference when it comes to levy of fees in Courts.
22. Where the Legislature is vested with absolute jurisdiction, the laws promulgated by it could take effect according to the language in which it is expressed liberally construed. When the legislative powers are varied and distributed under different heads of legislation, then it becomes necessary to examine with strictness the substance of the legislation for the purpose of determining what it is the Legislature is doing and under which power it is acting. The materials placed before us show that even prior to the Constitution, and even prior to the Government of India Act, 1935, distinction between fee and tax was observed, though it often got blurred, where the distinction could have no material significance. Under the Government of India Act, 1935, Entry 59, List I of the Seventh Schedule, provided for fees in general in respect of matters in the list, but not including fees taken in any Court. Under Section 2i4 of the Act the Federal Court was empowered to make rules as to the fees to be charged in respect of proceedings in that Court. Entry 1 of List II of the Act related to the constitution and organisation of all Courts except the Federal Court and fees taken therein, and Entry 54 of List II contained the general head 'fees' in respect of any of the matters in List II, but not including fees taken in any Court. The 'Entries, in List III, 25 and '66, while providing for fees in respect of the matters in the List excepted from the head of legislation fees taken in any Court. Corresponding to Articles 110 and. 199 of the present Constitution, there were Sections 37 and 82, excepting fees for licences or fees for services rendered, from the concept of Money Bills. Section 136 of the Act defined the revenues of the Federation and the revenues of the provinces as including all revenues and public moneys raised or received by the Federation of by the Provinces, as the case may be. It is relevant at this stage to point out that in the British Parliament also the distinction between fees and taxation is general, is kept up. A ways and means resolution is a necessary preliminary there to the imposition of new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or the extension of the incidence of a tax so as to include persons not already payers. In May's Parliamentary Practice, Fifteenth Edition, page 765, it is found stated:
Payments which are intended to cover the expenses of a Government department in performing services for the public or sections of the public and are retained by the department, are not regarded as charges. Such payments may take the form of fees or licences.
This rule is not allowed to legitimize charges so disproportionate to the cost of the services rendered as to amount to taxation.
The Speaker has ruled that, in the case of a licence granted by a Government department, the payment charged for the issue of the licence, if it is a small fee of an administrative character, should not be considered a charge upon the subject necessitating a ways and means resolution, but that if the fee charged did more than this, a ways and means resolution would be necessary. If the fees are payable into the Exchequer a ways and means resolution is rendered necessary.
23. It is seen at page 783 that the Commons Which had claimed the exclusive right in respect of legislation over charges imposed upon the people, formerly extended the claim to the imposition of fees and pecuniary penalties and to the mode of suing for fees and penalties and their application when recovered, denying the Lords the power to deal with these matters. Finding the rigid enforcement of this claim inconvenient, in 1849 the Lords were given the power by a standing order (now No. 55) to deal by bill or amendment with pecuniary penalties, forfeiture of fees, when the object of such penalties or forfeitures was to secure the execution of an Act, and when the fees imposed were not payable into the exchequer, or in aid of the public revenue.
24. We may remark here that the Court-Fees Act of 1955 was admittedly not introduced as a Money Bill. Of course, this is not of much importance, and cannot affect the real character of the levy. Before the distribution of legislative powers the distinction between fee and tax could arise, and have arisen, when local authorities were delegated the power of fixing rates in respect of imposts and levying licence fees. When the Legislature itself had plenary powers of taxation, it would matter little whether the levy exceeded the limits of the impost as fee properly so called. But when the Legislature authorised the levy, and left it to a local authority or other body, then the question can arise whether the delegated authority had exceeded its powers. If the Legislature had sanctioned only a fee, and the delegated authority in excess of its powers under the guise of a fee had provided for an exaction which in reality would be a tax, then it would be ultra vires the local authority. If what had been authorised was a fee, then there has to be correlation between the income and the expenditure. The Court in such a case should scrutinize the reasonableness of the levy and strike down the levy if it had exceeded the bounds of a fee. The question in this form arose for consideration before the Rangoon High Court in Municipal Corporation of Rangoon v. The Sooralee Bara Bazaar Co., Ltd. AIR (1927) Rang. 212, on the claim of the Corporation of the City of Rangoon under the City of Rangoon Municipal Act to exact as licence fee any amount. The Court held that the intention of the Legislature was not to give the Corporation power to impose on owners of private markets a charge for a licence which might extend to any amount for which the sanction of the local Government could be obtained, but to limit it to charge a fee which would cover the expenses of the Corporation in carrying out the duties imposed on it by the Act, of the supervision and regulation of private markets. Cunliffe, J., in the Court of first instance observed (at page 221):
I am of opinion that the rule levying such a high licensing fee upon the plaintiffs for the occupation of their bazaars amounts not to a proper and reason-
able fee such as was contemplated but does in fact amount to the infliction of an unauthorised tax.
The Division Bench (Rutledge, C.J., and Brown, J.), after quoting from Maxwell the well settled rule of law that all charges upon the subject must be imposed by-clear and unambiguous language, because in some degree they operate as penalties and the subject is not to be taxed unless the language of the statute clearly imposes the obligation, observed (at page 228):
The question must be decided by the intention of the Legislature. Was it the intention to give the Corporation power to impose on the owners of private markets a charge for a licence which might extend to any amount for which the sanction of the local Government could be obtained? Of was the intention merely to give power to charge a fee which would save the Corporation from being out of pocket by reason of the duties and liabilities imposed on it by Act of the supervision and regulation of private markets? In our opinion some more definite words than the general words of Section 178(3) are necessary before we can read into the words the former intention.
25. Section 178(3) referred to there ran thus:
For every such licence or permission a fee may be charged at such rate as shall from time to time be fixed, by the Corporation.
The levy in question was struck down as subordinate legislation which was ultra vires. The Corporation had been empowered to levy only a fee, but it was exacting a tax.
26. The governing Constitution then, was the Government of India Act of 1919 with diarchy in the Provinces. The subjects of administration were divided into two categories, central and provincial by the rules known as the Devolution Rules. The sources of revenue were also divided, and the Provincial, Legislature was empowered, to present its own budget and levy its own tax relating to the provincial sources of revenue. It could not, under Section 80-A of the Act, without the previous sanction of the Governor-General, make or take into consideration any law imposing or authorising the imposition of any new tax, unless the tax was one scheduled as exempted from the provisions of the rules made under the Act. The heading of Schedule II of the 'Scheduled Taxes Rules' provided that in the Schedule the word 'tax' included cess, rate, duty or fee. In the List of provincial subjects in the Government of India Act, 1919, item 20 is described thus:
Non-judicial stamps, subject to legislation by the Indian Legislature, and judicial stamps, subject to legislation by the Indian Legislature, as regards amount of Court-Fees levied in relation to suits and proceedings in the High Courts under their Original Jurisdiction.
Reference is made to these aspects to emphasise that 'fee' as such, though a form of taxation in its wider sense, had for long received a significance all its own, and has generally been understood as an impost severely restricted in its scope and operation. It might be that occasionally statutes levying imposts have not always maintained, the distinction, and the expression 'fee' might have been used loosely while intending a tax and in any given case, when the question arose as to what had been intended, the substance of the levy had been scrutinised. But when a fundamental document like the Constitution, in defining legislative powers, uses a particular expression m more than one place, and the expression has a significance of its own, it should ordinarily receive the same meaning wherever it is found unless the context or setting compels or necessitates otherwise.
27. The learned Advocate-General strongly relies on two features relating to Court-fees as placing it in a different category and making the tests in regard to the validity of a fee inappropriate. The first argument is that fees taken in Courts are specially taken out of the general category of fees in Entry 66. It is said that the expression 'fees taken in any Court' has not been the subject of consideration by the Supreme Court, and that, when their Lordships of the Supreme Court were pointing out the distinction between 'fees' and 'taxes' it was with reference to the Entries 96 in List I, 66 in List II and 47 in List III. Fees taken in Courts, according to the learned Advocate-General, are a class of imposition by themselves, and though called fees, differ from the type of fees referred to in the decisions of the Supreme Court. True, the framers of the Constitution, and the Constitution Act of 1935, have separated fees taken in Courts from other fees, and made it a distinct head of legislative power. But in our view they were familiar with the generally recognised usage of the expression, and, if a valid legislative purpose is apparent in separating fees taken in Courts from other fees, we should be going against the ordinarily accepted canons of construction, if we hold that the expression 'fees' in Entry 3 in List II, does not carry its normally accepted connotation. The purpose in separating fees taken in Courts from other fees is obvious. Now, an action in a civil Court in respect of any matter may invite the consideration of more than one law and several laws would be involved. A single suit relating to immoveable property may necessitate the consideration of the Succession Act, the Transfer of Property Act, the Contract Act, the Stamp Act, Registration Act, Evidence Act, and various other laws. If the Legislature fixes a fee in respect of a Court action with reference to every law it makes, it will lead to utter confusion. Fees will have to be calculated and levied under the several Acts, and it may not be apparent when the suit is instituted as to what laws would come up for consideration in the action. Frequently new legal problems become apparent only during the course of the trial or at the stage of arguments, and quite often at the appellate stage. By separating fees taken in Courts from the general power for levying fees in respect of matters in any list, and providing for a single head of legislation for fees in Courts, confusion and practical difficulty in the matter of levy and collection of Court-fees are avoided. By investing the power under one head, the method of levying1 fee for Court action is simplified. Fees have been taken in Courts always when the proceedings were initiated, generally on the document presented in Courts. The Constitution has taken a pragmatic approach in this regard when distributing legislative powers, and therefore,, in our view, the mere fact that fees taken in Courts are made a separate head of legislation cannot alter the innate character of the levy as a fee. If the Constitution makers did not intend to give the expression 'fees' in Entry 3 of List II the same connotation as it had in Entry 66 of the List, they could have adopted any other synonym of tax. Of course, fees may be of various kinds, and they may have special 'features of their own, and so fees taken in Courts may have certain special characteristics having regard to the occasion of the levy, the manner of the levy, and other related matters. But the core of the expression will not be lost by reason only of certain special features attaching to the levy.
28. We shall take up the next argument of the learned Advocate-General, that fees taken in Courts cannot be considered to be fees in the technical sense, as under the Constitution they have to form part of the Consolidated Fund. It is urged that, for an impost to be a fee levied as such for services rendered} it should be earmarked to meet the expenses of rendering services and must not go into the general revenues of the State. The Advocate-General refers to Articles 146 and 229 of the Constitutions. Referring to the Supreme Court, Article 146(3) runs:
The administrative expenses of the Supreme Court, including all salaries, allowances and pensions payable to or in respect of the officers and servants of the Court, shall be charged upon the. Consolidated Fund of the State, and any fees or other moneys taken by the Court shall form part of that Fund.
29. Based on these Articles, it is stressed that the fees taken by the Courts have to go into the Consolidated Fund of India or the State, as the case may be : they cannot be credited to any separate fund, and so lack the sine quo non for a fee. It is urged that the Constitution itself does not provide for fees taken in Courts -maintaining an essential element of a 'fee' properly so called, that it should be earmarked and credited to a separate fund. Therefore, it is said the Constitution marks out fees taken, in Courts, from the other fees. This feature, it is stated, makes it a tax, though called a fee. The question for consideration is whether it is an essential and necessary element of a fee properly so called that it should be credited or capable being credited to a separate fund and should not fall into the Consolidated Fund. It may be convenient to read here Article 266 of the Constitution:
Article 266 (1) : Subject to the provisions of Article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled 'the Consolidated Fund of India', and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled 'the Consolidated Fund of the State.'
(2) All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited, to the public account of India or the public account of the State, as the case may be.
(3) No moneys out of the Consolidated Fund of India, or the Consolidated Fund of a State, shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.
Instances of 'all other public moneys' referred to in Clause (2) are to be found in Article 284:
All moneys received by or deposited with-
(a) any officer employed in connection with the affairs of the Union or of a State in his capacity as such, other than revenues or public moneys raised or received by the Government of India, or the Government of the State, as the case may be, or
(b) any Court within the territory of India to the credit of any cause, matter, account or persons.
In our view, it is not an essential element for a levy to be a fee that it must be separately funded and dealt with. Only separate funding will be presumptive proof that the levy is a fee. Far a fee to retain its character as 'fee' correlation has to be established between the law which is contended to be a fee and the expenses incurred by the State for purposes of rendering the related services, and, as pointed out by the Supreme Court in Ratilal V. Stale of Bombay : 1SCR1055 , 'this can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services.'
30. In Commissioner, Hindu Religious Erdowments, Madras v. Sri Lakshmindra Thirtha Swamiar : 1SCR1005 , referring to the fact that the contribution levied under Section 76 of the Hindu Religious and Charitable Endowments Act went into the consolidated fund of the State, and the expenses were met, not out of the collections, but out of the general revenues by appropriation as in the case of other Government expenses, it is; observed by the Supreme Court:
That in itself might not be conclusive, but in this case there is total absence of any co-relation between the expenses incurred by the Government and the amount raised by contribution....
It follows that, if otherwise correlation could be established, the levy could be shown to be a fee, and the mere fact that it goes into the consolidated fund would not take away its character as a fee, if otherwise it is a fee. In Hingir-Rampur Coal Co. v. State of Orissa : 2SCR537 , this aspect noticed by Mukherjea, J., (as he then was) in the above case is referred to.
