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NC: 2024:KHC-K:3733 "From a perusal of Article 285 it is clear that no property of the Union of India shall be subject to tax imposed by the State, save as Parliament may otherwise provide. The question is whether 'the charges for' supply of water and maintenance of sewerage is in the nature of a tax or a fee for the services rendered by the Jal Sansthan. There is a distinction between a tax and a fee, and hence one has to see the nature of the levy whether it is in the nature of tax or whether it is in the nature of fee for the services rendered by any instrumentality of the State like the Jal Sansthan. There is no two opinion in the matter that so far as supply of water and maintenance of sewerage is concerned, the Jal Sansthan is to maintain it and it is they who bear all the expenses for the maintenance of sewerage and supply of water. It has to create its own funds and therefore, levy under the Act is a must. In order to supply water and maintain sewerage system, the Jal Sansthan has to incur the expenditure for the same. It is in fact a service which is being rendered by the Jal Sansthan to the Railways, and the Railways cannot take this service from the Jal Sansthan without paying the charges for the same. Though the expression tax has been used in the Act of 1975 but in fact it is in the nature
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NC: 2024:KHC-K:3733 of a fee for the services rendered by the Jal Sansthan. What is contemplated under Article 285 is taxation on the property of the Union. In our opinion the Jal Sansthan is not charging any tax on the property of the Union; what is being charged is a fee for services rendered to the Union through the Railways. Therefore, it is a plain and simple charge for service rendered by the Jal Sansthan for which the Jal Sansthan has to maintain staff for regular supply of water as well as for sewerage system of the effluent discharge by the railway over their platform or from their staff quarters. It is in the nature of a fee for service rendered and not any tax on the property of the Railways.
11. The distinction has to be kept in mind between a tax and a fee. Exemption under Article 285 is on the levy of any tax on the property of the Union by the State, and exemption is not for charges for the services rendered by the State or its instrumentality which in reality amounts to a fee. In this connection, a reference was made to the decision of this Court in Sea Customs Act (1878), S.20(2) [ AIR 1963 SC 1760]. This was a case in which a reference was made by the
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NC: 2024:KHC-K:3733 of service charges is beyond the statute and/or that the Corporation has no power to impose and collect such a charge. They also cannot contend that the imposition and collection of service charges is akin to a tax or a fee. It is evident that provision of these civic amenities and special services mentioned above is itself is quid pro quo for the charges demanded by the Corporation. As a matter of fact, a Division Bench of Kerala High Court in the case of Food Corporation of India, Alleppey vs. Alleppey Municipality and others [AIR 1996 KER 241], was considering a case of collection of service charge on a property belonging to the Food Corporation of India. The Division Bench repulsed the contention of the petitioner therein that the property of the Food Corporation of India being a property of the Union of India is exempt from payment of tax under Article 285 of the Constitution of India. It held that even if provision is not made in the concerned Municipal Corporation Act for collecting the