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PETITIONER: NAGAR MAHAPALIKA VARANASI

       Vs.

RESPONDENT: DURGA DAS BHATTACHARYA & ORS.

DATE OF JUDGMENT: 04/03/1968

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C. MITTER, G.K.

CITATION:  1968 AIR 1119            1968 SCR  (3) 374  CITATOR INFO :  RF         1975 SC 846  (15,19)  R          1980 SC1008  (17,21)

ACT: U.P.  Municipalities Act (II of 1916) Chapters V,  VIII  and IX-Licence  fees  from  owners  of  rickshaws  and  rickshaw drivers-If in the nature of tax-Whether quid pro quo in  the form of services by municipality necessary,

HEADNOTE: Under  s.  294  of  the  U.P.  Municipalities  Act,  1916  a Municipal  Board may charge a fee, to be fixed by  bye  law, for  any licence, and, s. 298 enables the Board to make  the bye-laws.   Purporting to act under s. 298(2) and List  I-H, of  the Act, the appellant (Municipal Boa  Varanasi)  framed certain bye-laws relating to the plying of rickshaws,  under which,  the  owner of each rickshaws had to  pay  an  annual licence  fee  of Rs. 30/and each rickshaw driver  an  annual licence  fee  of Rs. 51-.  The rickshaw owners  and  drivers challenged  the  validity of the bye-laws in a suit  on  the ground that the licence fees were not commensurate with  the services   and  advantages  rendered  or  provided  by   the appellant. The  trial  court dismissed the suit.  The  High  Court,  on appeal.  held  that the imposition of licence  fees  at  the rates  of Rs. 30/- and Rs. 51- was ultra vires and  illegal, because,  after excluding certain items of  expenditure  the balance  did not constitute sufficient quid pro quo for  the amount of licence fees charged. In appeal to this Court, it was contended : (1) that the fee charged  was not for rendering any services but was  in  the nature of a tax; (2) that s. 294 of the Act contemplates the charge  of a fee not only in the restricted sense of  a  fee for  which a quid pro quo is provided but also in the  sense of a fee in which the taxation element is predominant,  that such  a licence fee could be imposed by enacting  a  bye-law for  that purpose under s. 298, and that the licence fee  in the  present case was of that category and (3) that even  if it was held to be a fee in the restricted sense for services rendered  by  the appellant, there was sufficient  quid  pro quo.

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HELD  :  (1)  The  fees mentioned  in  Chapter  VIII,  which contains  s,,_ 294, are meant for the purpose of  regulation of  certain trades and professions, for  rendering  services and for the maintenance of public safety and convenience  of the inhabitants of the municipality, and, it is not  contem- plated that they should be merged in the public revenues  of the  municipality or should go for the upkeep of  the  roads and other matters of general public utility.  Therefore, the fees  imposed under s.’294, are only fees in the  restricted sense  of  a fee for which a quid pro quo  is  provided  and cannot be considered to be an impost in the nature of a tax. [384 E-G] The Commissioner, Hindu Religious Endowments, Madras v.  Sri Lakshmindra Thirtha Swamiar of Sri Sirur Mutt, [1954] S.C.R. 1005, 1042, followed. (2)  The  Act  contemplates only two categories  of  impost, that is, taxes enumerated in Chapter V and fees mentioned in ss. 293, 293-A and 294 of Chapter VIII.  If a levy is a  tax the  imposition could be lawfully made only after  following the  mandatory  procedure prescribed under ss. 131  to  135. Under s. 128(1)(iii) and (iv), which are in Chapter V, it is 375 competent  to  a municipality to impose, a tax  on  rickshaw drivers and rickshaw owners.  If it is assumed that the  tax element  was  predominant  in  the  present  case  and  that therefore  the licence fee was in the nature of a  tax,  the imposition would be ultra vires because the procedure  under ss. 131 to 135 was not followed.  There is no third category of impost of licence fee which is in the nature of a tax for which  the  procedure prescribed by ss. 131 to  135  is  not applicable,  but the procedure contemplated by  Chapter  IX, which contains s. 298, is applicable. [383 G-H; 384 D-E] (3)  The  items  disallowed by the High Court could  not  be considered as having been spent in rendering any services to rickshaw  owners and drivers, because they were  spent  over paving bye-lanes suitable for rickshaws and for the lighting of streets and lanes; and, under s. 7(a) and (h) of the Act, it  was the statutory duty of the municipal board  to  light public  streets  and places and to  construct  and  maintain public  streets,  culverts  etc.  A licence  fee  cannot  be imposed  for  reimbursing  the cost  of  ordinary  municipal services performed in the discharge of its statutory duty to provide  for  the  general public.   Since  the  balance  of expenditure constituted only 44% of the total income of  the appellant  from  the licence, the High Court  was  right  in holding that sufficient quid pro quo was not established  in the circumstances of this case. [385 G-H; 386 A-c] India  Sugar and Refineries Ltd. v. The  Municipal  Council, Hospital, I.L.R. [1943] Mad. 521, approved.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 558 of 1967. Appeal from the judgment and decree dated November 23,  1961 of the Allahabad High Court in First Appeal No. 315 of 1958. C.   B.  Agarwala,  Ravindra Rana and 0. P.  Rana,  for  the appellant. S.   Y.  Gupta, Jai Shankar Lal, Yogevhwar Prasad and  Mohan Behari Lal, for the respondents. The Judgment of the Court was delivered by Ramaswami,  J. This appeal is brought, by certificate,  from the judgment of the Allahabad High Court dated November  23, 1961 in First Appeal No. 315 of 1958 by which the appeal  of the  respondents was allowed and the suit was  decreed  with

