2007 (11) TMI 701 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the demand raised by Allahabad Jal Sansthan for water and sewerage charges is sustainable.
2. Whether Article 285 of the Constitution exempts the Railway Administration from paying these charges.
3. Distinction between a tax and a fee for services rendered.

Summary:

1. Demand Raised by Allahabad Jal Sansthan:
The appellants challenged the recovery proceedings initiated by Jal Sansthan, Allahabad, for water and sewer charges on Railway properties for the period from October 1994 to March 1999. The Division Bench of the Allahabad High Court dismissed the writ petition and upheld the recovery proceedings.

2. Article 285 Exemption:
The appellants argued that under Article 285 of the Constitution, the property of the Union is exempt from state taxation, and thus, the charges for water and sewer services should not be payable. The High Court, however, concluded that these charges are not in the nature of a tax but a fee for services rendered by Jal Sansthan. The court referred to previous decisions, including Union of India v. Purna Municipal Council and Union of India v. Ranchi Municipal Corporation, to support its conclusion that the charges are fees and not taxes.

3. Distinction Between Tax and Fee:
The court emphasized the distinction between a tax and a fee, stating that a tax is imposed for general revenue purposes, while a fee is a charge for specific services rendered. The Jal Sansthan provides water supply and maintains the sewerage system, incurring expenses for these services, which justifies the levy of charges. The court noted that the exemption under Article 285 applies to taxes on Union property, not to fees for services rendered.

Conclusion:
The Supreme Court upheld the High Court's decision, stating that the charges levied by Jal Sansthan are fees for services rendered and not taxes on the property of the Union. Therefore, these charges are not exempt under Article 285 of the Constitution. The appeal was dismissed, affirming the liability of the appellants to pay the service charges.