TaxTMI 
TaxTMI 
2020 (10) TMI 1219
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....pondent Nos.5, 6 MR. H.S. MUNSHAW for the Respondent­Municipality R/SPECIAL CIVIL APPLICATION NO. 4538 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 2603 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 1612 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 2579 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 3082 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 4539 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 4540 of 2019 With CIVIL APPLICATION (FOR ORDERS) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 4540 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 4585 of 2019 With MISC. CIVIL APPLICATION (FOR BREACH OF ORDER) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 4585 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 4564 of 2019 With MISC. CIVIL APPLICATION (FOR BREACH OF ORDER) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 4564 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 4579 of 2019 With MISC. CIVIL APPLICATION (FOR BREACH OF ORDER) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 4579 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 4554 of 2019 With MISC. CIVIL APPLICATION (FOR BREACH OF ORDER) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 4554 of 2019 R/SPECIAL CIVIL APPLICATION N....
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....AL CIVIL APPLICATION NO. 9481 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9544 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9543 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9537 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9538 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9208 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9222 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9664 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10081 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10083 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10087 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10088 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10723 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10724 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10730 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10131 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10732 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10733 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10737 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10739 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10745 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10747 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10781 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10848 of 2....
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....not collect any license fees in garb of tax for the advertisement hoardings in the private properties. 5. The petitioner has also challenged the constitutional validity of the Section 386(2) of the Gujarat Provincial Municipal Corporation Act, 1949 (for short "the GPMC Act") and sought declaration that the said provision is ultra vires to the Article 243X of the Constitution of India. FACTS :- 6. The controversy arising in this batch of petitions with regard to determination of the license fees on the advertisement hoardings in the private properties of the respective Municipal Corporation has a checkered history:- (i) Before 1992 the license fee on the advertisement hoardings in private properties was charged at the rate of around Rs. 100 per sq. meter per year. (ii) From 1992 till 1997, the license fee rate was revised to Rs. 200 per sq. meter per year. (iii) On 26th February 1997, the Standing Committee of the AMC passed a resolution increasing the license fee to Rs. 350/- per sq. meter per year irrespective of the location of the advertisement hoarding in private property. (iv) The General Board of the AMC passed a resolution on 29th....
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....June 2000 passed by it was in operation but was being reconsidered by the State Government and until the Government decides, the AMC would follow the interim arrangement. The learned Single Judge continued the interim arrangement as per the order dated 11th August 2005 for further four weeks. (xi) Against the aforesaid judgment of the learned Single Judge, the petitioner association preferred Letters Patent Appeal no.331 of 2006. (xii) During the pendency of the LPA no.331 of 2006, from 2006 to 15th May 2012, the license fee was charged as per the rates mentioned in the interim arrangement as per the order dated 11th August 2005 passed by the learned Single Judge in SCA no.12603 of 2005. (xiii) On 15th May 2012, during the pendency of the LPA, the petitioner association addressed a letter to the AMC and intimated that without prejudice, the association was agreeable with the rates suggested by the AMC in the meetings held on 28th July 2011 and 22nd September 2011 for enhancement of 10% after the next five years and as such increased license fee would remain static for five years and thereafter it would be enhanced by 10% every year. (xiv) In ligh....
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....ter considering the proposal and justification provided, on 5th November, 2018, the Commissioner of the AMC approved the rates proposed for the increase of the license fee for the advertisement hoardings in privately owned properties. Accordingly a letter dated 17th November 2018 was issued by the Commissioner recommending the revised license fee rates for the advertisement hoardings in privately owned properties. (xxi) Thereafter, the Standing Committee of the AMC by Resolution no.928 dated 22nd November 2018 sanctioned the revised rates of license fees on the basis of the letter dated 17th November 2018 of the Commissioner. (xxii) The General Board of the Corporation by the Resolution no.1075 dated 24th December 2018 confirmed the sanction granted by the Standing Committee for the enhanced rate of the license fees for the advertisement hoardings in privately owned properties. (xxiii) The Outdoor Advertisement Owners' Association made a representation on 9th January 2019 raising objections. (xxiv) Being aggrieved by the increase in the license fees, the petitioners along with others approached this Court by way of filing this batch of petiti....
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....esolution no.928 dated 22.11.2018 at Annexure-A hereto and Resolution No.l075 dated 24.12.2018 at Annexure-AA hereto. (C) Award cost of this petition. (D) Pass such other and further orders as may be deemed just and expedient." 7. This Court passed the following order on 1st March 2019 and issued notice and the ad-interim relief was granted to the petitioners by staying the implementation of the Resolutions passed by the AMC on the condition that the petitioners continue paying the license fees applicable prior to the said Resolutions without prejudice to their rights or contentions:- "1. The learned advocate for the petitioners has tendered a draft amendment. The amendment is allowed in terms of the draft. The same shall be carried out forthwith. 2. By these petitions, the petitioners have challenged resolution No.928 dated 28.11.2018 passed by the Standing Committee of the respondent Corporation approving the revised rates of license fees. The petitioners also seek a declaration that after the introduction of GST with effect from 1.7.2017 in the light of the 101st amendment of the Constitution, the respondents cannot collect any tax on hoard....
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....easing the license fee is not for any regulatory purpose but because the present rates impact the tender process and make it commercially unviable. It was contended that therefore, the justification given cannot be a basis for arbitrary increase in the license fees. 5. Next it was submitted that subsection (2) of section 386 of the GPMC Act suffers from two infirmities; firstly, it does not specify any procedure or limits subject to which such levy or collection can be made; and secondly, it does not provide any guidelines as to which factors should be taken into account for the purpose of determining the rates of license fees. 6. The attention of the court was further invited to the provisions of Article 243X of the Constitution and more particularly, to clause (a) thereof which provides that the Legislature of a State may, by law authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits as may be specified in the law. It was submitted that in the present case, subsection (2) of section 386 of the GPMC Act does not specify any limits and, therefore, the same is ultra v....
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....ly through Registered Speed Post. Registry to place a copy of this order in each petition." 8. It would be germen to refer to relevant provision of the constitution of India as well as the GPMC Act to consider the submissions made by both the sides with regard to the constitutional validity of Section 386(2) of the GPMC Act being ultra vires to the Articles 14 and 243X of the Constitution of India as under:- [A] Articles 243X and 243ZF and relevant entries in List II of the VIIth Schedule of the Constitution of India "243X : Power to impose taxes by, and Funds of, the Municipalities The Legislature of a State may, by law,- (a) authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits; (b) assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits; (c) provide for making such grants-in-aid to the Municipalities from the Consolidated Fund of the State; and (d) provide for constitution of such Funds for crediting all moneys receiv....
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....e to time be fixed by Commissioner, with the sanction of the Corporation." SUBMISSIONS ON BEHALF OF THE PETITIONERS :- 9. The learned Senior Advocate Mr. Mihir Joshi assisted by the learned advocate Mr. Amar Bhatt for the petitioners and other learned advocates for the petitioners submitted that the license fees increased by the AMC and other Municipal Corporations for the advertisement hoardings in the private properties is more than double than the prevailing license fees. The contentions raised on behalf of the petitioners are twofold: (1) That Section 386(2) of the GPMC Act and levy of the license fee by the respondent-AMC are violative of the Article 14 and 243X of the Constitution of India and are also unauthorized after enforcement of the GST Regime and (2) The license fees determined by the AMC and other corporations are exorbitant and therefore, prayer was made for refund of license fees paid so far. (A) Submissions for the contention that Section 386(2) of the GPMC Act being ultra vires to Article 14 of the Constitution of India. (i) It was submitted that the Section 386(2) of the GPMC Act provides for charging the license fees at....
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....Legislature." (iii) Thereafter, reliance was placed on the decision of the Apex Court in case of Krishna Mohan (P) Ltd. Vs. Municipal Corporation of Delhi and others, reported in (2003) 7 SCC 151 and referred to Para no. 51 which reads thus: "51. In the result, we allow the appeals and hold as under:- (1) Section 116(3) is declared invalid as it delegates unguided and uncanalised legislative powers to the Commissioner to declare any plant or machinery as part of land or building for the purpose of determination of the rateable value thereof; (2) The cost of plant or machinery, lifts and air conditioners fixed on the land or building of the appellant in question shall not be liable to be included for the determination of the rateable value of the land or building; (3) The decisions in Pragati Builders (supra) and that of the Full Bench of the High Court under appeal do not lay down the law correctly. Consequently, they are hereby over ruled. (4) The appeals are accordingly allowed and impugned judgments of the High Court are set aside. The impugned assessment orders are set aside and remitted to the assessing authority under the ....