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costs throughout. On  March 26, 1956, the plaintiff respondents who are  rick- shaw owners and rickshaw drivers filed a representative suit in  the court of Civil Judge, Varanasi praying for a  decree against  the,  appellant  to  restrain  it  by  means  of  a permanent  injunction  from  charging  any  license  fee  or preventing  the respondents from plying rickshaws  for  hire without  paying license fee within the municipal  limits  of Varanasi.   Purporting to act under’s. 298(2), List  I-H  of the  U.P.  Municipalities Act, 1916 (Act No. IT,  of  1916), hereinafter  referred to as the ’Act’, the  Municipal  Board L6SLip.  C.1/68-11 376 of Varanasi framed certain bye-laws relating, to the  plying of   rickshaws.   The  bye-laws  were  first  published   by Government  order No. 3471/XXIII-9994 dated March  10,  1941 and  were  subsequently  amended by  two  notifications  No. 4022/XXIII-445 dated February 2, 1950 and No. 5834-XXIII-745 dated  September  6, 1951.  Under these  bye-laws,  as  they stood  amended,  the owner of each rickshaw had  to  pay  an annual  licence  fee  of  Rs. 30/1- and  each  driver  of  a rickshaw  had  to  pay  an  annual  fee  of  Rs.  5/-.   The respondents challenged the validity of these byelaws  mainly on  the  ground that considering the amount that  was  being levied  what should have ’been only a fee was really  a  tax which the Municipal Board had no authority to levy.  It was, contended on their behalf that a licence fee could be levied only  for services rendered or advantages provided  and  the imposition  must  be  commensurate  with  the  services  and advantages  so rendered.or provided.  It was urged  that  so far  as  the  rickshaws that were  being  plied  within  the municipal limits of Varanasi were concerned no advantages or services were provided which could justify the levy of a fee at  such a rate.  The suit was contested ’by  the  appellant Municipal  Board on the ground that services and  advantages were,  in fact, provided and their cost was much  more  than the  total amount that was being realised from the  rickshaw owners  and drivers.  By his judgment dated March  26,  1958 the 1st Additional Civil Judge, Varanasi dismissed the  suit of  the respondents, holding that the bye-laws  in  question were not invalid.  The respondents took the matter in appeal to the, Allahabad High Court being- First Appeal No. 315  of 1958.   The  appeal  was  first  placed  before  Gurtu   and Srivastava,  JJ.  who  referred it for  consideration  by  a larger  Bench.   The appeal was finally heard by  the  Chief Justice,  Jagdish  Sahai  and Bishambhar Dayal,  JJ.   By  a majority  _judgment dated November 23, 196 1. the appeal  of the respondents was allowed, the judgment of the trial court was  set aside and the suit of the respondents decreed.   It was held by Sahai and Dayal, JJ. who delivered the  majority judgment that the imposition of the license fee- at the rate of  Rs. 30/- on each of the rickshaw owners and Rs.  5/-  on each of the rickshaw drivers was ultra vires and a permanent in_junction   was   accordingly  granted   restraining   the appellant  from realising the license fees at this rate  for the period in question.  It was however, made clear that  it was  open  to  the Municipal Board to reduce the  fee  to  a reasonable figure and co-relate it to the services  rendered by the Municipal Board. Chapter V of the Act deals with Municipal Taxation.  Section 128 falls within that Chapter and reads as follows :               "(1)  Subject to any general rules or  special               orders of the State Government in this behalf,               the taxes which               377

