MUNICIPAL CORPORATION OF DELHI AND OTHERS v. MOHD. YASIN ETC

Citation: [1983] 2 S.C.R. 999

Court: Supreme Court of India

Bench: D.A. DESAI, O. CHINNAPPA REDDY

Case summary

They properly belong to the world ofpublic 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.

Judgment text

MUNICIPAL CORPORATION OF DELHf AND OTHERS v. MOHD. YASIN ETC. April 28, 1983 (D. A. DESAI AND 0. CHINNAPPA REDDY, JJ. ) Tax and fee, contradistinction-Fees for slaughtering animals at slaughter houses enhanced by the Municipal Corporation, eightfold Legality ofthe enhancemeni-Whether the enhancedfee for slaughterinu animals was wholly dispropor~ tionate to the cost of the services and supervision and the,. efore, not a fee, but a tax. 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 fi 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 Coi::poration 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 realisatioh of fee ,at the rates permitted by the court with the an1ount of expenditure as revealed by the budget and excluding from consideration all expenditure not shown in the budget from item XIV B, the 1.

J:igh 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_ 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 and from rupee 1. 00 to Rs. 8. 00 in _. -L ,- the case of large animals was wholly justified, in the circumstan "ulsory exaction as part of a Ctftnmon burden, without promise of any special advantages to cla*s of tax• 11ayerJ1 Whereas a f4!

e is a payment for services rendered; benefit provided oi' privilege conferred; (ii) Compulsion is not the hall mark of the distinction between a tax and foe; (iii) That the money collected does not go into a sepl• rate fund but goes into the Consolidated Fund does not also necessarily iriake levy tax. ; (iv) Though a fee must have relation to the services rendered, or the advantage conferred, such relation need l'. lol be dirtct; a mere· CEl'Sttal 'relation may be enough; (V) Further neither tlie incidence of the fee nor the service filndercd rteod be uniform; (vi) That others besides those paying the fees are als enefitt~d wo11Jd not detpi,ct from the chiiracter of the levy as a fee. WIJ. ere. 4owever, the specilic. service is inl! istinguishable fr9m public iervice, and in essence is directly a part of it, di~rent considerations may arise. In such a case, it is necessary t! > enquir. e wlJ. at is th!

l primary object of tile levy 1111d the essential purpose wbich it is inten4ed to ~hi~vi:. I~ primary object and the esseJl. tial p11rpose 1UUSt be di~ti11· guished from its ultimate or incidental results or conse· q11ences. That is tile tr~ test in equality. He said, "For the purpose of finding whether there is correlationship between the services rendered to ·t)le fee payers and the fees charged to them, it is necessary to know the cost incurred for organising and rendering the services, l! ut matters involving consideration of such 11 correlationship are not required I to be proved by a mathematical formula. ·What has to be seen is whether there is 11 fair correspondence between tile 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 paf! iculars been supplied, to Jabori.

ous and fruitless inquiry into minute details of the Comlllissi• ' oner'1 departmental budget. A vivisection of the aJ! lounts spent by the Commissioner's establishment at different places fqr various pur~ poses and the ad-hoc allocation by the Court of different amounts to different heads would at best have been speculative. It woμld have 6een no more possible for the High Court if th~ inforllll1tio11 were before it, t! ian it would be"possible for us if t~. information were before us. to find 011t what pat'! of the expenses in\alrre - payment for services rendered, benefit provided or privilege conferred'. Compulsion is not the hall-mark of the distinction between a tax and 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- [I) [1982] S,C. R. 519, Wl! IIClPAL CORPN. V. J•IOl;ID. Y. \. SIN lChinnappa Reddy, J. ) 1007 pared witht the primary motive of regulation in the public interest. J 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 re11dered etc. against the amount of fees collected so as to evenly balance the two. A broad correJationship is all that is ne· cessary. 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. ~jwani Deputy Health Officer (Public Health) of t)le Municipal Corporation of Delhi, the amount of Rs. 2,56,000 covers only thos~ items of expenditure as are reflected in item XIV-B of the Municipal Budget. The items of of expenditure covered by item XIV-B of the municipal budget are evidently those item of expenditure which are incurred directly and exculsively 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 whose duties are connected with slaughter houses. There is then the cost of depreciation of the buildings ar. d fittings in the slaughter houses. There is also the provision for ex· pansion and improvement of slaugter 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 t! mt the fees collected should be s)lown to be related to expenditure incurred directly and exclusively ip connectioiL with th<; slaughtering of animals in its &laughter houses and also, shown as -·-r I: such in · the municipal budget. This was a·· wholly · erroneous approach, in the light of what we· have said earlier. We have ex• plained earlier that the expenditure need not be incurred directly nor even primarily in connection. with the· special . benetit or. adv1111tage . conferred. . We have also explained. that there ! leed. not be any fastidious balancing of the cost of the services rendered with the fees · collected.

It appears to have been common ground before th~ High Court that the price of ! Peat had. gone up·. about IO to J2 times since ·the rates were original fixed. If so~:one wonders how the. Municipal __j__ _. Corporation coiild be expected to effectively discharge its obligations in connection. with the supervision of th~ 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. l. OO to Rs. 8. 00 in the case of large aninials appears to us to be wholly justified in the circumstances of the case, · The appeal is therefore, allowed with i:osts the judgment of the Higl1Court set aside an,d the Writ Petition_ filed ill _the High Court dismissed with costs. • S. R. , ·. Appeal allowed. . ' ' ,_ '<, -·, ' . . ,, ---·. " '