Delhi High Court
Shri Ramesh Chandra vs Municipal Corporation Of Delhi on 7 August, 2006
Equivalent citations: AIR 2009 DELHI 58, 2009 (3) AIR KAR R 437
Author: S. Ravindra Bhat
Bench: S. Ravindra Bhat
JUDGMENT
S. Ravindra Bhat, J.
1. The petitioner, a senior counsel practicing in this Court, has questioned the levy and recovery of amounts by the Municipal Corporation of Delhi (MCD) the respondent in these proceedings, towards parking charges.
2. It is claimed that the petitioner purchased a ‘Getz’ car, manufactured by the second respondent. When he sought its registration, an amount of Rs. 4000/- was recovered on the footing that it was payable on account of ‘MCD Parking charges’. The recovery has been impugned as unauthorized, and impermissible in law. The petitioner avers that his vehicle is parked within his premises, and whenever he parks it outside, on MCD land, parking charges, as per policy of the MCD, are paid, for the duration of the service rendered. Therefore, it is submitted that there is no occasion to extract such an amount as ‘parking charges’ payable to the MCD, at the stage of purchase of the car. It is also claimed that there is no corresponding service rendered by the MCD, and for every instance of parking on its land, MCD levies parking charges separately.
3. In its counter affidavit, the MCD justified the levy of the parking charges, on the basis of a resolution (No 216) dated 12-7-2004 of the Standing Committee, that parking charges ought to be recovered, inter alia, from classes or categories of vehicles registered in Delhi. The MCD has averred that such charges are necessary to create a fund for construction of modern parking facilities, as required by the directions of this Court and the Supreme Court, with the aim of de-congesting public places, and bringing about orderliness in parking in the city. Provisions of Section 43 and 108 have been relied upon to say that the charges are leviable as a part of the discretionary duties of the MCD, and for purposes of creation of a Special Fund.
4. The petitioner urged that the impugned charges amount to taxation without authority of law. It was submitted that the revenues of the MCD, whether through rates or through taxes, are as prescribed in the specific provisions of the Delhi Municipal Corporation Act, 1957. The subject matter of taxation, or levy of fees, are outlined in Section 113 of the Act. The specific head of taxes on vehicles are enumerated in Section 113, and co-related with the Third schedule. Outside of the said provisions, without amending the Act or the rules, it was not permissible to the MCD to levy parking charges.
5. It was submitted that the obligatory functions of the MCD did not include regulation of parking spaces, and therefore, it could not even be urged that the MCD was empowered, in exercise of its incidental powers, to levy one time parking charges, and annual charges, as was sought to be done. It was also submitted that if the levy was to be supported on the basis of its being a fee for services rendered, then too, it was beyond jurisdiction, because on each occasion when a passenger or owner of vehicle parks his vehicle on MCD land, separate charges or fees are recovered, on the basis of policies, through MCD, or its agents. Hence, the parking fee of Rs. 4000/- levied at the stage of purchase of vehicle amounted to extraction of a tax, without authority of law.
6. Mr. Raj Birbal, learned senior counsel for the MCD, submitted that the levy of parking charges was justified, because huge funds were required for construction of multi-level parking facilities to augment the infrastructure in the city. It was submitted that as per Special Resolution, the Corporation, after taking into account the recommendations of the Standing Committee, decided, in compliance with the directions of courts to levy parking charges. These charges were justified, having regard to Section 43(w) which empowered MCD to construct and maintain garages, sheds and stands for vehicles and cattle biers. Counsel also submitted that the creation of adequate parking amenities constituted an essential element of modern municipal functions.
7. Learned Counsel also submitted that as per Section 108, MCD could create special funds. In this case, such a special fund was contemplated, for financing multi-level parking, and also ensuring better parking facilities in the city.
8. The relevant part of the MCD resolution is as follows:
…This proposal was placed before the Standing Committee as an item of URGENT BUSINESS vide Item No. 316 and the Standing Committee vide Resolution No. 708 dated 7-1-2004 resolved to refer back the matter to Commissioner for re- consideration.
The Delhi High Court has ordered the construction of parking infrastructure based on the parking policy which was filed in the High Court. The parking policy, inter alia, proposes to construct modern parking structures, wherever possible. Four modern parking systems are under consideration in South Extension Market, Greater Kailash, M-Block Market, Shastri Park (Karol Bagh) and Old Delhi Railway Station. But there are other areas where such parking systems can be constructed. This requires funds for investment. A parking fee shall enable raising revenues to construct modern parking systems, which can be constructed in market complexes, city centres, office complexes, temple complexes, high rise building complexes. This would enable to solve the growing parking problems in the city.
