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PETITIONER: MUNICIPAL CORPORATION OF DELHIAND OTHERS

       Vs.

RESPONDENT: MOHD. YASIN ETC.

DATE OF JUDGMENT28/04/1983

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) DESAI, D.A.

CITATION:  1983 SCR  (2) 999        1983 SCC  (3) 229  1983 SCALE  (1)492

ACT:      Tax and  fee, contradistinction-Fees  for  slaughtering animals  at  slaughter  houses  enhanced  by  the  Municipal Corporation, eightfold  Legality of  the enhancement-Whether the  enhanced   fee  for  slaughtering  animals  was  wholly disproportionate to the cost of the services and supervision and therefore, not a fee, but a tax.

HEADNOTE:      As per  the  rates  fixed  in  the  year  1953  by  the Municipal Corporation  of Delhi,  the slaughtering fees were 0.25 paise  for each animal, in the case of sheep, goats and pigs  and  rupees  one  for  each  animal  in  the  case  of buffaloes.  By   a   Notification   dated   31.1.1968,   the Corporation purported  to enhance  the slaughtering  fee  in both the  categories eightfold,  with effect from February 1 1968. Some  butchers of  the city questioned the revision of rates on  the ground  that the  proposed  enhanced  fee  was wholly disproportionate  to the  cost of  the  services  and supervision and was in fact not a fee, but a tax.      During the  pendency of  the writ petitions in the High Court, by  virtue of  an interim arrangement, the appellant, was permitted  to collect  slaughtering fees  at double  the rates fixed  in 1953 and as a result thereof the Corporation realised  a  sum  of  Rs.  4,24,494/-.  The  budget  of  the 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 from 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  sufficient to  meet the expenditure involved and, therefore, there was no reason at all for increasing the fee eightfold and  so the  proposed fee was no fee but a tax for which there  is no  legislative mandate. Hence the appeal by special leave.      Allowing the appeal, the Court ^      HELD: 1;1  The increase  of the  slaughtering fee  from 0.25 P  to Rs.  2.00 per animal in the case of small animals

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and from rupee 1.00 to Rs. 8.00 in the case of large animals was wholly justified, in the Circumstances of the case.                                                   [1008 C-D]      1:2 True,  the Municipal Corporation has realised a sum of Rs.  4,24,494 way  of fees  at the  rate of Re. 00.50 per animal in the case of sheep, goats 1000 and pigs  and Rs.  2 per  animal in  the case  of buffaloes, whereas the  budget of  the M.C.D.  showed under  item XIV-B that an  amount of  Rs. 2,56,000  was expended in connection with slaughter  houses. The  Items of expenditure covered by item XIV-B of the Municipal Budget are evidently those items of expenditure  which are  incurred directly and exclusively in connection with slaughter houses. There are several other items  of   expenditure  the  whole  or  part  of  which  is attributable  to   slaughter  houses  like  the  expenditure involved in  the purchase, maintenance and the use of trucks and other  vehicles for  the removal of filth from slaughter houses,  conservancy,   petrol  oil  etc.,  the  expenditure incurred in  connection with  the maintenance of supervisory staff like  a fulltime  Veterinary officer, Municipal Health officer, Deputy  Health officer and Zonal Head officers, the cost of  depreciation  of  the  buildings  and  fittings  in slaughter houses,  expansion and  improvement  of  slaughter houses for  utilities etc.  but actually  debited  to  other heads of account under the Municipal budget. Apparently, the High Court  was under  an erroneous impression that the fees collected should  be shown  to  be  related  to  expenditure incurred directly  and exclusively  in connection  with  the slaughtering of  animals in  its slaughter  houses and also, shown as such in the Municipal budget. [1007 B-H, 1008 A-B]      2. Vicissitudes  of time  and necessitudes  of  history contribute to  changes of philosophical attitudes, concepts, ideas and  ideals and,  with them, the meanings of words and phrases and  the language  itself. The  philosophy  and  the language of  the law  are no  exceptions. Words  and phrases take colour and character from the context and the times and speak differently in different contexts and times. Words and phrases have not only a meaning but also a content, a living content, which breathes, and so, expands and contracts. This is particularly  so where  the words  and  phrases  properly belong to other disciplines. "Tax" and "Pee" are such words. They properly  belong to  the world  of public  finance  but since the  Constitution and the laws are also concerned with Public Finance, these words have often been adjudicated upon in an effort to discern their content. [1002 D-G]      3. From  the decided  cases beginning from Commissioner of Hindu  Religious Endowments,  Madras v.  Shri Lakshmindra Thirtha Swamiyar  [1954] S.C.R.  1005 till date, it is clear that: (i)  There is  no generic difference between a tax and fee, though  broadly a  tax is a compulsory exaction as part of  a   common  burden,   without  promise  of  any  special advantages to  classes of  tax payers  whereas a  fee  is  a payment for services rendered; benefit provided or privilege conferred; (ii)  Compulsion is  not the  hall  mark  of  the distinction between  a tax  and fee;  (iii) That  the  money collected does not go into a separate fund but goes into the Consolidated Fund does not also necessarily make a levy tax; (iv) Though  a  fee  must  have  relation  to  the  services rendered, or the advantage conferred, such relation need not be direct; a mere casual relation may be enough; (v) Further neither the  incidence of  the fee  nor the service rendered need be  uniform, (vi)  That others besides those paying the fees are  also benefited does not detract from the character of the  fee; (vii)  In fact the special benefit or advantage