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.... such law must specify the limits and procedure for "levy, collection and appropriation of taxes, duties, tolls and fees". (iii) It was submitted that specifying limits and procedure in the law itself by the legislature is mandatory as per the language of the Article 243X of the Constitution of India. Reliance was placed on Sections 99, 100, 127, 142-B of the GPMC Act to demonstrate the compliance of the Constitutional mandate vis-a-vis absence of such compliance of the Constitutional mandate in the impugned provision of Section 386(2) of the GPMC Act. (iv) In support of the above submissions, reliance was placed on the Full Bench decision in case of Anil Kumar Gulati and others Vs. State of M.P. And others reported in AIR 2004 (M.P.) 182, wherein the Full Bench of the Madhya Pradesh High Court with regard to the Article 243X of the Constitution of India has observed as under:- "20.It is submitted by the learned counsel for the petitioners that if the aforesaid Article is scanned and scrutinized in proper perspective, it is absolutely vivid that the Legislature of the State has been authorised by the Constitution only to authorise the Municipalities for t....
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....case of State of Uttar Pradesh and another Vs. Zila Parishad, Ghaziabad, reported in (2013) 11 SCC 783 to submit that the Apex Court in the said decision has held that it is for the State Legislature to consider conditions and to make laws accordingly and it is also open to the State to eliminate or modify the same. (vii) It was therefore, submitted that prior to introduction of Chapter-IXA in the Constitution by 74th Amendment, the law was that the delegation by the Legislature cannot be excessive and unguided and without prescribing limits as held in case of Manek Chowk Spinning and Waiving (supra) and in case of Krishna Mohan (supra). (viii) It was submitted that Article 243X of the Constitution, thus, recognises the principle of delegation by legislature, which cannot be excessive and unguided or not prescribing limits and obliges the legislature to specify the limits and procedure in the law itself if it makes such law and therefore, in absence of any limits and procedure prescribed in Section 386(2) of the GPMC Act, the same would be ultra vires to Article 243X of the Constitution of India. Reliance was placed on Article 243ZF of the Constitution of India wh....
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....roper facilities. Only when the Corporation provides proper roads and lighting, parking facilities wherever necessary and by providing for proper drainage and keeps such roads clean and well maintained with, the property owners on either side of such roads would be able to attract customers to exhibit their advertisements on their properties. One does not need much thinking to appreciate that on roads full of pot holes and dust on dirt filled streets, on small narrow lanes, on congested bye-lanes there would be no potential for commercial development and there would be no potential for exhibiting attractive advertisers. The companies who put up their advertisements exhibiting their products and services would wish to maximize their profits. Such companies would pay hefty rentals only if they find that their advertisements are likely to be seen by large number of commuters. If this purpose is not fulfilled, advertisers would have no interest in putting up their advertisements". (xii) It was further submitted that the judgment of the Single Judge does not refer to the Constitution Bench (7 Judges) Judgment of Supreme Court in case of Commissioner, Hindu Religious Endowments,....
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....is part to seek such services and if he does not want the services, I he can avoid the obligation. The example given is of a license fee. If a man wants a license that is entirely his own choice and then only he has to pay the fees, but not otherwise. We think that a careful examination will reveal that the element of compulsion or coerciveness is present in all kinds of imposition though in different degrees and that it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees. It is difficult, we think, to conceive of a tax except it be something like a poll tax, the incidence of which falls on all persons within a State. The house tax has to be paid only by those who own houses, the land tax by those who possess lands, municipal taxes or rates will fall on those who have properties within a municipality. Persons who do not have houses, land or Properties within municipalities, would not have to pay these taxes, but nevertheless these impositions come within the category of taxes and nobody can say that it is a choice of these people to own lands or houses or specified kinds of properties so that there ....
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....dominant, and if the money paid by license holders goes for the upkeep of roads and other matters of general public utility, the license fee cannot but be regarded as a tax. 49. In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax. There is really no generic difference between the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes. 50. Our Constitution has, for legislative purposes, made a distinction between a tax and a fee and while there are various entries in the legislative lists with regard to various forms of taxes there is an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of the matters that is included in it. The implication seems to be that fees hav....
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....6 is a tax and not a fee and consequently it was beyond the power of the State Legislature to enact this provision." (xiii) Referring to the above judgment of the Supreme Court, it was submitted that the findings of the learned Single Judge in Special Civil Application no.12603 of 2005 is contrary to the judgment of the Constitution Bench (7 Judges), wherein it is held that if the money paid by license holders goes for the upkeep of roads and other matters of general public utility, then it would be regulatory in nature. It was submitted that in such circumstances, the license fee can only be regarded as a tax. (xiv) It was therefore, submitted that the reliance placed by the respondent to justify the levy as fees upon the judgment of the learned Single Judge in Special Civil Application no.12603 of 2005 is without basis as the said judgment is 'per incuriam' being contrary to the decision of Apex Court in case of Commissioner, Hindu Religious Endowments(supra) and the judgment of learned Single Judge is now substituted by the judgment of Letters Patent Appeal no.331 of 2006 by consensus. (xv) Reliance was also placed on the decision of the Apex Court in ....
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....rporation while prescribing fees has levied fees on ad valorem basis which is one more circumstance to show that the impugned levy is in the nature of tax and not in the nature of a fee. Further, the quantum of levy indicates that it is a tax and not a fee. The analysis of the various provisions of the Act and the impugned regulations show that the impugned levy is in exercise of power of taxation under the said Act to augment the revenues primarily and not as a part of regulatory measure. As stated above, the purpose of mutation is to register the transfer in the records of the corporation which in turn would help the corporation to recover taxes from the existing tax payers. Therefore, no special benefit results to the transferee who is made statutorily liable to inform the corporation of the change, if any, in the name of the person primarily liable to pay the tax. (xvi) Thereafter, the reliance was placed on the decision of Secunderabad Hyderabad Hotel Owners' Association and others Vs. Hyderabad Municipal Corporation, Hyderabad and another, reported in (1999) 2 SCC 274 to point-out that the current trend with respect to deciding whether the levy is tax or "fees" a....
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....ries Ltd.([1995] 1 SCC 655 in paragraph 21). 12. In the present case, however, the fees charged are not just for services rendered but they also have a large element of a regulatory fee levied for the purpose of monitoring the activity of the licensees to ensure that they comply with the terms and conditions of the license. Dealing with such regulatory fees, this Court in Vam Organic Chemicals Ltd. & Anr. etc. v. State of U.P. &Ors. etc. ([1997] 2 SCC 715 at page 726) observed that in the case of a regulatory fee no quid pro quo was necessary but such fee should not be excessive. The same distinction between regulatory and compensatory fees has been made in the case of P. Kannadasan & Ors. v. State of T.N. & Ors. ([1996] 5 SCC 670 in paragraph 36) as well as State of Tripura & Ors. v. Sudhir Ranjan Nath ([1997] 3 SCC 665 at 673)." (xvii) Reliance was placed on the decision of Supreme Court in case of Jindal Stainless Ltd. & Anr. Vs. State of Haryana & Ors., reported in (2017) 12 SCC 1 to submit that the decision in case of Commissioner, Hindu Religious (supra) reported in AIR (1954) SC 282 is still a good law as the same is referred to and relied upon as locus cla....
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....id pro quo between the taxpayer and the public authority (See Findlay Shirras on "Science of Public Finance", Vol. p. 203.). Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay. 44. Coming now to fees, a 'fee' is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay (Vide Lutz on "Public Finance" p. 215.). These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases." 154.Further, on distinction between tax and fee following was stated in paragraphs 45 and 46: "45... The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, ....
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....the submission with regard to Entry no.66 of List-II of VIIth Schedule of the Constitution of India which deals with fees in respect of any of the matter in the said list, but not including any fees taken in any Court, vis-a-vis entry no.5 of List-II of that schedule which refers to the Constitution of India and power of trust and other local authorities for the purpose of local self Government at village administration. The Supreme Court has held as under:- "3. The High Court of Gujarat has held that Entry 66 of List 11 of VIIth Schedule to the Constitution deals with fees in respect of any of the matters in the said List but not including any fee taken in any Court. Entry 5 of List 11 of that Schedule refers to Constitution and powers of improvement trust and other local authorities for the purpose of local self-government or village administration. The High Court has held that under entry 66, the State Legislature has legislative competence to make provisions for fees to be imposed by the Development Authority constituted under Section 31 of the said Act. The High Court has, however, held that simply because there is legislative competence for the State Government to ch....
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....as not delegated any such power to the Development Authority to impose fees for development, the regulations framed for such imposition of fees and the demands made therefor are wholly unauthorised and illegal. xxx 7. After giving our anxious consideration to the contentions raised by Mr. Goswami, it appears to us that in a fiscal matter it will not be proper to hold that even in the absence of express provision, a delegated authority can impose tax or fee. In our view, such power of imposition of tax and/or fee by delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. It appears to us that the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary power in the matter of exercise of fiscal power. The facts and circumstances in the case of District Council of Jowai, (AIR 1986 SC 1930) are entirely different. The exercise of powers by the Autonomous Jantia Hills Districts are controlled by the constitutional provisions and in the special facts of....
