1975 (5) TMI 84 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of house-tax levy.
2. Legality of Permission Fee levy.

Summary:

1. Legality of House-Tax Levy:
The Supreme Court addressed the issue of the Kuthbullapur Gram Panchayat's power to levy house-tax on the respondent's buildings, including factory premises. The High Court had previously ruled that the buildings did not fall within the definition of a 'house' u/s 2(15) of the Andhra Pradesh Gram Panchayats Act, 1964, and thus were not subject to house-tax. However, the Andhra Pradesh Gram Panchayats (Amendment) Act, 16 of 1974, retrospectively amended the definition of 'house' to include factory buildings and eliminated the requirement of a separate principal entrance from the common way. The Supreme Court upheld the retrospective amendment, stating that the legislature has the power to make laws retroactive and that the amendment effectively removed the basis of the High Court's decision. Consequently, the levy of house-tax was deemed lawful.

2. Legality of Permission Fee Levy:
The Supreme Court examined the legality of the Permission Fee imposed by the Gram Panchayat for the construction of buildings. The High Court had ruled the fee illegal, noting that no services were rendered by the Panchayat to justify the fee. The Supreme Court concurred, emphasizing that fees must have an element of quid pro quo, correlating the fee with services rendered. The Court found no provision in the Act requiring permission from the Gram Panchayat for constructing non-factory buildings and no evidence of services rendered to the respondent. Additionally, the Court rejected the argument that the Permission Fee could be considered a tax on buildings, noting that the fee was payable regardless of whether a building was eventually constructed. Thus, the levy of the Permission Fee was struck down as illegal.

Conclusion:
The Supreme Court partially allowed the appeal, upholding the levy of house-tax but striking down the Permission Fee as illegal. The success being divided, no order as to costs was made.