Compensatory toll principle: municipal levy invalid where no matching service or benefit was provided to users.

A municipal toll can validly be imposed only if it is compensatory, meaning the levy must be linked to some amenity, service, benefit or advantage provided to the persons charged. Here, the municipal board provided no relevant facility to stage carriage operators using the national highway; the highway was maintained by the Government, the approach road by the Public Works Department, and the cited municipal works were not shown to be services for the levy-payers. Mere municipal expenditure or statutory responsibility for roads and bridges did not convert the charge into a compensatory toll. The levy was therefore ultra vires and invalid, and the appeals succeeded.

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Issues: Whether the toll tax levied by the Municipal Board on vehicles, conveyances, animals and laden coolies entering the municipal limits was a valid compensatory levy under Section 128(1)(vii) of the U.P. Municipalities Act, 1916, or was ultra vires and ed by Article 301 of the Constitution of India.

Analysis: A toll can be justified only where there is some amenity, service, benefit or advantage provided to those on whom it is imposed, so that the levy is compensatory in character. The record showed that the Municipal Board provided no relevant facility to the operators of stage carriages using the National Highway; the highway was maintained by the Government, the approach road by the Public Works Department, and the municipal works referred to were not facilities for the levy-payers as such. The existence of municipal expenditure or statutory duties relating to roads and bridges did not convert the levy into a compensatory tax. The levy therefore could not be sustained as a toll in the constitutional sense.

Conclusion: The toll tax was not a compensatory levy and was invalid. The levy was struck down as ultra vires and the appeals succeeded.

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