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.... hoardings in private properties by increasing the license fees on such hoardings. The two are not comparable at all since the Petitioners would in any case be paying license/lease amounts to the owners. (c) That apart, even for arriving at the license fees as per Resolutions at Annexur-A and Annexure-AA, there is absolutely no logic principle or method. Column 6 of the table of letter dated 4^th October, 2018, addressed to the Commissioner indicates 10% of the average of maximum and minimum rates for tenders and column 7 is for the rates of license proposed for private sites. If these columns are compared, it would be clear that there is no rational in determining the license fees of private properties. Thus, it is absolutely arbitrary and irrational and without legal principle and therefore, violative of Article 14 of the Constitution of India. Reliance was placed upon paragraph 21 of the judgment reported in Calcutta Municipal Corporation and others Vs. Shrey Mercantile (P) Ltd., and others, reported in (2005) 4 SCC 245 which is as under:- "21. Now coming to the question of challenge to the levy as arbitrary and discriminatory and violative of Article 14, we fi....
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....by the Bidhanagar Municipality it appears that the increase in the valuation ranges from 3954%, i.e., 39.5 times to 137%, i.e., 1.4 times. Such exorbitant increase in the tax on the public is, in our opinion, itself indicative of arbitrariness, and hence, violative of Article 14 of the Constitution. In a democracy, the people are supreme, and all authorities must function for the public welfare. Excessive increase in the tax burden on the public is surely not for the public welfare. Also, in the aforementioned context, in our opinion, the very method applied by the Municipality and the Central Valuation Board must be held to be arbitrary in nature and hence violative of the Constitution. In Maneka Gandhi v. Union of India [AIR 1978 SC 597], it was held that arbitrariness may be violative of Article 14 of the Constitution." (D) Submissions that after introduction of GST Regime, the respondents cannot collect any tax on the hoardings and consequently any fees. (i) It was submitted that by 101^st Amendment to the Constitution of India, Entry-55 of List-II of the VIIth Schedule of the Constitution was deleted with effect from 16th September 2016. The Entry-55 prior to....
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....tan Dave, Mr.Soaham Joshi and Mr.Vinay Vishen submitted that the contentions raised on behalf of the petitioners with regard to the constitutional validity of Section 386(2) of the GPMC Act and contention that license fees in question is a tax in garb of fees and such fee is excessive are without any basis. (A) Submissions with regard to presumption as to Constitutionality of Section 386(2) of the GPMC Act. 1. It was submitted that it is well established position of law that the writ courts while pronouncing upon the constitutionality of any statutory provision start with the presumption in favour of constitutionality and prefer a construction, which keeps the statutory provision within the competence of the Legislature. As per the rule of construction, if on one construction, a given statutory provision will become ultra vires, whereas on another construction, which may be open, the statutory provision in question remains effective and operative, the writ courts will prefer the later on the ground that the Legislature is presumed not to have intended an excess of its jurisdiction. In support of this submission, reliance was placed upon the judgment of the Apex Co....
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....partly set aside, and it is held that the impugned rule so far as it places directly recruited Assistants above the promotees for promotion as Deputy Tehsildar shall only apply to those promotees who are non graduates, but it is inapplicable to those promotees who are graduates." 2. It was therefore, submitted that Section 386(2) of the GPMC Act has been holding the field since 1949 and has stood the test of time. Therefore, challenge to the constitutional validity of Section 386(2) of the GPMC Act in the year 2019-2020, if succeeds, would invite serious upheaval against larger public interest since the amount of license fee in question collected by the Corporation along with other amounts by way of tax or otherwise are always being utilized for the benefit of people at large. Therefore, as held by the Apex Court in case of PGFG Ltd. Vs. Union of India, reported in (2015) 13 SCC 50 while examining the vires of any statutory provision, the writ court is to examine whether such challenge is raised at the earliest point of time when the statute came to be introduced or any provision was brought into the statute book or any long time-gap exists as between the date of the enact....
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....ing town planning, regulation of land-use and construction of buildings. Thus, Article 243-W contains merely an enabling provision, and it does not mean that the State is obligated to provide for such a statute. The Constitution (Seventy-fourth Amendment) Act, in any event, does not envisage that the existing laws would become non-operative or a vacuum would be created in the matter of enforcement of existing laws relating to urban planning and/or regulation of land-use and construction of buildings, etc. 10. The existing provisions of the statutes which govern the field, in our opinion, unless a statute is enacted by the State Legislature in terms of Article 243-W of the Constitution would continue to operate in the field. In view of the fact that the validity and/or interpretation of the MRTP Act and/or the regulations framed by the State are otherwise pending consideration before this Court, entertaining this special leave petition at this stage, in our opinion, would not serve any fruitful purpose. 11. We have noticed hereinbefore thatthe petitioners had not laid any foundation on facts in the writ petition so as to comprehensively question the vires of the ex....
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.... Panchayats as units of self-government. Article 40 reads as under: "40. Organisation of Village Panchayats.-The State shall take steps to organise Village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government." 2. Part IV of the Constitution deals with "directive principles of State policy". Article 37 provides that the provisions contained in this Part shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. 3. By the 73rd Constitutional Amendment Article 243-G was introduced in the Constitution of India. Article 243-G reads as under: "243-G. Powers, authority and responsibilities of Panchayats.-Subject to the provisions of the Constitution, the legislature of a State may, by law, endow the panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchaya....
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....ate or modify. See Constitution Bench judgment in M. Nagaraj v. Union of India8. Also see Akhil Bharat Goseva Sangh (3) v. State of A.P. and Kuldip Nayar v. Union of India where a Constitution Bench of this Court considered the basic structure theory in para 107 of the judgment and held as under: (Kuldip Nayar reported in 2006(7) SCC 1 at p. 67) "107. The basic structure theory imposes limitation on the power of Parliament to amend the Constitution. An amendment to the Constitution under Article 368 could be challenged on the ground of violation of the basic structure of the Constitution. An ordinary legislation cannot be so challenged. The challenge to a law made, within its legislative competence, by Parliament on the ground of violation of the basic structure of the Constitution is thus not available to the petitioners." 4. It was submitted that while dealing with similar challenge against the validity of the taxing provision i.e. Section 141B of the GPMC Act, the aforesaid view has been followed by the Division Bench of this Court in the case of Adani Gas Ltd. Vs. Ahmedabad Municipal Corporation, vide judgment dated 24.10.2013 rendered in SCA no.11459 of 2012 ....
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....ed powers with respect to the fixation of the rates of license fee or levy and collection thereof and that the same is always levied only with the approval / sanction of the Corporation. It was submitted that whatever the Commissioner proposes, the same does not become a rule of the Corporation, unless and until the same is approved by the Standing Committee, which is, in turn, required to be approved/ sanctioned by the Corporation under Section 386(2) of the GPMC Act. 7. It was submitted that reliance placed by the Petitioners in this behalf on the judgment of the Hon'ble M. P. High Court in case of Anil Kumar Gulati vs. State of M. P., reported in AIR 2004 MP 182, is totally misconceived. In the said case, validity of the taxing provisions relating to property tax was challenged, inter alia, on the strength of Article 243-X of the Constitution by contending that the language of the said Article suggests that the Legislature has the authority to make law and to authorize the Municipality to collect taxes on its own in accordance with such procedure and subject to such limits, as may be laid down therein, but without being constrained or governed by the Rules framed by the....
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....ng levied on coal-bearing land, held that the same is justified as a fee within the protective constitutional coverage of Entry 5 read with Entry 66 of List II, whereas the power to levy tax would be covered by Entry 5 read with Entries 49 and 50 of List II. 4. It was submitted that In view of above contentions, the provision contained in Section 386(2) of the GPMC Act is constitutionally valid in view of Entry 5 and Entry 66 of List II, which aspect of the matter has not been affected at all by deletion of Entry 55 of List II, which was otherwise not applicable in the instant case. (D) Submissions with regard to the effect of Article 243ZF of the Constitution of the India of to the provision contained in Section 386(2) of the GPMC Act. 1. It was submitted that the Article 243ZF of the Constitution of India provides that in case any provision of any law relating to Municipalities in force in a State is inconsistent with the provision of Part-IX of the Constitution of India, then in that eventuality, such inconsistent provisions would continue to be in force only until the expiry of one year from the commencement of operation of Part-IX, i.e. from 01.06.19....