It has been proposed to levy the parking charges for commercial and non- commercial vehicles as under:
1. Scooters/ Motor-cycles or Two wheelers Rs. 500/-
2. Cars or Four wheelers having cost up to 4 lakhs Rs. 2,000/-
3. Cars or Four wheelers having cost more than 4 lacs Rs. 4,000/-
xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx This shall not be applicable to DTC buses being state owned transport agency.
The above proposal would enable the MCD to raising Rs. 10.00 crores annually to fund future construction of modern parking systems.
Collections of the proposed parking charges could easily be made at the time of registration of all new vehicles whereas for old vehicles, it can be recovered at the time of issue of Annual Fitness Certificate by the Transport Authority. The collection of the proposed parking charges can be got done through the Transport Authority of Delhi Government for which 1% of the total parking charges collected would be paid to the Transport Department as collection charges. This revenue will be used exclusively to construct modern parking systems in Delhi. We have already prepared a parking policy and filed it in the High Court, which reviews the same every three months. The construction of modern parking will substantially solve the parking problem in Delhi which is mandated by order of the High Court of Delhi. MCD has already signed an MOU with IDFC for providing public private partnership in existing parking infrastructure….
xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx Resolution No. 216. Resolved that as recommended by the Standing Committee vide its Resolution No. 164 dated 7-7-2004, the proposal of the Commissioner as contained in his letter No. F. 33/RPC/950/ CandC dated 1-7-2004, be approved with the stipulation that the following categories of vehicles be deleted/ exempted from levy of parking charges as proposed by the Commissioner in his aforesaid letter:
1. Auto Rickshaws
2. Taxis
3. Two wheeler Scooters/ Motor Cycles….
9. The issue which arises for consideration is whether the imposition of a parking fee, at the time of purchase of a motor vehicle, as in the present case, amounts to a ‘tax’ or a ‘fee’ properly leviable in terms of the Act.
10. It was not disputed at the time of hearing, nor could it be disputed, that vehicles, particularly of the class purchased by the petitioner, are levied with registration fee, and subjected to road tax. It was also not disputed that the MCD charges parking fees, as per its policies, whenever a car or other vehicle owner parks his vehicle on its land, just as in the case of other municipal authorities, such as the NDMC, in the city. The question therefore, is what then is the ‘parking charge’ leviable at the time of purchase of the vehicle, and annual charge, leviable at the stage of renewal of registration of the vehicle. MCD asserts that this charge is of a different breed altogether, and not co-relatable to the specific instances of parking, but to its need to create infrastructure.
11. Sections 41 to 43 outline the functions of the MCD. Section 42 delinates the obligatory functions; Section 43 outlines discretionary functions. None of the obligatory provisions make reference to parking; Section 43(w) contains some reference to parking. The other relevant provisions of the Act are extracted below:
Special funds
108. Constitution of Special Funds (1) The Corporation shall constitute such special fund or funds as may be prescribed by regulations and such other funds necessary for the purposes of this Act as may be so prescribed.
(2) The constitution and disposal of such funds shall be effected in the manner laid down by regulations.
Levy of taxes Section 113 – Taxes to be imposed by the Corporation under this Act (1) The Corporation shall, for the purposes of this Act, levy the following taxes, namely:
(a) property taxes;
(b) a tax on vehicles and animals;
(c) a theatre-tax;
(d) a tax on advertisements other than advertisements published in the newspapers;
(e) a duty on the transfer of property; and
(f) a tax on buildings payable along with the application for sanction of the building plan.
(2) In addition to the taxes specified in Sub-section (1), the Corporation may, for the purposes of this Act, levy any of the following taxes, namely:
(a) an education cess;
(b) a local rate on land revenues;
(c) a tax on professions, trades, callings and employments;
(d) a tax on the consumption, 1[sale or supply] of electricity;
(e) a betterment tax on the increase in urban land values caused by the execution of any development or improvement work;
(f) a tax on boats; and
(g) tolls.
(3) The taxes specified in Sub-section (1) Sub-section (2) shall be levied, assessed and collected in accordance with the provisions of this Act and the bye-laws made there under.
2[Explanation– In this Chapter, ‘person’ shall, unless the context otherwise requires, include a company, a society registered under any law for the time being in force, an association of individuals, a partnership, and a Hindu undivided family.] xxxxxxxxxxxxxxxx xxxxxxxxxxxxxx Section 136 – Tax on certain vehicles and animals and rates thereof Tax on vehicles and animals Save as otherwise provided in this Act, a tax at the rates not exceeding those specified in the Third Schedule shall be levied on vehicles and animals of the descriptions specified in that Schedule which are kept within Delhi.
Xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx Maximum amount of Tax per annum For vehicles without pneumatic tyre For vehicles with pneumatic tyres Rs.
Each four-wheeled vehicle drawn by camels, horses, ponies, mules, donkeys, bullocks or buffaloes–
Each two-wheeled vehicle drawn by camels, horse, ponies, mules, donkeys, bullocks or buffaloes–
Each vehicle drawn or impelled other wise than by camels, horses, ponies, mules, Maximum amount of tax per annum Each horse, pony or mule of a height Each horse, pony or mule of a height Each bullock or buffalo kept for Each donkey/ass kept for drought or Section 481 gives the power of framing bye-laws to the MCD. It reads as follows:
Section 481 – Power to make bye-laws (1) Subject to the provisions of this Act the Corporation may, in addition to any bye-laws which it is empowered to make by any other provision of this Act, make bye-laws to provide for all or any of the following matters, namely:
A. Bye-laws relating to taxation (1) the maintenance of tax books and registers by the Commissioner and the particulars which such books and registers should contain;
(2) the inspection of and the obtaining of copies and extracts from such books and registers and fees, if any, to be charges for the same;
(3) the publication of rates of taxes as determined by the Corporation from time to time;
(4) the requisition by the Commissioner of information and returns from persons liable to pay taxes;
(5) the notice to be given to the Commissioner by any person who becomes the owner or possessor of a vehicle or animal in respect of which any tax is payable under this Act;
(6) the wearing of badge by the driver of any such vehicle and the display of number plate on such vehicle;
(7) the submission of returns by persons liable to pay any tax under this Act;
(8) the collection by the registrar of Delhi appointed under the Indian Registration Act, 1908, (16 of 1908), of the additional stamps duty payable to the Corporation under this Act, the periodical payment of such duty to the Corporation and the maintenance by such registrar or sub-registrar of separate accounts in relation thereto;
(9) any other matter relating to the levy, assessment, collection, refund or remission of taxes under this Act;
B. 1[Omitted] C. 1[Omitted] D.2[Omitted] E. Bye-laws relating to streets (1) the closure of streets when any work is in progress and alternative passage during the progress of such work;
(2) the erections of a temporary nature during festivals;
(3) the setting up of hoards on buildings adjacent to streets during their construction or repair;
(4) the precautions to be taken when permission is granted to any private individual for opening or breaking up any public street and the fees to be paid for the restoration of a street in its original condition;
(5) the permission, regulation or prohibition of use or occupation of any street or place by itinerant vendors or hawkers or by any person for the sale of articles or the exercise of any calling or the setting up of any booth or stall and the fees chargeable for such occupation;
(6) any other matter in connection with the construction, repair, maintenance, naming, numbering and lighting of streets for which provision is necessary or should be made;
3[* * * * * * * * *] G. Bye-laws relating to sanitation and public health (1) the position of latrines and urinals;
(2) the provision of air spaces between latrines and buildings or places used for various purposes;
(3) the white-washing of buildings;
(4) the provision of living accommodation for sweepers in buildings newly erected requiring ten or more latrines;
(5) the regulation or prohibition of the stabling or herding of animals or any class of animals so as to prevent danger to public health;
(6) the seizure of ownerless animals straying within the limits of Delhi and the regulation and control of pounds;
(7) the fixing and regulation of the use of public bathing and washing places;
(8) the prevention of the spread of dangerous disease;
(9) the segregation in or the removal or exclusion from any part of Delhi or the destruction of animals suffering or reasonably suspected to be suffering from any infectious or contagious disease;
(10) the supervision, regulation, conservation and protection from injury, contamination or trespass, of sources and means of public water supply and of appliances for the distribution of water;
(11) the enforcement of compulsory vaccination and inoculation;
(12) the proper disposal of corpses, the regulation and management of burning and burial places and other places for the disposal of corpses and the fees chargeable for the use of such places where the same are provided or maintained at the expense of the Municipal Fund;
H. Bye-laws relating to vital statistics (1) the prescribing of qualifications of persons to be appointed as registrars under Chapter xviii;
(2) the registration of births, deaths and marriages and the taking of a census;
I. Bye-laws relating to public safety and suppression of nuisances The regulation or prohibition for the purpose of sanitation or the prevention of disease or the promotion of public safety or convenience, of any act which occasions or is likely to occasion a nuisance and for the regulation or prohibition of which on provision is made elsewhere by this Act;
J. Bye-laws relating to markets, slaughter houses, trades and occupations (1) the days on, and the hours during which any market or slaughter house may be kept open for use;
(2) the regulation of the design, ventilation and drainage of markets and slaughter houses and the materials to be used in the construction thereof.
