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TMI Blog2021 (10) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... g the levy under clause (a) of Section 52(1) the legislature has provided that the levy will be on premises situated within the area of the Jal Sansthan, where the area is covered by the water supply services of the Jal Sansthan. This stipulation in clause (a) does not render the levy a fee instead of a tax. The levy is on premises situated within the area of the Jal Sansthan. The measure of the tax is the assessed annual value of the premises, annual value being assessed in the manner indicated in Section 53. The rate of tax in the case of a local area, other than a city, has to be not less than 6 per cent and not more than 14 per cent. In the case of the water tax in a city the rate is to be not less than 7.5 per cent and not more than 12.5 per cent. A similar provision has been incorporated in regard to the levy of a sewerage tax in Section 52(1)(b) and sub-Sections (2) and (3) provide for the measure and the rate of tax - The restrictions which are imposed by Section 55 do not render the tax a fee, nor are they indicative of the tax being charged for the actual use of water. While imposing the levy in Section 52(1)(a), the legislature has considered it appropriate to restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to its volume or, in lieu thereof on a fixed sum, the tax under Section 52 is a compulsory exaction. Where the premises are connected with water supply, the tax is levied on the occupier of the premises. On the other hand, where the premises are not so connected, it is the owner of the premises who bears the tax. The levy under Section 52 (1) is hence a tax and not a fee. It is a tax on lands and buildings within the meaning of Entry 49 of List II. Applicability of judgement in the two judge Bench of this Court in Union of India v. State of U.P. [ 2007 (11) TMI 701 - SUPREME COURT] - HELD THAT:- The Jal Sansthan was catering to the need of maintaining the sewerage system not only at the railway stations but in the adjoining areas as well as the residential quarters, offices, gardens, and sheds maintained by the Union of India through the railways. The Division Bench of the High Court dismissed the writ petition challenging the levy. The two judge Bench held that Section 52 states that the Jal Sansthan can levy tax, fee and charge for water supply and for sewerage services and though the charge was termed as a tax, in substance it is a fee for the supply of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .............................................................................. 11 D.2 Nature of levy under Section 52 of the UP Water Supply and Sewerage Act .......................................................................................... 20 D.3 Entry 49 List II: Taxes on Lands and Buildings ................................. 28 D.4 Tax and fee .............................................................................................. 38 D.5 The Railways judgment ....................................................................... 44 E Conclusion ...................................................................................................... 47 A Factual Background 1 By its judgment dated 7 March 2014, a Division Bench at the Lucknow Bench of the High Court of Judicature at Allahabad allowed a petition under Article 226 of the Constitution of India instituted by the first respondent and directed the appellants to refund water and sewerage taxes levied and collected under the provisions of the Uttar Pradesh Water Supply and Sewerage Act 1975- UP Water Supply and Sewerage Act . In coming to the conclusion that the levy was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court by order dated 9 August 2014. On 7 August 2015, while entertaining the special leave petition and issuing notice, this Court stayed the operation of the impugned judgments of the High Court. B Issues 4 Principally, two issues arise in these proceedings: - (i) Whether the demand of water tax and sewerage tax is sustainable with reference to the provisions of the UP Water Supply and Sewerage Act; and (ii) Whether the State Legislature has the legislative competence to levy the tax under the provisions of Section 52(1)(a). 