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to the  payers of the fees may even be secondary as compared with  the   primary  motive  of  regulation  in  the  public interest; (viii)  Nor is  the court  to assume the role of a Cost Accountant.  It is  neither necessary  nor expedient to weigh too meticulously the cost, of the services rendered 1001 etc. against  the amount  of fees  collected so as to evenly balance the  two and  (ix) A  correlationship is all that is necessary. Quid  pro quo in the strict sense is not the only true index of a fee; nor is it necessarily absent in a tax.                                         [1006 E-H, 1007 A-B]      Commissioner of H.R. & C.E., Madras v. Shri Lakshmindra Thritha Swamiyar,  [1954] S.C.R.  1005; H.  H. Sudhundra  v. Commissioner for  Hindu Religious and Charitable Endowments, [1963] Supp.  2 S.C.R.  302; Hingir-Rampur Coal Co. Ltd. and others v.  The State  of Orissa  and others,  [196] 2 S.C.R. 537;  H.  H.  Swamiji  v.  Commissioner  Hindu  Religious  & Chariiable Endowments Dept. and others, [1980] 1 S.C.R. 268; Southern Pharmaceuticals  & Chemicals,  Trichur  and  others etc. v.  State of  Kerala and  others, [1982]  1 S.C.R.  519 referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal Nos. 2120 & 2125 of 1970.      From the  Judgment and order dated the 17th April, 1970 of the  Delhi High  Court in Civil Writ Petitions Nos. 133 & 134 of 1968      Kapil Sibal,  Rameshwar Dial, Adarsh Dial and S. Mittar for the Appellants.      K. B. Rohtagi for the Respondents.      The following Judgment of the Court was delivered by      CHINNAPPA REDDY,  J. BY  a notification  dated 31.1.68, the Delhi Municipal Corporation purported to enhance the fee for slaughtering  animals in  its slaughter  houses from Re. 00.25p to  Rs. 2.00  for each  animal, in the case of sheep, goats and  pigs, and  li from  Re. 1.00 to Rs. 8.00 for each animal, in  the case  of  buffaloes.  The  notification  was quashed by  the High  Court of  Delhi on the ground that the Corporation was  really proposing  to levy  a tax  under the guise of enhancing the fee. The original rates were fixed in March 1953  and the  revised rates  were to take effect from February 1,  1968. Some  butchers of the city questioned the revision of  rates on  the ground that the proposed enhanced fee was  wholly disproportionate to the cost of the services and supervision  and was  in fact  not a fee, but 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. 1002 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 Re. 00.50p. per  animal in the case of sheep, goats and pigs and Rs. 2.00  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