31. In State of Orissa v. Chakobhai Chelahhai & Co. : 1SCR719 , already referred to, the fees levied under Rule 59 of the Orissa Sales Tax Rules, 1947, were challenged as an illegal levy, and a direction for refund of the fees paid was prayed for. The rule in question enabled the levy of a fee of 5 per cent, of the amount in dispute calculated to the nearest rupee subject to a maximum of Rs. 100 and a minimum of Re. 1 on a memorandum of appeal against order of assessment or penalty or both, or on application for revision or review of such order. The levy under consideration was under Item 54 of List II of the Government of India Act, 1935. The High Court had, struck down the levy as illegal, and the Supreme Court, while agreeing with the High Court that the assessing authorities were not Courts, held that it did not necessarily follow that the fees imposed were illegal. It was observed that the legislature had power to make a law for tax on sale of goods and for fees in respect thereof, under Items 48 and 54 of List II of the Government of India Act, 1935, that the fees indisposed were not taxes, and that it came within the provision in Section 29 of the Orissa Sales Tax Act, which enabled the State Government to make rules 'prescribing the procedure for and other matters (including fees) incidental to the disposal' of appeals and applications for revision and review under Section 23 of the said Act. It was pointed out that the procedure for disposal of an appeal included as a necessary incidental matter the filing of an appeal on a proper fee. We are referring to this case, as the fees collected under the relevant provisions were not separately shown in the budget, but were included in the Consolidated Fund of the State. The amounts collected by way of fees by the Sales Tax authorities were merged in. the Consolidated Fund. The High Court had upheld the contention of the assessee that the fees collected were additional taxes and not fees. This may be seen from the following extract from the judgment of the High Court in Chakko Bhai v.. State of Orissa A.I.R. 1956 Ori 7:
Mr. Mohanty has taken considerable pains to satisfy us that the amounts collected by way of fees by the sales tax authorities are merged is the Consolidated Fund of the State and are not charged merely for the services rendered.
It would appear that these fees are collected as additional taxes and not as fees which are separately shown in the budget, but are included in the Consolidated Fund of the State. I am therefore satisfied that the levy of fees on a graded scale on appeals and applications for revision or review amounts in the circumstances, to the imposition of a tax which is clearly unwarranted and is beyond, the rulemaking power of the State Government.
The fact that the fees collected went into the Consolidated Fund did not at all weigh with the Supreme Court, and notwithstanding that they went into the Consolidated Fund, the validity of the levy as fees was upheld. As pointed out by the Supreme Court, there may be various kinds of fees end it is not possible to formulate a definition that would be applicable to all cases.
32. In the dissenting judgment in Corporation of Calcutta v. Liberty Cinema : 2SCR477 , Rajagopala. Ayyangar, J., speaking for himself and Subba Rao, J., (as he then was), observed (at page 1125):
The segregation of the Fund, therefore, could not have been a decisive factor for determining the nature of the levy.
Of course, the matter was being considered from the other angle, namely, whether the mere fact of the segregation of the fund from the Consolidated Fund would make the levy not a tax for the principle would be the same, and on this aspect of the discussion we do not find any different opinion expressed by the majority of the Court.
33. It must be noticed that in every one of the cases before the Supreme Court, wherever their Lordships applied the test of merger of the collection, in the general revenues of the State, they referred to its consolidation with the general revenues of the State to be spent for general public purposes. No doubt, when the moneys pass into the Consolidated Fund their identity would be lost. But there can ,be no difficulty in the State earmarking the collections for any particular purpose or services rendered by the State. The following observation of Latham, C.J., in what is known as the Uniform Tax Case (1942) 65 Com. L.R. 373, is appropriate in this context;
All taxation moneys must pass into the Consolidated Revenue Fund, where their identity is lost, and whence they can be taken only by an Appropriation Act. An appropriation Act could provide that a sum measured by the receipts under a particular tax Act should be applied to a particular purpose, but this would mean only that the sum so fixed would be taken out of the general consolidated revenue.
34. Where no question of excessive execution arises, and the levy realised could be related to the services rendered by the Governmental agency, as in the case of State of Orissa v. Chakobhai Chelabhai & Co. : 1SCR719 , notwithstanding that the levy was absorbed in the Consolidated Fund, it could be validated as a fee. May be the rationale behind Articles 146(3) and 229(3) is fundamental recognition that the cost of administration of justice is properly charged on the general revenues of the State and that it would be inappropriate far any civilised State co require the High Courts and the Supreme Court to pay themselves from fees realised from suitors. The judicial department of the State which has to administer laws promulgated by the Legislature and render justice to the wronged, according to the law of the realm, is an essential limb of any modern State and will have to be maintained whether there are suitors to pay for its upkeep or not. A skeletal judiciary at least will be in the interests of the community as a whole and a public purpose. In our view, the second argument based on Articles 146 and 229 of the Constitution, providing for fees taken in Courts to form part of the Consolidated Fund, to impart to fees taken in Courts the character of taxation, also fails.
35. The decision of the Privy Council in Attorney-General for British Columbia v. Esquimalt and Nanaimo Railway Co. L.R. (1950) A.C. 87, an appeal from the Supreme Court of Canada, was cited. The question that arose therein for consideration was whether a particular levy was service charge or a tax. The relevant Act prohibited that certain lands shall not be subject to taxation. Lord Greene, speaking for the Court, observed:
There is no context to give to the word 'taxation' any special meaning, and the question therefore comes to this: Is the impost charged by Section 124 of the Forest Act 'taxation' within the ordinary significance of that word?.... Section 124 provides that from the owners of timber land there shall be payable and paid to the Crown on the first day of April in each year an annual tax at the rate of six cents far each acre. These payments are to be placed to the credit of a fund in the Treasury to be known as the forest protection fund and are made recoverable by action at the suit of the Crown. An annual sum of $1,650,000 is, to be added out of the consolidated revenue fund. Advances may be made out of the consolidated revenue fund to meet the charges incurred before the full collection of tax or to cover deficiencies. In the case of a deficiency or a surplus there is power to increase or decrease the levy as the case may be. The forest protection fund is applicable for a variety of purposes connected with the protection of forest lands, including the maintenance and equipment of fire-prevention and protection force, the construction of trails, look-out stations, etc., and the payment of expenditure incurred by any person in fighting fires. The Legislature has thus thought it proper to divide the expense of what is a public service of the greatest importance to the Province as a whole between the general body of tax-payers and those individuals who have a special interest in having their property protected. The levy has what are, undoubtedly, characteristics of taxation, in that it is imposed compulsorily by the State and is recoverable at the suit of the Grown. It is suggested, however, that there are two circumstances which are sufficient to turn the levy into what is called a 'service charge'. They are, first, that the levy is on a defined class of interested individuals and, secondly, that the fund raised does not fall into the general mass of the proceeds of taxation but is applicable far a special and limited purpose. Neither of these considerations appears to their Lordships to have the weight which it is desired to attach to them. The fund is made up partly of the levy and partly by contributions from the taxes paid by the general body of taxpayers. This is no doubt a reasonable apportionment of the burden, for to impose the cost of services which are of general interest to the community as well as a particular interest to a class of individuals exclusively on one or the other might well have seemed oppressive. The fact that in the circumstances the persons particularly interested are singled, out and charged with a special contribution appears to their Lordships to be a natural arrangement. Nor is the fact that the levy is applicable for a special purpose of any real significance. Imposts of that character are common methods of taxation-taxation for the road fund in this country was a well-known example. The objects of the Legislature in adopting such a form of tax may be various. But if it finds it convenient to do so the impost, if in other respects it has the character of a tax, does not thereby change its character.
36. We do not find anything in these observations of the learned Law Lord to persuade us to hold that fees taken in Courts should be considered taxation with all its incidents under our Constitution. The Judicial Committee specifically points out that there was nothing in the context to give to the word 'taxation', which they were interpreting, any special meaning.
37. Adverting to this case, Gajendragadkar, J. (as he then was), speaking for the majority in Hingir-Rampur Coal Co., Ltd. v. State of Orissa : 2SCR537 , 465 observed:
The Privy Council did consider two circumstances which Were relevant; the first that the levy was on a defined class of interested individuals, and the second that the fund raised did not fall into the general mass of the proceeds of taxation but was applicable for a special and limited purpose. It was conceded that these considerations were relevant but the Privy Council thought that the weight to be attached to them should not be exaggerated. In appreciating the weight of the said relevant circumstances the Privy Council was impressed by the fact that the lands in question formed an important part of the national wealth of the Province and their proper administration, including in particular protection against fire, is matter of high public concern as well as one of particular interest to individuals. In other words, the effect of the impugned provision was that the expenses of what Was the public service of the greatest importance for the province as a whole had been divided between the general body of taxpayers and those individuals who had a special interest in having their property protected. It would thus appear that this decision proceeded on the basis that what was claimed to be a special service to the lands in question was in reality an item in public service itself, and so the element of quid pro quo was absent. It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a 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 benefiting the specified class, or area the State as a whole, may ultimately and indirectly be benefited 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 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.
38. We may also refer to the decision of the Judicial Committee in Attorney-General for Quebec v. Walter Reed (1885) L.R. 10 A.C. 141, a case under the British North America Act, from the Supreme Court of Canada. Therein a Quebec Act, which imposed a duty of 10 cents upon every exhibit filed in Court in any action, depending therein was held ultra vires of the Provincial Legislature. The taxing powers in Canada are divided between the Dominion and Provinces. The Dominion's power extends to any mode or system of taxation, while that of the Province is restricted to direct taxation within the province in order to the raising of revenue for provincial purposes. The question has often arisen in Canada as to whether a particular levy was director indirect taxation. It must also be borne in mind that the Dominion like our centre, had residuary powers of taxation. A direct tax, it has been held, is one which is demanded from the very person who it is intended and desired should pay it, while indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another. After holding that the levy in question was not direct taxation, the Lord Chancellor, the Earl of Selbourne addressed himself to the question whether it would come under Sub-section (14) of Section 92 of the British North America Act, which dealt with the exclusive powers of the provincial legislatures. Sub-section (14) runs thus:
The administration of justice in the province, including the constitution, maintenance, and organisation of provincial Courts, and including the procedure in. civil matters in the Courts.
It was observed (at page 144):
Now it is not necessary for their Lordships to determine whether, if a special fund had been created by a provincial Act for the maintenance of the administration of justice in the provincial Courts, raised for that purpose, appropriated to that purpose, and not available as general revenue for general provincial purposes, in that case the limitation to direct taxation would still have been applicable That may be an important question which will be considered in any case in which it may arise; but it does not arise in this case. This Act does not relate to the administration of justice in the province; it does not provide in any way, directly or indirectly, for the maintenance of the provincial Courts; it does not purport to be made under that power, or for the performance of that duty. The subject of taxation, indeed, is a matter of procedure in the provincial Courts; but that is all. The fund to be raised by that taxation is carried to the purposes mentioned in the 2nd sub-section; it is made part of the general consolidated revenue of the province. It, therefore, is precisely within the words taxation in order to the raising of a revenue for 'provincial purposes'. If it should greatly exceed the cost of the administration of justice, still it is to be raised and applied to general provincial purposes, and it is not more specialty applicable for the administration of justice than any other part of the general provincial revenue.
Their Lordships, therefore, think that it cannot be justified under the 14th sub-section.
The emphasis is ours, the argument before us being that the levy from the civil suitors greatly exceeds the cost of administration of civil justice, and is also utilised for the maintenance of law and order, a general public purpose.
39. Reference was also made in the course of the arguments for the State to another decision of the Privy Council under the British North America Act, in George Walkem v. Lower Mainland Dairy Products Board (1938) F.L.J. 147 : A.I.R. 1939 P.C. 36, where Lord Atkin had observed:
If regulation of trade within the province has to be held valid the ordinary method of regulating trade, i.e., by a system of licences, must also be admissible.... A licence fee, though usual, does not appear to be essential. But if licences are granted it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the province or for both purposes. The object would appear to be in such a case to raise a revenue for either local or provincial purposes.... It cannot, as their Lordships think be an objection to a licence plus a fee that it is directed both to the regulation of trade and to the provision of revenue. It would be difficult in the case of saloon and tavern licences to say that the regulation of the trade was not at least as important as the provision of revenue. And if licences for the specified trades are valid their Lordships see no reason why the words 'other licences' should not be sufficient to support the enactment in question. The impugned provisions can also, in their Lordships' opinion, be supported on the ground accepted by Martin, C.J., in his judgment on the reference, viz., that they are fees for services rendered by the province or by its authorised instrumentalities under the powers given by Section 92(13) and (16).
The above observations are not of general applicability arid have to be related to the provincial heads of legislation under Section 92 of the British North America. Act. Under Section 92(9) the provinces may legislate in relation to 'shop, saloon, tavern, auctioneer and other licences in order to the raising of a revenue for provincial, local or municipal purposes.' The head of legislation authorises-legislation for provincial revenues in relation to licences also. The problem that had arisen in Canada was (i) whether the phrase 'other licences' had to be read ejusdem generis with the preceding enumeration; (ii) whether the revenue raising provisions of licensing legislation should conform to the standards of direct taxation; and (iii) whether the province could license for regulatory rather than, of for regulatory as well as, revenue purposes. It is now established that the ejusdern generis rule does not apply to 'other licences,' and where the licensing system, established f or regulatory purposes, also exhibited a revenue purpose by reason of the exaction of licence fees, resort could be had to Section 92(9), and that it was not necessary in this connection to meet the requirements of direct taxation. The case above referred to cannot therefore be authority under our Constitution for taxation measures for general revenue purpose under the head of 'fees'.
40. We shall now take up the argument for the State that the history and legislative practice and judicial dicta with reference to the levy of fees in Courts is to treat the fees taken in Courts as a category by itself and as a source also of general revenues of the provinces. In Henrietta Muir Edwards v. Attorney-General of Canada L.R. (1939) A.C. 124, where the question was whether in Section 24 of the British North America Act, 1867, the word 'person' would include a 'woman,' the Privy Council said (at page 127):
In coming to a determination as to the meaning of a particular word in a particular Act of Parliament, it is permissible to consider two points, viz., (i) The external evidence derived from extraneous circumstances such as previous legislation and decided cases, (ii) The internal evidence derived from the Act itself. As the learned Counsel on both sides have made great researches and invited their Lordships to consider the legal position of women from the earliest times injustice to their arguments they propose to do so....
But it is also clear that the Privy Council is of the view that while history may be called in aid to show what facts existed to bring about a statute, the inferences to be drawn therefrom are slight. While the language is plain, legislative history cannot avail for a different interpretation.
41. Considerable reliance is placed for this contention on the decision of the Judicial Committee in Rachappa Subbardo Jadhav v. Shidappa Venkatarao Jadhav (1919) L.R. 49 IndAp 24 : (1919) 36 M.L.J. 437, where it is observed:
The Court Fees Act was passed not to arm a litigant with a weapon of technicality against his opponent but to secure revenue for the benefit of the State. This is evident from the character of the Act, and is brought out by Section 12 which makes the decision of the first Court as to value final as between the parties, and enables a Court of appeal to correct any error as to this, only where the first Court decided to the detriment of the revenue. The defendant in this suit seeks to utilise the provisions of the Act not to safeguard the interests of the State, but - to obstruct the plaintiff; he does not contend that the Court wrongly decided to the detriment of the revenue, but that it dealt with the case without jurisdiction.