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             a board may impose in the whole or any part of               a municipality are-               ..........................................               (iii) a tax on trades, callings and  vocations               including   all  employments  remunerated   by               salary or fees ’               (iv)  a tax on vehicles and other  conveyances               plying   for   hire   or   kept   within   the               municipality or on boats moored therein;               ..........................................               Section 131 deals with framing of  preliminary               proposals and reads as follows :               "131.  (1) When a ’board desires to  impose  a               tax,  it  shall by  special  resolution  frame               proposals specifying,-               (a)   the   tax,  being  one  of   the   taxes               described  in subsection (1 ) of section  128,               which it desires to impose; .               (b)   the  persons or class of persons  to  be               made  liable, and the description of  property               or  other  taxable thing or  circumstances  in               respect  of which they are to be made  liable,               except  where and in so far as any such  class               or description is already sufficiently               defined under clause (a) or by this Act,               (c)   the  amount or rate leviable  from  each               such person or class of persons;               (d)   any other matter referred to in  section               153,  which the State Government  requires  by               rule to be specified.               (2)   The board shall also prepare a draft  of               the   rules   which  it  desires   the   State               Government  to make in respect of the  matters               referred to in section 153.               (3)   The  board shall, thereupon, publish  in               the  manner  prescribed  in  section  94   the               proposals framed under sub-section (1) and the               draft  rules  framed  under  sub-section   (2)               along- with a notice in the form set forth  in               Schedule Ill." Section 132 provides for filing objections by inhabitants of the,  municipality and the procedure for dealing  with  such objections.  It reads 378               "132.  (1) Any inhabitant of the  municipality               may,  within a fortnight from the  publication               of  the  said notice, submit to the  board  an               objection  in  writing to all or  any  of  the               proposals framed under the preceding  section,               and the board shall take any objection so sub-               mitted  into  consideration  and  pass  orders               thereon by special resolution.               (2)   If  the  board  decides  to  modify  its               proposals  or  any of them, it  shall  publish               modified proposals and (if necessary)  revised               draft  rules  along with a  notice  indicating               that  the proposals and rules (if any) are  in               modification of proposals and rules previously               published for objections.               (3)   Any objections which may be received  to               the modified proposals shall be dealt with  in               the manner prescribed in sub-section (1).               (4)   When  the board has finally settled  its               proposals, it shall submit them along with the               objections   (if  any)  made   in   connection

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             therewith to the (Prescribed Authority)." Section  133  relates to the power of  State  Government  to reject  sanction  or modify the proposals of  the  Municipal Board.  Section 134 states :               "(1)  When the proposals have been  sanctioned               by  the  Prescribed  Authority  or  the  State               Government, the State Covernment, after taking               into  consideration the draft rules  submitted               by the board, shall proceed forthwith to  make               under  section 296, such rules in  respect  of               the  tax  as for the time being  it  considers               necessary.               (2)   When the rules have been made the  order               of  sanction and a copy of the rules shall  be               sent  to  the board, and thereupon  the  board               shall   by  special  resolution   direct   the               imposition of the tax with effect from a  date               to be specified in the resolution."               Section 135(1) & (2) provide as follows :               "(1)  A  copy of the resolution  passed  under               section  134 shall be submitted to  the  State               Government, if the tax has been sanctioned  by               the  State  Government and to  the  Prescribed               Authority, in any other case.               (2)   Upon   receipt  of  the  copy   of   the               resolution the State Government or  Prescribed               Authority as the case may be, shall notify  in               the Official Gazette, the imposi-               379               tion  of the tax from the appointed date,  and               the imposition of a tax shall in all cases  be               subject  to the condition that it has been  so               notified." Chapter  VII  deals with powers of the  Municipal  Board  in respect of buildings, public drains, streets, extinction  of fires, scavenging and water supply.  Chapter VIII deals with other  powers in respect of markets, slaughter-houses,  sale of  food,  public  safety,  sanitation  and  prevention   of disease,  inspection, entry, search, rent and  charges  etc. Sections 293 and 294 fall within Ch.  VIII.  Section 293  of the Act reads as follows :               "(1) The board may charge fees to be fixed  by               byelaw  or by public auction or by  agreement,               for  the  use or  occupation  (otherwise  than               under  a  lease)  of  any  immovable  property               vested  in, or entrusted to the management  of               the  board,  including, any public  street  or               place of which it allows the use or occupation               whether  by allowing a projection  thereon  or               otherwise.               (2)   Such  fees  may either be  levied  along               with  the  fee charged under section  294  for               ’the  sanction, licence or permission  or  may               ’be  recovered  in  the  manner  provided   by               Chapter VI."               Section  293-A of the Act is to the  following               effect               "A board may with the previous sanction of the               State Government impose and levy fees for  use               of  any place to which the public  is  allowed               access  and  at which the  Board  may  provide               sanitary and other facilities to the public."               Section 294 of the Act enacts as follows               "The  board  may charge a fee to be  fixed  by               bye-law   for   any   licence,   sanction   or

