Court upholds constitutionality of GPMC Act's Section 386(2), advises challenging license fees with State Govt.

The court upheld the constitutional validity of Section 386(2) of the GPMC Act, rejected the argument that license fees were akin to a tax, and refrained from ruling on the alleged arbitrariness and excessiveness of the fees. The petitioners were advised to challenge the fee quantum before the State Government. The petitions were dismissed without costs.

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Issues Involved:

1. Constitutional validity of Section 386(2) of the Gujarat Provincial Municipal Corporation Act, 1949 (GPMC Act).
2. Levy of license fees as a tax in the guise of fees.
3. Arbitrariness and excessiveness of the license fees.

Detailed Analysis:

1. Constitutional Validity of Section 386(2) of the GPMC Act:

The petitioners challenged the constitutional validity of Section 386(2) of the GPMC Act on four grounds:

(i) Article 243X of the Constitution: The petitioners argued that Section 386(2) does not provide for the procedure and limits for levy or collection of fees as required by Article 243X. However, the court noted that Article 243X is an enabling provision and does not obligate the State to provide for such a statute. The court referred to the Supreme Court's judgment in Shanti G. Patel v. State of Maharashtra, which held that Article 243X merely outlines the scheme for levy and imposition of taxes and does not prescribe any specific procedure or limits.

(ii) Deletion of Entry 55 of List II: The petitioners contended that after the deletion of Entry 55 of List II, the State legislature has no competence to enact a law authorizing the Corporation to levy and collect fees. The court rejected this argument, stating that Entry 55 dealt with taxes, not fees, and the State legislature still has competence under Entry 66 of List II to levy fees.

(iii) Article 243ZF of the Constitution: The petitioners argued that Section 386(2) is inconsistent with Part IX of the Constitution and should have lapsed after one year from the commencement of the 74th Amendment. The court held that Section 386(2) is not inconsistent with any provision of Part IX and therefore does not lapse under Article 243ZF.

(iv) Excessive Delegation: The petitioners argued that Section 386(2) suffers from excessive delegation as it provides unguided and uncanalized powers to the Commissioner. The court noted that the Commissioner’s power to levy fees is subject to the sanction of the Corporation, providing sufficient checks and balances. The court also referred to the Supreme Court's judgment in Delhi Race Club Ltd. v. Union of India, which held that guidelines are required for taxation but not for fees.

2. Levy of License Fees as a Tax in the Guise of Fees:

The petitioners contended that the license fees were in the nature of a tax rather than a fee, as there was no quid pro quo and the fees were deposited in the same account as tax collections. The court referred to the Supreme Court's judgment in Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, which distinguished between a tax and a fee. The court held that the license fees in question were regulatory fees and not taxes, as they were levied for granting the privilege of placing advertisement hoardings on private properties.

3. Arbitrariness and Excessiveness of the License Fees:

The petitioners argued that the license fees were arbitrary, irrational, and highly excessive. The court noted that the sufficiency of the levy falls within the powers prescribed under Section 386(2) of the GPMC Act and is subject to the control of the State Government. The court refrained from considering the submissions regarding the alleged arbitrariness and excessiveness of the license fees, stating that the petitioners could challenge the quantum of the fees before the State Government as per the provisions of the GPMC Act.

Conclusion:

The court upheld the constitutional validity of Section 386(2) of the GPMC Act, rejected the contention that the license fees were in the nature of a tax, and refrained from adjudicating on the arbitrariness and excessiveness of the license fees, leaving it to the petitioners to challenge the quantum before the State Government. The petitions were dismissed with no order as to costs.

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