Their Lordships of the Judicial Committee were, in that case, not on the question of any distinction between a fee and tax. The defendant in that case objected to the jurisdiction of the Court in which the suit was instituted. It was his case that it was not properly brought in the Court of the First Class Subordinate Judge The objection was not taken in the written statement or at the settlement of issues or in the defendant's appeal to the District Judge or in the High Court. The defendant sought to question the jurisdiction of the Court by reference to the court-fee which had been paid on the plaint, and the observations of the Privy Council were in that context. It must further be noticed that the word 'revenue' is colourless in its import and all receipts from whatever sources would be revenue. Their Lordships did not say that the Court Fees Act was passed for raising revenue for the general purposes of the State.
42. In Anson's Law and Custom of the Constitution, Volume II, Part II, Fourth Edition, referring to the expression 'revenue', it is stated (page 146):
The so-called revenues of the Crown are for the most part the sums paid in various forms, by the people for the maintenance or promotion of the various objects for which the Government exists.
At page 171 is found the following:
Other departments receive moneys directly or indirectly in the course of their business from fees, the sale of old materials, or similar sources. Sometimes these are used by the department as 'appropriations in aid' of the amount granted by Parliament to meet departmental expenditure. Sometimes they are paid into the Exchequer and then falls under the head of revenue described in the Finance accounts as 'miscellaneous'.
43. As pointed out in an earlier part of the judgment, from the standpoint of the State, the distinction between fees and taxes will be of little significance when the State is possessed of plenary powers of taxation. The distinction between the various forms of taxation, using the word in its widest sense, gets practical importance only when legislative powers are distributed. In a Federal Constitution, where the legislative powers have been distributed between the Provinces and the Federation the competence of the Legislature to enact a particular legislation or make a levy would depend upon whether the topic of legislation or power of levy has been assigned by the Constitution to that Legislature.
44. Reference has also been made to certain observations of the eminent Judge Mahmood, J. in Muhammad Sahm v. Nabian Bibi ILR (1886) All. 282 Balkaran Rai Gobind Nath Tiwari ILR (1890) All. 129 and Radha Bai v. Nathuram ILR (1881) All. 66. The question that arose for consideration in Muhammad Salim's case (1886) I.L.R. 8 All. 282, was whether the dismissal of a former suit of the plaintiff therein under Section 10 of the Court Fees Act could be regarded as res judicata, barring the subsequent action. It is in this connection that the learned Judge observed that the dismissal of a suit under Section 10 of the Court Fees Act could never operate as res judicata, so as to bar a fresh action. He said (at page 286):
Now what I wish to say in the first place is that the object of these provisions, as indeed of the whole Act, is to lay down rules for the collection of one form of taxation, and this I regard to be the scope of the enactment, though it contains no preamble at all....
It cannot be denied that, in one sense, fees are a form of taxation.
45. In Balkaran Rai's case ILR (1890) All. 129, the learned Judge said (at page 164):
My difficulty further arose from the circumstance that I felt, in the absence of a preamble in this Court Fees Act, whether it was intended to regulate questions of procedure or to regulate the method of the collection of revenue, that is to say, fiscal questions for the purposes of the obtainment of money from the taxpayer in order to achieve such results as the State had in view to carry on the administration of the country.
The learned Judge lower down refers to these levies as 'law taxes' and would follow the views of Jeremy Bentham that
the more stringent they are, the less do they achieve their aim, for they are stringent not in the interests of justice, but make the administration of justice difficult and in many cases impossible.
Again in Radha Bai v. Nathu Ram ILR (1891) All. 66, the learned Judge observed that the Indian population had been taxed by the Court Fees Act.
46. In our view, the expression 'taxation' in these decisions has been used only in a generic sense. There was no need to examine the special character of the levy. The Court Fees Act was a fiscal Act, and this was emphasised with particular reference to the hardship which it caused the suitors. The same is the case in regard to the observations of Rankin, C.J., 'The Court Fees Act is a taxing statute' in Shihan v. Abdul Alim : AIR1930Cal787 , The learned Judge made that observation to point out that the Court Fees Act has to be considered with strictness and that it was passed not to arm a litigant with a weapon of technicality against his opponent, but to secure revenue for the benefit of the State, referring to the decision of the Judicial Commute in Rachappa Sub Jadhav Rao V. Shidappa Venkatarao Jadhav (1919) L.R. 46 IndAp 24 : (1919) 36 M.L.J. 437.
47. We may now refer to the line of cases, where the levy of court-fees is regarded as taken for services rendered by the Courts. In Gayaranga Sahu v. Botokrishna Patro ILR (1909) Mad. 305 : (1909) 19 M.L.J. 340, where a question arose, whether the validity of a plaint for the purposes of Section 4 of the Limitation Act (1887) depended on its validity for the purpose of the Court Fees Act (1870), it was observed:
One of its (Court Fees Act) main purposes, no doubt, is to levy fees for services to be rendered by Courts and public officers, and the plaint is not to be effectual for such purposes until it is duly stamped.
48. With reference to the fees levied in High Courts the position appears to be clear. Coutts Trotter, J. (as he then was), examining the power of the High Court in the matter of levying fees, in Mahomed Ishack Sahib v. Mahomed Moideen : (1922)43MLJ436 , said.
It is, I think, reasonably clear that that part of Section 15 of the High Court's Charter Act which speaks of settling fees to be allowed to Sheriffs, Attorneys, and all clerks and officers of the Court will not cover this case because, as the the Advocate-General pointed out, Section 3 of the Court Fees Act clearly point to the fee which is to be taken by the officer as a perquisite, as until recent years we all know they were. Therefore the fee payable for the time being to all clerks and officers of the High Court under Section 3 of the Court Fees Act cannot be covered by those words of the High Court's Charter Act. It has always been maintained that the power under which fees are levied on the Original Side of the High Court was derived from the general powers to issue general rules for regulating the practice and procedure of the Courts. It is argued, and I think it is rightly argued. That the power to make Regulations for procedure necessarily includes imposition of fees and the collection of them, and the Court can collect the fees only through its proper officers.
The lines emphasised by us clearly show that the imposition on suitors on the Original Side of the High Court is fees under the power to make regulations for procedure. This view was affirmed by the Division Bench, of this Court. Subba Rao, J. (as he then was) sitting with Ramaswami, J. in Seshadri v. Province of Madras I.L.R. (1954) Mad. 543 : (1954) 1 M.L.J. 206, already cited. The learned Judges therein remarked (at page 209):
The power of the High Court to prescribe Court-fees in regard to proceedings in the High Court was subject to judicial scrutiny prior to the coming into force of the Constitution of India.
49. We may also refer to the observations of Wallace, J., in Lakshmi Ammal, In re : AIR1926Mad96 (Devadoss and Wallace, JJ.) (at page 614):
The scheme of Section 12 of the Court Fees Act is to see that the revenue is not defrauded, that the proper fee payable to Government as the 'price' of the trial of the suit has been paid.
50. In Pethu v. Chidambara : AIR1931Mad533 , Jackson, J., remarked:.and it must be remembered that some one has to pay for the upkeep of the judiciary. If the litigant is relieved, the burden is merely shifted to the general tax-payer.
51. In G.T. Williams, In re : AIR1924Cal115 Greaves, J., remarked (at page 117):
The sum charged upon a grant of Probate or of Letters of Administration is not a tax or duty levied upon the property upon which the probate or administration operates, and it is not charged thereon as is Estate Duty in England, but it is merely a fee levied by the Court issuing the Probate or Letters of Administration for the work done in this connection. And I do not think that this is any less the case because the fee is levied upon the value of the property.
52. As one of the cases before us relates to Court-fees claimed in a Probate action on caveat being entered, we may refer also to the observations of Viscount Haldane in Attorney-General for Manitoba v. Attorney-General for Canada (1925) LR A.C. 561, the question again arising under the British North America Act as to whether a particular levy was a direct tax or an indirect tax. It is stated (at page 567):
A probate duty (as distinguished from such a succession duty), paid as the price of services to be rendered by the Government and imposed on the person claiming probate, might, it was indicated, on the other hand, well be direct taxation.
53. No doubt, Wanchoo, C.J. (as he then was) in M.S.U. Mills, Ltd. v. State of Rajasthan , has remarked that the Court-Fees Act, generally speaking, is a measure for raising revenue for the State. The relevant portion of the judgment is (at page 180):
So far as fees are concerned, they have to be divided into two parts. There are some fees which are really taxes though they are called fees. In their case, all the incidents of a tax apply, and the limitations to which fees are subject do not apply. As an example of this kind, we may mention Court-fees under the Court Fees Act. Though it may be said that Court-fees are charged from parties who come to Court it is still true that the Court Fees Act, generally speaking, is a measure for raising revenue for the State. Then there are fees strictly so called, which are not meant for raising revenue, but for meeting the expenses of the departments of the Government created for regulating professions, trades, callings and employments from which licence fees are levied.
The question in that case was the validity of a licence fee levied by the Rajasthan State under the Factories Act, whether it was fees strictly so called and had the authority of law, or it was a tax. Under the rules framed under the Factories Act certain fees were charged on factories according to the horse-power installed and the number of persons employed in the factory during the year on a sliding scale. Pointing out the distinction between a fee and tax, that a fee levied is not meant to augment the general revenue of the State and that it is fixed generally at such a level as to meet the expenses of the services rendered by the State in connection with matters for which the fee is levied, the learned Judges observe that the distinction between fee and tax is not always kept in mind rigorously in legislative enactments and that many a time what is called a fee is really a tax meant for raising revenues. It is also observed that, constitutionally speaking, a fee is also a tax for the purposes of Article 265 of the Constitution, for no fee can be levied without the authority of law. It is in the context of giving examples that Court-fee was referred to as a tax. The matter was not in actual controversy before the Court in that case.
54. Examining the history of the levy in the Fifth Report (1812) on East India Affairs, Volume I, at page 63, to which our attention has been drawn by the learned Advocate-General for the State and Counsel for the suitors, is seen the following:
The chouthay or fourth part of the value of property recovered in a Court of Judicature, seems to be considered in most parts of the Indian peninsula, as the compensation or fee due to the ruling power, for the administration of justice. The early abolition of this exaction, on the accession of the British power to the Government of Bengal, and in lieu of it, the introduction of a small percentage on the institution of the suit, has been noticed. This institution fee, under subsequent modification, continued to be received until the establishment of the Courts of dewany adawlut and Courts of Appeal, in 1793, under the new system; when with a view of affording the readiest possible means of relief to such as should be compelled to have recourse to judicial process, it was provided, that no expense whatever beyond the fee of the pleaders, whom the parties might choose to entertain, and the actual charge of summoning their own witnesses, should be incurred in the prosecution of any civil suit, or in the appeal. But this indulgence, arising from motives of humanity, misapplied to a community peculiarly disposed to litigation, was soon found to be productive of such an inundation of suits, as was likely, by overwhelming the provincial adawluts with business, to put a stop to the course of justice altogether; and the Government was obliged to have recourse again, in 1795, to an institution fee, as well as to fees on exhibits, established at rates, such as might render law more expensive, without discouraging recourse to it, where the cause of action might be well founded.
55. The Bengal Regulation XXXVIII of 1795 contained the following Preamble:
No expense attending the institution of suits in the first instance; and the ultimate expense, being moderate and limited, whatever length of time the suit may be depending; and no fees whatever being charged on the exhibits and papers filed in the Courts, nor on petitions presented to the Courts not immediately forming part of the proceedings in any suit under trial, many groundless and litigious suits and complaints have been instituted against individuals, and the trials of others have been protracted, by the filing of superfluous exhibits, or summoning witnesses whose testimony was not necessary to the development of the merits of the case. The business in many of the Courts of Judicature, has in consequence increased so as to prevent the Judges determining the causes and complaints filed, with that expedition which is essential for deterring individuals from instituting vexatious claims, or refusing to satisfy just demands, and for giving full effect to the principles of the Regulation. The establishing of fees on the institution and trial of suits, and on petitions presented to the Courts, being considered to be the best mode of putting a stop to this abuse of the ready means now afforded to individuals of availing themselves of the exercise of the laws, without obstructing the bringing forward of just claims; the following rules have been enacted.
There was a graduated levy tapering as the claim went up in suits for money and for the value of personal property. By Bengal Regulation VI of 1797 new fees were levied, abolishing certain taxes which, it was found inconvenient to realise, and in the preamble of this Regulation one finds the object of the levy is also to add to the public revenues. The relevant part of the preamble runs thus:
The Vice-President in Council has therefore resolves to abolish this tax; and with a view further to discourage the preferring of litigious complaints, and the filing of superfluous exhibits and the summoning of unnecessary witnesses on the trial of suits, and also to provide for the deficiency which will be occasioned in the public revenue by the abolition of the police tax, as well as to add eventually to the public resources, without burdening individuals, he has resolved to substitute new fees on the institution and trial of suits in the room of the fees established by Regulation XXXVIII, 1795....
56. Bombay Regulation VIII of 1802, Clause 1, ran as follows:
Five per cent, commission has been levied on the institution of suits in the Civil Court of Surat since the 8th of June, 1800; but no fees whatever being charged on the exhibits and papers filed in the Court, nor on petitions presented to the Court, not immediately forming part of the proceedings in any suit under trial, groundless and litigious suits and complaints are liable to be instituted against individuals, and the trials of others have been protracted by the filing of superfluous exhibits, or the summoning of witnesses whose testimony was not necessary to the development of the merits of the case. The business has, in consequence, increased, so as to prevent the Judge determining the causes and complaints filed, with that expedition which is essential for deterring individuals from instituting vexatious claims, or refusing to satisfy just demands, and for giving full effect to the principles of the Regulations. The establishing of fees on the institution and trial of suits, and on petitions presented to the Courts being considered to be the best mode of putting a stop to this abuse of the ready means now afforded to individuals of availing themselves of the exercise of the laws, without obstructing the bringing forward of just claims, the following rules have been enacted.
