Bombay High Court
Selvel Publicity Consultant Pvt. Ltd. ... vs Municipal Corporation Of Greater ... on 5 March, 1992
Equivalent citations: 1992(3)BOMCR322, (1992)94BOMLR562
JUDGMENT Ashok Agarwal, J.
1. The present group of petitions are filed by several advertising agencies seeking to impugn the hike in the licence fees for advertising hoardings in the city of Bombay. The respondent Municipal Corporation has raised the fees once in the year 1985 and again in the year 1989. By a Resolution No. AR(C)/255 dated 8th May, 1985 the fees were increased by about 50%. By a Resolution No. 27 dated 2nd May, 1989 they are further increased by about 60 to 70%. Both the increases are impugned in the present petitions. In short, it is the contention of the petitioners that the impugned increase is illegal and cannot be justified on the principle of quid pro quo. The impugned increase is not supported by additional services rendered.
2. The aforesaid hike in the licence fees is justified by the Corporation by stating that it was necessitated due to high cost of living and increase in the expenditure of the Corportion. It is contended that on account of the above reason there was no alternative but to increase the licence fees. It is further contended that the raise in advertisement fees had to be effected to meet the cost of municipal services to be rendered to the public.
3. It is further the case of the Corportion as can be seen from the affidavit of Shri Gajanan Gunwant Manjrekar dated 31st August, 1991 that the cost of administering municipal services has increased from year to year. The Corporation is feeling acute shortage of funds. The 1982-83 costs of administering municipal services was Rs. 298.90 crores; in 1985-86 it was 363.52 crores; in 1986-87 it was 409.19 crores; in 1988-89 it was 658.10 crores. The affidavit recites that the cost of living has been rapidly increasing. The value of the rupee has gone down substantially, that 100 paise in 1960 was already 11.67 paise in 1988. It was, therefore, necessary to increase that the fee at 50% from 1985-86. After careful consideration of the relevant facts the Corportion has increased the fees for hoardings by 50% only. The increase in fees is reasonable having regard to the increase in the cost of administering municipal services. It is further pleaded on behalf of the Corporation that if the levy is considered as a tax, the Corporation is entitled to levy the same for granting permission for advertisements under the Bombay Municipal Corportion Act. On the basis of it being taxed still it is valid in law and the Corporation has power to impose such fees.
4. The distinction between a 'tax' and a 'fee' has been the subject of consideration in various decisions of the Supreme Court as also of various High Courts.
5. In the case of The State of Maharashtra and others v. The Salvation Army, Western India Territory, reported in A.I.R. 1975 S.C. page 46, it was observed as follows :---
"A tax is a compulsory exaction of money by a public authority for a public purpose enforceable by law and is not a payment for any specific service rendered. The levy of a tax is for the purpose of general revenue which when collected forms part of the public revenues of the State. There is no element of quid pro quo between the tax prayer and the public authority. Fees are ordinarily uniform but absence of uniformity is not a criterian on which alone it can be said that levy is in the nature of tax. As a fee is regarded as a sort of return or consideration for services rendered, it is necessary that the levy of fees should be correlated to the expenses incurred by the agency in rendering the services. Thus, two elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accept either willingly or unwillingly and in the second place, the amount collected must be earmarked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes.
"As we said, the fee must, as far practically as possible, be commensurate with the services rendered. One should not seek for any mathematical accuracy in these matters but be content with rough approximation."
6. In the case of the Delhi Cloth and General Mills Co. Ltd. v. The Chief Commissioner, Delhi, case reported in (1970)2 S.C.R. page 348 : A.I.R. 1971 S.C. 34 it was observed:---
"Services worth 60 per cent of contribution would be sufficient quid quo to make a levy a fee. So, when we find that in this case the organisation has been rendering services worth 62 per cent of the contribution, it cannot per se be said that there is no correlation between the fees levied and the services rendered.
7. In the case of Sudhindra Thirtha Swamiar and others v. The Commissioner for Hindu Religious and Charitable Endowments, Mysore and another, , it was observed as follows:---
"A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulated of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for 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 is true that ordinarily a fee is uniform and no account is taken of the varying avilities of different recipients. But absence of uniformity is not a criterion on which alone it can be said that it is of the nature of a tax. A fee being a levy in consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence, or because of compulsion in the collection thereof, nor because some of the contributories do not obtain the same degree of service as others may."