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....itted that the provision relating to levy of tax and collection of fees cannot be compared with, inasmuch as for imposition of tax, there must be necessary safeguard/ guidelines. However, for levying fee, such safeguards/ guidelines are not required. Therefore, the judgments relied upon on behalf of the petitioners in cases of (i) New Manek Chowk Spg. & WVG Mills Co. Ltd. Vs. Ahmedabad Municipal Corporation, reported in AIR 1967 SC 1801; (ii) Krishna Mohan Pvt. Ltd., Vs. Municipal Corporation of Delhi, reported in (2003) 11 SCC 151; and (iii) Bhavnagar (Salt Lake) Welfare Association vs. Central Valuation Board, reported in (2007) 5 SCC 668 which are with reference to the taxing provisions, would not be applicable to the facts of the present case. 3. It was submitted without prejudice to other submissions that there are sufficient guidelines, checks and balances, flowing from the title of the GPMC Act along with its various provisions to support the levy and collection of the license fee in question under Section 386(2) of the GPMC Act. In this behalf, reliance is placed on the judgment of the Apex Court in case of Consumer Action Group vs. State of T.N. reported in (2000)....
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.... relating to Water Supply; Chapter XIV relating to Streets, Sky-Sign and Advertisement; Chapter XXII (Sections 372 to 386) relating to License Fees and Permits, provide sufficient policy, guidelines, checks and balances for providing levy and collection of a license fee in question under Section 386(2) of the GPMC Act. 5. It was submitted that apart from above, even Section 386(2) of the GPMC Act itself provides for sufficient guidelines, checks and balance inasmuch as a fee may be charged by the Commissioner only after taking sanction of the AMC consisting of 119 elected Municipal Councilors, representing the entire population within the limits of the Corporation. Thus, Section 386(2) of the GPMC Act itself provides guideline to control the discretion of the Commissioner in the matter of proposing fixation/ revision in the rates of license fee. The said aspect of taking sanction of the Corporation for levying a fee also takes care that the Commissioner does not have unbridled and unfettered power with respect to levy and collection of fee and the same is always levied only with the approval of the Corporation as whatever the Commissioner proposes, the same does not become....
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....license fee in question is a fee or a tax, is no longer res integra inasmuch as, the above referred aspects have already been considered and decided by this Court in the said judgment dated 02.02.2006 and upheld by the Division Bench in appeal. In the said judgments, after considering all the aspects of the very license fee in question i.e. license fee for advertisement hoarding in private properties, it has been categorically held by this Court that the same is not a tax, but is a regulatory fee. 4. It was submitted that the levy of license fee in question is a 'fee' and not a 'tax' and it is a regulatory-cum-compensatory fee. It is not even the case of the petitioners that the corporation is not providing any services and that no allegations of such nature have been made in the captioned writ petitions. Hence, once it is established/admitted position of fact that the AMC is providing services to the payer and the same is primary intention for charging such fee then in that eventuality, it maintains the characteristics of 'fee'. It is more particularly in view of the fact that the said license fee in question is being levied since last more than three decades continuously....
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....inction with those of tax as relied upon by the petitioners on Para nos. 41 to 51 of the judgment, has undergone a change, and therefore, various subsequent judgments of the Apex Court rendered were relied upon to demonstrate the gradual shift in the judicial thinking, to submit that today's legal position is very much in accordance with the legal position as propounded by this Court in its judgment dated 02.02.2006 received in SCA no.12603 of 2005 in case of Outdoor Advertising Owners' Association of Ahmedabad (supra) and confirmed by the learned Division Bench of this Hon'ble Court in appeal to that case. 6.1 It was submitted that the Apex Court in the case of Commissioner, Hindu Religious Endownments (supra) while dealing with the provisions of Section 76 of the Madras Hindu Religion and Charitable Endownments Act, 1951 which directed every religious Institution to pay the Government annually such contribution not exceeding 5% of its income, held to the following effect: (i) In Para 45 of the said judgment, characteristics of 'Tax' is enumerated i.e. it is a compulsory exaction of money under statutory power, it is without any reference to any special benefit t....
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....unds/ defects, referred in Para 51 of the aforesaid judgment, were made good by the Legislature. However, the said amendment came up for consideration before the Apex Court in case of Sadhindra Thirtha Swamiar Vs. The Commissioner for Hindu Religious and Charitable Endownments, reported in AIR (1963) SC 966, wherein the Apex Court, while upholding the amendment, observed in Para 18 to the following effect: (i) A levy in the nature of fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it; (ii) It is not a postulate of a fee that it must have direct relation to the actual services rendered by the authority to each individual who obtains the benefit of the service. (iii) If with a view to provide a specific service, levy is imposed by law and expenses maintaining the service are met out of the amounts collected, there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. It was submitted that, thus, shift in the earlier view had thus commenced. 6.3 Thereafter....
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....y market committees in the State of Andhra Pradesh under Section 12(1) of the Andhra Pradesh (Agriculture Produce and Livestock) Markets act, 1966, from Re.0.50 to Re.1 (i.e. 100%), in Para nos. 31 to 39, it was held as follows: (i) The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. (ii) In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class and that, it may be of no consequence that the State may ultimately and indirectly be benefited by it. (iii) Co-relationship between the levy and services rendered is one of general character and not of mathematical exactitude. All that is necessary is that there should be "reasonable relationship" between the levy of the fees and the services rendered. (iv) Once the petitioners therein concede that they do not challenge the levy of market fee at 50 paise per hundred in the year 1972, there can be no basis for challenging the increase in the rate of market fee from Re.0.50 to Rs. 1 in the year 1978. 6.6 Thereafter, in t....
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....dging house, hotel, etc. under Section 622 of the Hyderabad Municipal Act, 1955, from Rs. 50/- and Rs. 1000/- to Rs. 2,000/- where rent was above Rs. 1,500/- but not more than Rs. 2,000/, in Para 1 to 9 and 12 to 18, the Apex Court observed as follows: (i) The license fee which is charged for regulation of an activity would be validly classifiable as a fee and not a tax although no service is rendered. (ii)The Corporation has chosen the quantum of rent paid as the criterion for deciding the quantum of fee to be changed, which does have a nexus with the area in occupation of the lodging house or eating house. (iii) Although the amount collected from the license fee is credited in the common fund and the same is spent not just for the services rendered, but also to various other people and members of the public who stand benefited, such license fee is not a tax but, a regulatory-cum-compensatory fee. 6.8 Thereafter, in the case of B.S.E. Brokers' Forum, Bombay Vs. Securities and Exchange Board of India, reported in (2001) 3 SCC 482, while upholding the validity of regulatory fee and registration fee under Section 11(2)(k) and 12 of the Securities a....
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....ring the afore-referred judgments, in Para 10 & 16 to 30, the Apex Court observed as follows: (i) So far as regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of a fee provided so charged is not excessive. (ii) It is not necessary that service to be rendered by the collecting authority should be confined to the contributories alone. (iii) It is not necessary to establish that those who pay the fee must receive direct or special benefit or advantage of the services rendered, but only genera benefit, for which the fee was being paid. 6.11 Thereafter, in the case of Vijayalakshmi Rice Mill Vs. Commercial Tax Officers, Palakol, reported in (2006) 6 SCC 763, while considering the validity of levy of Cess under the Andhra Pradesh Rural Development Act, 1996, which levies cess in addition ot the purchase or sales tax being paid, in Para 18, 21, 27 & 28, the Apex Court observed s follows: (i) There has been a sea change in the concept of fee and now it is no longer regarded necessary that (a) some specific service must be rendered to the particular individuals from whom f....
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.... herein, however, what is lost sight of by the petitioners is an important fact that the Apex Court in its said 2018 judgment, only refers to those paragraphs viz. 43 to 46 of its 1954 judgment, in respect whereof, there has been no change in the judicial thinking. This was sought to be done by the Apex Court to come to the conclusion in its 2018 judgment that 'the transit fee' in question in the said case was a regulatory fee wherein the State was not to prove quid pro quo for levy of the said fee. It was submitted that 'sea-change in the judicial thinking' as referred to by the Apex Court in its subsequent decisions was, in fact, in respect of the observations of the Apex Court in Para nos. 48 to 51 of its 1954 judgment. Under the circumstances, the petitioners' reliance on the above referred 2018 judgment of the Apex Court is totally misconceived and erroneous. 7. It was submitted that the observations of this Court in its judgment dated 02.02.2006, rendered in SCA no.12603 of 2005 in case of Outdoor Advertising Owners' Association of Ahmedabad Vs. State of Gujarat to suggest that the proposition of law laid down therein still holds good and the same is not per incuriam....
