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TMI Blog2020 (2) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... if the total income of the person does not exceed five lakh rupees, the fee payable under this Section shall not exceed one thousand rupees. (2). The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018." 3. The above said Section is sought to be challenged on the ground that it is a penalty guised as a fee and secondly, there is no service provided for by the authorities and therefore, fee is not leviable for the simple reason that for levy of fee, there should be an element of quid pro quo. Petitioner, relies on a judgment of the Hon'ble Supreme Court in KUNNATHAT THATEHUNNI MOOPIL NAIR, ETC., Vs. STATE OF KERALA AND ANOTHER {(1961) 3 SCR - 77}, more particularly, paragraph 8, and the same reads as under:- "It is common ground that the tax, assuming that the Act is really a taxing statute and not a confiscatory measure, as contended on behalf of the petitioners, has no reference to income, either actual or potential, from the property sought to be taxed. Hence, it may be rightly remarked that the Act obliges every person who holds lands to pay the tax at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by Section 7. This Court has examined the cases decided by it with reference to the provisions of Article 14 of the Constitution, in the case of Shri Ram Krishna Dalmia Vs. Shri Justice S.r.Dendolkar - S.R.Das, C.J., speaking for the Court had deduced a number of propositions from those decisions. The present case is within the mischief of the third proposition laid down at pp.299 and 300 of the Report, the relevant portion of which is in these terms: "A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well settled that it is not necessary that there must be mathematical precision between the fee paid and service rendered. All that is necessary is a reasonable relationship between fee charged and the services rendered. The Hon'ble Supreme Court in SONA CHANDI OAL COMMITTEE Vs. STATE OF MAHARASHTRA {(2005) 2 SCC 345, wherein at paragraph No.22, held thus:- "22.A three-Judge Bench of this Court inB.S.E. Brokers' Forumv.Securities and Exchange Board of India[(2001) 3 SCC 482] after considering a large number of authorities, has held that much ice has melted in the Himalayas after the rendering of the earlier judgments as there was a sea change in the judicial thinking as to the difference between a tax and a fee since then. Placing reliance on the following judgments of this Court in the last 20 years, namely,Sreenivasa General Tradersv.State of A.P.[(1983) 4 SCC 353] ,City Corpn. of Calicutv.Thachambalath Sadasivan[(1985) 2 SCC 112 : 1985 SCC (Tax) 211] ,Sirsilk Ltd.v.Textiles Committee[1989 Supp (1) SCC 168 : 1989 SCC (Tax) 219] ,Commr. & Secy. to Govt., Commercial Taxes & Religious Endowments Deptt.v.Sree Murugan Financing Corpn.[(1992) 3 SCC 488] ,Secy. to Govt. of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise due to delay on his part. The department is correct in contending that the acts of an assessee in discharging his entire tax liability to the Government by way of Advance Tax, TDS, self assessment, etc., is set at naught if the same is not intimated to the Government in time by filing of return of income in order to enable to cross verify the same and complete the assessment within the period of limitation and in order to ensure that such acts of an assessee in discharging his entire tax liability bear fruits, a regulatory mechanism in the form of Section 234 F has been inserted in the statute book and the same cannot be termed as illogical or harsh. 10. A provision can be held unconstitutional only when the legislature was incompetent to bring out the legislation or that it offends some provision of the Constitution or when it is manifestly arbitrary. The Hon'ble Supreme Court in GOVERNMENT OF ANDHRA PRADESH Vs. SMT.P.LAXMI DEVI {(2008) 4 SCC - 720}, wherein, the Hon'ble Supreme Court has observed as under:- "46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consulting the specialists in the field, it will be wholly unwise for the Court to encroach into the domain of the executive or legislative (sic legislature) and try to enforce its own views and perceptions." 11. The Parliament is competent to pass legislation on Taxes in Income under Entry 82 of the List I to the Seventh Schedule. Section 234 F is not violative of any of the other provisions of Income Tax Act or the Constitution of India. Nothing has been shown as to how the Section is manifestly arbitrary for it to be struck down. 12. It is well settled that if it is a charge for service rendered by the commercial agency and the amount of fee levied is based on the expenses incurred by the Government rendering the fee. Unlike the tax which is compulsory extraction of money, enforceable by law and not in return of any services rendered. The distinction between the tax and the fee is that tax is levied as a part of common burden while fee is payment for a special benefit of privilege. Fee confers some advantage and is a return of consideration for services rendered. The Hon'ble Supreme Court in Jindal Stainless Steel v. State of Haryana {(2006) 145 STC 544 (SC), while laying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it must be "by and large" a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered (sic or) expected is one of general character and not of Mathematical exactitude. All that is necessary is that there should be a reasonable "relationship" between levy of the fee, and the services rendered; If authority is needed for this pro position, it is to be found in the several decisions of this Court drawing a distinction between 'tax' and 'fee'. See: The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, supra; H.H. Sundhundra Thirtha Swamiar v. Commissioner for Hindu Religious & Charitable Endowments, Mysore, The Hingir-Rampur Coal Co. Ltd. v. State of Orissa; H.H. Shri Swamiji of Shri Admar Mutt v. Commissioner, Hindu Religious & Charitable Endowments Department; Southern Pharmaceuticals & Chemicals, Trichur etc. v. State of Kerala etc., and Municipal Corporation of Delhi v. Mohd. Yasin. 32. There is no generic difference between a tax and a fee. Both are compulsory exactions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a p ..... 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