5 We must note at the outset that the High Court has allowed the prayer for refund purely on the basis of a judgment of a two-judge Bench of this Court in Union of India v. State of U.P. (supra). The judgment of the High Court has been drafted in a rather casual manner which is evident from the fact that: (i) While extracting from a portion of the judgment of this Court noted above, the High Court has neither referred to the citation nor the name of the case; (ii) After citing the extract from the judgment, the High Court recorded the submissions of the first respondent that the law laid down in the above case is also extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provisions in Chapters IX to XI. (ii) The scheme of the legislation provides for the levy, imposition, collection and realization of water tax and sewerage tax under Section 52(1); (iii) The decision of this Court in Union of India v. State of U.P. (supra) is not an authority for the interpretation of Section 52 since in that case a service charge was levied on the railways. The challenge to the levy was raised by the railways on the ground that the Jal Sansthan was levying a tax in violation of the provisions of Article 285 of the Constitution and it was this submission which was rejected, by holding that the levy was of a service charge in the nature of a fee and not a tax; and (iv) In the present case, the imposition is of water tax and sewerage tax which falls within the ambit of Section 52(1)(a). Constitutional Challenge 8 Ms Madhavi Divan, Additional Solicitor General appearing on behalf of the first respondent, has urged a constitutional challenge to the provisions of Section 52(1)(a), Section 55(d)(a) and Section 56(b) of the UP Water Supply and Sewerage Act. Ms Divan has prefaced her submissions at the outset by stating that there is no challenge to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 49 List II. (vii) Entry 17 of List II provides for water and water supplies . (viii) In sum and substance, the levy under Section 52(1)(a) though described as a water tax, is a fee and not a tax and though the legislature has used the nomenclature of water tax , the levy in effect is an exaction on water or water supply. 9 Opposing the above submissions challenging the constitutional validity of the statute, Mr Pradeep Kant, Senior Counsel urged that: (i) The two judge Bench of this Court in Union of India v. State of U.P. (supra) has erroneously interpreted the provisions of Section 52 to be in the nature of a fee and not a tax; (ii) In that case the levy imposed by the Jal Sansthan on the railways was a service charge for the use of water and sewerage; the levy was not in the nature of a tax, as a consequence of which this Court came to the conclusion that the immunity in Article 285 on taxing property of the Union of India was not attracted; (iii) As a consequence, the observations of the Court to the effect that the imposition under Section 52 is in the nature of a fee are per incuriam, since this Court held that the levy was in the nature of a service c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody to be known as Jal Sansthan for that area. Section 24 specifies the functions of a Jal Sansthan: 24. Functions of a Jal Sansthan.- The functions of a Jal Sansthan shall be as follows: (i) to plan, promote and execute schemes of and operate an efficient system of water supply; (ii) where feasible, to plan, promote and execute schemes of, and operate, sewerage, sewage treatment and disposal and treatment of trade effluents; (iii) to manage all its affairs so as to provide the people of the area within its jurisdiction with wholesome water and where feasible, efficient sewerage service; (iv) to take such other measures, as may be necessary, to ensure water supply in times of any emergency; (v) such other functions as may be entrusted to it by the State Government by notification in the Gazette. Section 25 enunciates the powers of a Jal Sansthan: 25. Powers of a Jal Sansthan.- (1) Every Jal Sansthan shall, subject to the provisions of this Act, have power to do anything which may be necessary or expedient for carrying out its functions under this Act. (2) Without prejudice to the generality of the foregoing provision such power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instituted or defended by or against the Jal Sansthan. 14 The finance and property of the Jal Sansthan are dealt with in Chapter V of the Act. Section 41 envisages that every Jal Sansthan shall have its own fund which shall be deemed to be a local fund to which shall be credited all monies received by or on behalf of the Jal Sansthan. Section 44 provides for the general principles governing the finance of the Jal Sansthan in the following terms: 44. General principles for Jal Sansthan's Finance.- A Jal Sansthan shall from time to time so fix and adjust its rates of taxes and charges under this Act as to enable it to meet, as soon as feasible, the cost of its operations, maintenance and debt service and where practicable to achieve an economic return on its fixed assets. 15 Chapter VI of the enactment is titled taxes, fees and charges . The provisions of Chapter VI contained a separate delineation of taxes, charges and fees. Section 52 provides for the levy of taxes in the following terms: 52. Taxes leviable.