TaxTMI 
TaxTMI 
1983 (4) TMI 50
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....ut a tax. The High Court accepted the contention of the butchers on what appears to us a superficial view of the facts and principles. Fortunately, the High Court has certified the case as a fit one for appeal under art. 133(1)(c) of the Constitution and the matter is now before us. During the pendency of the writ petitions in the High Court, by virtue of an interim arrangement, the Municipal Corporation was permitted to collect fee at the rate of 50 p. per animal in the case of sheep, goats and pigs and Rs. 2 per animal in the case of buffaloes. As a result, the Municipal Corporation realised a sum of Rs. 4,24,494 by way of fee for slaughtering animals in its slaughter houses. Now, the budget of the Municipal Corporation under item XIV-B showed a sum of Rs. 2,56,000 as the expenditure involved in connection with the slaughter houses. Comparing the amount of actual realisation of fee at the rates permitted by the court with the amount of expenditure as revealed by the budget and excluding from consideration all expenditure not shown in the budget under item XIV-B, the High Court came to the conclusion that even if the original fee was doubled the amount realised would be more than....
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....pecial benefit or privilege. But it was noticed that the special benefit or advantage might be secondary to the primary motive of regulation in the public interest, as for instance, in the case of registration fees for documents or marriage licences. It was further noticed that art. 110 of the Constitution appeared to indicate two classes of cases where " fees " could be imposed: (i) where the government simply granted a permission or privilege to a person to do something which otherwise that person would not be competent to do and extracted from him, in return, heavy or moderate fees, (ii) where the government did some positive work for the benefit of the person and money was taken as a return for the work done or services rendered, such money not being merged in the public revenue for the benefit of the general public. It was, however, made clear that the circumstance that all the collections went to the Consolidated Fund of the State and not to a separate fund may not be conclusive. The court finally observed that there was really no generic difference between the tax and fees though the Constitution had, for legislative purposes, made a distinction between a tax and a fee. Whil....
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....is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case, it is necessary to enquire what is the primary object of the levy and the essential Purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy." In Swamiji of Admar Mutt v. Commissioner, Hindu Religious & Charitable Endowments Department, [1980] 1 SCR 368; AIR 1980 SC 1, Chandrachud C.J., speaking for the Constitution Bench, emphasised the necessity as well as the sufficiency of a broad correlationship between the services rendered and the fees charged and discounted the attempts to go into minutiae to discover meticulously whether or not there was mathematical equality. He said (pp. 376-377 o....
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....s a sine qua non of a fee. It is needless to stress that the element of quid Pro quo is not necessarily absent in every tax ...... The traditional concept of quid pro quo is undergoing transformation. " What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct ; a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary....