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PETITIONER: CITY CORPORATION OF  CALICUT

       Vs.

RESPONDENT: THACHAMBALATH SADALINAN & ORS.

DATE OF JUDGMENT26/02/1985

BENCH: DESAI, D.A. BENCH: DESAI, D.A. SEN, AMARENDRA NATH (J)

CITATION:  1985 AIR  756            1985 SCR  (2)1008  1985 SCC  (2) 112        1985 SCALE  (1)294  CITATOR INFO :  R          1989 SC 100  (26)  R          1989 SC 317  (34)

ACT:       Constitution of India 1950, Article 265 Tax and  fee-Quid pro  quo-Whether an  essential element for fee       Kerala Municipal Corporation Act 1961 (Act 30 of 1961)       Section 299 & Schedule IV-Use of premises and land for soaking Coconut  husks-Levy of  licence fee  by Corporation- Whether valid.

HEADNOTE:         The appellant-Corporation levied licence fee for use of  premises  and  land  for  soaking  coconut  husks  under Schedule  IV   of  the  Calicut  City  Municipal  Act  1961, Subsequently restyled  as the  Kerala Municipal  Corporation Act 1961.       The  respondents were carrying on the trade of soaking coconut husks,  and as  they had not taken out the requisite licence, the  Commissioner of the Corporation issued notices to show  cause  why  they  should  not  be  prosecuted.  The respondents challenged  the validity  and  legality  of  the notices in Writ Petitions to the High Court, contending that if the  licence fee  is levied  as  a  fee,  no  service  is rendered or  special advantage or favour is conferred by the Corporation for  collecting such  fee and  that there  is DO quid pro  quo and that the relevant provisions of the Act do not enable  the Corporation  to levy  such  a  fee.  It  was further contended  that if  the levy is treated is a tax, it is  beyond   the  taxing  powers  of  the  Corporation.  The Corporation contested  the Writ Petitions justifying the fee as licence  fee and  that it  had the power to levy a tax of the nature levied by it.       A  Single Judge  of the  High Court  allowed the  Writ Petitions, and quashed the impugned licence fee as not legal in the  absence of conferment of special benefits in respect of persons  who soak coconut husks. It was further held that the power  to  levy  the  various  taxes  conferred  on  the Corporation  under  Chapter  V  of  the  1961  Act  did  not comprehend the  impugned levy  and consequently  the tax was not valid  and legal.  The writ  appeals of  the Corporation

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were dismissed. 1009       Allowing the Appeals, this Court ^       HELD: By numerous recent decisions of this Court it is well-settled that  the traditional  concept in a fee of quid pro quo  is undergoing  a transformation and that though the fee must  have relation  to the  services  rendered  or  the advantages conferred,  such relation  need not  be direct, a mere casual  relation may  be enough. It is not necessary to establish that  those who  pay the  fee must  receive direct benefit of  the services tendered for which the fee is being paid. If  one who  is liable to pay receives general benefit from the  authority levying  the fee  the element of service required  for   collecting  fee  is  satisfied.  It  is  not necessary that the persons liable to pay     must    receive some special benefit or advantage for payment of the fee.                                                    [1012E-F]       In  the instant  case, it is incontrovertible that the appellant-Corporation is  rendering numerous services to the persons within its areas of operation and that therefore the levy of  the licence  fee as fee is fully justified. Soaking coconut husks  emit foul odour and contaminates environment. The Corporation  by rendering  scavanging services, carrying on  operations   for  cleanliness   of  the  city,  to  make habitation tolerable  is rendering  general service of which amongst  others   respondents  are   beneficiaries.  a   The decisions of  the Single Judge and of the Division Bench are set aside  and the  Writ Petitions  of the  respondents  are dismissed. [1012 G-H]       Municipal  Corporation of  Delhi & Ors. v. Mohd. Yasin JUDGMENT: Others v.  State of  Andhra Pradesh  and Others (1983) 4 SCC 353 &  M/s Amarnath Om Prakash and Others v. State of Punjab & Ors. (1985) I SCC 345 referred to.

&       CIVIL  APPELLATE JURISDICTION: Civil Appeal Nos. 1 3 & 14 Of 1971       From the Judgment & Order dated 2. 7. 68 of the Kerala High Court  at Ernakulam in Writ Petition NOS. 107 & 108/68. F       A. S. Nabiar and P. Parmeswaran, for the Appellant. N. Sudhakaran. P.  K. Pallai, V. J. Francis,  N. M. Popli A. C. Pudissary for the respondents.       The Judgment of the Court was delivered by.              DESAI,  J. The respondents in these two appeals filed Original  Petitions Nos. 2892-3073 of 1965 challenging the validity of the licence fee levied by the appellant ’The City Corporation  of Calicut’ to be paid for use of the land or premises  for soaking  of coconut  husks.  The  appellant Corporation by  its resolution dated January 25. 1963 levied licence fees in respect of various items set out in 1010 Schedule  IV   of  the  Calicut  City  Municipal  Act,  190l subsequently restyled  as Kerala  Municipal Corporation Act, 1964 (  Corporation act’  for short)  including for  use  of premises and land for soaking coconut husks. The respondents are admittedly  carrying on  the trade  of  soaking  coconut husks and  they had  not taken out a licence for carrying on the trade.  The Commissioner  of the  appellant  Corporation issued a  notice to each of the respondents calling upon him to show  cause why  within three  days of the receipt of the