- (l) For the purposes of this Act, a Jal Sansthan shall levy, on premises situated within its area: (a) where the area is covered by the water sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the annual value otherwise determined under this section. (2) The annual value of premises for the purposes of the levy of taxes under subsection (2) of Section 52 shall be assessed by such authority as the State Government may, by general or special order direct, and such authority may be either the Jal Sansthan itself or any other agency as may be specified in the order. (3) Where the assessment is made by the Jal Sansthan or by any other agency the Jal Sansthan or such other agency shall follow the prescribed procedure. (4) Until an assessment of the annual value of premises in any local area is made by the Jal Sansthan or any other agency specified under sub-section (2) the annual value of all premises in that local area, as assessed by the local body concerned for the purposes of house tax shall be deemed to be the annual value of the premises for the purposes of this Act as well. (5) Where the annual value of premises in any local area is assessed by the Jal Sansthan or other agency specified under sub-section (2), it shall, subject to any variation therein on appeal under Section 54, be deemed to be the annual value of the premises for the purposes also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted consumption of water during the period. Section 59 provides as follows: 59. Cost of water.- (1) A Jal Sansthan shall, by notification in the Gazette, fix the cost of water to be supplied by it according to its volume, and also the minimum cost to be charged in respect of each connection. (2) A Jal Sansthan may, in lieu of charging the cost of water according to volume, accept a fixed sum for a specified period on the basis of expected consumption of water during that period. Section 60 provides for the fixation of the cost of disposal of waste water by the Jal Sansthan. Section 61 provides for the provision of water meters and the recovery of charges for the rent of the meters according to the bye-laws. Section 62 is a provision enabling the Jal Sansthan to demand security from the consumer in connection with the supply of a meter or for the sewer connection as provided in the bye-laws. Section 63 deals with the levy of fees in the following terms: 63. Fees.- A Jal Sansthan may charge such fees, for connection, disconnection, reconnection of any water supply or sewer or testing or supervision or for any other service rendered or work executed or supervised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 246 of the Constitution read with Entry 49 of List II. Second, that the levy under Section 52(1)(a), though labelled as a water tax, is in the nature of a fee. We shall consider each of these submissions in turn. D.2 Nature of levy under Section 52 of the UP Water Supply and Sewerage Act 19 A legislative enactment which provides for the imposition of a tax may make provisions for (i) The levy of the tax on the basis of a taxable event; (ii) The measure of the tax; (iii) The rate at which the tax will be imposed; (iv) The incidence of the tax; and (v) Assessment, collection, recovery and other incidental provisions. 20 This characterization of the components of a tax has been described repeatedly in the decisions of this Court. The locus classicus on this point was a two judge Bench decision in Govind Saran Ganga Saran v. CST 1985 Supp SCC 205. Justice RS Pathak (as the learned Chief Justice then was) held: 6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. 22 In Federation of Hotel and Restaurant Association of India v. Union of India (1989) 3 SCC 634, a challenge was raised to the constitutional validity of the Expenditure Tax Act 1987 which imposed an expenditure tax on persons incurring chargeable expenditure in a class of hotels. In that case, the petitioners argued that the Act in essence levied a tax on luxuries, which falls within Entry 62 of List II and lies outside the competence of Parliament. Rejecting this contention, the Constitution Bench, speaking through Justice MN Venkatachaliah (as the learned Chief Justice then was), observed: 43. The subject of a tax is different from the measure of the levy. The measure of the tax is not determinative of its essential character or of the competence of the legislature. In Sainik Motors v. State of Rajasthan [AIR 1961 SC 1480 : (1962) 1 SCR 517] , the provisions of a State law levying a tax on passengers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Hingir Rampur Coal Co. Ltd. v. State of Orissa AIR 1961 SC 459 , and observed 33. [ ] It has been long recognised that the measure employed for assessing a tax must not be confused with the nature of the tax. A tax has two elements : first, the person, thing or activity on which the tax is imposed, and second, the amount of tax. The amount may be measured in many ways; but a distinction between the subject-matter of a tax and the standard by which the amount of tax is measured must not be lost sight of. These are described respectively as the subject of a tax and the measure of a tax. It is true that the standard adopted as a measure of the levy may be indicative of the nature of the tax, but it does not necessarily determine it. The nature of the mechanism by which the tax is to be assessed is not decisive of the essential characteristic of the particular tax charged, though it may throw light on the general character of the tax. (emphasis supplied) 24 A