57. While on this aspect of the matter, it is interesting to refer to a return of salaries and fees drawn in the Supreme Court from the Master downwards, inclusive of Interpreters and the Official Assisgnee in 1858 found at page 22 in the Letters of Strange, J. of the Sudr Udalut, to the Government of Fort St. George on Judicial Reforms (i860). The total salaries drawn for the year 1858 was Rs. 48,475-5-8. The fee realised by them was Rs. 84,929-0-9. The salary of the Chief Justice was Rs. 60,000 and of the puisne Judge Rs. 50,000, the total expenditure of the Supreme Court amounting to Rs. 1,58,475-5-8. It is stated in the report that the charge for salaries fell upon the Government, and the fees were paid by the suitors who were otherwise largely taxed. It would be apparent from the above return that the State was not realising the entire expenditure of the administration of the Supreme Court from the suitors. The Fifth Report looks upon fees as purely regulatory. The preamble to the Bengal Regulation VI of 1797, where Court-fees are contemplated for adding to the public resources, must be read in the context of the times. The phrase therein 'without burdening individuals' is significant. The preamble is apologetic considering the grandiose manner in which earlier even a small percentage as institution fee was abolished and the suitor had to pay only his pleaders and the cost of summoning his witnesses.
76. In the Statement of Objects and Reasons to the Court Fees Act (VII of 1870), the following is found:
The rates of Stamp fees leviable in Courts and offices established beyond the local limits of the ordinary original civil jurisdiction of the High Courts of Judicature at Fort William, Madras and Bombay, and in proceedings on the appellate side of such High Courts, were, as fixed by Act XXVI of 1867, to a great extent tentative.
The experience gained of their working during the two years in which they have been in force, seems to be conclusive as to their repressive effect on the general litigation of the country.
It is, therefore, thought expedient to make a general reduction in the rates now chargeable on the institution of civil suits, and to revert to the principle of maximum fee which obtained under the former law.
As some measures of compensation for the loss of revenue which is expected to result from the general reduction of fees, it is proposed to discontinue the refund of any portion of the amount levied on the first institution of suits and also to raise the fees heretofore chargeable on Probates and Letters of Administration granted under the Indian Succession Act, and on certificate issued under Act XXVII of i860 to the ad valorem rates leviable under the English Law in like cases.
The abolition of refunds is justified by the consideration that for all practical purposes in the majority of cases, the plaintiff, whose suit has not gone beyond the stage at which under the present law he is entitled to recover a moiety of the institution fee, has gained as much through the Court's agency as the suitor whose case has proceeded to a decision, and that, therefore, on the principle on which all Court-fees are adjusted, the former should contribute in equal proportion with the latter to the maintenance of the Courts from whose action both derive an equal benefit.
Lastly, that for the future there may be no confusion between stamp revenue proper and the revenue derived from what have heretofore been termed 'judicial stamps' the proceeds of the proposed enactment are to be designated Court fees.
58. Clearly, the object and reason for the levy of Court-fees herein stated appear to be the maintenance of the Courts from whose action the suitors derive benefit. This-Act of 1870 with certain amendments introduced in this State in 1922 was in force here till it was repealed by the Madras Court-fees and Suits Valuation Act of 1955. The necessity for the passing of the Madras Amendment Act (V of 1922) to the Court Fees Act, 1870, is stated thus in the Statement of Objects and Reasons published in the Fort St. George Gazette (Part IV), on the 7th February, 1922:
To meet the increased cost of administration it had become necessary to provide additional revenue. The scale of Court-fees for this Presidency was fixed in 1870 by the Court Fees Act, and experience had shown that in regard, to various classes of documents to which it refers, the amount payable as Court-fee is not commensurate with their character and importance.
59. It looks to us in the context, that the cost of administration referred to, relates to the cost of administration of justice. The ad valorem fee though increased was as-before graded and tapering as the claim increased. The Court-fee payable on a claim for Rs. 50,000 as already referred to, was Rs. 1,762-7-0. There was no maximum as in the Act of 1870, arid when the amount for value of the subject-matter exceeded Rs. 50,000, for every Rs. 5,000 or part thereof in excess of Rs. 50,000, a Court-fee of Rs. 30 was payable.
60. The Statement of Objects and Reasons for the latest Court Fees Act, which has. ultimately been adopted for proceedings in the Original Jurisdiction of the High Court, published in the Fort St. George Gazette, Extraordinary, dated 10th May, 1954, ran thus:
The Court Fees Act, 1870 was enacted more than eighty years ago. Conditions have materially changed since then and litigation has grown enormously in variety and complexity. The application of the old rules to altered facts and the extension of the rules to cover new cases have resulted in a jumble of statutory and case-law which, at many points, is indefeasible on principle and is a source of all-round inconvenience. The Suits Valuation Act, 1887 (Central Act VII of 1887) makes its own contribution to the incongruities with which this branch of the law abounds. Rationalization of the law relating to Court-fees and suits valuation has, for the last twenty years, been regarded as an urgent measure of judicial reform. This Bill seeks to achieve that object.
The new Court Fees Act provides for a uniform ad valorem fee at 71/2 per cent, without limit. Rationalization is its basis and lowers the Court-fee payable in causes whose value is below Rs. 5,000.
61. The history of levy of fees in Courts does not decisively make out, that all through Court-fees were levied to raise the general revenues of the State. In fact originally there was no institution fee at all, and Court-fees were later levied with a view to prevent institution of frivolous suits. It was regulatory in its origin, and this attempt to stifle suitors at the threshold evoked caustic comments from Lord Macaulay in his minutes. Even assuming that there are observations in the preamble to some of the regulations that they were intended to increase the public revenues, we have no figures whether the revenues from Courts were intended to meet the general expenditure of the State or just to cover the cost of administration of the judicial department. The report of Sir Thomas Strange shows that the State had been meeting salaries of the Judges. The Statement of Objects and Reasons for the Madras Amendment of 1922 refers only to the need for further finance for the cost of administration, and the object of the current Court Fees Act is to rationalize the imposition of Court-fees. Mahmood, J., no doubt remarked that the preamble had been deliberately omitted in the 1870 Act to cover the fact that the State was taxing the people. But then, whether it was a fee or tax, the levy could not be questioned in a Court of law. Unless there is something else sufficiently weighty to take the view that fees taken in Court's are not fees for services, but are intended to add to the general revenues of the State, regardless of the limited requirements for the administration of justice, neither the legislative history of the levy nor the judicial pronouncements as to the character of the levy compel us to hoi d that fees levied in Courts are taxation and their reasonableness is not open to scrutiny; and nothing else is manifest.
62. We are on the interpretation of the Constitution, and trying to find out the content and extent of the power under a legislative head. The Supreme Court in a catena of decisions has held that the Constitution draws a distinction between 'fees' and 'taxes'. The argument that 'fees' and 'taxes' are found indiscriminately used in some statutes cannot apply, when we are examining the Constitution to find out what legislative powers have been conferred under a particular Entry under the Provincial List. Where words though analogous having distinct and separate meanings, 'fees' and 'taxes' are found used, in the same part of the Constitution, and the content of the expression 'fees' in the three Legislative Lists, Entries 96, 66 and 47 have been analysed and determined, the expression 'fees' in Entry 3 of List II should normally be held to have the same content. When there are two expressions, and one of them covers only a segment of the former, and both the expressions are found in the same Part of the Constitution, we cannot readily assume that analogous words have been used and the contents are the same. In Wallace v. Commissioner of Income-tax L.R. 75 IndAp 86 : (1948) 2 M.L.J. 62 : (1948) F.L.J. 32 : (1948) F.C.R. 1, the Privy Council observed:
Where Parliament has conferred a power to legislate on a particular topic, it is permissible and important in determining the scope and meaning of the power to have regard to what is ordinarily treated as embraced within that topic in legislative practice of the United Kingdom.
The learned Advocate-General referred us to Holdsworth's History of English law, but we find nothing in it to warrant an expansion of the ambit of the expression 'fees.' It is seen in Holdsworth that, in fact, fees were collected only for services and, from the first Judges were paid salaries by the Crown, though, no doubt salaries of the Judges had not in the earlier centuries formed their only source of income, and they appear to have drawn a considerable part of their income from fees. But the officials of the Courts of common law were paid almost entirely by fees. 'In fact, it would be true to say that the official staff of all the central Courts (except the Lord Chancellor and the Judges) was almost entirely self-supporting.'. (Vide-Holdsworth's History of English law, Vol. 1, Seventh Edition, page 255). The principle accepted in England in the matter of levy of Court-fees appears to be that the salaries and pensions of Judges should be paid by the State out of public funds, it being accepted that it is the obligation of the State to provide the machinery for the dispensation of justice in all its Courts-civil, criminal and revenue-and that only the other expenses of the administration of justice should be borne by the litigants. In the Second Interim Report of the Committee of Supreme Court Practice and Procedure (England) at page 43 is found the following quotation from Mr. Justice Macnaughten:
The Supreme Court is not merely engaged in the work of dispensing justice to the private suitors who resort there; it administers public justice not only in criminal cases, but also in civil matters, such as proceedings on the Crown side of the King's Bench. For the cost of administration of justice where the public itself is directly concerned, the State ought to, it is suggested, provide the necessary funds since there can be no reason why the private suitors should do so. Though it would, no doubt, be difficult to calculate exactly how much of the expenditure of the Supreme Court is attributable to the administration of public, as distinguished from private justice, the salaries and pensions paid to the Judges may perhaps be taken to represent fairly that figure.
63. In our view, there is another aspect of the matter. The actual suitor, who goes to the Court and avails himself of the machinery of the administration of justice which the State provides in discharge of one of its fundamental functions, is not the only person benefited by this activity of the State. For every cause that comes to the Court, many may not arise at all, the very existence of the Court and the fact that the State through its machinery would enforce rights and obligations recognized by law deter many a would-be defaulter from carrying out his obligations. The existence of rights declared, recognized or given by laws, will be of little avail if there is no machinery for securing them when denied. Laws are automatically adhered to and obligations duly discharged by a person not necessarily and always from a recognition of a sense of duty, but because of the existence of a machinery for enforcement and the consequences that might follow, if the aggrieved party seeks his remedy through Court. A suitor who goes to Court and seeks a special benefit, may be liable for a fee, but whether there are enough cases are not, some Courts at least would have to be maintained, and when the suitors are few it would be taxing them if they are called upon to bear the entire cost of the administration of justice in all its branches without any reference whatsoever to the services rendered to the few that are driven to the Courts to seek justice. In such a case suitors are called upon to meet also cost of the general expenses of a department of the Government without any correlation, to the services rendered. Viewed in this (sic) and having regard to the practice in England, the power to which the levy or fees in the High Courts is traced assumes some significance. Sections 106(1) and 107 o the Government of India Act of 1915 have to be referred to here:
Section 106(1) : The several High Courts are Courts of record and have such jurisdiction...and all such powers...and power to make rules for regulating the practice of the Court, as are vested in them by letters patent, and, subject to the provisions of any such letters patent, all such jurisdiction, powers and authority as are vested in those Courts respectively at the commencement of this Act.
Section 107 : Each of the High Courts has superintendence over all Courts for the time being subject to its appellate jurisdiction, and may do any of the following things-
* * * * *(e) settle tables of fees to be allowed to the Sheriff, Attorneys, and all clerks and officers of Courts.
As pointed out in Seshadri v. Province of Madras : AIR1954Mad643 :
A combined reading of these provisions (the above along with Section 15, of the Charter Act, and Article 37 of the amended Letters Patent of the High Court) enable the High Courts to make rules for regulating the practice of the Court and also to fix Court-fees in respect of proceedings in the High Court. It is true, as contended by the plaintiff, the terminology used in Section 107(e) is not appropriate to the power to impose Court-fees, alleged to be conferred on the High Court. But the words have a historic origin. Originally the officers were paid from the fees collected and though that practice was given up, the same words, were continued to be used. These words, obtained as it were, a secondary meaning and it is neither possible nor permissible to give a different meaning to those words at this stage. Indeed the Court Fees Act passed by the Central Legislature uses similar words in Section 3 of the Act to indicate Court-fees.
64. For a proper approach to a matter of this kind, to ascertain the real character of the levy, we get guidance from the observations of Gajendragadkar, J. (as he then was), in Hingir Rampur Coal Co. v. State of Orissa : 2SCR537 , already cited:
In such a case it is necessary to enquire what is the primary object of 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.
65. Referring to the circumstances under which the Court Fees Act (VII of 1870), which provided the pattern for levy of Court-fees till the passing of the Court Fees Act of 1955 in our State, came to be passed, the Report (1939) on the revision of the Court Fees Act, which formed the basis for the now impugned Act, says (at page 3):
Lord Lawrence considered that the greatest evil in the administration of justice arose from the under-payment to the mufassal Judges and Officers of their Courts. Plans were considered to remedy this evil and the main reason for the Stamp Bill of 1867 was a proposal by Mr. Strachey that a certain sum of money should be expended in enhancing the salaries of ministerial officers and judicial officers. This proposal involved extra expenditure of several lakhs and the finances of the country could then ill-afford to bear the additional burden. To find ways and means, a Commission was appointed with the object to derive, if possible, out of the Stamp duties levied in judicial proceedings, sufficient revenue to meet the increased expenditure to be incurred by the Courts and made the Courts self-supporting. On the recommendations of the Stamp Commission Act (XXVII of 1867), was passed, which was then superseded by the present Court Fees Act (VII of 1870).
66. No objection has been taken before us to the reference of the report, evidently because as pointed out by Lord Atkin in Ladore v. Bennet L.R. (1939) A.C. 468, it is not cited as evidence of the facts therein found but as indicating the materials which the Government of the Province had before them before promoting in the Legislature the statute now impugned.
67. In M.S.U. Mills Ltd. v. State of Rajasthan , 181, already cited, where there is a passing observation that Court-fees are really taxes, as an illustration of fees, which are taxes, the test for a levy to be a fee is thus stated:
If a levy is a fee strictly so called, it is subject to the limitations, which we have mentioned above, namely, that it should not be levied for purposes of augmenting general revenues, and should be for some service rendered by the State and should be preceded by permission sought by the subject.