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.... It is contended that only when such facilities are provided that the petitioners are able to erect sites for exhibiting advertisements. (Emphasis supplied) 30. As noted above, strict fulfillment of quit pro quo is not necessary. A portion of funds collected by way of fee is utilised for the purpose of maintaining regulatory machinery by the Corporation. Besides, these funds are also diverted for the purpose of betterment of the roads and for ensuring that the commuting public is provided with proper facilities. Only when the Corporation provides proper roads with lighting, parking facilities wherever necessary and by providing for proper drainage and keeps such roads clean and well maintained that, the property owners on either side of such roads would be able to attract customers to exhibit their advertisements on their properties. One does not need much thinking to appreciate that on roads full of pot holes and dust on dirt filled streets, on small narrow lanes, on congested bye-lanes there would be no potential for commercial development and there would be no potential for exhibiting attractive advertisers. The companies who put up their advertisements exhibiting their....
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....ns that these roads house some of the prime properties in the city and it is only on account of such commercial development, that existing property owners can claim highest rent by permitting companies to exhibit their advertisements. Therefore, money spent by the Corporation for building these roads, for maintaining these roads in the prime condition and for maintaining other facilities such as proper parking and drainage on these roads, ultimately benefits owners of the properties and in turn the petitioners as agents and other similarly situated persons. It is therefore, not possible to accept the contention that by spending such money on maintenance of the roads and other incidental facilities around the area, the petitioners receive no direct or indirect benefit from the Corporation. As discussed earlier, if the roads were to become full of pot holes and have no cleanliness, if debris or dirt is allowed to collect around these roads, if heaps of filth give constant stench, automatically, the glitter of the roads would vanish. The property owners would no longer enjoy same potential, would not enjoy the same earning from getting maximum rental out of their properties. It is the....
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....advertisements on such sites. It is at that rate that potential advertiser would have to pay to the tenderer to exhibit his advertisement. The Corporation therefore, committed no error in adopting the rate offered by the tenderer to the corporation for tender sites as a base figure upon which the license fee is calculated. 16% of the said rate for those properties which are within 80 meters and 8% for those properties which are outside 80 meters of a road junction, cannot be termed as excessive. No facts and figures are placed before this Court to examine the true impact of such increase on the earning potential of the petitioners. Even otherwise, as noted above, it is the base rate which the tenderer offered to pay to the corporation, which has been accepted as yard stick. The tenderer has to keep sufficient margin for administrative expenses, interest loss on advance payments as also his net profit. It is only after these additions are made, that market value of site in question would be determined. On this count also I do not see that increase in the rate is excessive. It may be that in certain areas on account of higher commercial development, the rates have undergone greater i....
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....s not arbitrary or excessive :- 1. It was submitted that the petitioners lastly contended that the rates of the license fee in question are arbitrary and excessive, as there is no justification for the increase in the license fee and that the so called calculation made by the Corporation is not based on the discernible principle and that the factors considered by the Corporation are irrational and Petitioners relied upon the judgments in case of (i) Ahmedabad Urban Development Authority vs. Sharadkumar Jayantkumar Pasawalla - MANU/SC/0400/1992 and (ii) Judgment dated 09.06.2017 of this Hon'ble Court in Bharat Petroleum Corporation Limited vs. State of Gujarat being SCA no.16304 of 2013 2. In this regard, it was submitted that the rates of license fee in question are neither arbitrary nor excessive, as alleged or otherwise and on the contrary, on perusal of the documents produced by the Corporation, it is obvious that the rate of license fee proposed by the Corporation is based on various relevant factors and it is not the case, where the rates are proposed without any basis. Thus, it is incorrect on the part of the petitioners to contend that the rates of license ....
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....ated 05.03.2014 passed in LPA No.331 of 2006 in SCA no.12603 of 2005 without disturbing any of the observations and propositions of law of the learned Single Judge and thus, the said judgment of the learned Single Judge of this Court has reached the finality. 9. It was therefore, submitted that in view of above and more particularly in view of the aforesaid judgment dated 02.02.2006 rendered by this Court in earlier round of litigation, the captioned petitions deserve to be dismissed. It was pointed out that identical question was also raised before the Bombay High Court in the case of Yog Advertising & Marketing Services vs. Municipal Corporaiton, reported in 2016 SCC online Bom 62 wherein after considering the law laid down by the Apex Court in above referred judgments, all the contentions raised by the petitioners therein were rejected upholding the levy of license fees imposed under the Mumbai Municipal Corporation Act. Lastly, it was submitted that the validity of Section 386(2) of the GPMC Act be upheld with a declaration that the Resolutions of the Standing Committee and the Corporation under challenge, are absolutely legal and valid and that, therefore, the s....
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.... and the Rules because it is a pre-constitution provision of the BPMC Act, 1949 without there being any guidance or check in the Act. It was therefore, submitted that the fees which is collected is nothing but tax in guise of fees and therefore, for levy of fees and tax, guidance has to be there in the statute. (C) With regard to the contention that fees charged is regulatory-cum-compensatory and the guidance in the statute is necessary for tax and not for fees and that the decision of the Apex Court in case of Commissioner, Hindu Religious Endowments (Supra) reported in AIR (1954) SC 282 is diluted and there is a paradigm shift, it was submitted that the contention of the respondents that the fees charged is regulatory-cum-compensatory is not borne-out from the affidavit-in-reply, which clearly states that the fees are regulatory. It was reiterated that for fees and tax both guidance has to be there in the Act itself, but Section 386(2) of the GPMC Act gives unbridled power to the Commissioner to charge fees at such rate as shall from time to time be fixed by him without any guidance at all. It was therefore, submitted that if contention that for tax limits and procedure ....
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.... has not even remotely established relationship between fees and regulatory purpose. (iv) (1983) 4 SCC 353 - Issue involved was regarding market fees. Issue is totally different. (v) (1985) Supp SCC 476 - Again question is of market fees and hence not applicable. (vi)(1999) 2 SCC 274 - The petitioners have relied upon for their submissions. (vii) (2001) 8 SCC 556 - This judgment was cited and harped upon by the respondents to contend that AIR 1954 SC 282 is diluted. The note of the editor on page 558 showing AIR 1954 SC 282 to be 'Overruled' was shown. However, it was submitted that from the following it will be clear that AIR 1954 SC 2892 still holds the field. i) It is a 7 Judge Bench decision and therefore it is binding and cannot be overruled by the Bench of lesser number of Judges. ii) Reliance was placed on Para 75, 77 and 92 in case of (2008) 10 SCC 1 . "75.By virtue of Article 141 of the Constitution, the judgment of the Constitution Bench in State of Karnataka Vs. Umadevi (3) [(2006) 4 SCC 1 : 2006 SCC (L&S) 753] is binding on all the courts including this Court till the same is overruled by a larger Bench. How....
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.... given in this judgment has been given by AMC for levy/ increase of license fees. (ix)(2006) 6 SCC 763 wherein it is accepted that there has to be co-relation between the fees generated by Cess and value of service. That is what petitioners are contending and the respondents have failed to established. (x) (2008) 8 SCC 167 In this case the license fee was regulatory in character. The License fees under challenge are quashed as too high. para 32, 33 and 35 ;- "32.From the conspectus of the views taken in the decided cases noted above it is clear that the impugned license fee is regulatory in character. Therefore, strictosensu the element of quid pro quo does not apply in the case. The question to be considered is if there is a reasonable correlation between the levy of the license fee and the purpose for which the provisions of the Act and the Rules have been enacted/framed. ... 33. The question that remains to be considered is whether the enhanced lincece fee under challenge is grossly high and excessive, and therefore, arbitrary. On a first look it appeared to us that the enhancement form Rs. 10,000 to Rs. 18,00,000 (maximum), was too high. We a....
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....ially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee." (xii) (2015) 5 SCC 813 -The issue in this case is totally different. It is pertaining to increase in the license fees for "Railway Property". It is with respect to distribution of the State largesse. Here the license fees for hoardings in Private properties are questioned. (D) With regard to the reliance placed by the respondents on the decision of Yog Advertising & Marketing Services Vs. Municipal Corporation reported in 2016 SCC Online Bombay 62, it was submitted by learned Senior advocate Mr. Joshi that the case of the Corporation in the said judgment was that for regulating the activity, it was required in the facts of this case by way of fees is to be used for....
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.... case of the existing rates are Rs. 500/-, 33% would come to Rs. 665/- whereas the rates proposed is Rs. 1000/-. The respondents have deliberately not given the calculation of other zones, where even when the 10% of average of maximum and minimum rates of tenders remain the same in several zones, the new rates proposed are different zones. For example in West Zone on CG Road 10% of average of maximum and minimum of tender rates is Rs. 3397.5 and the proposed rate for license fees is Rs. 4,000/-. For West Zone on Ashram Road 10% of average for tender rates is same i.e. Rs. 3397.5 whereas the proposed rates is Rs. 2,500/-. (G) Lastly it was submitted that no rational is given for the proposed increase for the license fees by the respondents and the so-called justification given by the respondents cannot be considered because the bare comparison of existing rates with the proposed rates would show that increase is irrational, arbitrary and highly excessive. It was therefore, submitted that the petitions are required to be allowed as prayed for and appropriate orders for refund in each petition may be passed. ANALYSIS :- 12. Considering the chronology of events ....
