Retrospective validating amendment upheld house-tax, but Permission Fee failed for lack of statutory authority and quid pro quo.

The retrospective amendment to the definition of "house" validly removed the defect on which the earlier challenge depended, and the State had legislative competence to impose house-tax on buildings under the relevant constitutional entry. The levy was therefore upheld. By contrast, the so-called Permission Fee lacked statutory authority as a fee, because the Act did not authorise such a charge and the record showed no real quid pro quo between the amount collected and any service rendered or intended to be rendered. It also could not be saved as a tax. The house-tax was sustained, while the Permission Fee was struck down.

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Issues: (i) Whether the levy of house-tax on the respondent's buildings was valid after the retrospective amendment to the definition of "house" and within the State's legislative competence; (ii) Whether the levy styled as Permission Fee was sustainable as a fee or could alternatively be upheld as a tax.

Issue (i): Whether the levy of house-tax on the respondent's buildings was valid after the retrospective amendment to the definition of "house" and within the State's legislative competence.

Analysis: The retrospective amendment substituted the definition of "house" so as to remove the earlier limitation based on a separate principal entrance from the common way and to include factory buildings. The amendment operated validatingly by removing the very basis on which the earlier judgment had proceeded. A legislature competent to enact the law prospectively can also enact it retrospectively, subject to constitutional limits. The tax was confined to buildings, machinery and furniture being excluded under the applicable rule, and therefore fell within the State power to impose taxes on lands and buildings under the constitutional entry relied upon.

Conclusion: The levy of house-tax was valid and sustainable, and the challenge to it failed.

Issue (ii): Whether the levy styled as Permission Fee was sustainable as a fee or could alternatively be upheld as a tax.

Analysis: The Act distinguished taxes from fees and contained no provision authorising a fee for permission to construct buildings in the manner adopted by the Panchayat. A fee requires a real correlation between the amount levied and services rendered or intended to be rendered, and no material showed any such quid pro quo. The levy was imposed as a percentage of capital value and was payable on application for permission, even before a building came into existence, which negatived its character as a tax on buildings. The rule-making power could not supply a levy absent authority in the parent Act.

Conclusion: The levy of Permission Fee was illegal and could not be sustained either as a fee or as a tax.

Final Conclusion: The house-tax was upheld, the Permission Fee was struck down, and the appeal succeeded only to that limited extent.

Ratio Decidendi: A retrospective validating amendment is permissible where it removes the defect in the underlying law and the legislature acts within its competence, but a levy can be sustained as a fee only if the statute and the record disclose a genuine quid pro quo between the charge and identifiable services rendered or intended to be rendered.

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