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Issues Involved:
1. Whether the levy of the licence fee amounted to expropriation and violated Article 19(1)(f) and (g) of the Constitution. 2. Whether the levy was a fee in return for services rendered or a tax. 3. Whether Section 548 of the Calcutta Municipal Act conferred an arbitrary power of taxation. 4. Whether the delegation of power to fix the rate of the licence fee under Section 548 was unconstitutional due to excessive delegation of legislative power. Issue-wise Detailed Analysis: 1. Violation of Article 19(1)(f) and (g): The contention that the levy amounted to expropriation and violated Article 19(1)(f) and (g) was rejected. The court found that the fee at the rate of Rs. 5 per show for a cinema house with a seating capacity of 551 was not unreasonably high. It was noted that the respondent would collect about Rs. 1,000 per show and pay Rs. 5 per show, which was not expropriatory. The increase from Rs. 400 to Rs. 6,000 per year was justified by the immense changes in circumstances between 1948 and 1958. The challenge to the levy on this ground was deemed wholly unfounded. 2. Fee vs. Tax: The primary issue was whether the levy was a fee in return for services or a tax. The court noted that the word "fee" in Section 548 did not necessarily mean a fee in return for services. The Act used the term "fee" indiscriminately, and some levies authorized by the Act were actually taxes. The court emphasized that a fee for a licence and a fee for services rendered are different kinds of levies, as indicated by Articles 110(2) and 199(2) of the Constitution. The court concluded that the levy under Section 548 was not a fee for services, as the Act did not provide for any specific services to be rendered in return for the fee. The inspection required by the by-laws was not considered a service to the licensee but a means to ensure compliance with the licence conditions. Therefore, the levy was determined to be a tax. 3. Arbitrary Power of Taxation: The court addressed the argument that Section 548 conferred an arbitrary power of taxation. It was contended that the levy was invalid as it was not commensurate with the costs incurred by the Corporation in providing services. However, the court found that Section 548 did not confer an arbitrary power of taxation. The court highlighted that the power to fix rates of taxes is not an essential feature of legislation and can be delegated to another authority, provided there is sufficient guidance in the Act. The court referred to several judgments supporting the delegation of power to fix rates of taxes, including Pandit Benarsi Das Bhanot v. The State of Madhya Pradesh, which upheld the delegation of power to determine details relating to the working of taxation laws. 4. Excessive Delegation of Legislative Power: The court examined whether the delegation of power to fix the rate of the licence fee under Section 548 was unconstitutional due to excessive delegation of legislative power. The court reiterated the principle that essential legislative functions cannot be delegated, but details can be left to the executive or other authorities. The court found that the Act provided sufficient guidance for the Corporation to fix the rate of the levy. The needs of the Corporation for carrying out its functions under the Act were deemed sufficient guidance for determining the rate of the levy. The court emphasized that the flexibility in taxing powers was necessary for a large municipality like Calcutta to address various and changing circumstances. Therefore, Section 548 was held to be valid legislation with sufficient guidance for fixing the rate of the levy. Conclusion: The court concluded that the levy under Section 548 was a tax and not a fee in return for services. The delegation of power to fix the rate of the levy was not unconstitutional, as the Act provided sufficient guidance for the Corporation. The appeal was allowed, and the levy was upheld.
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