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             permission which it is entitled or required to               grant by or under ,his Act."               Section 298 relates to the power of the  Board               to make bye-laws and reads as follows :               "298.  (1) A board by special resolution  may,               and  where  required by the  State  Government               shall make bye-laws applicable to the whole or               any part of the municipality, consistent  with               this Act and with any rule, for the purpose of               promoting  or maintaining the health,  safety,               and  convenience  of the  inhabitants  of  the               municipality   and  for  the  furtherance   of                             municipal administration under this Ac t.               (2)   In particular, and without prejudice  to               the generality of the power conferred by  sub-               section (1 ),               380               the   board  of  a   municipality,   wherever,               situated,  may,  in the exercise of  the  said               power,  make any bye-law, described in List  I               below  and the board of a  municipality-wholly               or in part situated in a hilly tract may  fur-               ther make, in the exercise of the said  power,               any byelaw described in List II below.               List I                ............................................               H-Public safety and convenience               ............................................               (c)   Imposing  the obligation of  taking  out               licences  on  the proprietors  or  drivers  of               vehicles  other  than motor vehicles  boxs  or               animals kept or plying for hire, or on persons               hiring  themselves  out  for  the  purpose  of               carrying,  loads  within  the  limits  of  the               municipality, and fixing the fees payable  for               such licences and the conditions on which they               are to be granted and may be revoked;               (d)   Limiting the rates which may be demanded               for  The  hire of a carriage,  cart,  boat  or               other conveyance, or of animals hired to carry               loads or for the services of persons hired  to               carry  loads, and the loads to be  carried  by               such  conveyances,  animals  or  persons  when               hired within the municipality for a period not               exceeding  twenty-four hours or for a  service               which  would  ordinarily be  performed  within               twenty-four hours; By  Government Notification No. 3471/XXIII-994  dated  March 10, 1941 the bye-laws framed by the Municipal Board under s. 298,  List IL-H (c) and (d) of the Act and confirmed by  the Commissioner,  were published.  Paragraphs 12, 13 and 14  of the bye-laws are to the following effect :               "12.   For every licence granted  under  these               byelaws  to the proprietor of the rickshaw,  a               fee of Rs. 25 per annum shall ’be charged  for               cycle  rickshaw and Rs. 3 per annum for  hand-               drawn rickshaws.               13.   The  licences shall be annual and  shall               terminate on    the 31st March, in each year.               14.   A  fee  of Re. 1 shall be  charged  from               every person who desires to take out a licence               for  driving a rickshaw and the licence  shall               be issued to the applicant               381