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by the  Court with  the amount of expenditure as revealed by the budget  and excluding from consideration all expenditure not show 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 sufficient to meet the  expenditure  involved  and  there  was,  therefore,  no warrant at all for increasing the fee eight-fold. So, it was said, the  proposed fee was no fee but a tax for which there was no legislative mandate. We shall presently point out the error into  which the  High Court  fell on  facts as well as principle.      A word  on interpretation.  Vicissitudes  of  time  and necessitude,   of   history   contribute   to   changes   of philosophical attitudes,  concepts, ideas  and  ideals  and, with them,  the  meanings  of  words  and  phrases  and  the language itself.  The philosophy and the language of the law are  no  exceptions.  Words  and  phrases  take  colour  and character  from   the  context   and  the  times  and  speak differently in  different contexts  and times.  And,  it  is worthwhile remembering  that word, and phrases have not only a meaning  but  also  a  content,  a  living  content  which breathes,  and   so,  expands   and   contracts.   This   is particularly so  where the words and phrases properly belong to other  disciplines. ’Tax’  and ’Fee’ are such words. They properly belong to the world of Public Finance but since the Constitution and  the laws  are also  concerned with  Public Finance, these  words have often been adjudicated upon in an effect to discover their content.      Commissioner of  Hindu Religious  Endowments, Madras v. Shri Lakshmindra Thirtha Swamiyar(1) is considered the locus classicus on  the subject  of the  contradistinction between ’tax’ and  fee?. The  definition of  ’tax’ given  by Latham, C.J. as "a compulsory exaction 1003 of money by public authority for public purposes enforceable by law  and not payment for services rendered" was accepted, by the  Court as  stating the essential characteristics of a tax. Turning  to fees,  it was  said  "a  fee  is  generally defined to  be a  charge for  a special  service rendered to individuals  by   some  governmental  agency",  but  it  was confessed, "as  there may be various kinds of fee, it is not possible to  formulate a definition that would be applicable to all  cases". As regards the distinction between a tax and a fee,  it was noticed that compulsion could not be made the sole or  even a  material criterion for distinguishing a tax from fee. It was observed that the distinction between a tax and fee  lay primarily  in the fact that tax was levied as a part of  a common  burden, while  a fee  was a payment for a special 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 Article 110 of the  Constitution appeared  to indicate  two  classes  of cases  where   ’fees’  could   be  imposed:  (1)  where  the government simply  granted a  permission on  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 revenues 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

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may not be conclusive. The Court finally observed that there was really no generic difference between the tax fees though the Constitution  had,  for  legislative  purposes,  made  a distinction between  a tax  and  a  fee.  While  there  were entries in  the legislative  lists with  regard  to  various forms of taxes, there was an entry at the end of each one of the three  lists as  regards fees  which could  be levied in respect of  any of  matters that  was included  in  it.  The implication seemed  to be  that fee had special reference to governmental action  undertaken in  respect to  any of those matters.      In HH  Sudhandra v.  Commissioner for Hindu Religious & Charitable Endowments(1), the Court reiterated the principle that a levy in 1004 the nature  of a  fee did  not cease to be of that character merely because  there  was  any  element  of  compulsion  or coerciveness present in it, and aided.           "Nor is  it a postulate of a fee that it must      have  direct   relation  to  the  actual  services      rendered  by   the  authority  to  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 services, the levy      would be  in the  nature of  a fee  and not in the      nature of  a tax  ....... but  a levy  will not be      regarded as a tax merely because of the absence of      unity 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."      In Hingir-Rampur  Coal Co.  Ltd. & Ors. v. The State of Orissa and  Ors.(1) the  Court while  reiterating that there was an element of quid pro quo between the person paying the fee and the authority imposing it, said:           "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." Later it was said:           "It is  true that when the legislature levies      a  fee   for  rendering  specific  services  to  a      specified area  or to  specified, class of persons      or trade  or business,  in the  last analysis such      services may  indirectly form  part of services to      the public  in general.  If  the  special  service      rendered is distinctly and primarily meant for the      benefit of a specified class or area the fact that      in ben  fitting the  specified class  or area  the      State as a whole may 1005      ultimately and  indirectly be benefitted 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

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    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 H.H.  Swamiji v.  Commissioner,  Hindu  Religious  & Charitable Endowments  Department and  Ors.,(1) Chandrachud, CJ. 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, "For the purpose of finding whether there is a  correlationship between  the services  rendered to the fee payers  and the fees charged to them, it is necessary to know the  cost incurred  for organising  and  rendering  the services. But  matters involving  consideration  of  such  a correlationship  are   not  required   to  be  proved  by  a mathematical formula.  What has  to be seen is whether there is a  fair correspondence  between the  fee charged  and the cost of  services rendered to the fee payers as a class. The further and  better particulars  asked for by the appellants under VI,  rule 5  of the  Civil Procedure  Code, would have driven the  Court, had  the particulars  been supplied, to a laborious and  fruitless inquiry  into minute details of the Commissioner’s departmental  budget. A  vivisection  of  the amounts  spent   by  the   Commissioner’s  establishment  at different  places  for  various  purposes  and  the  ad  hoc allocation by  the Court  of different  amounts to different heads would  at best  have been  speculative. It  would have been no  more possible for the High Court if the information were before  it, than  it would  be possible  for us  if the information were  before us.  to find  out what  part of the expenses incurred  by the  Commissioner’s  establishment  at various places  and what  part of the salary of his staff at those places should be allocated to the functions 1006 discharged by  the  establishment  in  connection  with  the services rendered  to the  appellants. We  do not  therefore think that  any substantial prejudice has been caused to the appellants by  reason of  the non-supply  of the information sought by them."      In Southern  Pharmaceuticals & Chemicals Trichur & Ors. etc. v. State of Kerala & Ors. etc.,(1) A.P.Sen, J. speaking for the Court noticed the broadening of the Court’s attitude and observed:           "It is  now increasingly realised that merely      because the  collections for the services rendered      or grant  of a  privilege or licence, are taken to      the consolidated  fund of  the State  and are  not      separately appropriated  towards  the  expenditure      for  rendering  the  services  is  not  by  itself      decisive. That is because the Constitution did not      con template  it to  be an essential element of- a      fee that  it should be credited to a separate fund      and not  to the  consolidated  fund.  It  is  also      increasingly realised that the element of quid pro      quo stricto  senso is not always a sine qua non of      a fee. It is needle to streess that the element of      quid pro  quo is  not necessarily  absent in every      tax............      The  Traditional   Concept  of  Quid  Pro  Quo  Is      Undergoing. A Transformation."      What do  we learn  from these precedents? We learn that