8. In the case of Kewal Krishan Puri and another v. State of Punjab and others, , while dealing with Punjab Agricultural Produce Market (General) Rules (1962) enacted under Punjab Agricultural Produce Markets Act, 1961, it was observed as follows :--
"From Clause (2) of Article 110 and Clause (2) of Article 199 of the Constitution it is clear that the Constitution clearly draws a distinction between the imposition of tax by a Money bill and the impost of fees by any other kind of Bill. So also in the Seventh Schedule both in List I and List II a distinction has been maintained in relation to the entries of tax and fees. In the Union List Entries 82 to 92-A relates to taxes and duties and Entry 96 carves out the legislative field for fees in respect of any of the matters in the said list except the fees taken in any Court. Similarly in the State List entries relating to taxes are Entries 46 to 63 and Entry 66 provides for fees in respect of any of matters in List II but not including fees taken in any Court. Entry relating to fees in List II is Entry 47. Our Constitution, therefore, recognises a different and distinct connotation between taxes and fees."
"Generally speaking a fee is defined to be a charge for a special service rendering to individuals by some governmental agency. A question arises- 'special service' rendered to whom, which kind of individuals? The argument that service rendered must be correlated to those on whom the ultimate burden of the fee falls is neither logical nor sound. The impost of fee and the liability to pay it is on a particular individual or a class of individuals."
9. The Supreme Court in the case of P.M. Ashwathanarayana Setty and ors., reported in 1989 Supp. (1) S.C.C. page 696 the Supreme Court observed as follows:--
"A fee is a charge for the special service rendered to a class of citizens by government agencies and is generally based on the expenses incurred in rendering the services. If the essential character of the impost is that some special service is intended or envisaged as a quid pro quo to the class of citizens which is intended to be benefited by the service and there is a broad and general correlation between the amount so raised and the expenses involved in providing the services, the impost would partake the character of a 'fee' notwithstanding the circumstances that the identity of the amount so raised is not always kept distinguished but is merged in the general revenues of the State and notwithstanding the fact that such special services, for which the amount is raised, incidentally or indirectly benefit the general public also. The test is the primary object of the levy and the essential purpose it is intended to achieve. The correlationship between the amount raised through the 'fee' and the expenses involved in providing the services need not be examined with a view to ascertaining any accurate, arithmetical equivalence or precision in the correlation; but it would be sufficient that there is a broad and general correlation. The concept of fee does not require for its substance that every member of the class on whom the fee is imposed, must receive a corresponding benefit or degree of benefit commensurate with or proportionate to the payment that the individually makes. It would be sufficient if the benefit of the special services is available to and received by the class as such. It is not necessary that every individual composing the class should be shown to have derived any direct benefit.
"A fee has also the element of compulsory exaction which is shared in common with the concept of a tax as the class of persons intended to be benefited by the special services has no volition to decline the benefit of the services. A fee loses its character as such if it is intended to and does go to enrich the general revenues of the State to be applied for general purpose of government. The object to be served by raising the fee should not include objects which are otherwise, within the ambit of general government obligations and activities. The concept of fees is not satisfied merely by showing that the class of persons from whom the fee is collected also derives some benefit from those activities of government. Such benefit is not one intended as special service to it but derived by it as part of the general public."
10. In my view, the following propositions can be culled out from the aforesaid decisions and the other decisions on the subject to which I have not made a specific reference. It is well settled that a levy or charge, if it is to be in the nature of a fee, must fulfil certain basic conditions. These conditions briefly stated are : first, that the levy must be on a definite class of persons for services rendered to that class. It is essential that the services rendered and the fee collected are in the nature of quid pro quo. Secondly there must be a reasonable co-relation between the services rendered and the fee collected. Mathematical/arithmetical accuracy is not required. But at the same time it must be shown that essentially the fee levied is in return for the services rendered. Services rendered to the general public or for the benefit of Society as a whole will not meet the test of a validity levied fee. The mere fact that indirectly the persons paying the fee, will benefit as members of society would not legitimize such a levy. The only variation that can be seen in the different decisions is the extent of the service which is required to be rendered for the fee collected to satisfy the test of quid pro quo. If, however, there is no relationship between the two, the levy must fail to qualify as a fee.
