TaxTMI 
TaxTMI 
2005 (3) TMI 753
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....pers decided to construct a new building after demolishing the existing old structure. The developers submitted the building plan for sanction which the corporation refused to accept without the names of the developers being brought on record by way of mutation. On 21.3.1997, the developers applied for mutation by deletion of the names of the previous owners and substitution of their names for which the corporation demanded mutation fees of Rs. 3 lacs under Calcutta Corporation (Taxation) Regulations, 1989. This demand was challenged by filing of writ petition in the Calcutta High Court. The Calcutta Municipal Corporation (Amendment) Act, 1988 was passed by the State Legislature, which was published in the gazette on 9.1.1989 and which came into effect from 20.2.1989. Section 7 of the Amendment Act (XXI of 1988) provided as under: "Section 7. Amendment of Section 183 In sub- section 183 of the Principal Act (1) after the words "Under this Section", the words "and upon payment of such fees as may be determined by regulation" shall be inserted, and (2) the words "in such form and in such manner as may be prescribed" shall be omitted." In terms of the aforest....
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....es; that prior to the amendment of section 183 by Act XXI of 1988, no fee was imposed for mutation; that after the amendment and framing of the aforestated regulations, enormous amounts were sought to be levied on ad valorem basis in the case of mutations consequent upon inter-vivos transfers vis-a-vis mutations on account of intestate successions where fees were charged at a flat rate, particularly when the functions performed by the corporation with regard to the mutations remained the same. That, whether the property was valued below Rs. 50,000/- or whether it was valued above Rs. 2 lacs, the function of the corporation with regard to mutation was the same. It was further averred that whatever may be the cause of mutation, whether it is because of transfer or change of ownership due to succession or otherwise, the function of the corporation in the matter of mutation remained the same and even the expenses, if any, incurred by the corporation in performing such functions did not vary, whatever may be the value of the property or the cause of mutation. It was further averred in the writ petition that under the provisions of the Act, the owner was primarily responsible to the corp....
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....'s name; that no other service of any kind whatsoever was rendered to the rate-payers; that under section 183(5). mutation fee was merely to be prescribed by regulations and not to impose a tax in the garb of fees; that no such delegation was ever made in favour of the corporation; that the rate of levy on ad valorem basis itself indicated that the levy was in the nature of a tax; that the different rates prescribed for mutation in the case of transfers vis-a-vis intestate succession indicated that the levy was a tax and not a fee; that the said provision was not for the benefit of the owner of the premises but it was for statutory compliance, failure to comply wherewith was to attract penal consequences; that no benefit was conferred on the rate-payers and on the contrary, the said provision was for the benefit of the corporation; that the nature of the services rendered to the rate- payers for mutation had no connection with the quantum of fees sought to be levied; that the fee was neither regulatory nor compensatory; and that the impugned regulations were discriminatory inasmuch as the purchasers were subjected to a higher fee than those who got the ownership of property by ....
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....therefore, there was no violation of article 14 of the Constitution in the matter of levy of mutation fees at different rates from different categories of persons. In the circumstances, it was submitted that the levy of mutation fees by the corporation was in the nature of "a fee" in terms of section 183(5) and, therefore, the corporation was entitled to prescribe mutation fees which it has done under the above Regulations and, therefore, there was no violation of articles 14 and 246 of the Constitution. Shri Pradip Kumar Ghosh, learned senior counsel appearing on behalf of the original petitioners submitted that although mathematical precision is not accepted in the matter of correlation between the service rendered and the imposition, the law as it stands today certainly requires an imposition in the nature of fees to be based on rendition of service; that no charge can be levied as a fee without any correlation between the amount of levy and the cost of any service; that in the present case, the corporation in the matter of taxation was duty bound to maintain assessment record containing names of the occupiers, names of the owners, description of the property, annual value etc.....
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....and buildings. Under section 170(2), the levy, assessment and collection of taxes mentioned in section 170(1) is required to be done in accordance with the provisions of the Act and the rules made thereunder. Section 174 deals with determination of annual valuation. Section 178 deals with municipal assessment code. Section 179 deals with periodical assessment of lands and buildings situated in any ward of the corporation. Section 180 deals with revision of assessment. Section 181 deals with submission of returns for purposes of assessment. Under the said section, the municipal commissioner is authorized to call upon any person primarily liable for payment of consolidated rate of land or building to give such particulars as may be required to determine the annual value of such land or building. Section 182 deals with the submissions of returns for purposes of revision in the annual value of land and building. Section 183 is the section which deals with notice of transfers. Under section 183(1), whenever the title of any person to any land or building is transferred, such person, if primarily liable for the payment of consolidated rate on such land or building, and the transferee to ....
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.... is certificate or in the case of testamentary succession Amount of fee in rupees (a) If the price/value of the property declared does not exceed rupees fifty thousand. 0.5% of the price/value (b) Where such price/value exceeds rupees fifty thousand but does not exceed rupees one lakh. 1% of the price/value. (c) Where such price/value exceeds rupees one lakh but does not exceed rupees three lakh. 1.5% of the price/value. (d) Where such price/value exceeds rupees three lakhs but does not exceed rupees five lakhs. 2% of the price/value. (e) Where such price/value exceed rupees five lakhs. 2.5% of the price/value. (2) In the case of transfer by a deed of lease/sub- lease/assignment or such other similar instrument, the amount to be paid will be at the same rates as at (1) above, on the value shown in the document for Stamp Duty: Provided that in calculating the amount of fee to be paid under (1) or (2) above any fraction of a rupee amounting to fifty paise or more shall be rounded off to the nearest rupee. (3) In the case of intestate succession Amount of fee (a) If the last decided annual valuation does not exceed rupees three thousand. Rs.25 (b) If such v....
