2004 Supreme(SC) 1073

2004(7) Supreme 78
SUPREME COURT OF INDIA
(From Himachal Pradesh High Court)
R.C. Lahoti, CJI, G.P. Mathur & C.K. Thakker, JJ.
State of Himachal Pradesh and Ors. -Appellants
versus
M/s. Shivalik Agro Poly Products and Ors. -Respondents
Civil Appeal No. 2122 of 1999
Decided on 14-9-2004
Counsel for the Parties :
For the Appellants : J.S. Attri, Advocate.
For the Respondents : Syed Shahid Hussain Rizvi and Irshad Hanif, Advocates.

IMPORTANT POINT
The notification issued by the State Government u/s 78 of the Registration Act, prescribing the registration fee on a graduated form on the basis of value of subject matter of the instrument is in accordance with the spirit of section 78 of the Act and is valid in law.

Headnote:Registration Act-Sections 78 and 79-Notification dated 14-4-1969 issued by State of Himachal Pradesh u/s 78 of the Act-Notification prescribing registration fee on a graduated form on basis of value of subject matter of the instrument-Validity challenged-Plaintiffs respondents were sanctioned two loans by State Financial Corporation for establishing an industrial unit-In order to secure loan, they were required to mortgage and hypothecate fixed assets of their leasehold rights and machinery installed therein-Plaintiffs were required to pay stamp duty and registration charges in accordance with the notification dated 14-4-1969-Plaintiffs filed suit seeking a declaration that the notification is void and ultra vires-Suit decreed by trial Court holding that there is distinction between tax and fee and that the amount realised is a tax and not a fee-Whether notification issued by the State Government could be struck down merely by taking into consideration registration fee paid by plaintiffs and quantification of value of services rendered by them-(No)-There is no generic difference between a tax and a fee-Both are compulsory exaction of money by public authorities.

       Held : The statement of law made in Shirur Mutt case (supra) regarding the attributes of fee has undergone a sea change. The consistent view now is that there is no generic difference between a tax and a fee which are both compulsory exaction of money by public authorities. The correlationship between the levy and the services rendered should be one of general character and not of mathematical exactitude. Further, the broad and general correlationship between the totality of the fee on the one hand and the totality of the expenses of the services on the other, will be sufficient to justify the levy. The levy will not fail only on the ground that the measure of its distribution on the persons or incidence is disproportionate to the actual services rendered by them. The true test being the comprehensive level of the value of the totality of the services set off against the totality of the receipts. The character of the fee is thus established. The vagaries in its distribution amongst the class do not detract from the concept of a fee as such. (Para 15)

       The fixation of registration fee under Sub-section (a) on a graduated scale depending upon the value or consideration for which the instrument has been executed may be on the higher side. However, the fee for various other items enumerated in sub-sections (b) to (i) is very small, though the State has to incur a considerable amount of expenditure for the same. The high value transactions are generally in big cities where the value of the property is high and not in small towns or in rural areas. Nevertheless, the State Governments have to maintain offices of Sub-Registrars in small sub-divisional towns and post staff which has to be paid salaries. Rules have been framed by various State Governments which lay down elaborate procedure for maintenance of Books and Registers wherein copies of registered documents have to be kept. This necessarily requires trained manpower entailing expenditure in payment of their salary. There is no material on record to show that the overall amount received by the Government by way of fee from the Registration department far exceeds the overall expenditure incurred in maintaining the said department. The High Court and also the District Court merely took into consideration the registration fee paid by the plaintiffs and did not at all examine whether there was any substantial discrepancy between the total amount of fee realized by the registration department and the total amount of expenditure incurred by the government in the maintenance and functioning of the department. The notification issued by the State Government could not be struck down merely by taking into consideration the registration fee paid by the plaintiffs and quantification of the value of services rendered to them. (Paras 17 and 18)