11. In order to find out whether the increase in the impugned levy is justified or not, a reference may be made to the parent provision being Article 265 of the Constitution of India which provides that no tax shall be levied or collected except by the authority of law. It would now be necessary to consider whether the Corporation has been given a specific authority to impose the impugned levy. Chapter 8 of the Bombay Municipal Corporation Act (hereinafter referred to as 'the Act') deals with municipal taxation. Section 139 provides :--
"139. For the purpose of this Act, taxations shall be imposed as follows, namely :---
(1) property taxes;
(2) a tax on vehicles and animals;
(3) a theatre tax;
and (4) octroi;
provided that no tax shall be levied on motor vehicles save as provided in section 20 of the Bombay Motor Vehicles Tax Act, 1958."
12. Section 140 deals with property taxes. It provides :---
"140.(1) the following taxes shall be levied on buildings and lands in Greater Bombay and shall be called 'property taxes', namely :---
(a) (i) the water tax of so many per centum of their rateable value, as the Standing Committee may consider necessary for providing water-supply;
(ii) an additional water tax which shall be called 'the water benefit tax' of so many per centum of their rateable value, as the Standing Committee may consider necessary for meeting the whole or part of the expenditure incurred or to be incurred on capital works for making and improving the facilities of water-supply and for maintaining and operating such works;
(b)(i) the sewerage tax of so many per centum of their rateable value, as the Standing Committee may consider necessary for collection, removal and disposal of human waste and other wastes;
(ii) an additional sewerage tax which shall be called the 'sewerage benefit tax' of so many per centum of their rateable value, as the Standing Committee may consider necessary for meeting the whole or a part of the expenditure incurred or to be incurred on capital works for making and improving facilities for the collection, removal and disposal of human waste and other wastes and for maintaining and operating such works;
(c) a general tax of not less than eight and not more than twenty six per centum of their rateable value, together with not less than one-eight and not more than two per centum of their rateable value added thereto in order to provide for the expense necessary for fulfilling the duties of the corporation arising under Clause (k) of section 61 and Chapter XIV;
(ca) the education cess leviable under section 195E;
(cb) the street tax leviable under section 195G.
(d) betterment charges leviable under Chapter XII-A. (2) Any reference in this Act or in any instrument to a water tax or a halakhor tax shall after the commencement of the Bombay Municipal Corporation (Amendment) Ordinance, 1973, be construed as a reference to the water tax or the water benefit tax or both, or the sewerage tax or the sewerage benefit tax, or both as the context may requires."
13. Sections 141 to 143 deals with water taxes, sewerage taxes and general taxes. Section 3(s) defines 'building' as :--
"'building' includes a house, out house, stable, shed, hut and every other such structure, whether of masonry, bricks, wood, mud, metal or any other material whatever."
Section 3(p) defines 'tax' as :---
"'tax' includes any impost leviable under this Act."
It would be clear that the hoardings would not be included within the definition of the term 'building'. Therefore, the impugned levy cannot be justified under section 139(1) as property taxes. The above provisions in Chapter 8, therefore, make it clear that the impugned levy cannot be justified under the said Chapter which deals with municipal taxes.
14. Sections 328 and 328A deal with sky signs and advertisements. Section 328 in so far as is relevant provides that, "no person shall, without the written permission of the Commissioner, erect, fix or retain any sky-sign......" Section 328-A provides that, "no person shall, without the written permission of the Commissioner, erect, exhibit, fix or retain any advertisement....." Hence, before a person is entitled to erect a sky-sign or an advertisement, he has to have a written permission of the Commissioner.
15. The next relevant provisions is to be found in section 479 which deals with licenses and fees chargeable for licences. Section 479(1) provides that :-
"Whenever it is provided in this Act that a licence or a written permission may be given for any purpose, such licence or written permission shall specify the period for which, and the restrictions and conditions subject to which, the same is granted, and shall be given under the signature of the Commissioner or of a Municipal Officer empowered under section 68 to grant the same."
Sub-sections (2) of section 479 provides that :---
"For every such licence or written permission, a fee may be charged at such rate as shall from time to time be fixed by the Commissioner, with the sanction of the Corporation."
It, therefore, follows that for every licence or written permission the Corporation is authorised to levy a fee.