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             on  receipt  of  the  prescribed  fee  by  the               licensing officer, after ascertaining that  he               is  strong,  healthy and above the age  of  18               years, provided that the Licensing Officer may               refuse the license if he is of opinion that it               would be inexpedient to grant it to the person               applying." An amendment was made by the Municipal Board to the  byelaws by Government Notification No. 4022/XXIII-745 (45-49)  dated February 2, 1950 and No. 5834/’XXIII-745 dated September  6, 1951 which read thus :               "No. 4022IXXIII-745 (45-49) dated 2-2-1950:               The  following amendment in the Rickshaw  bye-               laws  for the Banaras  Municipality  published               under  notification No.  3471/XXIII-994  dated               March  10,  1941, which has been made  by  the               Banaras Municipal Board under section 298-H(c)               and  (d) of the U.P. Municipalities  Act  1916               and  confirmed by the Commissioner, is  hereby               published as required under Section 301 (2) of               the said Act.                                 AMENDMENT               In  the  2nd line of rule 12 of  the  Rickshaw               bye-laws read ’Rs. 30’ instead of ’Rs. 25’  in               between the words ’a fee of’ and ’per annum’.               No. 58341’XXIII-745 dated September- 6, 1951               The  following amendment in the  bye-laws  for               the regulation and control of Rickshaws plying               for  hire  or  kept for  private  use  in  the               Banaras Municipality sanctioned under G.O. No.               3471/XXIII-994 dated March 10, 1941, which has               been  made by the Municipal Board of  Banaras,               under-  Section 298-H(c) and (d) of  the  U.P.               Municipalities Act, 1961, as confirmed by  the               Commissioner  is hereby published as  required               by Section 301 (2) of the said Act.               Amendment               In  Rule  14  between the words  ’A  fee’  and               ’shall   be   charged’   ’rupees   five’    be               substituted  in place of ’Re.  I/-’  occurring               in the first line." On behalf of the appellant Mr. Agarwala argued, in the first place, that the impugned bye-laws under which the  appellant charged the license fee from the respondents were not  ultra vires  the powers of the Board.  It was maintained that  the impost was not a fee in the sense ,’bat the Municipal  Board had to give a quid 382 pro  quo to the persons from whom the fee was  charged.   In other  words, the contention of the appellant was  that  the fee  charged  Was  not under the bye-laws a  fee  taken  for render in any services but it was a license fee which was in the  nature  of a tax.  I’( was contended that  it  was  not necessary to show that there was any co-relationship between the  amount of license fee and the services rendered by  the Municipal  Board  to rickshaw owners and  rickslia"  drivers concerned.  The question about the distinction between a tax and  a  fee  has  been  considered  by  this  Court  in  The Commissioner,  Hindu  Religious Endowments,  Madras  v.  Sri Lakshmindra  Tirtha Swamiar of Sri Shirur Mutt(1)  in  which the  constitutional validity of the Madras  Hindu  Religious and Charitable Endowments Act 1951 (Madras Act XIX of  1951) came to be examined.  Amongst the sections challenged war s. 76(1  ). Under this section every religious institution  had to pay to the Government annual contribution not exceeding 5

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per  cent of its income for the services rendered to  it  by the  said  Government; and the argument was  that  the  con- tribution  thus exacted was not a fee but a tax and as  such outside the competence of the State Legislature.  In dealing with this argument Mukherjee, J., as he then was, cited  the definition  of  tax given by Latham, C.J., in  the  case  of Matthews(1)  and has elaborately considered the  distinction between  a tax and a fee.  "A tax", said Latham, C.J., is  a compulsory exaction of monev by public authority for  public purposes enforceable by law and is not payment for  services rendered".  In b,-in-ing out the essential features of a tax this definition also assists in distinguishing a tax from  a fee.   It is true that between a tax and a fee there  is  no generic  difference; both are compulsory exactions of  money by  public  authorities  but whereas a tax  is  imposed  for public purposes and is not supported by any consideration of service rendered in return, a fee is levied essentially  for servires  rendered and as such there is an element  of  quid pro  quo between the person who pays the fee and the  public authority  which  imposes  it. In  The  Commissioner,  Hindu Religious  Endowments, Madras.v v. Sri  Lakshmindi-a  Tirtha Swamiar  of  Sri Shirur Mutt(1) Mukherjee, J.  examined  the scheme of the Act and observed as follows:                " If, as we hold, a fee is regarded as a sort               of   return  or  consideration  for   services               rendered, it is absolutely necessary that  the               levy  of  fees  should, on  the  face  of  the               legislative  provision, be co-related  to  the               expenses  incurred by Government in  rendering               the services.  As indicated in Article 110  of               the  Constitution,  ordinarily there  are  two               classes  of  cases  where  Government  imposes               ’fees’  upon persons.  In the first  class  of               cases,               (1)  [1954]  S.C.R. 105, I-42.         (2)  60               C.L.R. 263, 276.               383               Government  simply  grants  a  permission   or               privilege  to a person to do something,  which               otherwise  that person would not be  competent               to  do  and  extracts  fees  either  heavy  or               moderate  from that person-in return  for  the               privilege that is conferred." After  giving  an  illustration of licence  fees  for  motor vehicles as coming under that class of cases, Mukherjee,  J. proceeds to state :               "In  such cases, according to all the  writers               on   public  finance,  the  tax   element   is               predominant, and if the money paid by  licence               holders goes for the upkeep of roads and other               matters of general public utility, the licence               fee cannot but be regarded as a tax.               In  the other class of cases,  the  Government               does  some  positive work for the  benefit  of               persons  and the money is taken as the  return               for the work done or services rendered. If the               money    thus    paid    is    set    apartand               appropriatedspecifically  for the  performance               ofsuch  work  and isnot merged in  the  public               revenues forthe benefit of thegeneral  public,               it  could  be counted as fees and not  a  tax.               There is really no generic difference  between               the tax and fees and as said by Seligman,  the               taxing power of a State may manifest itself in               three  different forms known  respectively  as