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....r the purported exercise of powers under Section 386(2) of the GPMC Act is without authority in law; (iv) Section 386(2) of the GPMC Act is bad in law for excessive delegation, since it does not provide for any guidelines, checks or control etc. (II) The petitioners have questioned levy of the license fees in garb of levy of the tax on following two grounds. (i) There is no broad quid pro quo between the quantum of the license fee in question and the specific services being provided, since the quantum of fee is higher than the expenses required for rendering specific services, and; (ii) The License fee in question is deposited in the same account where the collection of tax is deposited and all the expenditure is being incurred from the very account, which is not permissible as per the judgment of the Apex Court in case of Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmi Thirtha Swamiar of Shri Mutt, reported in Air 1954 SC 282." (III) The petitioners have also prayed that the levy of fees is arbitrary, irrational and highly excessive in absence of any rational bases for increase of license fees. 14. On perusal of the provisions o....
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....statute and on that ground existing laws could be stuck down only on that premise. 16. Section 386(2) of the GPMC Act is in operation since 1949 and the challenge thereto being ultra vires to the Articles of the Constitution would result in detriment to the public interest since the amount of license fee being collected by the Municipal Corporation along with the other amount collected by way of tax or otherwise are always being utilized for the benefit of people at large. As held by the Apex Court in case of PGF Ltd. Vs. Union of India (supra) that while examining the vires in preliminary statutory provision writ Court is to examine whether the challenge is raised at the earliest point of time when the statute came to be introduced or any provision was brought into the statute book for any long time-gap on the date of enactment and the date when the challenge is made. The Apex Court held as under:- "37. The Court can, in the first instance, examine whether there is a prima facie strong ground made out in order to examine the vires of the provisions raised in the writ petition. The Court can also note whether such challenge is made at the earliest point of time when the....
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.... law and thereby creating an impediment for the authorities and institutions concerned. Such challenges always result in prolongation of litigation enabling such unscrupulous elements to take advantage of the pendency of such litigation preferred by them and thereby gain unlawful advantage, to the detrimental disadvantageous position of the others. In effect, such attempts made by invoking the extraordinary jurisdiction of the writ courts of many such challenges, mostly result in rejection of such challenges. However, concurrently, while taking advantage of the long time-gap involved in the pending proceedings, such unscrupulous litigants even while suffering the rejection of their stand at the end as to the vires of the provisions, always try to wriggle out of their liabilities. It is, therefore, imperative and worthwhile to examine at the threshold as to whether such challenges made are bona fide and do require a consideration at all by the writ courts by applying the principle of "lifting the veil" and as to whether there is any hidden agenda in perpetrating such litigation. With that view, some of the criteria should be kept in mind whenever a challenge to a provision of law is....
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.... that the Legislature is presumed not to have intended to have exceeded its jurisdiction. 29. Sometimes to uphold the constitutional validity the statutory provision has to be read down. Thus, In re, Hindu Women's Right to Property Act, AIR 1945 FC 28, the Federal Court was considering the validity of the Hindu Women's Right to Property Act, 1937. In order to uphold the constitutional validity of the Act, the Federal Court held the Act intra vires by construing the word `Property' as meaning `property other than agricultural land'. This restricted interpretation of the word `Property' had to be given otherwise the Act would have become unconstitutional. Similarly, in Kedernath vs. State of Bihar AIR 1962 SC 955, this Court had to construe Section 124-A of the Indian Penal Code which relates to the offence of sedition which makes a person punishable who `by words, either spoken or written or by sign or visible representations, or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the Government established by law'. This Court gave a restricted interpretation to the aforesaid ....
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....-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats, at the appropriate level, subject to such conditions as may be specified therein, with respect to (a) the preparation of plans for economic development and social justice; (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule." 4. Article 243-G, thus, endows the Panchayats with such power and authority as may be necessary to enable them to function as instructions of selfgovernment. Such law may contain provisions for the devolution of powers and responsibilities upon Panchayats, subject to conditions as may be specified, with respect to the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule of the Constitution. 37. This contention, in our view, is not tenable in law. We have already said that the 73rd Amendment was brought into force on 24.4.93 to give effect to one of the Directive Princ....
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....sed by the submission of Mr. Bhatt in this regard. The challenge to the validity of the Vadodara Urban Development Authority is after a lapse of almost 35 years. Mr. Trivedi, the learned Advocate General appearing for the State Government is right in submitting that the main purpose of VUDA is for the proper development or redevelopment of urban area according to the provisions of Section 22 of the Act. The powers and functions of the Urban Development Authority are conferred under Section 23 of the Act. Such powers are issued upon the Urban Development Authority for an effective planned development and control, keeping in view the interest of the public at large. Mr. Trivedi is justified in submitting that the challenge should fail also on the ground of delay because at such a belated stage if such a challenge is accepted then it would hamper the entire development process affecting the public at large. It would also affect and have a far-reaching repercussions upon the actions which have been taken so far by the development authorities over a period of 35 years including the implementation and execution of several town planning schemes which are in existence. 20. In case of J.....
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....utional provisions. 15. In Mcdowell and Co.2 while dealing with the challenge to an enactment based on Article 14, this Court stated in paragraph 43 (at pg. 737) of the Report as follows : "........A law made by Parliament or the legislature can be struck down by courts on two grounds and two grounds alone, viz., (1) lack of legislative competence and (2) violation of any of the fundamental rights guaranteed in Part III of the Constitution or of any other constitutional provision. There is no third ground.......... ........ if an enactment is challenged as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck d....
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....tion 11 insofar as it provided for payment of compensation in instalments was invalid. The ground of invalidation is clearly one of discrimination. It must be remembered that an Act which is discriminatory is liable to be labelled as arbitrary. It is in this sense that the expression 'arbitrary' was used in para 7." 24. In Hamdard Dawakhana and another V/s. The Union of India and others, AIR 1960 SC 554, inter alia, while referring to the earlier two decisions, namely, Bengal Immunity Company Ltd. and Mahant Moti Das , it was observed in paragraph 8 (at pg. 559) of the Report as follows: "8. Therefore, when the constitutionality of an enactment is challenged on the ground of violation of any of the articles in Part III of the Constitution, the ascertainment of its true nature and character becomes necessary i.e. its subject-matter, the area in which it is intended to operate, its purport and intent have to be determined. In order to do so it is legitimate to take into consideration all the factors such as history of the legislation, the purpose thereof, the surrounding circumstances and conditions, the mischief which it intended to suppress, the remedy for....
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....C/0293/1983, the Andhra Pradesh High Court has held as under: "24. It is argued that since the impugned provision has been in existence for over twenty three years and its validity has once been upheld by the High Court, this Court should not pronounce upon its validity at this late stage. There are two answers to this pro position. First, the very fact that nearly twenty three years are over from the date of the enactment of the impugned provision and the discrimination is allowed to be continued unjustifiably for such a long time is a ground of attack in these cases. As already observed, the landlords of the buildings constructed subsequent to August 26, 1957 are given undue preference over the landlords of buildings constructed prior to that date in that the former are free from the shackles of the Act while the latter are subjected to the restrictions imposed by it. What should have been just an incentive has become a permanent bonanza in favour of those who constructed buildings subsequent to August 26, 1957. There being no justification for the continuance of the benefit to a class of persons without any rational basis whatsoever, the evil effects flowing from the im....
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....te or semi-literate persons who used to blindly follow the preachers of the religion. Such a purpose has lost all significance with the passage of time and, therefore, has to be declared ultra vires Article 14 of the Constitution of India. 25. The Division Bench of this Court while considering the challenge against the validity of existing provision of Section 141B of the GPMC Act, in case of Adani Gas Vs. AMC (supra) has held as under :- "16.8. Now, considering the scheme of the property tax under the GPMC Act, Section 127(3) provides that "Municipal Tax shall be assessed and levied in accordance with the provision of this Act and Rules". Pursuant to Section 127(3), the Municipal Corporation has framed the Rules in exercise of powers under Section 454 of the Act and are approved by the State Government. The rules provide procedure for assessment and collection of the levy. As observed by the Hon'ble Supreme Court in the case of M/s. Goodyear India Limited (supra) and even otherwise there are three stages in the imposition of tax. There is declaration of liability i.e. part of the Statue which determines what percent in respect of what property are liable. Section 127 p....