16. The question that falls for consideration is whether the present levy can be justified as a fee. The Act contemplates the grant of various licences or written permissions. For instance, section 191B speaks of the licence for a dog. Section 355 relates to grant of licences to surveyors and plumbers. Section 394 relates to grant of licence for storing or sale of articles or animals and for carrying on trades and professions. Section 401 relates to licence for sale of animals or licence for sale of articles in any municipal markets. Section 403 deals with licences for slaughter houses, section 412 relates to licences for butchers and section 412-A relates to licence for dealing in milk etc. It would appear that for grant of the aforesaid licences, Corporation under the provisions of section 479(2) will be authorised to levy a fee. Similarly, sections 328 and 328A speak of the requirements of the Municipal Commissioner's permission for putting up sky-signs or hoardings. There are several other provisions in the Act which require similar written permission of the Commissioner to which I do not find it necessary to make a reference. For the aforesaid licences and written permissions, the Corporation in terms of section 479(2) would be entitled to levy a fee. As observed by the Supreme Court in the aforesaid cases, before a levy can be justified by way of fee, it has to satisfy the broad test of quid pro quo. In the instant case, the respondents have made no attempt to justify the levy as a fee. It has not even whispered that any services are being or are sought to be rendered. It is, therefore, not even the case of the Corporation that it is a fee. I have, therefore, no hesitation in holding that it is not a fee.
17. Once the levy goes out of the four corners of 'fee', the only way that it can be justified is by way of a tax. I have already held that the levy does not fall under any of the taxing provisions of Chapter 8 of the Act.
18. The Counsel for the Corporation has, however, sought to justify the levy as a tax. Reliance is placed on the decision of the Supreme Court in the case of The Corporation of Calcutta v. Liberty Cinema, . In that case, the Corporation of Calcutta in the year 1948 had fixed the scale of fees on the basis of the annual valuation of the cinema houses. By a subsequent Resolution, the basis of assessment as a licence fee was changed. Under the new method the fee was assessed at rates prescribed per show according to the sanctioned sitting capacity of the cinema houses. Since it resulted in a substantial increase of fee, the same was challenged by way of a writ petition. On grounds, inter alia, that the levy was a fee in return for services to be rendered and not a tax and it had, therefore, to be commensurate with the costs incurred by the Corporation in providing those services. The impugned levy was far in excess to those costs and for that reason was invalid. The Corporation supported the levy by contending that levy was a tax and not a fee taken in return for services and no question of its being proportionate to any costs or services arose. The Supreme Court posed a question for its consideration in the following terms :-
"The only question on this part of the case therefore is---was the levy a fee in return for services?"
The Court noted that section 548 of the Calcutta Municipal Act does not use the word 'fee'. It uses the words licence fee and held that those words do not necessarily mean a fee in return for services. A provisions for the imposition of a license fee does not necessarily lead to a conclusion that the fee must be only for services rendered. In paragraph 18 this is what has been observed:-
"It was also contended that the levy under section 548 must be a fee and not a tax for all provisions as to taxation are contained in Part IV of the Act, while this section occurred in Chapter XXXVI headed 'Procedure' in Part VIII which was without a heading. It was pointed out that Part V dealt with 'Public Health, Safety and Convenience" and section 443 which was included in Chapter XXVI contained in this Part was headed 'Inspection and Regulation of Premises and of Factories, Traders and Places of Public Resort." A cinema house, it is not disputed, is included in the words 'places of public resort'. It was, therefore, contended that a levy outside Part IV could not be a tax and hence must be a fee for services. This contention was sought to be supported by the argument that section 443 occurred in a Part concerning public health, safety and convenience and therefore the intention was that the levy authorised by the section would in return for work done for securing public health, safety and convenience and was hence a fee. We are wholly unable to accept this contention. Whether a particular levy is a fee or tax has to be decided only by reference to the terms of the section as we have earlier stated. It position in the Act cannot determine its nature; and imposition which is by its terms a tax and not a fee, which in our opinion the present imposition is, cannot become a fee by reason of its having been placed in a certain part of the statue. The reference to the heading of Part V can at most indicate that the provisions in it were for conferring benefit on the public at large. The cinema house owners be getting that benefit. We are not concerned with the benefit, if any, received by them as members of the public for that is not special benefit meant for them. We are clear in our mind that if looking at the terms of the provision authorising the levy, it appears that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statue. A consideration of where section 548 are placed in the Act is irrelevant for determining whether the levy imposed by them is a fee or a tax."
19. Placing reliance on the above decision, Counsel for the Corporation strenuously submitted that the impugned levy which is sought to be recovered under section 479(2) of the Act is by way of tax for grant of written permission under sections 328 and 328A to erect a sky-sign or advertisement.
