2005 (3) TMI 753 - SC - Indian Laws

Whether the imposition for the process of change in the name of the owner in the assessment books of the corporation is in the nature of a fee or tax ?

Issues Involved:
1. Whether the imposition for the process of change in the name of the owner in the assessment books of the corporation is in the nature of "a fee" or "tax".
2. Validity of the Calcutta Corporation (Taxation) Regulations, 1989.
3. Whether the levy of mutation fees is arbitrary, irrational, unjustified, and discriminatory.
4. Whether the levy violates Articles 14 and 246 of the Constitution.

Detailed Analysis:

1. Nature of Imposition: "Fee" or "Tax"
The central issue is whether the imposition for the process of change in the name of the owner in the assessment books of the corporation is in the nature of "a fee" or "tax." The court referred to various legal precedents and definitions to differentiate between a fee and a tax. It was noted that a charge or fee, if levied for the purpose of raising revenue under the taxing power, is a "tax." Conversely, impositions for the primary purpose of "regulation and control" are classified as fees. The court emphasized that if revenue is the primary purpose and regulation is merely incidental, the imposition is a "tax."

2. Validity of the Calcutta Corporation (Taxation) Regulations, 1989
The court examined the Calcutta Corporation (Taxation) Regulations, 1989, which prescribed fees for recording transfers or devolution of title of any land or building. The regulations provided a schedule for fees based on the value of the property and the nature of the transfer. The court found that the primary object of such a charge was to augment revenue, indicating that the levy was in the nature of a tax rather than a fee. The court held that the quantum of the levy and its ad valorem basis further supported this conclusion.

3. Arbitrariness and Discrimination in Levy
The court addressed the challenge that the levy was arbitrary, irrational, and discriminatory. It was argued that the functions of the corporation regarding mutation remained the same regardless of the value of the property or the cause of transfer. The court agreed, noting that the expenses incurred by the corporation in performing such functions did not vary. Therefore, charging different rates based on the value of the property and the cause of transfer resulted in unequal treatment of persons similarly situated, violating Article 14 of the Constitution. The court found the levy to be disproportionate to the so-called "services," further indicating arbitrariness.

4. Violation of Articles 14 and 246 of the Constitution
The court examined whether the levy violated Articles 14 and 246 of the Constitution. Article 14 ensures equality before the law, and Article 246 deals with the distribution of legislative powers. The court found that the impugned regulations were arbitrary and discriminatory, violating Article 14. The court also noted that the regulations exceeded the scope of Section 183(5) of the Calcutta Municipal Corporation Act, 1980, as amended, thereby violating Article 246.

Conclusion
The court upheld the judgments of the learned Single Judge and the Division Bench, which had found the levy to be in the nature of a tax rather than a fee. The court found the levy to be arbitrary, discriminatory, and violative of Articles 14 and 246 of the Constitution. Consequently, the civil appeals were dismissed with no order as to costs. The court also clarified that the dismissal of IA No.1 of 2004 in Civil Appeal No.6121 of 2000 would not preclude the Intervener(s) from claiming a refund in accordance with the law.

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