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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 hall-mark 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 as com- 1007 pared with  the primary  motive of  regulation in the public interest. Nor  is the  Court to  assume the  role of  a cost accountant. It  is neither  necessary nor expedient to weigh too meticulously  the cost  of the  services  rendered  etc. against the amount of fees collected so as to evenly balance the two.  A broad  correlationship is all that is necessary. Quid pro  quo in  the strict  sense is  not the one and only true index of a fee; nor is it necessarily absent in a tax.      What do  we have  in  the  present  case  ?  True,  the Municipal Corporation  has realised a sum of Rs. 4,24,494 by way of  fees at  the rate  of Re.  00.50p. per animal in the case of sheep, goats and pigs and Rs. 2.00 per animal in the case of  buffaloes, whereas  the  budget  of  the  Municipal Corporation showed  under item  XIV-B that  an amount of Rs. 2,56,000 was  expended in  connection with slaughter houses. But as explained in the affidavit of Dr. A. C. Ajwani Deputy Health officer  (Public Health) of the Municipal Corporation of Delhi, the amount of Rs. 2,56,000 covers only those items of expenditure  as  are  reflected  in  item  XIV-B  of  the Municipal Budget.  The items  of expenditure covered by item XIV-B of  the municipal  budget are  evidently those item of expenditure which  arc incurred  directly and excessively in connection with  slaughter houses.  In  addition  there  are several other  items of expenditure connected with slaughter houses but  which are  not included in item XIV-B. To name a few, .  there is  the expenditure  involved in the purchase, maintainance and  the use  of trucks  and other vehicles for the removal of filth and refuse from slaughter houses. These expenses,  though  attributable  to  slaughter  houses,  are debited in  the municipal  budget under  other heads such as transport, conservancy,  petrol and  oil etc.  There is also the expenditure incurred in connection with the maintainance of supervisory  staff like  a full  time Veterinary officer, and a Municipal Health officer, Deputy Health officer, Zonal Health officer etc., a considerable part of those duties are connected with  slaughter houses.  There is then the cost of depreciation of  the buildings and fittings in the slaughter houses. There  is  also  the  provision  for  expansion  and improvement of slaughter house facilities. There are several other items  of expenditure  the whole  or part  of which is attributable to  slaughter houses.  Unfortunately, the  High Court refused  to look  at any  of these formidable items of expenditure on the ground that the Corporation could not ask the Court  to look  at any  figures other  than  the  figure mentioned  under   item  XIV-B   of  the  municipal  budget. Aparently the  High Court  was under the impression that the fees collected should be shown to be related to

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1008 expenditure incurred  directly and exclusively in connection with the slaughtering of animals in its slaughter houses and also, shown  as such  in the  municipal budget.  This was  a wholly erroneous approach, in the light of what we have said earlier. We have explained earlier that the expenditure need not be  incurred directly  nor even  primarily in connection with the  special benefit  or advantage  conferred. We  have also  explained  that  there  need  not  be  any  fastidious balancing of the cost of the services rendered with the fees collected. It  appears to have been common ground before the High Court that the price of meat had gone up about 10 to 12 times since  the rates  were  original  fixed.  If  so,  one wonders how  the Municipal  Corporation could be expected to effectively discharge its obligations in connection with the supervision of  the slaughtering of animals in the slaughter houses maintained by it by merely raising the rates two-fold and three-fold. The increase from Re. 00.25p to Rs. 2.00 per animal in the case of small animals and from Re. 1.00 to Rs. 8.00 in the case of large animals appears to us to be wholly justified in  the circumstances  of the  case. The appeal is therefore, allowed with costs the judgment of the High Court set aside  and the  Writ Petition  filed in  the High  Court dismissed with costs. S.R.                                         Appeal allowed. 1009