basic principle of tax jurisprudence is that the levy of a tax cannot be conflated with its measure. In the context of Section 52, the levy by the Jal Sansthan is on premises situated within its area meaning the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntains restrictions on the levy of the tax set out in Section 52. Clause (a) specifies that a tax shall not be levied on land which is used exclusively for agricultural purposes unless water is supplied by the Jal Sansthan for such purpose to that land. Clause (b) of Section 55 contains two further restrictions on the levy of water tax by providing that it shall not be levied on premises: (i) not situated within the radius prescribed of the nearest stand post or other water works on which water is made available to the public by the Jal Sansthan; or (ii) whose annual value does not exceed ₹ 360 and to which no water is supplied by the Jal Sansthan. The restrictions which are imposed by Section 55 do not render the tax a fee, nor are they indicative of the tax being charged for the actual use of water. While imposing the levy in Section 52(1)(a), the legislature has considered it appropriate to restrict the levy within the parameters which are specified in Section 55. That does not alter the fundamental nature of the levy, which is constituted as one on premises (defined to mean land and building) situated within the area of Jal Sansthan. 26 Section 56, which is a provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60. A distinct provision is contained in Section 63 for the recovery of fees. Fees under Section 63 can be recovered for the connection, disconnection or reconnection of water supply or sewer, for testing or supervision or for any other purpose or work executed or supervised as provided in the bye-laws. The provisions of Section 63 indicate that the recovery of a fee is, broadly speaking in relation to a service which is provided. 28 The nomenclature that the legislature has ascribed to the tax does not determine either the nature of the levy or its true and essential character. The legislature may choose a label for a tax. The label however will not determine or for that matter clarify the nature of the levy. The nature of the levy has to be deduced from the nature of the tax, the provision which specifies the taxing event and, as in the case of Section 52, the unit upon which the levy is to be imposed. The legislature may choose a label for the tax based on the nature of the levy. On the other hand, the legislature may choose a label having a relationship with the function of the authority which imposes the tax as in the present case. The tax has been labelled as the water tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Urban Land Tax, North Madras (North West) Ayanavaram AIR 1971 Mad 61 (FB) , the validity of the Madras Urban Land Tax Act 1966, which imposed a tax on the basis of the market value of land, was challenged on the ground that it was in substance an income tax. Following the decision in Ralla Ram (supra), the High Court held the law to be within the purview of Entry 49 of List II. 31 In Ajoy Kumar Mukherjee v. Local Board of Barpeta AIR 1965 SC 1561 , a Constitution Bench of this Court upheld the validity of an annual tax levied by local boards upon lands used for holding markets created under the Assam Local Self-Government Act 1953. Justice KN Wanchoo, speaking for the Constitution Bench, observed that: 4. It is well-settled that the entries in the three legislative lists have to be interpreted in their widest amplitude and therefore if a tax can reasonably be held to be a tax on land it will come within Entry 49. Further it is equally well-settled that tax on land may be based on the annual value of the land and would still be a tax on land and would not be beyond the competence of the State legislature on the ground that it is a tax on income: (see Ral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Constitution Bench held that for the purpose of levying a tax under Entry 49 of List II, the State legislature may adopt the annual or capital value of the lands and buildings for determining the incidence of the tax. Justice V Ramaswami (I) observed: 4. The first question to be considered in these appeals is whether the Madras Legislature was competent to enact the legislation under Entry 49 of List II of Schedule VII of the Constitution which reads: Taxes on lands and buildings . It was argued on behalf of the petitioners that the impugned Act fell under Schedule VII, List I, Entry 86, that is Taxes on the capital value of the assets, exclusive of agricultural land of individuals and companies; taxes on the capital of companies. [ ] In our opinion there is no conflict between Entry 86 of List I and Entry 49 of List II. The basis of taxation under the two entries is quite distinct. As regards Entry 86 of List I the basis of the taxation is the capital value of the asset. It is not a tax directly on the capital value of assets of individuals and companies on the valuation date. [ ] But Entry 49 of List