20. The Supreme Court in case of the Madurai Municipality v. R. Narayana, , while dealing with a fee imposed on all hoteliers under section 321 of the Madras District Municipalities Act, observed that :---
"The authority to justify the levy qua fee must render some special services to the category from whom the amount is exacted and the total sum so collected must have a reasonable correlation to the cost of such services. Where these dual basic features are absent, you cannot legally claim from the licensee under the label 'fee'."
In regard to the Liberty Cinema case, the Supreme Court observed that, the Council in that case, had rightly abandoned the fee-cum-quid pro quo formula and anchored itself on the right to exact the higher rate as a 'tax on land and building' under Entry 49 of List II in the Seventh Schedule read with section 321(2) of the Madras District Municipalities Act, 1920. It noted that the powers to tax under section 548 of the Calcutta Municipal Act was only placed in Chapter primarily concerned with licences and permissions. In paragraphs 7 and 8 of the judgment, the Supreme Court observed as under :---
"We have therefore to have a view of the concerned parts of the Act with a comparatively on the Calcutta Municipal Act which fell for decision in Liberty Cinema. Every local authority, under the relevant statute, has the power to tax, so as to finance the various welfare activities it is expected to fulfil. Similarly such local bodies also exercise the police powers of the State to the extent they are vested in them by the State law for the purpose of controlling, regulating and prescribing operations of individuals which may need to be conditioned by licences and permissions or prohibited in public interest because they are noxious or dangerous. Towards these ends, licences and fees for services, if any, rendered may be prescribed. The Madras Act, like other similar statutes, embraces both types of activities in a systematized way. Thus Taxation and Finance are covered by Par III while Public Health - Safety and Convenience, comes under Part IV Procedure and Miscellaneous which include general provisions regarding licences and permissions are clubbed together in Part VI. Section 78, empowering property tax levy falls in Part III (Taxation and Finance), while section 321, relating to licence fees is located in Part VI. The scheme thus separates issue of licences and levy of licence fees from taxes on property and other items. Prima facie, in the absence of other compelling factors, to lug in a taxing provision into Par VI may, therefore, lead to obscurity and confusion."
"The Calcutta Municipal Act, 1951, also has some scheme of sorts and deals with Finance in Part III, Taxation in Part IV and Public Health, Safety and Convenience in Part V. In the same Part, Chapter XXVI deals with a miscellany of matters like Inspection and Regulation of Premises and of Factories, Trades and Places of Public Resort. Section 443 deals with licensing and control of theatres, circuses and places of public amusement. Strangely enough, section 548(1) which relates to 'licence and written permission' also empowers' in addition to any other matter required to be specified under any other section of this Act:---
(a) x x x x
(b) x x x x
(c) x x x x
(d) x x x x
(e) the tax or fee, if any, paid for the licence or written permission.' There is thus in section 548 an extra power specifically conferred to levy tax or fee, which is significantly absent in the Madras Act (we are aware there is some obscurity here because cinema licensing is provided for earlier in section 443). It is this provisions of the Calcutta Act (section 548) which fell for consideration before this Court in Liberty Cinema, . While one may discern a broad scheme in that Act, there is some wobbling in the sense that a power to tax is oddly placed in a Chapter primarily concerned with licences and permissions. The Madras Act, on the other hand, speaks with more precision and relegates licences and licence fees to a part different from Taxation and Finance. The procedure for each is also delineated separately. For these reasons we refuse to accede to the contention that 'fee' in section 321(2) is a tax."
21. The observations contained in the aforesaid madurai Municipality case, therefore, aptly explains the Liberty Cinema's case. It points out that under the Calcutta Municipal Act, a power to tax is oddly placed in a Chapter primarily concerned with licences and permissions. It has pointed out the distinction between the Calcutta and the Madras Act. It pointed out that in the Madras Act, Chapter VI of Part III is devoted to Taxation and Finance. Section 78(1)(a) authorizes levy or property tax. The section sets out the other taxes a Municipal Council may levy. Section 7(3) together with a proviso, contains the procedural prescriptions for imposing taxes. It has pointed out that admittedly there has been no compliance with this procedure and if such conformance is mandatory, as it is, the case tax set up by the appellant collapses. In respect of the Calcutta Act it is pointed out that the tax was on the land and the expression 'thereon' under scores this idea. Once the tax is on land, the link between the tax and the land-user like running a market or hotel based on the letting value is good. In respect of the Madras Act it observed that there is nothing to indicate that it is a tax at all. Secondly, the phraseology does not suggest that it is a tax on the land or the building. On the other hand, it is on the licence-fee for plying a particular trade. The user of the land or building as a restaurant or hotel being the link as explained above, the fact that there is a tax on all property within the municipality does not mean that this local body cannot levy an additional tax or surcharge on the land or building if put to a particular specialised use.
