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2007(8) Supreme 10
Supreme Court of india
(From Allahabad High Court)
A.K. Mathur & Markandey Katju, JJ.
Union of India & Ors. — Petitioners
versus
State of U.P. & Ors. — Respondents
Appeal (civil) 2549 of 2001
Decided on : 01-11-2007
(1992) 1 SCC 100; (1996) 7 SCC 542; AIR 1963 SC 1760; (1997) 7 SCC 339 – Distinguished.
(b)Words and Phrases – Tax and Fee – Distinction – Ordinarily a tax generates general revenue but not for any service rendered – However, the nomenclature is not important – Sometimes a ‘tax’ may be in reality a fee, depending upon its nature – Distinction between a tax and a fee remains, even though the concept of a fee has undergone a sea change. (Para 20)
(2006) 6 SCC 763 – Relied upon.
(c)Constitution of India – Article 285 – Article 285 contemplates exemption of Union property from State tax – It does not extend to exemption from levy of indirect tax. (Para 21)
(2004) 7 SCC 195 – Relied upon.
(d)Constitution of India – Article 285 r/w section 52, U.P. Water Supply and Sewerage Act, 1975 – What is being charged is for service rendered by the Jal Sansthan i.e. an instrumentality of the State under the Act of 1975 – Section 52 of the Act empowers the Jal Sansthan to levy tax, fee and charge for water supply and for sewerage services rendered by it as water tax and sewerage tax – Though the charge was loosely termed as ‘tax’, nomenclature is not important – In substance it is fee for the supply of water as well as maintenance of the sewerage system – Such service charges being fee cannot be said to be hit by Article 285 of the Constitution – No infirmity in the impugned High Court judgment. (Para 23)
(2004) 3 SCC 92; (2005) 2 SCC 345 – Relied upon.
Facts of the case :
1.The Union of India and two others filed a writ petition before the High Court of Allahabad challenging the orders of recovery dated 1.7.1999 and 20.12.1999 issued by the Executive Engineer, Jal Sansthan, Khusru Bagh, Allahabad on account of service charges on Railway properties situated at Allahabad for the period from October, 1994 to March, 1999. The appellants also challenged the recovery certificate issued by the Tahasildar, Sadar, Allahabad for recovery of a sum of Rs.26,23,360/- from the appellant No.2 i.e. the Divisional Railway Manager, Northern Railway, Allahabad.
2.The writ filed thereagainst was dismissed by the High Court.
Findings of the Court :
The charges in question are fee and not tax, and therefore not hit by Article 285 of the Constitution.
Result : Appeal dismissed.
JUDGMENT
A.K. MATHUR, J.—
1.This appeal is directed against the judgment dated 12.12.2000 passed by the Division Bench of the Allahabad High Court whereby the Division Bench has dismissed the writ petition filed by the appellants and upheld the recovery proceedings initiated against the appellants for the demand raised by the Jal Sansthan, Allahabad as water and sewer charges.
2.The Union of India and two others filed a writ petition before the High Court of Allahabad challenging the orders of recovery dated 1.7.1999 and 20.12.1999 issued by the Executive Engineer, Jal Sansthan, Khusru Bagh, Allahabad on account of service charges on Railway properties situated at Allahabad for the period from October, 1994 to March, 1999. The appellants also challenged the recovery certificate issued by the Tahasildar, Sadar, Allahabad for recovery of a sum of Rs.26,23,360/- from the appellant No.2 i.e. the Divisional Railway Manager, Northern Railway, Allahabad. It was alleged by the Jal Sansthan that the appellants were liable to pay the sewerage charges for 3125 seats at the rates notified under Allahabad Jal Sansthan Notification published in U.P. Gazette dated 19.11.1994. The plea of the appellants was that they were holding the property of the Central Government for which the service charges were not payable under Article 285 of the Constitution of India as such charges were in the nature of a tax. It was submitted that in view of the policy taken by the Ministry of Railways, Government of India such charges cannot be recovered as this was totally exempted but the respondent Jal Sansthan did not heed to it and they moved the Tahasildar, Sadar, Allahabad for effecting recovery. Therefore, the appellants were constrained to file the present writ petition before the High Court of Allahabad.
3.The writ petition was contested by the respondents and they filed their reply and pointed out that in view of various circulars of the Ministry of Railways, the appellants have been paying the service charges to the Jal Sansthan and in that connection it was pointed out that other Central Government Offices situated in Allahabad i.e. Telephone Department; Post Offices; Accountant General Office; Central Excise Department; Income Tax Offices were all making regular payment of service charge and sewerage charge to the Jal Sansthan, Allahabad. It was also pointed out that earlier the demand of service charges was being paid by the Railway Administration to the Allahabad Nagar Mahapalika but with the establishment of Allahabad Jal Sansthan under the U.P. Water Supply and Sewerage Act, 1975 (herein after to be referred to as the Act) the aforesaid charges were being levied and realized by the Allahabad Jal Sansthan.
4.On the basis of these pleadings the question that came up before the Division Bench of the High Court was whether such demand raised by Allahabad Jal Sansthan for the services rendered by it to the Railway colonies was sustainable or not. The short question was whether Article 285 of the Constitution of India will exempt the Railway Administration from paying the water and sewerage charges under the Act of 1975. In this connection, reference was specially made to two decisions of this Court i.e. Union of India v. Purna Municipal Council & Ors.1, [(1992) 1 SCC 100] & Union of India & Anr. v. Ranchi Municipal Corporation, Ranchi & Ors.2, [(1996) 7 SCC 542]. There is no dispute that the bulk of water is supplied by the Jal Sansthan for maintenance of the railway platforms as well as railway colonies and the Jal Sansthan is catering to the need of maintaining the sewerage system not only at the railway stations but in the adjoining areas and also the residential quarters, offices, godowns, shades are being maintained by the Union of India through the Railways. The contention of the appellants in the writ petition was that in view of the aforesaid two decisions of this Court the question is no more res integra and the Jal Sansthan cannot charge for th
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