II, contemplates a levy of tax on lands and buildings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons own or occupy it. In other words, it was held that the tax under Entry 49 of List II is not a personal tax but a tax on property . Consequently, the wealth tax imposed under the Wealth Tax Act was held to be distinct from a tax under Entry 49 of List II. 34 A Bench of three learned judges of this Court in Goodricke Group Limited v. State of WB 1995 Suppl. (1) SCC 707 considered the validity of the levy of an education cess on rural employment by the West Bengal Taxation Laws (Second Amendment) Act 1989. The levy of the rural employment cess was annually imposed on a tea estate at the rate of 12 paise for each kilogram of green tea leaves produced in the State. The issue was whether the levy was a tax on lands and buildings within the meaning of Entry 49 of List II. After adverting to the above decisions, Justice BP Jeevan Reddy speaking for the three judge Bench came to the following conclusion: 20. It is thus clear from the aforesaid decisions that merely because a tax on land or building is imposed with reference to its income or yield, it does not cease to be a tax on land or building. The income or yield of the land/building is taken merely as a measure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and buildings situated within the area of the Jal Sansthan for the purpose of imposing the tax. The tax is imposed on premises which fall within the territorial area of the Jal Sansthan. The expression premises is defined to mean land and building. The tax is on lands and buildings. The nomenclature of the tax does not indicate its true character and substance. Nor does the fact that the law enables the Jal Sansthan to levy the tax render it a tax on water. The charging section indicates in unambiguous terms that it is a tax on lands and buildings. The legislature has introduced certain restrictions in Section 55 inter alia stipulating in clause (a) that for land which is exclusively used for agricultural purposes, the tax shall not be levied unless water is supplied by the Jal Sansthan for such purposes to the land and in clause (b) stipulating that (i) the premises should be situated within the prescribed radius from the nearest stand-post or other waterworks at which the water is made available to the public; and (ii) the annual value of which does not exceed ₹ 360 and to which no water has been supplied by the Jal Sansthan. These restrictions do not detract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst group, a tax in relation thereto is separately mentioned in the second. Thus, Entry 22 in List I is Railways , and Entry 89 is Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights . If Entry 22 is to be construed as involving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions Trade and commerce with foreign countries; import and export across customs frontiers . If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then Entry 83 which is Duties of customs including export duties would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of corporations. Entry 85 provides separately for corporation tax. Turning to List II, Entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with taxes. Entry 18, for example, is Land and Entry 45 is Land revenue . Entry 23 is Regulation of mines and Entry 50 is Taxes on mineral rights . The above analysis - and it is not exhaustive of the Entries in the Lists ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and fee has substantially been effaced in the development of our constitutional jurisprudence. At one time, it was possible for courts to assume that there is a distinction between a tax and a fee: a tax being in the nature of a compulsory exaction while a fee is for a service rendered. This differentiation, based on the element of a quid pro quo in the case of a fee and its absence in the case of a tax, has gradually, yet steadily, been obliterated to the point where it lacks any practical or constitutional significance. For one thing, the payment of a charge or a fee may not be truly voluntary and the charge may be imposed simply on a class to whom the service is made available. For another, the service may not be provided directly to a person as distinguished from a general service which is provided to the members of a group or class of which that person is a part. Moreover, as the law has progressed, it has come to be recognized that there need not be any exact correlation between the expenditure which is incurred in providing a service and the amount which is realized by the State. The distinction that while a tax is a compulsory exaction, a fee constitutes a voluntary pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 2, p 1252, para 2239] It is submitted that as recognised by Mukherjea, J. himself, the fact that the collections are not merged in the consolidated fund, is not conclusive, though that fact may enable a court to say that very important feature of a fee was present. But the attention of the Supreme Court