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notice, the  respondents should  not be prosecuted for using premises for  soaking   coconut husks  without  obtaining  a licence as  required by  law. The respondents challenged the validity and  legality of the afore-mentioned notices issued by the  Corporation and  served  upon  them  in  the  afore- mentioned two  writ petitions on diverse grounds, inter-alia contending that  if the  licence fee  Is levied as a fee, no service is  rendered  or  special  advantage  or  favour  is conferred  by   the  Corporation   on  the  respondents  for collecting such  fee and  that there  is no quid pro quo and that the  relevant provisions  of the  Act do not enable the Corporation to  levy  such  a  fee.  Alternatively,  it  was contended that  if it  is levied  as a tax, it is beyond the taxing powers of the Corporation.       The Corporation filed its counter-affidavit and sought to justify the fee as a licence fee or in the alternative it was contended  that the  Corporation had the power to levy a tax of the nature levied by it.       Both  the petitions  came up  before a  learned Single Judge of  the high  Court who  held that  the  levy  of  the impugned  licence  fee  is  not  legal  in  the  absence  of conferment of  special benefit  on the petitioners and other persons who  soak coconut  husks. The alternative submission that the  Corporation had  the power to levy it as a tax was negatived observing that the power to levy the various taxes conferred on the Corporation under Chapter V of the 1964 Act does not  comprehend the  impugned levy and accordingly held that as  a tax  it was not valid and legal. Accordingly both the writ  petitions were  allowed and  the impugned  notices were  quashed.   The  Corporation  after  unsuccessful  Writ Appeals Nos.  107-108 of l967 filed these Appeals by special leave.          Mr. A. S. Nambiar, learned counsel who appeared for the appellant-Corporation urged that the levy of licence fee as fee is fully justified and the High Court was In error in rejecting it as 1011 such on  the ground  that the  respondents do  not enjoy any special A  service or  benefit for  paying the  fees on  the traditional view  of law  more or  less than prevailing that for a  fee there  must  necessarily  be  quid  pro  quo.  He submitted that  the trend  revealed by  recent decisions  of this Court  would show  that traditional  view about fee has undergone a sea change and that the demarcating line between tax and  fee has  become so  blurred  as  to  become  almost invisible.  It   w-s  alternatively   submitted  that   even according to  traditional view  the Corporation  has  placed enough evidence  on record to show that the respondents have been and  are receiving special service or benefit in return for the  fees levied and paid It is not necessary to examine the alternative  submission save  saying in passing that the respondents do  enjoy certain  benefits from  the  functions discharged  by  the  Corporation.  The  first  limb  of  the contention  must  prevail  in  view.  of  the  three  resent decisions of this Court.       in Municipal Corporation of Delhi & Ors. v. Mohd Yasin & Anr.1)  after a  review of  the earlier  decisions it  was observed as under:                  "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 tax payers whereas      a fee  is a  payment  for  services  rendered,  benefit      provided or  privilege conferred. Compulsion is not the

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    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      casual relation  may be  enough. Further,  neither  the      incidence Or  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      compared 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  coat of  the      services rendered  etc.  against  the  amount  of  fees      collected so  as to evenly balance the two. A broad co-      relationship is all (1) [1983] 3 S. C. 229. 1012                 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  This  view  was      reaffirmed in  Sreenivasa General Traders and Others v.      State of Andhra Pradesh and Others(l) observing that it      is increasingly  realized that  the element of quid pro      quo in  the strict  sense is  not always a sine qua non      for a  fee. However,  co-relationship between  the levy      and the services rendered or expected is one of general      character and  not of mathematical exactitude. All that      is necessary  is that  there should be a reasonable co-      relationship between  the  levy  of  the  fee  and  the      services rendered.       In  a very  recent decision in M/s Amarnath Om Prakash and  Others  v.  State  of  Punjab  &  Ors.  (2)  the  Court reiterated the principle laid down in Mohd. Yasin’s case. It is thus  well-settled by  numerous recent  decisions of this Court that  the traditional concept in a fee of quid pro quo is under going a transformation and that though the fee must have relation  to the  services rendered,  or the advantages conferred, such  relation need  not be direct, a mere casual relation may  be enough.  It is  not necessary  to establish that those  who pay  the fee  must receive direct benefit of the services  rendered for  which the  fee is being paid. If one who  is liable  to pay receives general benefit from the authority levying  the fee  the element  of service required for collecting fee is satisfied It is not necessary that the person liable  to pay  must receive  some special benefit or advantage for payment of the fee.        Applying   the  ratio   of  these   decisions  it  is incontrovertible that the appellant-corporation is rendering numerous  services  to  the  persons  within  its  areas  of operation and  that therefore the levy of the licence fee as fee is fully justified Soaking coconut husks emit foul odour and contaminates  environment. The  Corporation by rendering scavenging services,  carrying on operations for cleanliness of city,  to make  habitation tolerable is rendering general service   of    which   amongst    others   appellants   are beneficiaries. Levy as a fee is thus justified. (1) [1983] 4 S.C.C. 353. (2) [1985] I S.C.C. 345. 1013       In  this view  of the  matter it  is not  necessary to consider the A alternative submission that the levy as a tax

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is legal.       Accordingly,  both the  appeals are  allowed  and  the decision of the learned Single Judge as well as the decision of the  Division Bench in writ appeals are set aside and the writ petitions  filed by  the petitioners are dismissed with no order as to costs. N. V. K.                                     Appeal allowed. 1014