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....tees and conferring them with powers and authority. We have already referred to the various provisions including clause (b) of Article 243-W. Therefore, the provision of section 4 of the BMC Act is consistent with the provision of Part-IXA. Clauses (a) and (b) of Article 243-X cannot be read in isolation and merely because Legislature authorizes the Standing Committee to fix the rates of property taxes and to approve rules framed by the Commissioner in accordance with sub-section (1B) of section 154, the relevant provisions of the BMC Act cannot be said to be ultra vires Article 243-X. The powers under the charging sections in Chapter VIII are conferred on the Corporation itself including the power to exercise option of taking recourse to capital value regime for the levy of property taxes. Moreover, we have pointed out that certain provisions of Chapter-VIII are machinery provisions. As required by law, the decision adopting Capital Value System has been taken by the Corporation consisting of 227 elected and nominated councillors. This power cannot be said to be unguided power only because subsection (1) of section 140A does not expressly lay down any specific conditions for exerc....
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....r arguments overlook the fact that it is the State which has to make the necessary law. Even in terms of this Constitutional Scheme the law making power of the State is untouched. The power to impose tax by, and funds of, the Municipalities, is granted vide Article 243X. 38. Therefore, what we have held above gets further reinforced and supported by Article 243X of the Constitution of India. It is the Legislature of the State and which makes the law by which Municipalities are authorized to levy, assess, collect and appropriate such taxes, dues, tolls and fees in accordance with such procedure and subject to such limits. There could be assignment of duties to the Municipalities. The State Government may assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits. Therefore, when the Legislature of the State has to endow the Municipalities and by law with powers and authority so as to enable them to function as institutions of self Government effectively, then, that position is in no way affected merely because the law authorizes the State to impose the taxes. Merely bec....
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.... of section 141B of the GPMC Act is required to be read along with sub-section (4) of section 141B. Sub-section (4) of section 141B specifically authorizes and/or permits the Corporation to increase or decrease or neither increase nor decrease the rate of Tax determined under section (1) read with subsections (2) and (3), however subject to the Rules which may be framed for that. As observed hereinabove, what are the factors to be taken into consideration while increasing or decreasing the rate of Tax determined under sub-section (1) read with sub-sections (2) and (3) of the GPMC Act are provided under Section 141B(4)(a) of the GPMC Act. Therefore, the words which are used under subsection (4) of section 141B of the GPMC Act are that "the Corporation may increase or decrease, rate of Tax determined under sub-section (1) read with sub-sections (2) and (3) of the GPMC Act. Therefore, under the Statute itself it authorizes the Corporation to increase or decrease the rate of Tax determined under sub-section (1) read with sub-sections (2) and (3) of Section 141B of the GPMC Act. Therefore, rate of Tax which are determined under subsection (3) of Section 141B of the GPMC Act also can be ....
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....he Taxation Rules cannot be said to be ultra vires to Article 243X of the Constitution of India. As observed hereinabove, section 141B(4) of the GPMC Act is part of the Statute which permits and/or authorizes the Corporation to increase or decrease the property Tax as per the Rules. Section 454 of the GPMC Act permits and/or authorizes to frame the Rules and in exercise of powers under Section 454 of the GPMC Act, Taxation Rules are framed." 29. In case of Selvel Advertising Pvt. Ltd. v. State of Orissa, reported in 2012 SCC OnLine Ori 105, the Orissa High Court has held as under: "20. Article 243X of the Constitution provides that the Legislature of a State may, by law authorize the Municipality to levy, collect, and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits, as may be specified in law. The Regulations, 2010 in question provides to levy tax on advertisements in the Municipality. Such Regulations have been made by Rourkela Municipality in exercise of the powers conferred by Section 388(30) of the Act, 1950. Section 388 empowers the Municipal Council to make Regulation or Bye-laws not inconsistent with thi....
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....265 requires that (i) there must be a law, (ii) the law must authorize the tax; and (iii) the tax must be levied and collected according to the law. In the instant case, ingredients of Article 265 are not satisfied. xxxx 37. In the result, the writ petition is allowed and the Rourkela Municipality Regulations of tax on advertisement, 2010 (Annexure-1) is quashed." 30. In case of Meghalaya Commercial Truck Owner and Operators Association v. State of Meghalaya , 2010 SCC OnLine Gau 412 : (2011) 4 Gau LR 398 at page 433, the Meghalaya High Court has held as under: "84. The proposition enunciated in New Delhi Municipal Council (supra), with reference to the power of the Municipalities to impose taxes under article 243X was held to be dependant upon their parent legislations for the bestowal thereof. Their lordships held that in case of Municipalities within the State, they would have to be specifically delegated the power to tax by the State Legislature concerned and that the Municipalities do not have any independent power to levy tax. That a subordinate legislation to be valid has to be within the scope of the rule making power provided in the statute ha....
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....herein, which is clearly indicative of the fact that wherever the movement of goods from outside the limit of local area terminates within the local area for the purpose of utilisation of such goods within that local area by way of use, consumption or sale therein, there is direct nexus with the activity of movement of goods and levy of tax on the entry of goods which moves into the local limits of the defined local area. Apparently, this nexus is related to levy of tax for providing fund for the institution of self governance to discharge functions which have been assigned to the Municipalities or Panchayats or any other authority designed as an Institution of self governance. That object is clear from these provisions of the constitution that the levy and collection of tax on the activity of entry of goods within the local area for use, consumption or sale therein is either to be levied and collected by the authority of local area concerned or to be levied and collected by the State Government itself and assign the same to the institution of self governance of such local area." 32. The provisions of Section 386(2) of the GPMC Act begins with the words "General provisions regar....
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....n by the Corporation as provided under Sub-section-2 of Section-386 of the GPMC Act. 34. In view of above analysis and conspectus of law, reliance placed by the petitioners on the ratio in case of Anilkumar Gulati Vs. State of MP reported in AIR (2004) SC 182 cannot be made applicable to the facts of the case because in the said case validity of taxing provision relating to property tax was challenged being violative of Article 243X of the Constitution and without any rules framed by the State Government, the legislature could not have delegated the powers to the Executive to frame rules and compel the local authority to impose tax in absence of any power by the State legislature ,no fee or tax could have been charged by the local body. However, in the facts of the case Sub-section-2 of Section 386 clearly empowers the Commissioner with the sanction of the Corporation to charge fees. 35. Therefore, in view of the above referred case law and discussion, it cannot be said that Section-386(2) of the GPMC Act is ultra vires to the Article 243X of the Constitution. Accordingly, the challenge to the constitutional validity of Section-386(2) of the GPMC Act fails. 36. The content....
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....decisions are the subject-matter of civil appeals filed under Article 136 of the Constitution. For the sake of convenience, we would call these matters, respectively as (A) "Coal matters", (B) "Tea matters", (C) "Brick earth matters", and (D) "Minor mineral matters". Inasmuch as the basic constitutional questions arising for decision in all these matters are the same, all the matters have been heard analogously. xxx 31. Article 245 of the Constitution is the fountain source of legislative power. It provides - subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the legislature of a State may make laws for the whole or any part of the State. The legislative field between Parliament and the legislature of any State is divided by Article 246 of the Constitution. Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule, called the "Union List". Subject to the said power of Parliament, the legislature of any State has power to make laws with respect to any of the matters enumerated in List III, called the "Concurrent List". Sub....
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.... lists is not by way of scientific or logical definition but by way of a mere simplex enumeratio of broad categories. A power to legislate as to the principal matter specifically mentioned in the entry shall also include within its expanse the legislations touching incidental and ancillary matters. (5) Where the legislative competence of the legislature of any State is questioned on the ground that it encroaches upon the legislative competence of Parliament to enact a law, the question one has to ask is whether the legislation relates to any of the entries in List I or III. If it does, no further question need be asked and Parliament's legislative competence must be upheld. Where there are three lists containing a large number of entries, there is bound to be some overlapping among them. In such a situation the doctrine of pith and substance has to be applied to determine as to which entry does a given piece of legislation relate. Once it is so determined, any incidental trenching on the field reserved to the other legislature is of no consequence. The court has to look at the substance of the matter. The doctrine of pith and substance is sometimes expressed in terms of as....
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....spite of the Act having been enacted in the year 1986, the successive State Governments, which had preceded it, did not take care of the legislation and it was only the then Government which became conscious of its obligations under the SADA Act and commenced identifying special areas requiring development such as Sonbhadra. The imposition of cess envisaged through the SADA Act and the Rules was a step towards developing the special area. It is a matter of common knowledge, and does not need any evidence to demonstrate, that mining activity carried on the land within the special area involves extraction, removal, loading-unloading and transportation of the minerals accompanied by its natural consequences entailed on the environment and the infrastructure such as roads, water and power supply etc. within the special area. The impugned cess can, therefore, be justified as a fee for rendering such services as would improve the infrastructure and general development of the area, the benefits whereof would be availed even by the stonecrushers. Entry 66 in List II is available to provide protective constitutional coverage to the impugned levy as fee. xxx 143. As a tax the impugn....