does not appear to have been called to Article 266 which requires that all revenues of the Union of India and the States must go into their respective consolidated funds and all other public moneys must go into the respective public accounts of the Union and the States. It is submitted that if the services rendered are not by a separate body like the Charity Commissioner, but by a government department, the character of the imposition would not change because under Article 266 the moneys collected for the services must be credited to the consolidated fund. It may be mentioned that the element of quid pro quo is not necessarily absent in every tax. Our attention has been drawn to the observations in Kewal Krishan Puri v. State of Punjab [(1980) 1 SCC 416, 425 : (1979) 3 SCR 1217, 1230] : (SCC p. 425, para 8) The element of quid pro quo must be established between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices rendered etc. against the amount of fees collected so as to evenly balance the two. A broad co-relationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax. 46 In Sreenivasa General Traders and Others v. State of Andhra Pradesh (1983) 4 SCC 353, a three judge Bench of this Court held: 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 person in spite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, where the premises are not so connected, it is the owner of the premises who bears the tax. The levy under Section 52 (1) is hence a tax and not a fee. Moreover, for the reasons that we have indicated above, it is a tax on lands and buildings within the meaning of Entry 49 of List II. D.5 The Railways judgment 48 The High Court in the present case has relied on the decision of a two judge Bench of this Court in Union of India v. State of U.P. (supra) in support of its decision to order a refund of the taxes collected by the appellants. In that case, the writ petition which was filed by the Union of India before the High Court challenged certain orders for the recovery of service charges on railway properties issued by the Jal Sansthan, Allahabad. The Jal Sansthan had directed the recovery of a sum of money towards sewerage charges for 3125 seats from the Divisional Railway Manager of the Northern Railway at Allahabad. The levy was sought to be challenged on the ground that the Railways were holding the property of the Central Government for which service charges were not payable under Article 285 of the Constitution as such charges were in the nature of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union. In our opinion the Jal Sansthan is not charging any tax on the property of the Union; what is being charged is a fee for services rendered to the Union through the Railways. Therefore, it is a plain and simple charge for service rendered by the Jal Sansthan for which the Jal Sansthan has to maintain staff for regular supply of water as well as for sewerage system of the effluent discharged by the railway over their platforms or from their staff quarters. It is in the nature of a fee for service rendered and not any tax on the property of the Railways. The above observations make it clear that what was being charged in that case were charges for the supply of water and maintenance of sewerage. This was held to be plain and simple a charge for service rendered by the Jal Sansthan. As a consequence, Article 285 of the Constitution had no application on the ground that what is prohibited by Article 285 is taxation on the property of the Union of India, but it does not prohibit a charge of a fee on account of a service rendered by local bodies or an instrumentality of the State, such as the supply of water or the maintenance of sewerage. This Court ruled that the charge wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute contains distinct provisions for the levy of taxes and for the imposition of charges and the recovery of fees. The levy under Section 52 is a tax simplicitor and cannot be regarded either as a charge or a fee for a service rendered. To that extent, the observations in paragraph 23 of the decision in Union of India v. State of U.P. (supra) would have to be and are accordingly overruled. E Conclusion 49 For the above reasons, we are of the view that there is no merit in the challenge raised in the writ proceedings before the High Court of Judicature at Allahabad. We reject the constitutional challenge to the validity of Sections 52 (1)(a), Section 55(b)(1) and Section 56 of the UP Water Supply and Sewerage Act. The appeals shall accordingly stand allowed and the judgment of the High Court of Judicature at Allahabad at its Lucknow Bench dated 7 March 2014 shall stand set aside. The writ petition filed by the first respondent shall in consequence stand dismissed. The appellants shall be entitled to recover the balance of the dues remaining to be recovered in pursuance of the notice of demand, together with interest at the rate of 9 per cent per annum. In the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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