COMMISSIONER M C GUNTUR Vs. VENKATEEWARA RAO

JUDGEMENT

(1.) THE Judgment of the Court was delivered by THE Hon'ble THE Chief Justice. This is an appeal against the judgment of our learned brother Umamaheswaram J. quashing the resolution passed by the Guntur Municipality levying a fee on sellers occupying road margins. On 2-2-1955 the Municipal Council, Guntur, passed a resolution under Sections 270 and 312 of the Madras District Municipalities Act (V of 1920) (hereinafter referred to as the Act.) In and by the said resolution the Municipality levied a tax on persons selling or displaying for sale any articles or animals on the margins of public roads at the following rates: Re. 0-3-0 per basket. Re. 0-6-0 per Jalla and Re. 0-2-3 per square yard of occupied space. THE right to collect the said amount was farmed out to the 2nd respondent. THE petitioner filed the petition under Art. 226 of the Constitution of India contending inter alia that the Municipality was not authorised to levy tax on persons vending their articles on the margins of public roads and that even if the tax was deemed to be a licence fee, they had no right to collect the same as they were not spending any sum whatsoever for discharging any obligation under the resolution. He further pleaded that he was entitled to the free use of the roads of the Municipality without any restriction under Art. (19) (1) (d) of the Constitution and that the restriction imposed by the resolution that a person should not use the same except on payment of a fee to the Municipality was unreasonable and void. In the counter filed tb the said petition the Municipality pleaded that the levy was neither a.tax nor a, licence fee but was only rent to be collected from those who occupy any road margin. THEy also denied that the petitioner had any fundamental right to use the road margins without any restriction by the Municipality. In the rejoinder the petitioner reiterated the plea that the levy was essentially a tax which the Municipality had no right to impose. Before the learned Judge the advocate appearing for the Municipality clarified its position by stating that though the notification levying the fee was issued under Section 270 of the Act, it must be regarded as one under Sec. 183 (3) of the Act and that the amount sought to be collected from persons occupying road margins should be regarded as rent. THE learned Judge after considering the argument came to the conclusion that there was no relationship of land-lord and tenant between the Municipality and the sellers and that the fees were collected only in respect of the right exercised by the sellers to vend their goods and not for the occupation of the road margins. On the assumption that the levy was a fee in respect of the right exercised by the sellers to vend their goods, the learned Judge held that as it was not stated that any extra expenses were incurred by the Municipalivy for the regulation of the trade or business, the levy was invalid. On those cenclasions, the learned Judge quashed the resolution, Hence the appeal. THE learned Advocate General who appeared for the Municipality before us adopted a different line of argument which was inconsistent and contrary to the admissions made both in the counter filed by the Municipality and in the arguments advanced before the learned Judge. He took the position that the levy was not rent but it was either a tax or a fee which the Municipality was authorised to levy under Section 270 of the Act. If it was a pure question of law arising on the admitted facts, it might be that there was some justification to allow the Advocate General to strike a new line altogether. But where the arguments depend upon going back on the admission of fact made by the Municipality in the counter affidavit, there cannot be any justification whatsoever for allowing the appellant to raise it for the first time in the appellate Court. As we have already noticed in the counter affidavit it was definitely stated that the levy was rent payable in respect of the occupation of the road margins and indeed before the learned Judge it was even argued that Section 270 was quoted in the resolution by mistake and that it should have been section 183 of the Act. THE argument before the learned Judge proceeded on the basis that the legal relationship between the parties was that of lessor and lessee and that the levy was rent whereas before us it is contended that the payment is either a tax or a fee. We cannot therefore, allow the Advocate General to raise this plea for the first time before us. But more to respect the arguments advanced rather than any necessity to decide the point raised, we shall express our opinion. Further as the point raised, by the Advocate General is definitely raised in another Writ petition which is posted along with this appeal a discussion on the question will not be merely of academic interest but would be useful in the connected petition. THE argument of the learned Advocate General may be summarised thus: Under the Government of India Act 1915 the Madras Legislature had plenary powers and therefore they had ample powers to authorise the Municipality to levy taxes in respect of the vending of articles on road margins. By enacting Section 270 of the Act they authorised the Municipality to levy a tax in respect of such vending. Under the Constitution also the Legislature has the right to make such law as item 5 of List II of the 7th schedule, namely, "Local Government etc." is comprehensive enough to take in a right to levy a tax in respect of the aforesaid subject matter and by reason of item 66 they have the right to make a law levying fees also in respect of the same subject-matter. Section 270 of the Act confers such a power on the Municipality and under that section they can either levy a tax or a fee for the purpose of regulating the sale or exposure for sale of any articles in or on any public street or part thereof. THE distinction between tax and fee has been finally laid down by the Supreme Court to the effect that if a privilege was conferred on a person or a particular class of persons the levy of fees in respect of the privilege so conferred would be in the nature of a tax and it need not have any relation to the services rendered. Even if the imposition be regarded as a fee it is for the petitioner to establish that the said fee is not proportionate to the services rendered by the Municipality and the petitioner has failed to do so in this case. That apart the petitioner has no fundamental right to vend his articles on the road margins and even if he possessed any such right, the levy of fees is a reasonable restriction within the meaning of Art. 19 (4) of the Constitution. THE learned Counsel for the 1st respondent assumed for the purpose of the argument that both under the Government of India Act, 1915 and also under the Constitution the Legislature has the power to authorise the Municipality to impose a tax on persons vending their articles on road margins. But he contended that Section 270 does not authorise the Municipality to levy a tax but only enables it to levy a fee for the purpose of regulating the sale of articles in a public road. As the right is only to levy a fee it must satisfy the legal requirement, namely that the Municipality has incurred extra expenses for the regulation of the trade or business and that the levy must be reasonable and must be proportionate to the expenses that may be incurred by the Municipality for the purpose of regulating the said business. In this case, there is neither allegation nor proof that the levy is made to cover the proportionate expenses which may have to be incurred for the regulation of the trade. Assuming that the levy is in the nature of a tax the Municipality has not complied with the conditions laid down in the Act. In view of the line of argument pursued by the learned Counsel for the 1st respondent, it is not necessary to express our view on the question whether under the Government of India Act or under the Constitution of India the Legislature has the power to authorise a Municipality to levy a tax for the purpose of regulating the sale of articles in or on a public street. As the said power is assumed the only question is whether section 270 of the Act enables the Municipality to levy such a tax. Before we consider the said question, it may be convenient at this stage to notice the essential characteristics of a tax and a fee and the difference between the two. THEre is a long catena of Madras decisions wherein this question was considered. It would suffice for the present purpose to refer to the latest of those decisions as the learned Judges therein have reviewed all the earlier decisions. That is the decision of a Division Bench of the Madras High Court consisting of the Chief Justice and Venkatarama AyyarJ. in Varadachari v. State of Madras. At page 412 the learned Judges summarised the legal position thus :