(3) the keeping of markets and slaughter houses and the lands and buildings appertaining thereto in a clean and sanitary condition, the removal of filth, rubbish and other polluted and obnoxious matter there from and the supply therein of pure water and of a sufficient number of latrines and urinals for the use of persons using or frequenting the same;
(4) the manner in which animals shall be admitted in a slaughter house;
(5) the manner in which animals may be slaughtered;
(6) the provision of passages of sufficient width between the stalls in market buildings and market places for the convenient use of the public and the prevention of encroachment of such passages;
(7) the setting apart of separate areas for different classes of articles in market buildings and market places;
(8) the disposal or destruction of animals offered for slaughter which are, from disease or any other cause, unfit for human consumption;
(9) the destruction of carcasses which from any disease or any other cause are found after slaughter to be unfit for human consumption;
(10) the regulation of the entry of animals into slaughter house and the bringing out of the carcasses of such animals after slaughter and the fee to be paid for use of slaughter houses;
(11) the proper custody and care of animals for the keeping of which licenses are granted under Section 417;
(12) the regulation of the import of animals and flesh within Delhi;
(13) the rendering necessary of licenses for the use of premises within Delhi as stables or cow-houses or as an accommodation for sheep, goat or buffalo, and the fees payable for such licenses and the conditions subject to which such licenses may be granted, refused, suspended or revoked;
(14) the regulation of sarais, hotels, dak bungalows, lodging houses, boarding houses, buildings, let-in-tenements, residential clubs, restaurants, eating houses, cafes, refreshment rooms and places of public recreation, entertainment or resort;
(15) the control and supervision of places where dangerous or offensive trades are carried on so to secure cleanliness therein or to minimise injurious, offensive or dangerous effects arising or likely to arise there from.
(16) the regulation of the posting of bills and advertisements and of the position, size, shade or style of the name boards, sign-boards and sign-posts;
(17) the fixation of a method for the sale of articles whether by measure, weight; piece or any other method;
(18) the procedure regarding the grant of permit to establish a factory, workshop or trade premises;
(19) the regulation of smoke in factories workshops and trade premises;
(20) the regulation of sanitary conditions in factories, workshops, and trade premises;
(21) the regulation of the use in any factory, workshop or trade premises of whistle, trumpet, siren, or horn worked by steam, compressed air, electricity or other mechanical means;
(22) the prevention of nuisance in any market building, market place, slaughter house or any factory, workshop or trade premises;
K. Bye-laws relating to improvement (1) the form and content of an improvement scheme or a rehousing scheme;
(2) the procedure to be followed in connection with the framing, submission, approval and sanction of such schemes;
(3) the local inquiries and other hearings that may be held before a scheme is framed, approved or sanctioned;
(4) the alteration of an improvement scheme or a rehousing scheme after approval and sanction;
L. Bye-laws relating to miscellaneous matters 4[* * * * * * * * *] (2) the circumstances and the manner in which owners of land or building in Delhi temporarily absent there from or not resident therein may be required to appoint as their agents for all or any of the purposes of this Act or of any bye-laws made there under, persons residing within or near Delhi:
(3) the maintenance of schools and the furtherance of education generally;
(4) the regulation and control of municipal hospitals and dispensaries;
(5) the rendering necessary of licenses–
(a) for the proprietors or drivers of hackney-carriages, cycle-rickshaws, thelas and rehries kept or plying for hire or used for hawking articles;
(b) for persons working as job-porters for the conveyance of goods;
(6) the classification of cinema theatres for the purposes of the Fourth Schedule;
(7) any other matter which is to be or may be prescribed by bye-laws made under this Act or in respect of which this Act makes no provision or makes insufficient provision and provision is, in the opinion of the Corporation, necessary for the efficient municipal government of Delhi.
(2) bye-law which may be made under Sub-section (1) may be made by the Central Government within one year of the establishment of the Corporation; and any bye- law so made may be altered rescinded by the Corporation in the exercise of its powers under Sub-section (1)
12. It is apparent that the provisions relating to taxation do speak of taxation of vehicles, but not of the kind and nature which concerns the present dispute; Section 113 contains a description of all heads of taxation. They do not refer to parking. The power to frame bye laws similarly, does not extend to making bye laws to recover fees for parking, or levy taxes in that regard.
