AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2009 (2) TMI 812
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.... before the CMDA. They were asked to deposit specified sums towards IDC payable to the Sewerage Board by CMDA. Contending that CMDA had no power to collect IDC and the Sewerage Board is otherwise obligated to supply water and provide sewerage connection, they filed writ petitions before the High Court of Madras. The said writ petitions have been dismissed by reason of the impugned judgment. SUBMISSIONS 4. Mr. L. Nageshwar Rao, learned counsel appearing on behalf of the appellants, would contend : 1) The Chennai Metropolitan Water Supply and Sewerage Act, 1978 (the 1978 Act) containing no provision for delegation of power to an outsider, the purported demand made by the CMDA must be held to be wholly illegal; 2) As no special services are to be rendered to the builders and/or developers or individuals so as to satisfy the doctrine of quid pro quo, the impugned judgment cannot be sustained. 5. Mr. Krishnamurty, learned senior counsel appearing on behalf of the respondent, on the other hand, urged : 1) The Board being bound by the directions issued by the State of Tamil Nadu, delegation to compute the IDC and collect the same by CMDA cannot be held to be ultra vires ....
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....ct and the rules made thereunder every planning authority including a local authority where such local authority is the planning authority, shall levy charges (hereinafter called the development charges) on the institution of use or change of use of land or building or development of any land or building for which permission is required under this Act in the whole area or any part of the planning area within the maximum rates specified in section 60: Provided that the rates of development charges may be different for different parts of the planning area and for different uses: Provided further that the previous sanction of the Government has been obtained for the rates of levy. (2) When a planning authority including a local authority where such local authority is the planning authority shall have determined to levy development charges for the first time or at a new rate, such authority shall forthwith publish a notification in the Tamil Nadu Government Gazette specifying the rates of levy of development charges. (3) The development charges shall be livable on any person who undertakes or carries out any such development or institutes or changes any such use....
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....ing responsibilities, powers, controls, facilities, services and administration relating to water supply and sewerage in or for the Chennai Metropolitan Area; (ii) to enlarge, improve or develop existing facilities and to construct and operate new facilities for water supply and sewerage in or for the Chennai Metropolitan Area; (iii) to prepare schemes for water supply and sewerage (including abstraction of water from any natural source and the disposal of waste and pollution water) in or for the Chennai Metropolitan Area; xxx xxx xxx (xii-a)to collect infrastructure development charges from the applicant builder or developer of such multistoreyed building or special building as may be prescribed for the provision of adequate water supply or sewerage; xxx xxx xxx (xv) to do all things necessary for the purpose of carrying out the provisions of this Act." 7. Powers of Board to call for information.-- The Board may, for the purpose of carrying out the provisions of this Act, by notice require any person to furnish such information in his possession relating to water supply and sewerage systems, and shall act as a centr....
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.... remittance of the infrastructure development charges or IDC to the Board and to grant NOC to applicant builders of special buildings and multistoreyed flats without referring individual cases to the Board. An office order being No.9/98 issued on 23.3.1998 by CMDA as regards processing of applications for planning permission fixing Rs. 64/- per square meter as IDC for multi-storeyed building which was to be collected by CMDA and transfer to Sewerage Board. 10. A Government Order being No.146 was also passed by Housing and Urban Development Department directing CMDA to collect Rs. 64/- per square meter from applicants towards IDC. 11. The 1978 Act was amended in terms whereof Sections 6(2)(xii-a) and Section 81(jj) were inserted empowering the Sewerage Board to collect IDC from applicant, builder or developer of multi-storeyed or special buildings. 12. Appellant herein applied for planning permission for construction of a multi-storeyed building before CMDA on 8.11.2005. A sum of Rs. 53,29,500/- towards development charges was demanded by CMDA in terms of its letter dated 8.9.2006 including a sum of Rs. 5,30,500 towards IDC payable to the Sewerage Board for developing water....
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....e Sewerage Board is a State within the meaning of Article 12 of the Constitution of India. It is a creature of a statute. It can delegate its power provided there exists a provision in the Act. Power to delegate, thus, being a statutory requirement must find its place in the principal Act itself and not in the Regulation. The High Court, in our opinion, has asked unto itself a wrong question. The appropriate question required to be posed was not as to whether the CMDA was appointed as an agent, but was as to whether the Sewerage Board could delegate its power to CMDA. It may have some advantages. But the same may not answer the legal requirement. 20. Mr. Krishnamurty, however, has submitted that the Sewerage Board is bound by the direction issued by the Government. CMDA may be a local authority within the provisions of the 1978 Act but it is an independent body. Prima facie, there is nothing to show that it has any statutory role to play in the functioning of the Sewerage Board. As a local authority, it has certain duties to perform. It, however, appears that the function relating to water supply and sewage services are vested in the Board itself. It was, therefore, the Board....
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....rine for the purpose of levy and collection of fees. 24. In Sri Krishna Das v. Town Area Committee, Chirgaon [(1990) 3 SCC 645], this Court observed : "22. A fee is paid for performing a function. A fee is not ordinarily considered to be a tax. If the fee is merely to compensate an authority for services performed or as compensation for the services rendered, it can hardly be called a tax. However, if the object of the fee is to provide general revenue of the authority rather than to compensate it, and the amount of the fee has no relation to the value of the services, the fee will amount to a tax. In the words of Cooley, "A charge fixed by statute for the service to be performed by an officer, where the charge has no relation to the value of the services performed and where the amount collected eventually finds its way into the treasury of the branch of the government whose officer or officers collect the charge is not a fee but a tax." 23. Under the Indian Constitution the State Government's power to levy a tax is not identical with that of its power to levy a fee. While the powers to levy taxes is conferred on the State legislatures by the various entrie....
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....capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the State's action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc. but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden. 41. On the other hand, a fee is based on the "principle of equivalence". This principle is the converse of the "principle of ability" to pay. In the case of a fee or compensatory tax, the "principle of equivalence" applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is meas....
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....In the opinion of the High Court the subsequent transfer of denatured spirit and possession of the same in the hands of various persons such as wholesale dealer, retail dealer or other manufacturers also requires close and effective supervision because of the risk of the denatured spirit being converted into palatable liquor and thus evading heavy duty. Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer. It is merely protecting its own rights. Further in this case, the State which was in a position to place material before the Court to show what services had been rendered by it to the appellant and other similar licensees, the costs or at any rate the probable costs that can be said to have been incurred for rendering those services and the amount realised as fees has failed to do so. On the side of the appellant, it is alleged that the State is collecting huge amount as fees and that it is rendering little or no service in return. The co-relationship between the services rendered and the fee levied is essentially a question of fact. Prima facie, the levy appears to be excessive even if the State can be said to be rendering some s....