Water and sewerage levy upheld as a land-and-building tax, not a fee, under State legislative power.

A levy of water tax and sewerage tax on premises within the Jal Sansthan area was held to fall within the State's legislative competence under Entry 49 of List II because it remained a tax on lands and buildings, with annual value used only as the measure of assessment. The court also held that Section 52(1)(a) created a compulsory tax, not a fee, because liability arose from the existence of premises within the statutory area and not from any direct quid pro quo or actual water consumption. The constitutional challenge failed, the refund direction was set aside, and the writ petition was dismissed.

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Issues: (i) Whether the levy of water tax and sewerage tax under Section 52 of the Uttar Pradesh Water Supply and Sewerage Act 1975 is sustainable and within the legislative competence of the State under Entry 49 of List II; (ii) Whether the levy under Section 52(1)(a) is, in substance, a tax or a fee.

Issue (i): Whether the levy of water tax and sewerage tax under Section 52 of the Uttar Pradesh Water Supply and Sewerage Act 1975 is sustainable and within the legislative competence of the State under Entry 49 of List II.

Analysis: The levy is imposed on "premises", which the Act defines as land or building, and it operates on premises situated within the area of the Jal Sansthan. The rate is fixed with reference to the assessed annual value, while Section 55 only places restrictions on levy and Section 56 identifies the person liable to pay. The use of annual value as the measure does not change the nature of the levy. A tax on lands and buildings may validly be measured by annual or capital value, and the liability may depend upon the use, location, or occupancy of the premises without ceasing to fall within Entry 49. The levy therefore remains a tax on lands and buildings and not a tax on water supplies.

Conclusion: The levy is constitutionally valid and falls within Entry 49 of List II. It is in favour of the Revenue.

Issue (ii): Whether the levy under Section 52(1)(a) is, in substance, a tax or a fee.

Analysis: Chapter VI of the Act separately deals with taxes, charges, and fees, and Section 52 specifically creates taxes, while Sections 59 and 63 deal with charges and fees. The levy under Section 52 is a compulsory exaction arising from the presence of premises within the jurisdiction of the Jal Sansthan; it does not depend upon actual consumption of water or a direct quid pro quo. The proceeds support the statutory functions of the Jal Sansthan, but that fiscal purpose does not convert the levy into a fee. The earlier observation treating the levy as a fee was inconsistent with the statutory scheme and was overruled.

Conclusion: The levy under Section 52(1)(a) is a tax and not a fee. It is in favour of the Revenue.

Final Conclusion: The constitutional challenge failed, the High Court's refund direction was set aside, and the writ petition stood dismissed with the appellants entitled to recover the remaining dues with interest.

Ratio Decidendi: A levy imposed on land or building within a statutory area, assessed by reference to annual value and designed to fund public services, remains a tax on lands and buildings under Entry 49 of List II even if the statute uses service-related terminology or apportions liability by occupancy, and such a levy is not converted into a fee merely because the authority provides water or sewerage services.

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