13. Several decisions of the Supreme Court, handed down over the last half century, have noted the distinction made in the three lists in the Seventh Schedule, to the Constitution, between a fee and a tax, in the context of the pattern indicated in Entry 96 of List I, Entry 66 of List II (State List) and Entry 47 of List III (Concurrent List). In the decision reported as P.M. Ashwathanarayana Setty v. State of Karnataka 1989-(Supple 1) SCC 696, the Supreme Court explained the difference between the two concepts as follows:
…Another review of all the earlier pronouncement of this Court on the conceptual distinction between a ‘fee’ and a ‘tax’ and the various contexts in which the distinction becomes telling is an idle parade of familiar learning and unnecessary. What emerges from these pronouncements is that if the essential character of the impost is that some special service is intended or envisaged as a quid pro quo to the class of citizens which is intended to be benefited by the service and there is a broad and general co-relation between the amount so raised and the expenses involved in providing the services, the impost would partake the character of a ‘fee’ notwithstanding the circumstance that the identity of the amount so raised is not always kept distinguished but is merged in the general revenues of the State and notwithstanding the fact that such special services, for which the amount is raised, are, as they very often do, incidentally or indirectly benefit the general public also. The test is the primary object of the levy and the essential purpose it is intended to achieve. The co-relationship between the amount raised through the ‘fee’ and the expenses involved in providing the services need not be examined with a view to ascertaining any accurate, arithmetical, equivalence or precision in the co- relation; but it would be sufficient that there is a broad and general co- relation. But a fee loses its character as such if it is intended to and does go to enrich the general revenues of the State to be applied for general purposes of government. Conversely, from this latter element stems the sequential proposition that the object to be served by raising the fee should not include objects which are, otherwise, within the ambit of general governmental obligations and activities. The concept of fee is not satisfied merely by showing that the class of persons from whom the fee is collected also derives some benefit from those activities of government. The benefit the class of payers of fee obtain in such a case is clearly not a benefit intended as special service to it but derived by it as part of the general public.
36. Nor does the concept of a fee – and this is important – require for its sustenance the requirement that every member of the class on whom the fee is imposed, must receive a corresponding benefit or degree of benefit commensurate with or proportionate to the payment that he individually makes. It would be sufficient if the benefit of the special services is available to and received by the class as such. It is not necessary that every individual composing the class should be shown to have derived any direct benefit. A fee has also the element of a compulsory exaction which it shares in common with the concept of a tax a the class of persons intended to be benefited by the special services has no volition to decline the benefit of the services. A fee is, therefore, a charge for the special service rendered to a class of citizens by government or governmental agencies and is generally based on the expenses incurred in rendering the services.
37. The extent and degree of the co-relation required to support the fees, has also been considered in a number of pronouncements of this Court. It has been held that it is for the governmental agencies imposing the fee to justify its impost and its quantum as a return for some special services.
38. In Municipal Corporation of Delhi v. Mohd. Yasin this Court relied on M.M. Sudhundra Tirtha Swamiar v. Commissioner, H.R.E. , which held which held : (SCC p. 233) If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax….
14. In Commissioner of Central Excise v. Chhata Sugar Co. Ltd. the Supreme Court commented on the essential distinction between a ‘tax’ and a ‘fee’, in the following terms:
18. The Constitution of India postulates either a tax or a fee. However, the use of the expression ‘tax’ or ‘fee’ in a statute is not decisive; as on a proper construction thereof and having regard to its scope and purport ‘fee’ may also be held to be a tax.
19. The definition of ‘tax’ in terms of Clause (28) of Article 366 of the Constitution is wide in nature. The said definition may be for the purpose of the Constitution; but it must be borne in mind that the legislative competence conferred upon the State Legislature or Parliament to impose ‘tax’ or ‘fee’ having been enumerated in different entries in the three lists contained in the Seventh Schedule of the Constitution of India, the same meaning of the expression ‘tax’ unless the context otherwise requires should be assigned.
20. Having regard to the fact that different legislative entries have been made providing for imposition of ‘tax’ and ‘fee’ separately, indisputably, the said expression do not carry the same meaning. Thus a distinction between a tax and fee exists and the same while interpreting a statute has to be borne in mind.
21. A distinction must furthermore be borne in mind as regards the sovereign power of the State as understood in India and the doctrine of police power as prevailing in the United States of America. In some jurisdictions a distinction may exist between a police power and a power to tax but as in the Constitution of India, the word ‘tax’ is defined, it has to be interpreted accordingly.