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             special assessments, fees and taxes." On behalf of the appellant learned, Counsel relied upon this passage  and  said that licence fee fell  within  the  first class  of  cases mentioned by Mukherjee, J. and it  was  not necessary  for the appellant to show that there was any  co- relationship  between the levy of the fees and the  expenses incurred by the Municipal Board in rendering the services. We shall assume in favour of the appellant that the tax cle- ment  is predominant in the imposition of the fee  upon  the respondents under the impugned bye-laws and the license  fee is  therefore  in  the  nature  of  tax.   Even  upon   that assumption  the  imposition of the fee under  the  machinery contemplated by s. 294 of the Act is ultra vires the  powers of  the  Municipal  Board.   The  reason  is  that  if   the imposition  is  in  the  nature  of  a  tax  the   procedure contemplated by ss. 131 to 135 of the Act should be followed by the Municipal Board and in the absence of such  procedure being  followed the imposition of this kind of fee would  be ultra virus.  It is manifest from s. 128 ( 1 ) (iii) &  (iv) that it is competent to the Municipality to impose a tax  on vehicles plying for hire or kept within the municipality and also  on  trades, calling and vocations  including  rickshaw drivers and rickshaw owners. 384 But  the imposition of such a tax can only be lawfully  made by  the  Municipal  Board  after  following  the   procedure prescribed under ss. 131 to 135 of the Act. It  was, however, contended for the appellant that under  s. 294 of the Act the Municipal Board has authority to impose a licence fee by enacting a bye-law for that purpose under  s. 298  of  the  Act.   It was said that  s.  294  of  the  Act contemplates the charge of a fee not only in the  restricted sense of a fee for which a quid pro quo is provided but also in  the  sense  of a fee in which the  taxation  element  is predominant.   It  was  hence  argued  that  the  procedural machinery  for the imposition of tax contemplated under  ss. 131  to 135 of the Act need not be followed in such a  case. We are unable to accept this argument as correct.  According to  the  scheme  of  the Act there  is  a  sharp  and  clear distinction  between  taxes  properly so  called  and  fees. There  is a logical and clear-cut division of the  Act  into several  Chapters, and taxes, by whatever  designation  they may  be called, are all comprehended and dealt with  in  Ch. V.  and by that Chapter alone.  And what is permitted to  be imposed by S. 294 which occurs in Ch. VIII is only a fee  in the restricted sense as distinguished from a tax.  To put it differently,  the  Act contemplates only two  categories  of impost, i.e., taxes enumerated in Ch.  V and fees  mentioned in  ss. 293, 293-A and 294 of Ch.  VIII.  It is not  contem- plated in the scheme of the Act that there should be a third category of impost of licence fee which is in the nature  of a  tax  for which the procedure contemplated by Ch.   IX  is applicable.  In our opinion, the scheme of Ch.  VIII of  the Act  shows that the provisions contained therein  are  meant for  the  purpose  of  regulation  of  certain  trades   and professions  and  for  maintenance  of  public  safety   and convenience  of  the inhabitants of the  municipality.   The fees  mentioned  in s. 294 are meant to be imposed  for  the purpose  of  regulation  of trade and  professions  and  for rendering services.  It is not contemplated by the Act  that licence  fees  imposed  by s. 294 should be  merged  in  the public  revenues of the municipality and should go  for  the upkeep  of  the roads and other matters  of  general  public utility.  It is therefore not permissible for the  Municipal Board to impose a tax on the respondents under the guise  of