22. In my judgment, the decision in the Liberty Cinema case can apply only to the provisions of the Calcutta Municipal Act which were under consideration of the Supreme Court. The said case does not lay down any ratio which can apply to the present case. The provisions of the Bombay Municipal Corporation Act are distinct from the provisions of the Calcutta Municipality Act. The decision of the Liberty Cinema case cannot be made applicable to the present case. The submission of the Counsel for the Corporation based on the aforesaid case, therefore, deserves to be negatived.
23. Reference may be made to the case of Kewal Krishna v. State of Punjab, . In paragraph 15, the Supreme Court noticed the Liberty Cinema case in the following terms:-
"In the case of Corporation of Calcutta v. Liberty Cinema, the respondent was charged by the Calcutta Corporation a very high licence fee assessed according to the sanctioned seating capacity of the Cinema house. The High Court quashed the imposition. In appeal to the Supreme Court the stand of the appellant Corporation was that the levy was a tax and section 548(2) of the Calcutta Municipal Act did not suffer from the vice of excessive delegation; while the respondent cinema contended that the levy was a fee and had to be justified as being imposed in return for services to be rendered. Alternatively the respondent submitted that if it was a tax it was invalid as it amounted to an illegal delegation of legislative functions. The majority view was expressed by Sarkar, J., as he then was, and the impost was upheld as a tax. In the minority opinion delivered by Ayyangar, J., it was held that even in the case of a licence fee a correlation between the fee charged and the service rendered was necessary to be established. It was, therefore, held to be a tax but invalidly imposed under a power suffering from the vice of unconstitutional legislative delegation. In the cases before us the licence fees charged from the various traders in the market areas are not excessive and have not been attacked on any ground whatsoever. We are the, therefore, not concerned to find out whether an element of quid pro quo is necessary in cases of all kind of licence fees. Some licences are imperative to be taken only by way of regulatory measure, some are in the nature of grant of exclusive right or privilege of the State, such as, excise cases noticed by this Court in the case of Har Shankar v. Dy. Excise & Taxation Commissioner, . Some may be cases of licence fees where element of quid pro quo is necessary to be established. But what is important to be pointed out from the case of Liberty Cinema (supra ) is that in the case of a fee of the kind with which we are concerned in this case the element of quid pro quo must be established. Otherwise the imposition of fee will be bad. In the majority opinion, it is stated at page 490:-
"The conclusion to which we then arrive is that the levy under section 548 is not a fee as the Act do not provide for any services of special kind being rendered resulting in benefits to the person on whom it is imposed. The work of inspection done by the Corporation which is only to see that the terms of the licence are observed by the licence is not a service to him. No question here arises of correlating the amount of the levy to the costs of any service. The levy is a tax."
Ayyangar, J., said at page 526 that there being no correlation between the fee charged and the service rendered the impugned levy was not authorised."
24. It further noticed the Madurai Municipality's case in the following terms:-
"In Municipal Council, Madurai v. R. Narayana, , endeavour was made as in the case of Nagar Mahapalika, Varanasi (supra) to justify the impost by the Municipal Council as a tax . Krishna Iyer, J., speaking for the Court repelled that argument and since the impost could not be justified as fee the resolution of the Municipal Council was held to be invalid."
After reviewing the various cases, it observed:-
"From a conspectus of the various authorities of this Court we deduce the following principles for satisfying the tests for a valid levy of market fees on the agricultural produce bought or sold by licensees in a notified market area:-
(1) That the amount of fee realised must be earmarked for rendering services to the licensees in the notified market area and a good substantial portion of it must be shown to be expended for this purpose.
(2) That the services rendered to the licensees must be in relation to the transaction of purchase or sale of the agricultural produce.
(3) That while rendering services in the market area for the purpose of facilitating the transactions of purchase and sale with a view to achieve the objects of the marketing legislation it is not necessary to confer the whole of the benefit on the licensees but some special benefits must be conferred on them which have a direct, close and reasonable correlation between the licensees and the transactions.