22. The expression ‘regulatory fee’ is not defined. Fee, therefore, may be held to be a tax if no service is rendered. While imposing a regulatory fee, although the element of quid pro quo, as understood in common parlance, may not exist but it is trite that regulatory fee may be in effect and substance a tax. [See: Corporation of Calcutta v. Liberty Cinema ].
23. In Municipal Corporation Amritsar v. Senior Supdt. of Post Offices it was held:
8. The question, whether the demand so made was by way of ‘service charge or ‘tax’, need not detain us any longer. The demand so made was with regard to the services rendered to the respondents’ Department, like water supply, street- lighting drainage and approach roads to the land and buildings. In the counter, the respondents averred that they are paying for the services rendered by the appellant separately. It is also categorically averred that no other specific services are being provided to the respondents for which the tax in the shape of service charges can be levied and realized from the respondents. There is no provision in the Municipal Corporation Act for levying services charges. The only provision is by way of tax. Undisputedly, the appellant Corporation is collecting the tax from general public for water supply, street- lighting and approach roads, etc. Thus, the `tax’ was sought to be imposed in the garb of ‘service charges’.
24. We may furthermore notice that a seven-Judge Bench of this Court in Synthetics and Chemicals Ltd. v. State of U.P. while considering the question as to whether the levy on industrial alcohol by the State is justifiable, inter alia, held that when revenue earned out of the impost is substantial, the same would not be justifiable as fee.
25. In Liberty Cinema this Court, while interpreting Section 548 of the Calcutta Municipal Act providing for grant of a license, observed: (AIR p. 1116, para 18) The reference to the heading of Part V can at most indicate that the provisions in it were for conferring benefit on the public at large. The cinema house owners paying the levy would not as such owners be getting that benefit. We are not concerned with the benefit, if any, received by them as members of the public for that is not special benefit meant for them. We are clear in our mind that if looking at the terms of the provision authorizing the levy, it appears that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statue. A consideration of where Sections 443 and 548 are placed in the Act is irrelevant for determining whether the levy imposed by them is a fee or a tax.
It was further observed: (AIR p.1116, paras 19-20)
19. The last argument in this connection which we have to notice was based on Sections 126 and 127 of the Act. Section 126 deals with the preparation by the Chief Executive Officer of the Corporation called Commissioner, of the annual budget. The budget has to include an estimate of receipts from all sources. These receipts would obviously include taxes, fees, license fees and rents. Under Section 127(3) the Corporation has to pass this budget and to determine subject to Part IV of the Act, the levy of consolidated rates and taxes at such rates as are necessary to provide for the purposes mentioned in Sub-section (4). Sub-section (4) requires the Corporation to make adequate and suitable provision for such services as may be required for the fulfillment of the several duties imposed by the act and for certain other things to which it is not necessary to refer. The first point made was that these sections showed that the act made a distinction between fees and taxes. It does not seem to us that anything turns on this as the only question now is whether the levy under Section 548 is a fee. The other point was that Clauses (3) and (4) of Section 127 showed that the Corporation could fix the consolidated rates and taxes and that the determination of rates for these had to be in accordance with the needs for carrying out the Corporation’s duties under the Act. It was said that as the license fee leviable under Section 548 did not relate to any duty of the Corporation under the Act, it being optional for the Corporation to impose terms for grant of licenses for cinema houses, the rate for that fee was not to be fixed in reference to anything except rendering of services. We are unable to accept this argument and it is enough to say in regard to that it is not right that Section 443 does not impose a duty on the Corporation. We think it does so, though in what manner and when it will be exercised it is for the Corporation to decide. It is impossible to call it a power, as the respondent wants to do, for it is not given to the Corporation for its own benefit. The Corporation has been set up only to perform municipal duties and its powers are for enabling it to perform those duties. Furthermore there is no doubt that an estimate of the license fee has to be included in the budget and therefore the word ‘tax’ in Section 127(3) must be deemed to include the levy under Section 548. The words ‘subject to the provisions of Part IV’ in Section 127(3) must be read with the addition of the words ‘where applicable’….
20. The conclusion to which we then arrive is that the levy under Section 548 is not a fee as the Act does not provide for any services of special kind being rendered resulting in benefits to the person on whom it is imposed. The work of inspection done by the Corporation which is only to see that the terms of the license are observed by the licensee is not a service to him. No question here arises of correlating the amount of the levy to the costs of any service. The levy is a tax. It is not disputed, it may be stated, that if the levy is not a fee, it must be a tax.
