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1989 (8) TMI 73 - SC - VAT and Sales TaxWhether Standing Order No. 3 framed under section 466(1)(A)(f) read with section 147 of the Bombay Provincial Corporations Act, 1949 as illegal and without the authority of law? Held that - So far as the authority of the Commissioner under section 466 of the Act is concerned and the manner in which the Standing Orders are framed, it is clear that the Commissioner had the authority and the Standing Orders have been framed in accordance with the procedure prescribed under section 466 and, therefore, on that count, the judgment of the High Court could not be sustained. So far as the charging of supervision fees is concerned, it reasonably appears to be a charge for the services rendered, from the affidavit filed by the Officers of the appellant-Corporation and, therefore, the High Court was not right in coming to the conclusion that this fee was not justified as it is not established that it reasonably satisfies that it is in consideration of the services or privilege conferred on the transporter on goods in transit. Therefore, the judgment of the High Court could not be sustained. The appeal is, therefore, allowed. The judgment of the High Court is set aside and it is held that Standing Order No. 3 passed by the appellant-Municipal Corporation is valid and enforceable.
Issues Involved
1. Legality and authority of Standing Order No. 3 under Section 466(1)(A)(f) of the Bombay Provincial Corporations Act, 1949. 2. Whether the supervision fee constitutes a tax or a fee. 3. The requirement of quid pro quo for the imposition of the supervision fee. Detailed Analysis 1. Legality and Authority of Standing Order No. 3 The primary issue was whether Standing Order No. 3, framed under Section 466(1)(A)(f) of the Bombay Provincial Corporations Act, 1949, was legal and within the authority of the Commissioner. The High Court of Gujarat ruled that this Standing Order was illegal and beyond the Commissioner's authority because it pertained to goods on which octroi was not payable. The Supreme Court disagreed, noting that Section 466(1)(A)(f) allows the Commissioner to make Standing Orders concerning the supervision, routes, and fees for goods intended for immediate exportation. The Court emphasized that the Standing Orders were approved by the Standing Committee and confirmed by the State Government, thus meeting all procedural requirements under Section 466. Hence, the Commissioner had the authority to frame such orders. 2. Whether the Supervision Fee Constitutes a Tax or a Fee The appellant argued that the supervision fee was optional and not a compulsory imposition. The transporter had the choice to either pay the supervision fee and avoid the octroi duty or follow the traditional method of paying octroi and claiming a refund. The Supreme Court clarified that the fee was not a tax but a charge for a specific service, as it provided an option to transporters to expedite their transit without paying octroi and then claiming a refund. The Court held that the supervision fee was a fee and not a tax, as it was charged for a specific service rendered to the transporter. 3. Requirement of Quid Pro Quo The High Court had found that there was no quid pro quo, meaning no direct correlation between the fee charged and the services rendered by the Corporation. The Supreme Court examined the affidavit filed by the appellant, which detailed that the fee was collected and spent to facilitate the transporters by allowing them to carry goods in transit under the supervision of the Corporation's authorities. The Court referred to previous judgments, such as Southern Pharmaceuticals and Chemicals v. State of Kerala and Sreenivasa General Traders v. State of Andhra Pradesh, to elucidate that the element of quid pro quo does not require exact equivalence between the fee collected and the service rendered. It is sufficient if there is a reasonable relationship between the fee and the service. The Court concluded that the supervision fee reasonably satisfied the quid pro quo requirement. Conclusion The Supreme Court allowed the appeal, setting aside the judgment of the High Court. It held that Standing Order No. 3 was valid and enforceable, and the supervision fee was a legitimate charge for the service provided by the Municipal Corporation. The appellant was also awarded costs of Rs. 5,000. Separate Judgments No separate judgments were delivered by different judges in this case. The judgment was delivered collectively.
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