In the light of the history of the levy and the legislative practice with regard to the same, and in the absence of any data, or figures that in the past Court-fees were regarded as a source of general revenues of the State and were levied with a view to raise more than necessary funds for the expenditure incurred in the administration of justice to be available for the general purposes of the State, the first test, we would say, of Wanchoo, C.J., (as he then was) is satisfied. There can be no doubt that the second and third are satisfied. A suitor approaches the Court for services, and no payment is called for where there is no request for service. It is not levied and exacted from a citizen who has nothing to do with the Courts, but it is the suitor who seeks some relief in Court that is called upon to pay it.
68. There are two decisions, since the Constitution, which take the view that the fee levied in Courts differs from the type of the fee found in Entry 66 of List II. In Khdcheru Singh V. S.D.O. Khurja : AIR1960All462 , the validity of the levy of a Court-fee of Rs. 50 on petitions under Article 226 was in challenge before a Full Bench. It was contended for the suitor that a fee taken in Court within the meaning of Entry 3 must be a levy which has the essential characteristic of a fee, that is to say, it must be a payment for services rendered which are reasonably related to the expenses incurred in providing that service. It was argued that while there was quid pro quo, as the State Government was also making a very large profit out of Court-fees, the Court-Fees Amendment Act of 1959 of the Uttar Pradesh increasing the Court-fee was ultra vires. It was contended for the State that the fees with regard to which the State Government had the power to legislate under Entry 3 were taxes and no question of quid pro quo therefore arose. The learned Judges held that the fee levied in Courts was neither a tax nor a fee, as these terms had been defined by the Supreme Court in Commissioner, Hindu Religious Endowments v. Lakshmindra Thirtha Swamiar : 1SCR1005 , Ratilal v. Stale of Bombay : 1SCR1055 , and Jagannath v. State of Orissa : 1SCR1046 . According to the learned Judges as it was not an exaction imposed without reference to any special benefit conferred on the payers, but being imposed only on those persons who wished to file documents in a Court, it could not properly be called a tax, and the learned Judges would hold that it was not a fee as so defined if only for the reason that the moneys realised have not been set apart, but have merged in the public revenue of the State. Emphasis is laid on Article 229(3) of the Constitution whereby fees taken in the High Court formed part of the Consolidated Fund of the State. Observing that it was not possible for fees taken in Courts to be credited to a separate fund in view of the constitutional provision in that regard, the learned Judges took the view that the fee taken in Courts under Entry 3 of List II should not be interpreted to refer to such fees which must be credited to a separate fund and not to the general fund of India or the State. They are of the view that it is an essential characteristic of the fee considered by the Supreme Court in the cases mentioned above that it shall be set apart and not merged in the general revenue of the State. Therefore, in their view there exists another class of imposition also called a fee in the Constitution which differs from the type of fee falling under Entry 66 of List II. One of the learned Judges (Dayal, J.) observed (at page 466):
There can be no doubt that Court-fee is charged for services rendered. It is the litigant who goes to Court for getting help in enforcing his rights. The Court renders him service by giving him redress when, he succeeds in establishing the wrong done to him. There can be no monetary measure of the service rendered. The first element essential to make a payment a fee is present. The second element of the fee not going to a separate fund does not exist in the case of Court-fee collected by the State.
The Allahabad High Court thus appears to be of the view that the fee taken in a Court is a fee sui generis, and though a fee, its application cannot be scrutinised and correlation examined. No doubt, Dayal, J., observes:
It follows therefore that the Constitution did not contemplate it to be an essential element of a fee that it be credited to a separate fund and not to the Consolidated Fund.
69. The argument before us is that, once the power that is granted is the power to levy a fee, there is a limitation in the power, and that the levy must satisfy the essential requisites of a fee, and there must be reasonable correlation of the services rendered. We find ho specific discussion on this aspect of the matter in the judgment under consideration. The question now mooted is whether under this; power of legislation revenues Could be raised for public purposes, the general expenses of the State, not solely for purposes of the administration of justice.
70. Similar is the view taken by the Bombay High Court in C.P. Syndicate (Private) Ltd. v. Income-tax Commissioners : AIR1962Bom106 , where the validity of the levy of Court-fee under the new Bombay Court Fees Act of 1959 on a group of income tax applications come up for consideration. The learned Judges referred to the decision of the Judicial Committee in Rachappa Subrao V. Shidappa L.R. (1919) 46 IndAp 24 : (1919) 36 M.L.J. 437 and observed that the Court Fees Act was in essence a taxing statute and that the fees collected under the Act were for the purposes of raising the general public revenue, had been the view expressed about the enactments in several judicial decisions. We have discussed the judicial decisions on the matter that have been brought to our notice, and also examined the legislative history of the levy, and with respect we would differ and hold that Court-fees were not levied to raise funds for the general purposes of the State. We agree with our learned brother, Srinivasan, J., in his referring: order that Court-fees are not instruments through which the general public revenues of the State are intended to be raised. The learned Judges of the Bombay High Court, as in Allahabad, referring to Article 229, observed (at page 114):
It is therefore clear that one of the essential elements laid down by the Supreme Court as the requisite of a fee, namely, that it must be appropriated to a separate fund earmarked to meet the expenses of the services, had never been true of the Court-fees at any time and is also not true of the Court-fees levied after the Constitution. We agree, therefore, with the learned Advocate-General that the Court-fee does not fall in the category of fees with which their Lordships of the Supreme Court were dealing.... The learned Advocate-General, in our opinion, is right in saying that the levy of Court-fee for raising the general revenue has been, authorised by the relevant Entries in the Legislative Lists under the Constitution and the challenge therefore to the validity of such fees on the ground that they are not earmarked as a separate fund for the purposes of meeting the expenses of the services rendered cannot be sustained.
71. The question in the form now before us was mooted in the Andhra Pradesh High Court in Satyanarayanamurti v. Income-tax Appellate Tribunal (1957) 1 AW.R. 360 : A.I.R. 1957 A.P. 123, but no definite views were expressed as there were no details to sustain the arguments. Subba Rao, C.J., (as he then was of that Court) observed:
The learned Counsel then raised an important question which if accepted, would invalidate the Act. He says that the Act, under the cloak of collecting fees, provides for taxation and, therefore, is void. Reliance is placed upon the obvious difference between a fee and a tax and the contention is advanced that fees payable on an application under Article 226 of the Constitution is unreasonable and not commensurate with the services rendered by the State, and, therefore, the enhancement of the rate of Court-fee is void. It is not possible to consider this question, in this case for it should be necessary to ascertain whether the Court-fee levied is far in excess of the expenses incurred by the State of Judicial Administration. The petitioner has not filed any affidavit giving details to sustain his arguments. We would prefer not to express our view on this important question in this case.
72. Having given our careful and, indeed, anxious consideration to the arguments-of the learned Advocate-General for the State, we are unable to agree with the contention that fees taken in Courts are a category by themselves, and need not contain even the essential elements of the expression 'fees' laid down by the judicial decisions and recognised in legislative practice. To accede to the argument would, in our view, be too readily assuming that the Constitution-makers were using the same expression in different senses in the same Entries-Entry 86 of List I, Entry 66 of List II, and Entry 47 of List III-and in Entries in the same list. There is nothing, compelling us to presume that the word 'fees' in Entries 96 of List I, 66 of List II, and 47 of List III, the phrase 'fees taken in any Court' bears a different meaning, from the same word in the beginning of the Entries, particularly when there is apparent a substantial and solid reason for placing 'fees taken in any Court' under a separate head. We are conscious that the provisions of the Constitution should not be cut down by any narrow technical construction and that a large and liberal interpretation should be given to the legislative Entries. But here we have to determine the limits of the power under different heads. We are not prepared to hold that the founding fathers of our Constitution lightly used a word which has a special significance in the context of legislative power when they used it to define a legislative power and did not intend the expression to have its accredited significance but empowerd the States to tax suitors for the general purpose of the State. The suitor approaches the Court for justice and enforcement of the laws the Governments have made. Declaration of rights and enactment of laws are of little avail unless there is remedy available for the citizen to have the benefit of the same.
The substantial law which defines our rights and duties is, of course, important to all of us, but unless the adjective law of procedure is a working machine constantly translating these obligations in terms of Court orders and actual execution, the substantive law might just as well not exist.' (Quoted by Paton in his. text-book of Jurisprudence, Third Edition, at page 538).
73. In Balkaran Rai's case ILR (1890) All. 129, Mahmood, J., remarked on the absence of a preamble to the Court Fees Act and doubted whether it was intended to regulate questions, of procedure or to regulate the method of the collection of revenue, that is to say fiscal questions for the purposes of the obtainment of money from the tax-payer in order to achieve such results as the State had in view to carry on the administration, of the country; and in Radha Bai's case ILR (1891) All. 66, he attributed the absence of a preamble in. the Court Fees Act to the anxiety of the Legislature not to explain the reason for the enactment as the reason could be nothing other than that they were taxing the Indian, population. In his scathing criticism of the Court Fees Act, referring to the absence of the preamble, he remarked that 'sometimes silence is golden'. But here we have the Constitution which speaks of the levy in Courts as 'fees', an expression that does not smack of any oppressive exaction. Why should we in the context equate the expression more or less to a tax and that is what it comes to, when all that is recognised for the levy is the occasion of the levy and not its correlation to the services required.
74. It remains to consider whether the impugned levy is not justified as a fee properly so called. Fees as already stated may be of Various kinds, and there can be no general definition applicable to all cases. They may have characteristics according to the need or occasion of the levy. But the essential element is that it is a levy in consideration of services performed by the State for the benefit of the individual, who is called upon to make the payment, and it cannot be an exaction that cannot be reasonably correlated to the services. Of course, there is some elegant of taxation in a fee there cannot but be. All the same the essential distinction is there, and the question will always be to look for the pith and substance, whether the taxing element predominates. If the element of revenue for the general purposes of the State predominates, then the taxing element takes hold of the levy and it ceases to have any relation to the cost of administration of the laws to which it relates it becomes a tax. Its validity has then to be determined with reference to its character as a tax and it has to be seen whether the Legislature has the power to impose the particular tax. When a levy is impugned as a colourable exercise of legislative power, the State being charged with raising a tax under the guise of levying a fee, Courts have to scrutinise the scheme of the levy carefully, and determine whether, in fact, there is correlation between the services and the levy, or whether the levy is excessive to such an extent as to be a pretence of a fee and not a fee in reality.-If, in substance, the levy is not to raise revenues also for the general purposes of the State, the mere absence of uniformity or the fact that it has no direct relation to the actual services rendered by the authority to each individual who obtains the benefit of the service, or that some of the contributories do not obtain the same degree of service as others may, will not change the essential character of the levy. Nor can the feature that it is not separately funded be decisive in the matter. However, when not funded, reasonable correlation must be established, and it must lo6 shown that the receipts are meant for the services. When a levy is challenged as unreasonable and beyond the legislative power which authorised only a fee, the decision will have ultimately to depend upon the particular facts of the case. Certain general tests have been formulated to decide whether a fee is reasonable in the circumstances and does not exceed the bounds of a fee. In Hingir Rdmpur Coal Co. v. State of Orissa : 2SCR537 , referred to supra it is said at page 468:
The extent of the levy authorised would always depend upon the nature of the services intended to be rendered and the financial obligations incurred thereby. If the services intended to be rendered to the notified mineral areas require that a fairly large cess should be collected and co-relation can be definitely established between the proposed services and the impost levied, then it would be unreasonable to suggest that because the rate of the levy is high it is not a fee but a duty of excise.... It is significant that the petitioners do not seriously suggest that the services intended to be rendered are a cloak and not genuine or that the taxes levied have no relation to the said services, or that they are unreasonable and excessive. Therefore, in our opinion, the extent of the rate allowed to be imposed by Section 4(2) cannot by itself alter the character of the levy from a fee into that of a duty of excise. If the correlation between the levy and the services was not genuine or real, or if the levy was disproportionately higher than the requirements of the services intended to be rendered it would have been another matter.
75. The question has come up for consideration, as stated earlier in this judgment, when considering the reasonableness of levies by local authorities. In Corporation of Madras v. Spencer & Co. : AIR1930Mad55 (Phillips and Reilly, JJ.) the validity of a licence fee imposed by the Corporation of Madras under Section 287 of the Madras City Municipal Act of 1919, came for scrutiny. The licence fee for storing foreign liquor was raised from Rs. 25 to Rs. 200, and it appearing from the evidence that the expenses of supervising the place where foreign liquor was stored was practically nil, this Court held that the levy of the enhanced fee was unreasonable. Reilly, J. observed (at page 775):
If the power to levy these fees cannot be used for taxation, it is admitted that the Council has not the power to fix any arbitrary fee which it chooses...when such a question comes before a Court, it is not for the Judge to try minutely to assess what is the proper fee; nor is it for the Judge to substitute his judgment in the matter for that of the public body to which the Legislature has entrusted it. But I think there are two principles which we may use to determine whether the fees fixed by a Municipal Corporation with powers such as these can be held to be reasonable or not. If we accept the proposition that 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 a rate that as a whole they bring in very much more than the cost of these operations to the Corporation, then I think we can rightly say that they are unreasonable. There is another 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 that sort-yet, surely it would be unreasonable if they so fixed the fees that the whole cost incurred by them in connection with all the licences or a grossly disproportionate part of it was imposed on one particular trade or a few particular trades. These principles, I think, may be of help in ascertaining whether a particular fee is reasonable or not.
76. There need be no exact correlation; in some cases it may be a practical impossibility. But the levy should not be so distributed that it is grossly disproportionate to the services, or requirements. This Court again examined the reasonableness of a levy under the Madras District Municipalities Act in India Sugars and Refineries Ltd. v. Municipal Council, Hospet : AIR1943Mad191 . While upholding the validity of the levy, the approach to the question of reasonableness was thus set out:
It is, we think, well settled that a licence fee for carrying on a particular trade or industry should not be regarded as a form of taxation the extent of which is to be 'governed purely by revenue considerations. The licence fee should bear as nearly as possible a relation to the cost of issuing the licence and the cost of supervising the trade or of any special measures rendered necessary by the character of that trade. We doubt whether the Municipality would be justified in increasing the licence fee chargeable upon a particular industry merely by reason of the cost of ordinary municipal services to which that industry is entitled by virtue of its position as a taxpayer in the municipality. But if the industry involves special sanitary precautions, a special supervising agency or such like expenditure, it is we think, reasonable to take this expenditure into account in fixing the amount of the fee. When a supervising agency is necessary for a number of industries it will always be difficult to say how the cost is to be apportioned and, so long as the apportionment is made on a reasonable basis, it is not for the Courts to interfere with the way in which it has been achieved.... The Courts certainly should not declare a fee or a levy to be ultra vires merely because it is somewhat higher than might have been thought necessary on a different view of the facts.
