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TMI Blog1960 (8) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... the quinquennial assessment list of buildings and lands ending on March 31, 1957, while the assessments for the financial year 1957-58 were made on the basis of the assessment list of buildings and lands for the quinquennial period beginning from April 1, 1957. It is further said in the counter-affidavit that the two assessment lists were validly prepared in accordance with the material provisions of law. No water-tax assessment list prepared, but Sections 142 and 143 of the U. P. Municipalities Act (hereinbelow called the Act) do not require the Board to do so. 4. Clause (f) of Sub-section (1) of Section 128 of the Act empowers the Board to impose a tax on the annual valuation of buildings or lands. Clause (x) thereof provides for the imposition of water-tax on the annual valuation of buildings or lands. Land and building tax (this nomenclature is coined by me) as well as water-tax are thus both levied on the annual valuation of buildings or lands. Section 140 defines the annual valuation of lands and building. Section 141 (1) reads: When a tax on buildings or lands or both is imposed, the board shall cause an assessment list of all buildings or lands or both in the municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 141 does not, in my opinion, require the Board to prepare an assessment list in regard to water-tax. Having regard to the circumstance that water-tax is also assessed on annual valuation of lands and buildings, Clause (b) of Section 146 and Sub-section (2) of Section 143 would also support my view. Since the assessment list of buildings and lands, prepared for ass-essing-tax on buildings and lands, is conclusive proof, for the purpose of assessing water-tax of the annual value of any building or land entered therein, the entry regarding the annual value of any building or land in the list cannot be disputed under Sub-section (2) of Section 143, and there is no sense in requiring the Board to prepare and publish an assessment list in regard to water-tax. The annual value of any building or land being definite and the rate of water-tax which is 10 per cent on the annual value of buildings or lands in this case, being certain, it is a mere matter of arithmetic to calculate the amount of water-tax that would be payable by the owner or occupier of a particular building or land. Accordingly, apart from mere slips in calculation (which may be set right on appeal under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unter-affidavit stated that only six persons raised objections, three of them being filed beyond time. Paragraph 6 of the counter-affidavit stated that the objections mainly questioned the right of the Board to levy water-tax on the ground that the water-works scheme of the municipality was financed by Government in the Second Five Year Plan. The objections were rejected by the Administrator of the Board by his order dated 23rd February 1956. It does not clearly appear from the affidavits of the petitioners that they had objected to the imposition of water-tax on the ground that it was imposed not solely with the object of defraying expenses connected with the construction, maintenance etc., of municipal water-works but for increasing the municipal revenues. The issue is essentially one of fact, and I would not permit the petitioners to raise the objection for the first time in the writ proceedings. 8. Secondly, it would be presumed that the Board has not transgressed its statutory powers and has imposed water-tax in conformity with the provisions of Section 129 (b) solely with the object of defraying expenses connected with the construction, maintenance, etc. of municipal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of the U. P. Legislature. It is pointed out that Entry 49 in List II of the Seventh Schedule to the Constitution cannot be read to include water-tax, and that there is no other entry in List II, which would enable the State Legislature to enact a law regarding levy of water-tax. One may agree that the subject of water-tax is not included in Entry 49, which deafs with the topic of Taxes on lands and buildings. This entry perhaps deals with a tax which may popularly be described as the land tax. But that does not conclude the matter. The U. P. Municipalities Act, of which Clause (x) of Section 128 (1) is a part, was enacted in June, 1916 and was published in the Gazette under Section 81 of the Government of India Act, 1915 on June 24, 1916. The U. P. Legislature was then not a legislature of enumerated powers, and could, under Section 79 (1) of the constituting instrument, make laws for the peace and good Government of the province, and the entire Municipalities Act was then legitimately enacted by the U. P. Legislature in exercise of its powers under that provision. The impugned enactment was continued in force by Section 292 of the Government of India Act, 1935, and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the U. P. Legislature was competent on the relevant date to enact a law with respect to fees in relation to water-supply by a municipality to its inhabitants. The pertinent question, therefore, is whether the water tax authorised by Section 128 (1) (x) is a fee within the meaning of that word in entry 66. If it appears that the subject-matter of Clause (x) of Section 128 (1) is not fee but a tax, entry 66 will not protect the imposition of water-tax by the Board in January 1957. If, on the other hand, it appears that the subject-matter of Clause (x) of Section 128 (1) is fee, then I have no doubt that the imposition of water-tax by the Board in January 1957 would be valid. It is, therefore, now necessary to determine whether the imposition in question is a tax or fee. One thing should be said at the outset. The imposition is no doubt described by Clause (x) of Section 128 (1) as water-tax, but the nomenclature of an imposition alone is not decisive. One has to ascertain the true nature and character of the imposition. If in its true nature and character the imposition is a fee, then