26. A regulatory statute may also contain taxing provisions.
27. The decisions of this Court point out towards the need of existence of the element of quid pro quo for imposition of fee; be it to the person concerned or be it to a group to which he belongs; irrespective of the fact as to whether the benefit of such service is received directly or indirectly.
28. The point at issue is required to be considered keeping in view the aforementioned legal position.
29. By reason of the provisions of the U.P. Sheera Niyantran Adhiniyam, 1964, the trade carried out by the respondents is sought to be regulated.
30. Some service, therefore, was required to be rendered by the State or the statutory authority to the owners of the factory producing molasses or the molasses industries generally if an impost by way of ‘fee’ was to be levied.
15. In State of West Bengal v. Kesoram Industries Ltd. a Constitution Bench of the Supreme Court while differentiating between the ‘power to regulate’ and ‘power to tax’ observed:
108. It is of paramount significance to note the difference between ‘power to regulate and develop’ and ‘power to tax’.
109. The primary purpose of taxation is to collect revenue. Power to tax may be exercised for the purpose of regulating an industry, commerce or any other activity; the purpose of levying such tax, an impost to be more correct, is the exercise of sovereign power for the purpose of effectuating regulation though incidentally the levy may contribute to the revenue. Cooley in his work on taxation (Vol.1, 4th Edn., 1924) deals with the subject in paras 26 and 27:
There are some cases in which levies are made and collected under the general designation of taxes, or under some term employed in revenue laws to indicate a particular class of taxes, where the imposition of the burden may fairly be referred to some other authority than to that branch of the sovereign power of the State under which the public revenues are apportioned and collected. The reason is that the imposition has not for its object the raising of revenue but looks rather to the regulation of relative rights, privileges and duties as between individuals, to the conservation of order in the political society, to the encouragement of industry, and the discouragement of pernicious employments. Legislation for these purposes it would seem proper to look upon as being made in the exercise of that authority which is inherent in every sovereignty, to make all such rules and regulations as are needful to secure and preserve the public order, and to protect each individual in the enjoyment of his own rights and privileges by requiring the observance of rules of order, fairness and good neighborhood, by all around him. This manifestation of the sovereign authority is usually spoken of as the police power. The power to tax must be distinguished from an exercise of the police power. [State v. Tucker 56 SC 516 : 35 SE 215].
The police power “is a very different one from the taxing power, in its essential principles, though the taxing power, when properly exercised, may indirectly tend to reach the end sought by the other in some cases. (p.94) The distinction between a demand of money under the police power and one made under the power to tax is not so much one of form as of substance. (p. 95).
The distinction between a levy in exercise of police power to regulate and the one which would be in the nature of tax is illustrated by Cooley by reference to a license. He says:
So-called license taxes are of two kinds. The one is a tax for the purpose of revenue. The other, which is, strictly speaking, not a tax at all but merely an exercise of the police power, is a fee imposed for the purpose of regulation. (p.97) Suppose a charge is imposed partly for revenue and partly for regulation. Is it a tax or an exercise of the police power Other considerations than those which regard the production of revenue are admissible in levying taxes, and regulation may be kept in view when revenue is the main and primary purpose. The right of any sovereignty to look beyond the immediate purpose to the general effect neither is nor can be disputed. The Government has general authority to raise a revenue and to choose the methods of doing so; it has also general authority over the regulation of relative rights, privileges and duties, and there is no rule of reason or policy in the Government which can require the legislature, when making laws with the one object in view, to exclude carefully from its attention the other. Nevertheless, cases of this nature are to be regarded as cases of taxation. If revenue is the primary purpose, the imposition is a tax. Only those cases where regulation is the primary purpose can be specially referred to the police power. If the primary purpose of the legislative body in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the public. (Cooley, ibid., pp.98-99) 110. This Court in a seven-Judge Bench decision in Synthetics and Chemicals Ltd. v. State of U.P. agreed that regulation is a necessary concomitant of the police power of the State. However, it was an American doctrine and in the opinion of the Court it was not perhaps applicable as such in India. The Court endorsed recognizing the power to regulate as a part of the sovereign power of the State exercisable by the competent legislature. Brushing aside the need for discussion on the question, whether under the Constitution the States have police power or not, the Court accepted the position that the State has the power to regulate. However in the garb of exercising the power to regulate, any fee or levy which has no connection with the cost or expenses of administering the regulation, cannot be imposed; only such levy can be justified as can be treated as part of regulatory measure. Thus, the State’s power to regulate perhaps not as emanation of police power but as an expression of the sovereign power of the State has its limitations. In our opinion , these observations of the Court lend support to the view which we have formed that a power to regulate, develop or control would not include within its ken a power to levy tax or fee except when it is only regulatory. Power to tax or levy for augmenting revenue shall continue to be exercisable by the legislature in whom it vests i.e. the State Legislature in spite of regulation or control having been assumed by another legislature i.e. the Union. State legislation levying a tax in such manner or of such magnitude as can be demonstrated to be tampering or intermeddling with the Centre’s regulation and control of an industry can perhaps be the exception to the rule just stated.