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....xes, or under some term employed in revenue laws to indicate a particular class of taxes, where the imposition of the burden may fairly be referred to some other authority than to that branch of the sovereign power of the State under which the public revenues are apportioned and collected. The reason is that the imposition has not for its object the raising of revenue but looks rather to the regulation of relative rights, privileges and duties as between individuals, to the conservation of order in the political society, to the encouragement of industry, and the discouragement of pernicious employments. Legislation for these purposes it would seem proper to look upon as being made in the exercise of that authority which is inherent in every sovereignty, to make all such rules and regulations as are needful to secure and preserve the public order, and to protect each individual in the enjoyment of his own rights and privileges by requiring the observance of rules of order, fairness and good neighborhood, by all around him. This manifestation of the sovereign authority is usually spoken of as the police power. The power to tax must be distinguished from an exercise of the police powe....
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....s such in India. The Court endorsed recognizing the power to regulate as a part of the sovereign power of the State exercisable by the competent legislature. Brushing aside the need for discussion on the question, whether under the Constitution the States have police power or not, the Court accepted the position that the State has the power to regulate. However in the garb of exercising the power to regulate, any fee or levy which has no connection with the cost or expenses of administering the regulation, cannot be imposed; only such levy can be justified as can be treated as part of regulatory measure. Thus, the State's power to regulate perhaps not as emanation of police power but as an expression of the sovereign power of the State has its limitations. In our opinion , these observations of the Court lend support to the view which we have formed that a power to regulate, develop or control would not include within its ken a power to levy tax or fee except when it is only regulatory. Power to tax or levy for augmenting revenue shall continue to be exercisable by the legislature in whom it vests i.e. the State Legislature in spite of regulation or control having been assumed ....
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....ion of India postulates either a tax or a fee. However, the use of the expression "tax" or "fee" in a statute is not decisive; as on a proper construction thereof and having regard to its scope and purport "fee" may also be held to be a tax. 19. The definition of "tax" in terms of clause (28) of Article 366 of the Constitution is wide in nature. The said definition may be for the purpose of the Constitution; but it must be borne in mind that the legislative competence conferred upon the State Legislature or Parliament to impose "tax" or "fee" having been enumerated in different entries in the three lists contained in the Seventh Schedule of the Constitution of India, the same meaning of the expression "tax" unless the context otherwise requires should be assigned. 20. Having regard to the fact that different legislative entries have been made providing for imposition of "tax" and "fee" separately, indisputably, the said expression do not carry the same meaning. Thus a distinction between a tax and fee exists and the same while interpreting a statute has to be borne in mind. 21. A distinction must furthermore be borne in mind as regards the sovereign power of the State as underst....
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....the public at large. The cinema house owners paying the levy would not as such owners be getting that benefit. We are not concerned with the benefit, if any, received by them as members of the public for that is not special benefit meant for them. We are clear in our mind that if looking at the terms of the provision authorizing the levy, it appears that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statue. A consideration of where Sections 443 and 548 are placed in the Act is irrelevant for determining whether the levy imposed by them is a fee or a tax." It was further observed: (AIR p.1116, paras 19-20) "19. The last argument in this connection which we have to notice was based on Sections 126 and 127 of the Act. Section 126 deals with the preparation by the Chief Executive Officer of the Corporation called Commissioner, of the annual budget. The budget has to include an estimate of receipts from all sources. These receipts would obviously include taxes, fees, licence fees and rents. Under Section 127(3) the Corporation has to pass this budget and to determine subject to Part IV of the Act, ....
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....nce are observed by the licensee is not a service to him. No question here arises of correlating the amount of the levy to the costs of any service. The levy is a tax. It is not disputed, it may be stated, that if the levy is not a fee, it must be a tax." 26. A regulatory statute may also contain taxing provisions. 27. The decisions of this Court point out towards the need of existence of the element of quid pro quo for imposition of fee; be it to the person concerned or be it to a group to which he belongs; irrespective of the fact as to whether the benefit of such service is received directly or indirectly. 28. The point at issue is required to be considered keeping in view the aforementioned legal position. 29. By reason of the provisions of the U.P. Sheera Niyantran Adhiniyam, 1964, the trade carried out by the respondents is sought to be regulated. 30. Some service, therefore, was required to be rendered by the State or the statutory authority to the owners of the factory producing molasses or the molasses industries generally if an impost by way of "fee" was to be levied." Applying the above principles to the present case, we find enumeration of obligatory and discretio....
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....t is clear that mutation enquiry is instituted in the interest of the corporation for tax purposes and not for the benefit of the tax payer. Now coming to the question of challenge to the levy as arbitrary and discriminatory and violative of Article 14, we find that the functions of the corporation with regard to mutation remains the same, whether the applicant is a transferee under a conveyance or a lessee or a beneficiary under a will or an heir in the case of intestate succession. Once an application for mutation is made, the same is examined by the department and after hearing the objections, if any, the record is ordered to be changed. Ultimately, the exercise is for fiscal purpose. Similarly, the property valuation may be below Rs. 50,000/- or above Rs. 2 lacs, the function of the corporation in making the mutation entry remains the same. Similarly, whatever may be the cause of mutation, whether it is case of transfer or devolution, the activity of mutation remains constant in all the cases. The expenses incurred in all the cases also cannot vary, whatever be the value of the property or the cause of mutation. In the circumstances, there is no reason given for charging diffe....