despite its nomenclature it cannot be held to be a tax. 11. The distinction between tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in carrying out the provisions of the Act. .... The fact that the amount of levy is graded according to the capacity of the payers though it gives it the appearance of an income tax, is not by any means a decisive test. 12. Mukerji, J., who delivered the judgment of the Supreme Court in the third case also, reiterated the test already formulated by him in the second case. It was said by Kirn that in fees there was always an element of quid pro quo which was absent in a tax and that there must be co-relation between the levy imposed and the expenses incurred by the State for the purpose of rendering services. At page 1075 (of SCR) : (at p. 395 of AIR) of the Report his Lordship observed, But in order that the collections made by the Government can rank as fees, there must be co-relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services. This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services. Thus two elements are essential in order that a payment may be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earmarked by the legislative provision for expenses in connection with the Municipal water-works service. By enjoining upon the Municipalities in plain language that the receipts should be expended solely on the water-works service, the Legislature has clearly manifested its intention that the receipts would not go to augment the general revenues of the Municipal Board but would be allocated by it towards efficient maintenance of a water-works for the supply of water to the inhabitants of the Municipality. The Legislature has not itself fixed the rate of water-tax, but has left it to be determined by Municipalities and the State Government. This fact indicates that the Legislature intended that Municipalities and the State Government should be free to vary and adjust from time to time the rate of water-tax to the expenses required for maintaining an efficient water-works. This fact is, therefore, an evidence of the legislative intention that the rate of water-tax should, in fact, also bear co-relation with the expenses required for maintaining the water-works service. The idea of quid pro quo is, therefore, there. 15. In the first Supreme Court case at page 1041 (of SCR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re than one reason. Firstly, I am of the view that the Legislature has not delegated to the State Government any essential legislative function. It has provided that a Municipality may levy a water-tax for maintaining water-works. It has also indicated the incidence of the tax. It has also defined in broad terms the standard of the water-tax, in that it is co-related with the expenses required for maintaining the water-works service. The power of the State Government to determine the radius cannot, therefore, be characterised as an essential legislative function in relation to the levy of water tax; it is, in my view, ancillary or subordinate to the main power of imposing water-tax. Clause (iii) of Sub-section (1) of Section 228 obligates every Municipal Board, in which a water-tax is imposed, to supply, in all the chief streets in which mains have been laid, water to stand-pipes or pumps situated at such intervals as may be prescribed. The word 'prescribed' is defined in Section 2(17) (1) of the Municipalities Act to mean prescribed by or under the Act or rules made thereunder. The State Government is, therefore, required to make rules fixing the distance at which st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board, after considering the objections, has finally settled its proposals it shall submit them, along with the objections, to the appropriate authority which, in certain cases, would be the State Government and in other cases may be some other authority. Section 134 (1) provides that, when the proposals have been sanctioned by the appropriate authority, the State Government, after taking into consideration the draft rules submitted by the Board, shall make under Section 296 such rules in respect of the tax as for the time being it considers necessary. When the rules have been made, the order of sanction and a copy of the rules are sent to the Board, and thereafter the Board may, by special resolution, direct the imposition of the tax with effect from a date specified in the resolution. The resolution is then published in the official Gazette, as required by Section 135. 20. In the instant case, it appears from the counter-affidavit of Anand Prakash Mittal, Water Works Engineer, Municipal Board, Saharanpur, that the Saharanpur Municipal Beard had framed proposals and rules in regard to water-works as required by Section 131, and then it published those proposals and rules fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of our Constitution to take from the Legislature the power which has been exercised in Europe by Governments of all classes from the earliest history, and the exercise of which has probably done more to promote civilisation than all the other causes combined; which has been constantly exercised in every part of our country from its earliest settlement, and which has raised up among us many of the most valuable institutions. 22. In Ram Kishan v. State AIR1951All181 , a Full Bench of our Court gave recognition to certain exceptions to the rule of non-delegation of essential legislative powers. At page 192 Wali Ullah, J., who gave the leading judgment, observed: A limited power of legislation conferred on Municipalities and other local bodies which enjoy a certain measure of local self-Government has also been recognised as an exception to the general rule. Indeed such a delegation of power is not regarded as a transfer of general legislative power but rather as the grant of the authority to prescribe local regulations. This is sanctified by immemorial practice both in England and in America . 23. In Suryapal Singh v. U. P. Government AIR1951All674 , another Full B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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