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a license fee without following the mandatory procedure  for imposition of the taxes prescribed by ss. 131 to 135 of  the Act.   Otherwise  there  will  be  a  circumvention  of  the provisions  of  ss. 131 to 135 of the Act.  It  is  manifest that s. 294 of the Act must be interpreted in such a  manner as  to  prevent the circumvention of the safeguards  of  the provisions of ss. 131 to 135 of the Act. In this context it is important to notice that the power  to tax  is  not included in the police power  in  the  American Municipal 385 Law.-(Dillon on ’Municipal Corporations’ Vol.  IV, 5th Edn., p.  2400).   It  has been held that the  police  and  taxing powers  of the legislature though co-existent, are  distinct powers.   Broadly  speaking,  the distinction  is  that  the taxing power is exercised for the purpose of raising revenue and   is  subject  to  certain   designated   constitutional limitations,  while  the police power is exercised  for  the promotion  of the public welfare by means of the  regulation of   dangerous   or   potentially   dangerous    businesses, occupations,  or  activities,  and is  not  subject  to  the constitutional restrictions applicable to the taxing  power. "It may consequently be said that if the primary purpose  of a  statute or ordinance exacting an imposition of some  kind is to raise revenue, it represents an exercise of the taxing power, while if the primary purpose of such an enactment  is the  regulation  of some particular occupation,  calling  or activity, it is an exercise of the police power, even if  it incidentally produces revenue." (American Jurisprudence, 2nd Edn.  Vol. 16, p. 519). We  pass  on to consider the next question  raised  in  this appeal,  namely,  whether there was a quid pro quo  for  the licence  fees  realised  by the appellant  and  whether  the impost  was a fee in the strict sense as contemplated by  s. 294 of the Act.  A finding has been recorded in the  present case  by the trial court that a sum of Rs. 1,43,741/7/0  was spent  by the Municipal Board for providing  facilities  and amenities  to owners and drivers of rickshaws.  This sum  of Rs. 1,43,741/7/0 is made up of the following items : "Rs.  68,000/- spent over the paving of bye-lanes, in  these the only conveyance that can operate is a rickshaw. Rs.  20,000/- spent as expenses for lighting of streets  and lanes. Rs.  47,741/7/0  spent  in  making  provision  for   parking grounds. Rs.  8,000/-  spent  on  payment  of  salary  to  the  staff maintained for issuing licences and inspecting rickshaws." The  High  Court was of the opinion that the amount  of  Rs. 68,000/- spent for paving of bye-lanes and Rs. 20.000/-  for lighting  of streets and lanes cannot be considered to  have been spent in rendering services to the rickshaw owners  and rickshaw drivers.  The reason was that under s. 7 (a) of the Act  it  was the statutory duty of the  Municipal  Board  to light  public  streets and places and under cl. (h)  of  the same  section  to  construct and  maintain  public  streets, culverts etc.  The expenditure under 386 these  two items was incurred by the Municipal Board in  the discharge of its statutory duty and it is manifest that  the licence  fee cannot be imposed for reimbursing the  cost  of ordinary  municipal services which the Municipal  Board  was bound  under  the statute to provide to the  general  public (See  the decision of the Madras High Court in  India  Sugar and Refineries Ltd. v. The Municipal Council Hospet(1).   If these two items are excluded from consideration the  balance

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of  expenditure  incurred  by the Municipal  Board  for  the benefit of the licensees is Rs. 55,741/7/0.  In other words, the expenditure constituted about 44% of the total income of the  Municipal  Board from the licensees.  In  our  opinion, there  is  no  sufficient quid pro quo  established  in  the circumstances of this case and the High Court was  therefore right in holding that the imposition of the, licence fees at the  rate of Rs. 30/- on each rickshaw owner and Rs. 51-  on each rickshaw driver was ultra vires and illegal. For  the  reasons expressed we hold that  the  judgment  anl decree  of the Allahabad High Court dated November 23,  1961 in  First Appeal No. 315 of 1958 is correct and this  appeal is accordingly dismissed with costs. V.P.S.                       Appeal dismissed. (1) I.L.R. [1943] Mad. 521. 387