77. These principles were again reiterated by this Court in Varadachari v. State of Madras (1952) 2 M.L.J. 410 : I.L.R. Mad. 217, where this Court struck down as unconstitutional the enhancement of a; licence fee from a flat rate of Rs. 10 to Rs. 100 per expeller in an oil mill under the Madras Manure Dealers Licensing Order, 1949. This Court examined the materials placed on record to see if there was any justification for the sudden enhancement of the licence fee from Rs. 10 to Rs. 100 per expeller. Finding that the amount collected was disproportionately high in comparison with the expenditure incurred by the Government, even according to their statement, the fee was struck down.
78. In Pazundaung Bazaar Co. Ltd. v. Municipal Corporation of the City of Rangoon (1931) L.R. 58 IndAp 313 : (1931) 61 M.L.J. 740 : I.L.R. 9 Rang. 440 the Judicial Committee had to consider the licence fee levied by the Corporation of the City of Rangoon, following the expression of the views of the High Court as to the scope of the power in Muncipal Corporation of Rangoon v. Sooratee Bara Bazaar Co. Ltd. ILR (1927) Rang. 212. It is instructive to examine the manner of levy of the fee in that case which was upheld by the Judicial Committee. Under the Municipal Act in question no one shall keep open a private market without a licence from the Corporation for which the Corporation may charge a fee. In fixing the fee, what the Corporation did was to arrive at the total amount of the cost which was to be covered by the sums payable by all the private markets. This total sum they divided among all the private markets, in the ratio their respective assessable value bore to the total assessable value of all the markets. The Judicial Committee felt unable to hold that the licence fees which were charged were not fees validly charged under the powers conferred upon the Corporation by that section.
79. In Delhi Cloth and General Mills v. Chief Commissioner, Delhi A.I.R. 1964 P&h492;, a Division Bench of the Punjab High Court had to examine the validity of the payment of Rs. 1,25,157-50 as registration fee, the contention being that it was not a fee, but a tax. Under a Notification issued in 1952 under the Registration Act (1908) the basis of the fee for registration of documents was the value or consideration money specified in the document sought to be registered. For documents in which the value or consideration money was above Rs. 1,000 for every one thousand rupees a fee of Rs. 5 was payable in addition to the sum of Rs. 12-8-0 payable oh the first one thousand rupees. Calculating in this manner, the amount aforesaid was demanded on a debenture trust deed mortgaging properties for a consideration of Rs. 2.5 crores. After referring to the decisions of the Supreme Court which we have cited above, and examining the scheme of the Registration Act, the learned Judges observed:
Applying the tests laid down in the decisions cited above to the, facts of the present case, we are clearly of the view that the fee in the instant case is not a fee-but in its very nature is a tax. The reasons why we hold so are:
(1) That the fee is not deposited in a separate head or account but is merged in the general revenue of the State. It is not solely used for the maintenance of the registration department but goes into a consolidated fund which is-utilised for various other governmental functions;
(2) That there is no reasonable correlation between the fee levied and the cost of maintenance and administration of the registration department. To illustrate, a document running into several pages may be liable to a nominal fee, whereas a document running into a single page may be liable to an exorbitant fee.
80. We shall now examine, in the light of the above principles, the figures in relation to the impugned levy which have been made available to us. Sri V.K. Thiruvenkatachari, learned Counsel for the suitors, emphasises that this is not a case of a new levy, but a case of enhancement, and that being the case, the first question for consideration is whether at all there has been such an increase of expenditure by the State in the administration of justice as warranted the exorbitant levies that have been imposed. The averment in the affidavit of the suitor in W.P. No. 1743 of 1964 is:
There was no justification for the increase of Court-fees in 1955 at all on the basis of civil litigants being made to pay fees covering the expenditure on civil litigation. While a fee which cannot be separately allocated to the service of each item, may be fixed on estimates at the inception, whenever an increase is contemplated, it is for the authority to justify by facts and figures such increase by showing that the actual expenditure at the time exceeds the fee income. The petitioner is advised and states that judged by this test, the increases of 1955, were without any legal or factual justification.
To repeat in this context, it is urged for the suitors that the State is proceeding on the basis that the Court-fees paid by the civil litigant is to compensate the Government both for the cost of civil and criminal administration and that this makes it a tax, as the civil suitor, is not bound to bear the cost of the criminal administration. The challenge is to the ad valorem fee at the uniform rate of 71/2 per cent, without limit even at the higher levels, when the demand is stated to become oppressive and discriminatory. It is urged that the value of the claim is not a reliable criterion of the complexity of the litigation or the judicial time it would take, at any rate they cannot be in direct proportion to the value. Our attention is drawn to the Court-fees levied still in their Original Jurisdiction in the High Courts of Bombay and Calcutta, where the very low court-fee of former days is continued. It is stated that as only suits for large claims can be instituted in the High Court, there cannot be marked difference in the judicial time taken over the suits by reason only of the difference in the value of the claims.
81. In the counter-affidavit originally filed in the matter by the Joint Secretary to the Government (Sri Kelu Erady) certain figures referred to as the actuals for 1954-55 relating to the revenue from Courts and the cost of administration of justice were furnished. As already pointed out, there was no plea then that what is levied is not a fee. The attempt in the counter-affidavit has been at correlation. It was contended for the Government that the cost of criminal administration and the fees paid to the Government law officers should also be taken into account when examining and correlating the realisations and expenses. Surprisingly, one finds also an averment that the levy has not become a weapon in the hands of the defendant, as the plaintiff can, if his case is true, recover the Court-fees from the defendant along with his claim and that therefore there was no need to fear. This is no answer as it is immaterial whether it is the plaintiff or the defendant that has ultimately to pay. The question is whether the cost of litigation which has necessarily to be incurred when the claims are high, is staggeringly heavy and has a regressive effect warding off from Court even suitors with just claims, at the same time being unrelated to the services rendered to the suitors. If it is an undue exaction the fact that the plaintiff could recover it from the defendant will not validate it. On no principle could the defendant be called upon to meet a demand which is invalid and further it is not always that recovery is possible from the defeated defendant.
82. Further figures have been placed before us by the Deputy Secretary to Government in the Finance Department (Sri Shivakumar) in a supplemental counter-affidavit. We shall first examine the figures furnished in the affidavit of Sri Kelu Erady, Joint Secretary to Government. The figures are, as already stated, the actuals for the years 1954-55. The Court-fees were increased in the year 1955. The total income from all sources in the matter of administration of justice, deducting refunds, is shown as Rs. 122.12 lakhs. Deduction has to be made from this of Rs. 1.63 lakhs, the cost of stamps and charges for the sale of stamps. The net income would come to Rs. 120-49 lakhs. The income includes fines and forfeitures. The cost of administration of justice is shown as Rs. 124.94 lakhs. It is, therefore, stated that the expenditure on the administration of justice was higher during the year than the fees realised. Thus correlation has been attempted, and justification pleaded for enhancing the Court-fees in 1955. But the expenditure includes not only expenses of maintaining the criminal Courts, but also the expenditure incurred by the Government on its own Law Officers. The expenditure on Law Officers of the Government like the Advocate-General, the Government Pleaders, Public Prosecutors and their establishments alone comes to Rs. 6.26 lakhs. Leaving out for the moment the expenditure incurred in the administration of criminal justice, deducting only the expenses of the Law Officers of the Government, the expenditure would be Rs. 118.58 lakhs, less than the revenue from all sources. Clearly, these figures do not per se justify any need for enhancement to the exhorbitant levies seen in the ad valorem scale on the higher claims under the Court-fees Act of 1955.
83. Sri V.K. Thiruvenkatachari, learned Counsel for the suitors, submits that when the State proceeded to bring in the fresh legislation for the levy of Court-fees, its avowed object was not to enhance the Court-fees having regard to any increased expenditure in the administration of justice, but for rationalisation of the law relating to Court-fees. And as we understand the learned Counsel, the rationalisation has been at the expense of the character of the levy. As we are here not attempting to interpret any provision in the Court-fees Act, but are examining the circumstances under which the enhancement came in the statute book, we may properly and usefully refer to the statement of objects and reasons in introducing the Bill. We have already set it out supra. The part relevant in the context is:
The Court-fees Act, 1870 was enacted more than eighty years ago. Conditions have materially changed since then and litigation has grown enormously in variety and complexity.... Rationalisation of the law relating to Court-fees and Suits Valuation has, for the last twenty years, been regarded a an urgent measure of judicial reform. This bill seeks to achieve that object.
Clearly, the new Court-fees Act was intended to rationalise the levy and not to enhance the revenue from the levy to meet any increased expenditure in the administration of justice. In the report on the revision of Court-fees Act submitted in 1030 by the Special Officer on the question of levy of Court-fees, which preceded the present Act, there is no whisper about enhancing the levy with a view to meet increased expenditure. As for the propriety of such references, learned Counsel drew our attention to Letang v. Cooper L.R. (1965) 1 Q.B. 232 : (1964) 3 W.L.R. 373 : (1964) 2 All. E.R. 929, wherein Lord Denning has stated (at page 933):
It is legitimate to look at the report of such a committee, so as to see what was the mischief at which the Act was directed. You can get the facts and surrounding circumstances from the report, so as to see the background against which the legislation was enacted.
While examining the effect of the legislation, the Court may take into account any public general knowledge of which the Court would take judicial notice, and may in a proper case require to be informed by evidence as to what the effect of the legislation will be - see Attorney-General for Alberta v. Attorney-General for Canada (1939) LR A.C. 117. Examining the financial implications of certain recommendations made as regards the ad valorem levy (reduction from 111/4 per cent, to 71/2 per cent, for claims) which do not exceed Rs. 1,000, and a flat rate of 6 per cent, for claims of Rs. 10,000 and above recommending also (a maximum fee of Rs. 10,000) it is found stated in the Report (page 22):
There need be no apprehension that the revenue will be reduced for there are several other recommendations in this report, namely, those regarding the levy of a proper fee in suits relating to immovable property and for the levy of fees in several other proceedings which are now escaping with the payment of a nominal fee and other recommendations which are expected to act as an effective check on the evasion of the payment of the proper Court-fee. These additional sources of revenue, the enhancement of the fee in proper cases and the stiffening, of the provisions of the Act to prevent a leakage of the revenue will, it is hoped, compensate for the loss that would result by effect being given to the above recommendation.
84. In the Fourteenth Report of the Law Commission of India (Reform of Judicial Administration), Volume I, page 503 is found the following table of revenue from an expenditure on the administration of justice in the State of Madras between1952 and 1955.
In the State of Madras : Between 1952-55.
Financial year. Receipts in Rupees. Charges in Rupees. Surplus.
1952-53 2,56,38,497 1,78,54,860 77,83,637
1953-54* 69,88,689 53,28,575 6,60,114
1954-55 1,22,12,475 1,20,51,874 1,54,601
*Forthe second 6 months only, asthere was separationof Andhra.
The learned Goverment Pleader also had supplied us with the following table of similar figures of Revenues and Expenditure from the year 1954-55 to 1966-67:
Revenue Head Revenue Head Total Revenue Major head Profit (+)
Year. IXXIV Administra- 27/21 or
Judicial tion of Justice. Expenditure Loss (-)
Stamps. on administra-
Rupees in lakhs.
Rs. Rs. Rs. Rs.
1954-55 78.53 43.60 122.13 124.94 (-) 2.1
1955-56 148.75 57.60 206.35 127.23 (+) 79.12
1956-57 124.58 62.05 186.63 125.73 (+) 60.91
1957-58 104.34 67.63 171.97 124.11 (+) 47.86
1958-59 117.12 56.07 173.19 135.58 (+) 37.61
1959-60 116.96 52.39 169.35 138.51 (+) 30.84
1960-61 118.96 60.36 179.32 148.51 (+) 30.81
1961-62 126.39 72.07 198.46 157.90 (+) 40.56
1962-63 132.70 85.32 218.02 162.85 (+) 55.17
1963-64 143.96 87.02 230.98 167,37 (+) 63.61
1964-65 150.40 94.90 245.30 173.27 (+) 72.03
1965-66 160.27 97.02 257.29 193.48 (+) 63.81
1966-67 160.27 94.66 254.93** 195.99 (+) 58.94
85. *This excludes expenditure on maintenance of buildings, construction of new buildings and other works expenditure.
86. **This does not include the increase on account of enhanced Dearness, allowance granted with effect from 1st June, 1966.
87. The tables show that right through (we have already dealt with the States figures for 1954-55) there has been substantial surplus, and no case could be made out for an increase in the revenues to meet the related administrative expenses.
88. No serious difficulty has been pleaded before us for analysing the income and expenditure in relation to the judicial wing of the State and giving break-up figures for a period of years except that some time would be taken. But the matter has been pending for over two years. Under the learned Advocate-General's directions the further figures referred to above separating the finances on Civil and Criminal Justice have been placed before us during arguments. Serious objections are taken for the suitors to these figures. We shall be presently examining the break-up figures given therein. It will be useful at this stage to refer also to the details of the receipts and expenditure set out in the original counter-affidavit for the State, that of the Joint Secretary (Sri Kelu Erady), and analyse the same:
ADMINISTRATION OF JUSTICE-REVENUE RECEIPTS ACTUALS FOR 1954-56.
