Judgment

SARKAR J. (with him Raghubar Dayal and Mudholkar JJ.) : The appellant Corporation was constituted by the Calcutta Municipal Act, 1951, an Act passed by the Legislature of the State of West Bengal. The act was intended to consolidate and amend the law relating to the Municipal affairs of Calcutta and it defined the duties, powers and functions of the Corporation in whose charge those affairs were placed. The respondent is a firm owning a cinema house and carrying on business of public cinema shows.

2. Section 443 of the Act provides that no person shall without a licence granted by the Corporation keep open any cinema-house for public amusement. It, however, does not say that any fee is to be paid for the licence. But sub-section(2) of S. 548 says that for every licence under the Act, a fee may, unless otherwise provided, be charged at such rate as may from time to time be provided. In 1948 the Corporation had fixed the scale of fees on the basis of the annual valuation of the cinemahouses made by a method which does not appear on the record. The respondent had under these sections obtained a licence for its cinema house and had been paying a licence fee calculated on the aforesaid basis. The fee so calculated was Rs. 400/- per year.

3. By a resolution passed on March 14, 1958 the Corporation changed the basis of assessment of the licence fee with effect from April 1, 1958. Under the new method the fee was to be assessed at rates prescribed per show according to the sanctioned seating capacity of the cinema houses. The respondent s cinema house had 551 seats and under the changed method it became liable to a fee of Rs. 5 / - per show. In the result it became liable to pay a fee of Rs. 6,000/ - per year.

4. The respondent then moved the High Court at Calcutta under Art. 226 of the Constitution for a writ quashing the resolution. The application was first heard by Sinha J, who allowed it. This order was confirmed by an

appellate Bench of the same Court consisting of Bose C. J. and G. K. Mitter J. on appeal by the Corporation. Hence the present appeal.

5. In this Court the levy was challenged on three grounds, the first of which may be disposed of at once. That ground was that the levy amounted to expropriation and was, therefore, invalid as violating cls. (f) and (g) of sub Art. (1) of Article 19. Sinha J. rejected this contention as on the materials on the record it could not be said that the new rate was so high as to make it impossible for the respondent to carry on its business. The learned Judges of the appellate Bench do not appear to have taken a different view of the matter. It seems to us that a fee at the rate of Rs. 5 /- per show in a house with a seating capacity of 551 cannot in any sense be said to be unreasonably high. With that seating capacity the respondent would at a reasonable estimate be collecting about Rs.1,000/- per show and paying the sum of Rs. 5/- per show. No doubt the increase in the rate of fee from Rs. 400/ - to Rs. 6,000/ - per year was large. But at the same time the circumstances obtaining in our country had undergone an immense change between 1948, when the fee was earlier fixed, and 1958. The challenge to the levy on the ground that it amounted to expropriation is wholly unfounded and was rightly rejected in the High Court. Substantially the same argument was advanced from a different point of view. It was said that Arts. 19(1)(f) and (g) were violated in any case as S. 548 gave an arbitrary power of taxation. This contention found favour with the learned Judges of the High Court but, with respect to them, we are unable to agree. In our view, for reasons to be later stated, no arbitrary power of taxation was conferred by S. 548.

6. The second challenge to the levy was put in this way : The levy authorised by Ss. 443 and 548 was a fee in return for services to be rendered and not a tax and it had therefore to be commensurate with the costs incurred by the Corporation in providing those servic