2007 (5) TMI 687 - HC - Indian Laws

Court rules imposition of Drainage Development Fees by Kolkata Municipal Corporation unauthorized and illegal, orders refund to petitioners.

Asian Leather Limited and Ors. Versus The Kolkata Municipal Corporation and Ors.

The court dismissed the appeals filed by the Kolkata Municipal Corporation, upholding the decision that the imposition of Drainage Development Fees was ... - Issues Involved:1. Legality of the Drainage Development Fees imposed by the Kolkata Municipal Corporation.2. Authority of the Kolkata Municipal Corporation under the Kolkata Municipal Corporation Act and related rules to levy such fees.3. Refund of Drainage Development Fees collected by the Corporation.4. Limitation period for claiming the refund of the fees.5. Applicability of Article 265 of the Constitution of India regarding unauthorized tax collection.Detailed Analysis:1. Legality of the Drainage Development Fees:The primary issue was whether the Kolkata Municipal Corporation (KMC) had the legal authority to impose Drainage Development Fees as a condition for sanctioning building plans. The court noted that the KMC did not have any statutory provision under the Kolkata Municipal Corporation Act, 1980, or the rules and regulations framed thereunder to levy such fees. The learned single judge had previously declared the circular imposing these fees as ultra vires the Constitution and the Act.2. Authority of the Kolkata Municipal Corporation:The KMC argued that sections 289(2), 290, 293, 307, and 543(2) of the Kolkata Municipal Corporation Act, along with specific rules, provided the authority to levy Drainage Development Fees. However, the court found no explicit provision in the Act, rules, or regulations authorizing the imposition of such fees. The court emphasized that a statutory corporation has no power to do anything unless explicitly authorized by statute, citing the principle that delegated authorities must act strictly within the parameters of their delegated powers.3. Refund of Drainage Development Fees:The court addressed the issue of refunding the fees collected by the KMC. It was argued that the fees were collected under a circular later declared ultra vires, and thus, the money should be refunded. The court held that once a statutory authority's action is declared illegal, the refund of money collected under such action is a matter of course. The court directed the KMC to refund the collected fees with interest.4. Limitation Period for Claiming Refund:The KMC contended that the claim for refund was barred by limitation. However, the court held that the limitation period for claiming a refund begins from the date the action is declared illegal by a competent court. Therefore, the writ petitioners' claim for refund was not barred by limitation as the right to claim the refund accrued only after the declaration of the circular's illegality.5. Applicability of Article 265 of the Constitution:The court reiterated the principle under Article 265 of the Constitution, which states that no tax shall be levied or collected except by the authority of law. Since the KMC had no legal authority to impose the Drainage Development Fees, the collection of such fees was in violation of Article 265.Conclusion:The court dismissed the appeals filed by the Kolkata Municipal Corporation, upholding the learned single judge's decision that the imposition of Drainage Development Fees was unauthorized and illegal. The court also directed the KMC to refund the collected fees with interest to the writ petitioners. The judgment emphasized the necessity for statutory authorities to act within their expressly conferred powers and reinforced the constitutional mandate against unauthorized tax collection.