Court-fee realised on stamps .. 73.76
Sale of stamped copy paper .. 5.86
Fines and penalties .. 0.11
Miscellaneous .. 0.88
79.81 Deduct refunds .. 1.29
Sale of unclaimed and escheated property .. 0.69
Court-fee realised in cash .. 1.79
General fees, fines and forfeitures .. 40.09
Receipts of the Official Assignee .. 0.28
Miscellaneous fees and fines .. 1.84
Recoveries of over-payments .. 0.07
Collection of payments for services rendered .. 0.33
Miscellaneous (including receipts) in England .. 1.65
Deduct refund .. 3.14
Grand total .. 122.12
JUDICIAL STAMPS ADMINISTRATION
Charges for sales of stamps .. 0.83
Cost of stamps supplied from Central Stores .. 0.80
ADMINISTRATION OF JUSTICE
High Court .. 16.90
Administrator-General .. 0.65
Official Assignee .. 0.85
Presidency Magistrate's Court .. 3.57
Civil and Sessions Courts .. 58.31
Courts of Small Causes .. 1.70
Criminal Courts .. 36.70
Law Officers .. 6.26
89. With reference to these figures the argument before us on behalf of the civil suitors may be thus summed up. On the receipts side, the revenue from Court fee stamps in the administration of criminal justice must be negligible. The actual sources of the receipts under the head 'Miscellaneous fees and fines' are not clear. To some extent it may have relation to civil proceedings also. It is quite likely that the head 'General fees, fines and forfeitures' relate to other than Civil Courts and in the context, the head 'fines and penalties' lakhs Order 11 may be a receipt on the Civil Side. Broadly looking at the matter and leaving out these receipts as not from Civil Courts, they total Rs. 42.04 lakhs, Rs. 80.08 lakhs may roughly be taken as receipts from the administration of civil justice. A further deduction of Rs. 1.63 lakhs has to be made with reference to the cost of stamps and the charges for the sale of stamps, and we are left with Rs. 78.45 lakhs. On the expenditure side, that on the Presidency Magistrates' Courts, the Criminal Courts, and the Law Officers have to go, and, deducting this from Rs. 124.94 lakhs, the expenditure comes to Rs. 78.41 lakhs. The receipts have been arrived at Rs. 78.45 lakhs. Clearly, the receipts exceed the expenditure, all calculated on a rough and practical basis. No notice has been taken of the considerable time devoted by the District and Sessions Judges and Additional Sessions Judges on Sessions cases. Even in the High Court, a considerable part of the judicial time is spent on criminal cases. One thing emerges from the figures furnished, that if a fairly reasonable allocation of the charges is made between the civil and criminal sides in the administration of justice, the revenue from the civil Courts would exceed the cost of that administration. The argument is telling.
90. The Law Officers of the State are either those assisting the State in the administration of criminal justice or officers like the Government Pleaders and others assisting the State giving advice in the conduct or defence of civil actions, apart from the Advocate-General. Whether in instituting or defending suits in the State or in seeking opinion of its Law Officers, the State is just in the position of an ordinary litigant, and, though funds of the State may be used to meet those expenses. Certainly it cannot be contended that private suitors have to meet those expenses of the Government. There has been no attempt to justify before us the debiting of the cost of the Law Officers of the State as an item of expenditure to be borne by the suitors in general.
91. Nor can we see any justification in calling upon the civil suitor to bear the cost of the administration of criminal justice. We may state that there has been no particular argument before us for the State on this aspect of the matter. The maintenance of law and order is one of the fundamental functions of the State, and the setting up and maintenance of the requisite machinery for the administration of criminal justice is a necessary concomitant of its obligation to maintain law and order. The cost of administration of criminal justice may properly fall on the public as a whole and be met from the general revenues of the State. It cannot be said that the magisterial functions have any reasonable relation to the services rendered to the civil litigant.
92. Sri V.K. Thiruvenkatachari, learned Counsel, questions the very correctness of the figures in the supplemental counter affidavit filed by Sri Shivakumar, Deputy Secretary to Government, on behalf of the State as worked up to show a different picture. It is stated that the figures given require drastic scrutiny and that the statements annexed do not give sufficient details to check the same. In the statements annexed to the supplemental affidavit, on the expenditure side, fresh items are introduced, to mention some, share of cost of Secretariat, Treasury and other general establishments, Executive Magistrates, interest on capital outlay and original works debited to Revenue account. The figures are given only for a few years, and counsel for the suitors charges that here is a desparate effort to show a deficit. But even these new figures as ultimately extracted in Statement III show a deficit only for 1954-55, and right through thereafter there is substantial surplus. A deficit of Rs. 27 lakhs is found for 1954-55 but in the subsequent periods for which figures are given, 1956-57, 1963-64, 1964-65, the profits are Rs. 11 lakhs, Rs. 10 lakhs and Rs. 9 lakhs respectively. Though an attempt is made in this supplemental counter-affidavit not to charge the civil suitor, with the expenses incurred in the administration of criminal justice and on the other Law Officers of the State, the gap is offset by adding to the administration of civil justice under other heads.
93. Objection is particularly taken for the civil suitors to a new item of charge in the supplemental affidavit, as a charge on the administration of civil justice, namely, a portion of the costs incurred by the State on other establishments of the State such as the Secretariat, Treasuries, Board of Revenue, Madras Public Service Commission, etc., as pertaining to the administration of justice. On this account, ten per cent of the expenditure in the Home Department of the Secretariat is debited on the administration of justice. The basis for this deduction is not quite clear. The affidavit of Sri Shivakumar states that for the Home Department in the Secretariat, it has been assumed that 10 per cent of the expenditure relates to its-work in connection with the administration of justice. Taking a broad view of the matter, even the cost of making laws at all stages may be considered to be incurred in the administration of justice. Without laws the suitor can have little relief in Courts. Looked at that way the contribution by the suitors will be a just fraction. But is that the proper approach? Revenue is essential for the functioning of any organised State and considerably in a welfare State. Equally the administration, of justice, maintenance of order and repression of crime are among the prime and inescapable functions of any civilised Government. No one can complain against the State looking to all possible avenues for raising the needed revenue, but the attack here is that the Constitution has empowered only the levy of a fee in Courts. The expenditure which the suitor is specially called upon to bear must have some relation to the services he as suitor seeks. Any way, it is not shown that the Legislature when revising the Court-fees Act in 1955 proceeded on any such data as now furnished.
94. Thirty-three per cent, of the expenditure incurred on executive Magistrates, who include Collectors, District Revenue Officers, Revenue Divisional Officers and Tahsildars, is also debited under the cost of administration of justice. The reason for this is stated to be that these officers do considerable amount of judicial work in relation to their responsibility under the Cultivating Tenants Protection Act, Fair Rent Act and numerous other statutes. But no account is taken of the realisations from Court-fees under these Acts, the Court-fee payable being Rs. 2 and below. Receipts from the sale of judicial stamps of the denomination of Rs. 2 and below have been taken to relate to petitions presented before public officers, criminal Courts, etc., and left out of account in determining the revenue. On this account a deduction of 15 per cent, of the revenue for Court-fee stamps is made. It is admitted that a rough and ready method has been adopted for the purpose. As the figures for the sale of judicial stamps in Chingleput and Madras districts in a full year alone were readily available, the percentage of 15.5 attributed to stamps of the value of Rs. 2 and below, having regard to the sale of judicial stamps in those districts, has been taken as the basis. Naturally, the deduction is challenged. It is well known that thousands of applications are filed annually in the High Court and the Court-fee payable thereon is Rs. 2. Similarly, thousands of applications are filed in the several City Civil Courts and Presidency Small Cause Courts, the Court-fee payable on these applications being below Rs. 2. Then again, process fees are generally made up of stamps of denominations below Rs. 2. The total volume of these proceedings in all the Courts taken together will be enormous. It cannot, therefore, in fairness be said, based only on the sale of stamps in Madras and Chingleput districts, that 15 per cent, of the revenue from Court-fees should be attributed to the applications made before public officers, criminals Courts etc. A cursory look at the working adopted in the supplemental counter affidavit would show that the balance struck therein cannot be taken straightaway as reasonable. To start with, while deducting from the revenue from Court-fee stamps 15 per cent, as the value of lower denomination stamps, on the expenditure side, the entire discount on sale of judicial stamps is debited against the administration of civil justice. Again, the receipts from the office of the Official Assignee and other miscellaneous receipts, about four lakhs of rupees, are excluded, along with the expenditure thereon, which is only two lakhs of rupees. We must say that we are not very much impressed by the data now furnished. While it is certainly gratifying to find that the State Government has not specifically pleaded either in the original counter-affidavit or even in the supplemental counter-affidavit that Court-fee is an ideal source of revenue which can be collected without any difficulty and made available for the purposes of general administration, we cannot but express surprise at the last minute attempt at correlation in the manner it has been done now. It was not so attempted in the original counter-affidavit. But as the question before us is in a very narrow compass the validity as a fee of the ad valorem levy under Article 1 of Schedule I of the new Court Fees Act of 1955, in the Original Jurisdiction of the High Court-it is not necessary to examine in further detail these figures, and see whether or not there is correlation.
95. The pattern of levy on a tapering scale has been prevalent ever since the institution of court-fees. Under the 1870 Act, a maximum had been fixed. Is it reasonable to levy court-fee at a flat rate? That is the point we are called upon to examine. Originally, when the claim exceeded Rs. 5,000, the total of fees tapered,, and over Rs. 50,000 there was a nominal levy. On the Original Side prior to 1949 there was a fixed institution fee, and then a flat rate of Rs. 5 for every Rs. 1,000. Further fees were collected as hearing fee, having relation to the time taken by the High Court in adjudging causes. It may be difficult to follow this system, particularly in the moffussil and, at any rate, since 1949, in the Original Jurisdiction also the Court Fees Act has been adopted.
96. It is pointed out for the suitors that the effect of the new levy is to bring about a fall in the number of suits instituted in the Original Side of the High Court, and that this will be apparent from the statistics of the institution of suits in the superior-Courts on claims of higher values. It cannot be seriously denied that this heavy levy will have a regressive effect on suitors who have to make a claim for large amounts. There can be no two views that cheapening the costs of judicial process and its expedition are essential if the judicial wing of the State is to continue as the palladium of the weak and timid or the wronged suitor. It is not as if that persons who have to make large claims will have ready cash to find the requisite court-fees, nor can it be assumed that they would have the necessary capacity to pay and bear the charges. It is stated for the suitors that there has been no fair and, equitable distribution of the cost of administration on all suitors and that the levy now falls grossly disproportionately on those who have to make heavy claims. The charge is that the levy is oppressively disproportionate and inequitable at higher levels and falls harshly on a few. We have not been furnished with clear comparative figures of the income from fees paid by suitors whose claims exceeded. Rs. 50,000 prior to the new Court Fees Act, and after the introduction of the new Court Fees Act, or of the income from court-fees in the lower brackets during the corresponding periods. Whether civil suitors as a body should bear the entire cost of the administration of civil justice or just that part of it as may be reasonably related to the special services rendered to the suitors, may be a matter of policy. The argument that the State cannot levy an exorbitant court-fee for making available its machinery for the administration of justice and make the suitors to pay for the entire cost of the administration of justice, when, after all, the State is performing one of its elementary functions by maintaining Courts, cannot be said to be; devoid of merits. As said earlier for every man who is forced to go to the Court to establish his rights, ten may get satisfied out of Court. The very existence of Courts would serve as a deterrent in many cases.' Again, when the superior Courts in any particular case declare or interpret the law, they no doubt give special relief to a particular suitor, but the declaration of the position in law is for the entire community. Democratic States move and live in law. Learned Counsel, while thus contending that what all could be justified in a welfare State is just a regulatory fee, would, for the present, limit the challenge to the ad valorem levy without limit. When on this question, we are not directly concerned with the total revenue raised or needed from court-fees, and its correlation to the expenditure on administration of justice.
97. A comparative table showing ad valorem court-fees charged in each State as compared with the fees fixed in the Court Fees Act of 1870 taken from the report of the Law Commission (at page 491-492) has been furnished. Under the Court Fees Act of 1870, on a suit of the value of Rs. 50,000, the court-fee payable was Rs. 1,175. The court-fee payable in this State under the new Act is Rs. 3,750. The figures in none of the other States come anywhere near this, the nearest being Punjab, where the fee payable on a claim for Rs. 50,000 is Rs. 2,827-8-0. It is stated that the Court Fees Act has recently been amended in Uttar Pradesh on a scale similar to that now prevalent here. A maximum has always been recognised in most of the States. Under the Central Act 'of 1870, the maximum leviable was Rs. 3,000. On a claim of the value of one lakh of rupees, the fee leviable here now is Rs. 7,500. Under the Central Act of 1870, it was Rs. 1,425. In Andhra Pradesh it is Rs. 3,427-8-0. In Bombay it is Rs. 2,406-4-0. In Punjab it is Rs. 3,315. And in no State does it come anywhere near the court-fee levied here. The Taxation Enquiry Commission's Report of the year 1953-54, Vol. 3 (at page 107) also gives some figures of the receipts from court-fees and expenditure thereon for 1954-55 for the various States. So far as this State is concerned-, the receipt is shown as Rs. 1.35 lakhs and the expenditure as Rs. 1.28 lakhs. The Taxation Enquiry Commission recommended, on the question of reduction of court-fees, the urgent review of the fees of the few State Governments which then derived from them a revenue which substantially exceeded the cost of administration of justice in order that the fees may be suitably reduced and readjusted as soon as possible.
98. One thing is clear from a consideration of the figures that have been placed before us, that no case has been made out for the ad valorem levy without limit and on a uniform scale irrespective of the magnitude of the claim. While it cannot be denied that Court-fee may bear some relation to the magnitude of the claim, it should not be overlooked that it is a fee and intended for the special services which the suitor seeks through the Courts. It is difficult, no doubt, to distribute the fee evenly according to the time taken by the suitor and the labour involved in any particular case. A pattern of levy was therefore followed with a sliding scale and a slab system of levy. Reilly, J., has pointed out in Corporation of Madras v. Spencer & Co. (1929) 52 Mad. 764, that where the cost has to be distributed between several persons, it would be unreasonable if the fees are so fixed that the whole cost or a grossly disproportionate part of it was imposed on a particular trade or a few particular trades. This principle should have to be borne in mind in ejecting an equitable distribution of the expenditure incurred in the administration of civil justice. It may be that a suit on a promissory note of Rs. 50,000 may take lesser time than a claim on a promissory note of Rs. 500. If a claim for Rs. 20,000 takes 10 hours of judicial time for adjudication, it does not necessarily follow that a claim for Rs. 2 lakhs will take 100 hours of judicial time. It may be over in an hour.