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....ssment or levy. Depending on the context and purpose of levy, cess may not be a tax; it may be a fee or fee as well. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of fee collected. It is equally not necessary that the services rendered by the fee collected should remain confined to the persons from whom the fee has been collected. Availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged. The levy of the impugned cess can equally be upheld by reference to Entry 66 read with Entry 5 of List II." 37. In view of the above dictum of law, provisions of Sub-section-2 of Section 386 of the GPMC Act is constitutionally valid as per Etnry-5 read with Entry-66 of list-II of the VIIth Schedule and deletion of Entry-55 of list-2 cannot be said to have any effect on the power to levy fees as provided by Section 386(2) of the GPMC Act. 38. Similarly, Article 243ZF of the Constitution of India provides that anything in this part any provision of any law relating ....
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....na Mohan (Supra) and Bidhannagar (Salt Lake) (Supra) with reference to taxing provisions and the same would not be applicable to the facts of the present case pertaining to levy of fees. The Apex Court in case of Consumer Action Group Vs. State of Tamilnadu reported in (2000) 7 SCC 425 while dealing with similar challenge against the validity of Section 113 of Tamilnadu Town and Country Planning Act, 1971 has held as under:- "13.For the State reliance is placed in the State of Bombay and Anr. V. F.N. Balsara, 1951 SCR 682 (Constitution Bench). With reference to the validity of Section 139(c) of the Bombay Prohibition Act (XXV of 1949) the submission was that power given to the Government to exempt any person or institution or any class of persons or institutions from observing whole or any of the provisions of the Act, rule or regulation or order is too wide and unbridled. This section is similar in the width of discretion to the section we are considering. This Court while setting aside the High Court decision upheld the provisions and held:- "This Court had to consider quite recently the question as to how far delegated legislation is permissible, and a referenc....
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....empt any person from the operation of the Act. This Court held: "A more substantial contention is the one based on s. 15, which authorises the Government to exempt any person or class of persons from the operation of the Act. It is argued that that section does not lay down the principles on which exemption could be granted, and that the decision of the matter is left to the unfettered and uncanalised discretion of the Government, and is therefore repugnant to Art. 14. It is true that that section does not itself indicate the grounds on which exemption could be granted, but the preamble to the Ordinance sets out with sufficient clearness the policy of the Legislature; and as that governs s. 15 of the Ordinance, the decision of the Government thereunder cannot be said to be unguided. Vide Harishanker Bagla v. The State of Madhya Pradesh. 16. P.J. Irani V. The State of Madras 1962 (2) SCR 169 (Constitution Bench). In this case Section 13 of Madras Buildings (Lease and Rent Control) Act, 1949 is similar to the provisions we are considering conferred power of exemption. This Court held: "It was not possible for the statute itself to contemplate every such con....
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....f economic, social order with scientific development spawns innumerable situations which Legislature possibly could not foresee, so delegatee is entrusted with power to meet such exigencies within the in built check or guidance and in the present case to be within the declared policy. So delegatee has to exercise its powers within this controlled path to subserve the policy and to achieve the objectives of the Act. A situation may arise, in some cases where strict adherence to any provision of the statute or rules may result in great hardship, in a given situation, where exercise of such power of exemption is to remove this hardship without materially effecting the policy of the Act, viz., development in the present case then such exercise of power would be covered under it. All situation cannot be culled out which has to be judiciously judged and exercised, to meet any such great hardship of any individual or institution or conversely in the interest of society at large. Such power is meant rarely to be used. So far decisions relied by the petitioner, where the provisions were held to be ultra vires, they are not cases in which court found that there was any policy laid down under....
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....e held to be unbridled, as Government has to exercise its power within this guideline. Hence we hold Section 113 to be valid." 41. Considering the scheme of the GPMC Act and the provisions contained therein, we observe that Chapter-II thereof pertains to Municipal Authorities having charge with the execution of the Act like Commissioner, Standing Committee, Councilor etc., whereas Chapter-IX provides for Municipal fund and other funds, whereas ChapterXI provides for Municipal taxation including property tax, Chapter-XII provides for drains and drainages, Chapter-XIII provides for water supply and Chapter-XIV provides for streets. Section244 prescribed regulations as to Sky-signs and advertisements and Section-245 provides for regulation and control of advertisement and Chapter-XXII provides for licenses and permits from Sections 372 to 386. Sections 372 to 375 provides for licensing of surveyors, architects, engineer, structure designers, clerks of work and plumber. Section-376 to 376A provides for trade license and other licenses for keeping animals and certain articles, Section 377 prescribed licenses for sale in Municipal market, Section378 to 380 provides for licenses for pr....
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....of any act, which is about to be done or has been done for and on behalf of the Corporation is in contravention of excess of powers conferred by the GPMC Act or any other law for the time being in force or such action is likely to lead breach of the peace etc., then the State Government may by order in writing suspend the execution of order or prohibit doing of any such act. Therefore, even the sanction of the Corporation as provided under Sub-section-2 of Section 386 is subject to the control of the State Government as provided under Section 451 of the GPMC Act. In view of the above, it cannot be said that there is excessive delegation by legislature upon the Commissioner for determination of the levy of the fees under Sub-section-2 of Section 386 of the GPMC Act. 43. The submissions of the petitioners that license fees in question is tax in garb of fees is concerned, the issue is no more res integra in view of the judgment of the learned Single Judge in the case of the petitioner being SCA no.12603 of 2005, which is now merged with the order passed in LPA no.331 of 2006 and the said judgment cannot be said to be per incuram as canvassed on behalf of the petitioners relying upo....
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....s kinds of fees, it is not possible to formulate a definition that would be applicable to all cases. 47. As regards the distinction between a tax and a fee, it is argued in the first place on behalf of the respondent that a fee is something voluntary which a person has got to pay if he wants certain services from the Government; but there is no obligation on his part to seek such services and if he does not want the services, he can avoid the obligation. The example given is of a licence fee. If a man wants a licence that is entirely his own choice and then only he has to pay the fees, but not otherwise. We think that a careful examination will reveal that the element of compulsion or coerciveness is present in all kinds of imposition, though in different degrees and that it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees. It is difficult, we think, to conceive of a tax except, it be something like a poll tax, the incidence of which falls on all persons within a State. The house tax has to be paid only by those who own houses, the land tax by those who possess lands, municipal taxes or ....
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....e fees for motor vehicles. Here the costs incurred by the Government in maintaining an office or bureau for the granting of licences may be very small and the amount of imposition that is levied is based really not upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases, according to all the writers on public finance, the tax element is predominant18, and if the money paid by licence holders goes for the upkeep of roads and other matters of general public utility, the licence fee cannot but be regarded as a tax. 49. In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax. There is really no generic difference between the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes19. ....
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....here is total absence of any co-relation between the expenses incurred by the Government and the amount raised by contribution under the provision of Section 76 and in these circumstances the theory of a return or counter-payment or quid pro quo cannot have any possible application to this case. In our opinion, therefore, the High Court was right in holding that the contribution levied under Section 76 is a tax and not a fee and consequently it was beyond the power of the State Legislature to enact this provision. The above principles laid down by the 7 Judges Bench of the Supreme Court are in the context of the facts of the said case, wherein the Apex Court was called upon to decide the constitutional validity of the Madras Hindu Religious & Charitable Endowment Act, 1951 being ultra vires to Articles 19(1), 25, 26 and 27 of the Constitution of India. In this context, the Apex Court after analyzing the object of the State legislation examined the Constitutional validity of the provisions thereof. The Apex Court also considered the Constitutional validity of Section-76 of the said Act which provides for payment of annual contribution for the services rendered by the Government and ....
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.... categorically held by the Apex Court that when the Government grants permission or privilege to a person to do something which otherwise that person would not be competent to do, it extracts fees either heavy or moderate on that person in return for the privilege conferred but if the amount of imposition i.e. levy is based clearly not upon the cost incurred by the Government but upon the benefit that individual receives and if the license fees collected, the same cannot be but regarded as tax. The Apex Court therefore, has rendered the above decision as per the language of Section-76 of the Madras Act which was having some of the characteristic of the tax and imposition bears an analogy to income tax. Whereas in the facts of the present case, section 386(2) of the GPMC Act provides for levy of license fees for license to place advertising hoardings in private properties for license to be issued as per provisions of the GPMC Act and hence the same can never be considered as tax because the person who is granted license will have privilege to place advertising hoarding in private property and for granting such privilege fees is levied. 44. With regard to reliance placed by the re....