(4) That while conferring some special benefits on the licensee, it is permissible to render such service in the market which may be in the general interest of all concerned with transactions taking place in the market.
(5) That spending the amount of market fees for the purpose of augmenting the agricultural produce, its facility of transport in villages and to provide other facilities meant mainly or exclusively for the benefit of the agriculturists is not permissible on the ground that such services in the long run go to increase the volume of transactions in the market ultimately benefiting the traders also. Such an indirect and remote benefit to the traders is in no sense a special benefit to them.
(6) That the element of quid pro quo may not be possible, or even necessary, to be established with arithmetical exactitude but even broadly and reasonably it must be established by the authorities who charge the fees that the amount is being spent for rendering services to those on whom falls the burden of the fee.
(7) At least a good and substantial portion of the amount collected on account of fees , may be in the neighbourhood of two-thirds or three-fourths must be shown with reasonable certainty as being spent for rendering services of the kind mentioned above."
25. Having considered the ratio laid down in the above cases, I have no hesitation in holding that in the instant case, the impugned levy cannot be justified as a tax as liable to be charged for the grant of written permission for putting up hoardings. Moreover, as pointed out in paragraph 11 of the case of Madurai Municipality, in the present case also the procedural prescriptions for imposing the impugned tax has not been followed. Chapter VII of the Act prescribe for the procedure for levy of taxes. Section 125 provides that the Commissioner shall, on or before each fifth day of February, have prepared and lay before the Standing Committee, in such form as the said committee shall from time to time approve an estimate of the expenditure which must or should, in his opinion, be incurred by the Corporation in the next ensuing official year. Section 126 provides that the Standing Committee shall, on or as soon as may be after each fifth day of the February consider the estimates and proposals of the Commissioner and after having obtained from the Commissioner such further detailed information, if any, as they shall think fit to require, and having regard to all the requirements of this Act, shall frame therefrom subject to such modifications and additions therein or thereto as they shall think fit, two budget estimates. Section 128 provides that, the Corporation shall, on or before the twentieth day of March, after considering the Standing Committee proposals, determine the rates of municipal taxes. In the present case, it is not even whispered that the imposition of the present levy has undergone the aforesaid procedure. The instant levy has been imposed in the month of May. It is obvious that the same could have undergone the procedure as section 128 enjoins upon the Corporation to fix the taxation on or before the twentieth day of March of each year. This is an additional ground why the impugned levy cannot be justified as a tax.
26. The Corporation has taken out a book-let styled as "Policy and Procedure for Advertisement Permits". It, inter alia , provides that advertisements in Greater Bombay are covered under sections 328 and 328A of the Bombay Municipal Corporation Act and provides for the procedure for applying and obtaining of permits. Clause-5 deals with Schedule of fees. It does not refer to collection of taxes. In Clause-15 which deals with Dos and Don'ts, it mentions, "Don't delay payment of permit fees. "It does not state that don't delay payment of taxes. In my view, the Corporation has all along treated the impugned levy as a fee. The present attempt to justify the levy as a tax is an after-thought. The same is probably prompted by the decision in the Liberty Cinema case which I have found to be wholly irrelevant to the instant case. The contention advanced on behalf of the Corporation, is therefore, liable to be rejected.
27. For the forgoing reasons, I find that the impugned levy is illegal as being without the authority of law. The impugned Resolutions, one dated 8th May, 1985 and the other dated 2nd May, 1989 are liable to be quashed. It is to be noted that the Resolution dated 8th May, 1985 has been impugned only in Writ Petition No. 1070 of 1986, whereas the other petitions impugn not the said resolution but only the subsequent resolution dated 2nd May, 1989. Hence, Rule in Writ Petition No. 1070 of 1986 is made absolute in terms of prayer Clause (a). In regard to the other petitions, they have not challenged the resolution dated 8th May, 1985. They will, therefore, not be entitled to the relief in respect of the said resolution. They will, however, be entitled to a declaration that the subsequent resolution dated 2nd May, 1989 is invalid and inoperative as against the petitioners in rest of the petitions. The amounts which have been paid by the petitioners to the Corporation in pursuance of the interim orders passed in each of the petitions are directed to be refunded.
On an application on behalf of the Corporation, my order is stayed for a period of 12 weeks. The interim orders passed in the petition will, however, continue during the aforesaid period of 8 weeks.