99. Mr. V. Thyagarajan, learned Counsel appearing for the appellant for probate, urges that the arbitrary and unreasonable character of the ad valorem levy gets underlined when a demand is made on the applicant on the entry of caveat of court-fee at one half of 71/2 per cent, on the market value of the estate, less the fee already paid. Under the Madras Court Fees Act of 1922 no additional fee was payable on the entry of caveat. The fee levied is in addition to a levy of 2 per cent, upto Rs. 5,000 and 3 per cent, on the excess over Rs. 5,000 as probate duty under. Article 6 of Schedule I and Section 56 of Act XIV of 1955. Learned Counsel submits that in a probate action the title to the property that may be the subject of the will does not come up for determination, it not being the province of the Court in a testamentary suit to go into questions of title with reference to the property disposed of or the validity of the disposition. The probate concluded only the truth and validity and the contents of the will. The representative title of the executor was perfected. Suits relating to immovable property, particularly lands, generally involve greater labour and take larger time of the Court than simple money claims. But these are details in the matter of distributing the burden. We are concerned only with the reasonableness of the levy now challenged. Court-fees, to a certain extent, may properly be in proportion to the claim. The value of the claim has been made a basis of fixing the form for adjudication. The privilege of a first appeal on facts and the forum of the appeal, further appeal and appeal to the Supreme Court depend generally on the value of the suit. In a suit of a small cause nature no second appeal is available. The time taken in Court will to a certain extent depend on the suitor's interest in the litigation. The suitor's interest in the litigation will ordinarily depend on the benefit he hopes to gain therefrom. No doubt the benefit will be relative to the suitor, and depend on several factors, may not be capable of being evaluated in all cases purely in terms of money, but the money value of the claim will have its own weight and relevance. One can, therefore, assume that the value of the claim will have relevance in fixing the levy, but we can see no correlation when the levy is raised in direct proportion to the claim. In this context we may point out that in the taxation of cost, advocate's fee is not calculated at a uniform rate but tapers, and sharply, as the claim goes up. Irrespective of the magnitude of the claim and the complexity of the case and the anxiety of the suitor, a limit will be reached so far as the service that could be rendered in Court is concerned. Judicial time is not spent in direct proportion to the value of the claim. It may have relation to the question involved. That appears to be the reason behind the maximum court-fee originally prevalent and even now found in some States. We do not say that there should be a maximum. Under the Madras Court Fees Act of 1922 there was no maximum, but after the value of the claim reached Rs. 50,000, the levy though without limit was comparatively a nominal sum. There may be some justification for not fixing a maximum. Human nature being what it is, if no court-fee at all is payable beyond a certain limit, the tendency to swell up the claim may manifest itself in some cases for fairly obvious reasons. Beyond a limit, a regulation fee may be justified. We have not heard any special argument that an ungraded levy and without limit is reasonable. So far as Courts are concerned, they will have to give the same care and attention to all claims irrespective of their magnitude.
100. For the year 1953, as seen from the extracts from Civil Court's Statistics furnished by the applicants, out of a total number of 1,99,400 suits instituted in all Courts, in only 1,116 suits the claims exceeded Rs. 10,000. Out of 12,905 suits in the city, in only 297 suits the claim exceeded Rs. 10,000. Between Rs. 5,000 and Rs. 10,000 the number of suits were 314 for the city and 1,424 for the entire State. In 1954, out of 11,998 suits instituted in the city, only 303 suits the claim exceeded Rs. 10,000. For the entire State, out of 1,01,335 suits, only 911 exceeded Rs 10,000 in value. In 1955, out of a total of 2,22,398 suits for the State, only 970 suits exceeded Rs. 10,000 in value. In the city out of 12,348, 235 suits alone exceeded Rs. 10,000 in value. In 1956, out of a total of 1,87,758 suits only 908 suits exceeded Rs. 10,000 in their value. In the city out of a total of 11,682 only 260 suits exceeded Rs. 10,000. In 1957 in all 1,26,028 suits were instituted in the State and out of this only 589 exceeded Rs. 10,000 in value. In the years 1959, i960 and 1961, there has been some increase in suits exceeding Rs. 10,000 in value, 903, 1,055 and 1,183 respectively. This increase is marked in the Sub-Courts outside the city. Suits exceeding Rs. 10,000 in value filed in the High Court in the respective years are 50,145 and 66 only. We do not have statistics of institution of suits over Rs. 50,000 in value, or even of suits exceeding Rs. 20,000 when only the levy may get heavy. But even the percentage of suits exceeding Rs. 500 in value in the year 1962 was only 28.06; 29.23 being the corresponding figures for the year 1961 (Civil Court Statistics of the State for 1962). Compared with the total receipts from court-fees the contribution from suits of higher values having regard to the percentage of such suits may be small, but we have to view the matter from the standpoint of the suitor who pays. The old Court Fees Act when providing for ad valorem levy made some attempt to rationalise the structure in the related sphere having regard to the character of the suit and its value. For suits of a small cause nature the court-fee upto Rs. 500 was fixed at 71/2 per cent, of the value. In all other cases of ad valorem levy, the court-fee starting at half-a-rupee for suits of the value Of Rs. 5 and below, upto one thousand, the rate was Rs. 12.50 per cent, levied on slabs of Rs. 5 upto rupees one hundred and on slabs of Rs. 10 upto rupees one thousand. Whea the value exceeded Rs. 1,000, the rate was Rs. 7-50 on the slabs of Rs. 100 in excess of Rs. 1,000 upto Rs. 5,000. The court-fee payable on a claim of Rs. 100 Was Rs. 11-3-0, on a claim of Rs. 1,000 Rs. 112-7-0 and on a claim of Rs. 5,000 Rs. 412-7-0. The present Court Fees Act which in so many words is intended to rationalise the levy of court-fees makes no distinction between small cause suits and other suits-it practically ignores that all suits would take some minimum of administrative and judicial time if contested, irrespective of the value that the time: demanded for disposal would depend on the complexity of the case, and will not be in direct proportion to its value. Petty claims may deserve some consideration, and lighter levy. Minimum fees are prescribed for certain classes of suit-that no doubt is as it ought to be. Refund of court-fee is provided for in certain cases-There may be much to be said in favour of these features. But it is the departure from the time tested mode of an equitable distribution of the burden while providing; for ad valorem levy, that makes the new Act unreasonable in its incidence. It is-not even argued for the suitors that the original scale of levy should not be enhanced. They may hot, having due regard to the increased cost of all services. Here it is not just any resulting surplus only that invalidates the levy. The surplus may be utilised in furtherance of the object of the levy-better facilities for speedy and efficient rendering of justice in Courts-amenities may be given to Suitors which,, it is common knowledge, is woefully lacking in our Courts. A continued surplus, may require a reconsideration of the scale of fees. We have not examined the question from that angle. The problem is in the distribution of the levy in a practical and reasonable manner so as to fall fairly equitably on all suitors, that no particular class or section of them is disproportionately hit and made to bear more than their fair share of the expenditure on the administration of justice, on consider rations not germane in the context of the levy authorised by law. There can be no exact correlation, but the present levy or its incidence on suits with large claims-cannot but be manifestly unreasonable. As it is, as the value of the claim goes up, the levy becomes more and more unrelated to the object of the levy. A few suitors would be made to bear a heavy share of the expenditure unrelated to the services, required by them with the result that, when the claims are high, only one of the two essential elements of a levy to be regarded as a 'fee' is left. While the occasion, for the levy is the demand of special service by the suitor that is, one element is present, there is no reasonable correlation between the levy and the services, that is the second element is lacking. The levy becomes excessive, grossly disproportionate, and unreasonable qua the particular suitor; it ceases to be a 'fee' and becomes, a tax for him.
101. If the financial capacity of the suitor is assumed, because of the heavy claims-he makes and the levy is related to it, then again the characteristic of fee is ignored. For the same kind of service why should one contribute more than the other? Differences in the nature of litigation may justify different charges. Law is the same for the rich and the poor. No different law is given to the rich to make them, pay more. Special concessions may be, and are, shown to those who do not have the means to pay the court-fee in the first instance. But the fee is then realised from the opposite party or from the fruits of the litigation. A fee in its technical sense is levy on a principle just the opposite of tax-a tax is paid for the common benefits conferred by the Government on all tax-payers; a fee is a payment made for some benefit sought for by the payer. When a suitor is singled out to bear a disproportionately heavy part of the cost of the administration of justice, he is to a certain extent called upon to pay for a State activity in which he is no more interested than any other citizen. The suitor shares the benefit of the existence of the Courts, the Magistrate and the administration of law and order by the State like every other citizen. Any levy on a suitor in the civil Court whereby revenues are realised generally and unrelated to his cause will to that extent, be an impost in the nature of a tax.
102. In the light of the foregoing discussion we have no hesitation in holding that Article 1 of Schedule I of the Madras Court Fees Act of 1955 and the Madras High Court Fees Rules, 1956, in so far as they set out for levy of court-fees in the High Court in the exercise of its Original Jurisdiction, Article 1, Schedule I of the Madras Court Fees and Suits Valuation Act (XIV of 1955), are invalid and ultra vires as an impost in excess of the powers conferred on the State Legislature and the High Court for levying fees on proceedings in the exercise of its Original Jurisdiction. Article 1 of Schedule I of the Madras Court Fees and Suits Valuation Act, (XIV of 1955) and Rule 1 of Order 2 of the High Court Fees Rules, 1956 to the extent it incorporates the said article, in their application to the High Court in its Original Jurisdiction are therefore struck down.
103. It is unnecessary for us to examine in further detail the validity or the reasonableness of the other provisions of the Madras Court Fees and Suits Valuation Act of 1955. It was contended for the suitors that the effect of our striking down the applicability of Article 1, Schedule I of the Court Fees Act of 1955, would be, so far as the High Court is concerned, to revive the Court Fees Act of 1870, as amended in Madras in 1922 which stood repealed by the new Act. Learned Counsel in this connection referred us to a passage from Cooley's Constitutional Limitations, Eighth Edition, Vol. 1, at page 378, where it is stated:
But other cases hold that such repealing clause is to be understood as designed to repeal all conflicting provisions, in order that those of the new statute can have effect; and that if the statute is invalid, nothing can conflict with it, and therefore nothing is repealed.
Reference was also made to Parameswaran Nambudiripad v. P.R. Swami and Ors. Referred Case Nos. 86, 63, 87 and 88 of 1954 (unreported case), a decision of Govinda Menon and Krishnaswami Nayudu, JJ. The following observations therein were relied on in particular:
We are now concerned with the effect of a declaration of Court that the Amending Act, which repealed certain provisions of the original Act, is void under Article 13 of the Constitution. The effect of a Court declaring a particular statute as void is the same as a repeal, the result being that the statute declared void never existed.... If we declare the entire amending statutes as wholly void, the original enactment, namely, Act XIV of 1930 which was sought to be amended by the Acts, would remain in force reinstated in its effectiveness.
In our view the principle enunciated in the aforesaid decisions can have no application in the present case. Here the particular rule of the Original Side, which incorporated the Madras Court Fees Act, 1955, as already stated, runs as follows:
The fees in all suits and proceedings instituted on or after the 19th day of May, 1955, and all proceedings by way of appeal or otherwise arising therefrom shall be levied by the Registrar, the Sheriff and the Reserve Bank of India, as the case may be, according to the provisions of the Madras Court Fees and Suits Valuation Act, XIV of 1965.
As pointed out at the outset the Madras Court Fees Act by its own force is applicable to proceedings on the Original Side of the High Court. We are striking down only 'the levy found in Article 1, Schedule I of the Madras Court Fees and Suits Valuation Act (XIV of 1955) in its application to the High Court. We have not dealt with or considered the validity or otherwise of the other parts of the Act. The effect of striking down the Article in question will not be to revive, to that extent, the earlier High Court Fees Rules, 1949 for the High Court. Again the earlier 1949 Rules adopted the then current Court Fees Act, and Section 87 of the new Act has specifically repealed that Act, the Court Fees Act of 1870, as applied in Madras. It was not contended before us on either side, that the result of striking down Article I of Schedule I in its application to the High Court will necessitate the declaration of the invalidity of the entire Court Fees Act, and so we have refrained from examining the position.
104. There is a prayer in the writ petitions for a direction to the Registry of the Court to levy fees in accordance with the High Court Fees Rules of 1933, and the Court Fees Act of 1870. We have declared the invalidity of the levy now in force. It is not for the Court to declare what the rules should be. In the matters now before us, to the extent there is prayer for an order directing levy of fees in accordance with the High Court Fees Rules of 1933 and the Court Fees Act of 1870 as amended and in force immediately prior to the enactment of Madras Act XIV of 1955, there can be no relief.
105. In Application Nos. 2445 of 1964 in C.S. Nos. 43 of 1961 and 2486 of 1964 in C.S. No. 7 of 1959, there are prayers for refund of the court-fees paid. The petitioners therein restrict their claim for refund to the excess over the rates specified in the Court Fees Act of 1870, as amended by the Madras State Court Fees Act V of 1922, the excess they have to pay by reason of the levy made under the Court Fees Act of 1955 over and above what they would have paid if Madras Act V of 1922 had been in force. As we have held that the levy in terms of the new Act is ultra vires and unconstitutional, there can be no doubt about the petitioners' claim for refund of the court-fees paid. It is not for the Court, as already stated, to substitute Madras Act V of 1922 in the place of Madras Act XIV of 1955-But the refund claimed is limited only to the difference, and there will be an order for refund of the difference as prayed for.
106. On the writ petitions we hold that the levy of court-fees in the Original Jurisdiction of the High Court under Rule 1 of the Madras High Court Fees Rules, 1956, as statutorily provided for under Article 1, Schedule I of the Madras Court Fees and Suits Valuation Act, 1955, is invalid and unconstitutional.
107. It is not our province to indicate how the pending or proposed proceedings should be stamped. However, to enable the appropriate authorities to take the required steps in the matter and to avert administrative difficulties in the interregnum, we suspend the operation of our orders by two months. There will be no order as to costs.