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Andhra Pradesh High Court
Judges : ANANTA NARAYANA AYYAR, P.SATYANARAYANA RAJU
Nizam Sugar Factory Ltd. - Appellant
Versus
City Municipality, Bodhan - Respondent
Decided On : 04-16-64
MUNICIPAL TAX - WATER TAX - LEVY - NATURE - TAX OR FEE - DISTINCTION - HYDERABAD DISTRICT MUNICIPALITIES ACT (XVIII OF 1956), SECS. 96, 97, 101, 227 TO 243, 228 (1), 230 (2) - CONSTITUTION OF INDIA, ART. 226 - WRIT OF CERTIORARI - GENERAL WATER TAX LEVIED UNDER SEC. 97 (1) (B) IS A TAX AND NOT A FEE - IT IS A PROPERTY TAX AND IS DISTINGUISHED FROM WATER FEE CHARGED UNDER SEC. 230 (2) WHICH IS A FEE.
Fact of the Case:
The petitioner, Nizam Sugar Factory, challenged the levy of a large specified amount as water tax by the City Municipality, Bodhan, contending that it was a fee and not a tax and was therefore illegal as there was no service rendered to the petitioner which would justify any such levy. The Municipality contended that the levy was not a fee but was a property tax under Section 97 of the Hyderabad District Municipalities Act and was perfectly legal.
Finding of the Court:
The court held that the levy in question was a water tax on lands and buildings and came under Entry 49 of List II of Schedule VII to the Constitution, and did not come under Entry 17 and Entry 66 of List II. The court found that the general water tax levied under Section 97 (1) (b) of the Hyderabad District Municipalities Act was a tax and not a fee, and was a property tax distinguished from the water fee charged under Section 230 (2) which was a fee.
Issues: 1. Whether the levy in question was a tax or a fee? 2. Whether the levy came under Entry 49 of List II of Schedule VII to the Constitution, or under Entry 17 and Entry 66 of List II?
Ratio Decidendi: 1. The court held that the levy in question was a tax and not a fee, based on the following factors: - The levy was designated and classified by the Act as a "tax" on buildings and lands and as property tax, and was distinguished from water fee charged under Section 230, which was designated and classified as a fee. - The quantum of general water tax was levied on the basis of rateable value of the building or land concerned and not on the basis of the quantity of water supplied and consumed, whereas the water fee was charged on the basis of water supplied and consumed. - Section 101 (2) specifically provided that where the water fee payable under Section 230 (2) was not equal to the general water tax, the person concerned could pay the higher of the two, which showed that the two levies were distinct in nature. 2. The court held that the levy came under Entry 49 of List II of Schedule VII to the Constitution, which dealt with "taxes on lands and buildings", and did not come under Entry 17 and Entry 66 of List II, which dealt with "water" and "fees in respect of any of the matters in this list", respectively.
Final Decision: The court dismissed the writ petition filed by the petitioner, holding that the levy in question was a legal water tax on lands and buildings and not an illegal fee.
( 1 ) THE petitioner is Nizam Sugar Factory represented by its General Manager. It has prayed for issue of a writ of certiorari or any other appropriate writ, order or direction quashing the order in Case No. 117/a/7 of 1960 dated 6-2-1961 to the effect that a large specified amount was due from the petitioner as water tax. The two respondents are the City Municipality. Bodhan, represented by its Executive Officer and the City Municipal Committee, Bodhan represented by its President.
( 2 ) THE relevant facts are as follows : In 1492, the City Municipality of Bodhan came into existence. Its jurisdiction included a large block of buildings belonging to the petitioner-factory which had been existing from a long time back along with a complete water supply system serving those blocks of buildings. In 1946-47, the Municipal Committee, Bodhan started its water works and began supplying a limited area within the Municipality. It has not extended its water supply to block of buildings belonging to the petitioner. The nearest public water tap which has been erected by the Municipality is far away from the blocks of buildings belonging to the petitioner. (2a) The contention of the petitioner is that the levy made by the Municipality is a fee and not a tax and is, therefore, illegal as there is no service rendered to the petitioner which would justify any such levy. (2b) On behalf of the respondents, a counter-affidavit was filed contending that the levy was not a fee but was a property tax under Section 97 of the Hyderabad District Municipalities Act and was perfectly legal and that it was a general tax and not a fee for actual quantity of water supplied or consumed coming under Chapter XIII of that Act.
( 3 ) THIS petition came up before this Bench on an order of reference by our learned brother, Basi Reddy J. , as follows : "in view of the stakes involved, I direct this writ petition to be posted before a Bench after the vacation. "
( 4 ) THE main question concerned in this case is whether the levy is a tax or a fee. The contention of Sri Venkatappayya Sastry on behalf of the Government Pleader before us is that it is a tax coming under Entry 49 in List II in Schedule VII to the Constitution. On the other hand, the contention of the learned Advocate for the petitioner is that it comes under Entry 17 and Entry 66 in List II in Schedule VII.
( 5 ) THE entries in List II (State list) are as follows ;"entry 17. Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of entry 56 of List I. (We are not concerned in this case about entry 56 of List I ). Entry 66 : Fees in respect of any of the matters in this list, but not including fees taken in any Court. "entry 49 : Taxes on lands and buildings. "
( 6 ) IN Hyderabad District Municipalities Act (Hyderabad Act XVIII of 1956) (hereinafter referred to for convenience as the Act), Chapter II bears heading "municipality taxes" and includes Section 96 to 136. Section 97 runs as follows :"97 (1 ). The following taxes shall, subject to exception, limitations and conditions herein provided, be levied on buildings and lands within municipal limits and shall hereinafter be referred to as property taxes namely : (a) a general tax ; (b) a general water tax ; (c) a drainage tax ; (d) a lighting tax ; (e) a conservancy tax. 97 (2 ). Save as otherwise provided in this Act, these taxes shall be levied at such percentages of their rateable value as may be fixed by the Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " (6a) Section 101 runs as follows :" (1) A Committee may levy a general water tax when public water taps or stand posts have been fixed or are being fixed for the use of the public within the municipal limits. (2) When in any building or land a private pipe connection is taken the owner of the said building or land shall have to pay either the gener
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