16. An analysis of the above case law would show that:
(1) The taxing power of a sovereign legislative body, i.e the State or the Union (i.e Parliament) is untrammeled by considerations of quid pro quo. The power of taxation is to collect revenue; it can be used to regulate an industry or activity.
(2) Levy and collection of a fee, on the other hand, denotes an element of quid pro quo. The extent of such co-relationship between the levy of the fee, and the nature of service rendered, however, would not be gone into by the court, if it satisfied about existence of such quid pro quo.
(3) Power to regulate, develop or control would not include within its sweep a power to levy tax or fee except when it is only regulatory. Power to tax or levy for augmenting revenue shall continue to be exercisable by the legislature in whom it vests i.e. the State Legislature in spite of regulation or control having been assumed by another legislature i.e. the Union.
17. In this case, the MCD’s consistent stand is that the levy of parking charges are not for specific service rendered, but to augment its finances. It could, conceivably have been said that those depositing parking charges, as levied, would be exempted from paying such charges for a specific period, such as for 6 months, or a year. Such is not the case here; the levy is universal, irrespective of whether the MCD facilities are used or not, irrespective of whether specific parking charges are used each time the owner or user of the vehicle parks it in municipal land. The levy is to augment revenue, to create modern parking facilities. In that sense, the levy is universal, and not co- related with a specific service. The element of quid pro quo is therefore, absent.
18. I am of the opinion that the impugned levy amounts to a tax, which could, if at all have been charged, by legislation, or amendment. The absence of any quid pro quo (as is evident from the fact that the MCD does not claim to give any service at this stage, or in the forseeable future to the vehicle owner, who may or may not live within its jurisdiction, and who may or may not use its land, and who may purchase the vehicle, and take it away to another place) places it in the category of a tax. None of the provisions of the Act or the power to frame bye laws, support the levy, or even the power to levy such a parking ‘charge’ or ‘tax’.
19. I am also of the opinion that had the intention of Parliament been to arm the MCD with the power to impose such tax or levy a fee, the Act would have contained an overt provision in that regard; recourse to a discretionary power, to justify a taxation provision, is not permissible. Even if it were to be held that the power to regulate parking exists, that power does not extend to levying taxes, without authority of law. If such a power were to be impliedly conceded, as is urged on behalf of the MCD, it would be fraught with grave, and perhaps unintended consequences. Every local authority- there are three in Delhi- would then be entitled, regardless of whether it constructed the facilities or not, to levy such charges, irrespective of whether the vehicle owner used them, and whether or not he even lived and worked in the areas falling within the jurisdiction of such authorities. I am also unpersuaded that Section 108 empowered levy of such parking ‘charges’. That provision merely empowers the MCD to create special funds, of monies obtained by it, and does not constitute a separate impost, or power to levy taxes, rates or fees.
20. The needs of the city to create parking facilities, and modernize existing parking spaces, is undeniable. The MCD cannot be faulted in its intention to find out ways and means to achieve that end; it is legitimate. Nevertheless, neither the MCD, nor any other body, whose powers are expressly delineated by provisions of law, can overstep those limits, and Constitutional limitations. One of the guarantees of the Constitution is that there can be no taxation without authority of law (Article 265). Legitimate ends have to be achieved through legitimate means, which in this case, means by appropriate legislation, or amendment to existing legislation. Absent that, the recourse to a mere resolution of the Corporation is impermissible, both under the Act, and the Constitution of India.
21. In view of the above discussion, I am of the opinion that the parking charge levied in this case was without authority of law. A direction is therefore issued to the MCD to refund the amount of parking charges, recovered from the petitioner, within two weeks. The MCD shall also deposit Rs. 10,000/- towards costs of these proceedings, with the Delhi High Court Legal Services Authority, within two weeks from today.
22. Writ petition allowed in terms of the directions; rule made absolute, in such terms.