1958 Supreme(Cal) 202

HIGH COURT OF CALCUTTA
D. N. Sinha
LIBERTY CINEMA - Appellant
Versus
COMMISSIONER, CORPORATION OF CALCUTTA - Respondent
Matter 48  Of  1958
Decided On : JULY 24, 1958

An imposition under a statute may be a fee or a tax depending on the nature of the imposition, the purpose for which it is levied, and the correlation between the amount of the imposition and the services rendered or to be rendered.

Headnote:

CINEMA HOUSES - LICENSE FEE - LEVY AND REALISATION - PROCEDURE - INCREASE IN LICENSE FEE - VALIDITY - DELEGATION OF LEGISLATIVE FUNCTIONS - UNREASONABLE RESTRICTION ON FUNDAMENTAL RIGHTS - ARTICLE 19 (1) (G) OF THE CONSTITUTION - ARTICLE 277 OF THE CONSTITUTION - ARTICLE 276 (2) OF THE CONSTITUTION - WRIT OF CERTIORARI - WRIT OF MANDAMUS.

Fact of the Case:

The petitioners, who are either a company or a firm carrying on the business or running a cinema house in the city of Calcutta, or a proprietor thereof, challenged the validity of a resolution passed by the Corporation of Calcutta increasing the existing charges in respect of cinema only, under Section 443 read with Section 548 (2) of the Calcutta Municipal Act, 1951. The petitioners contended that the levy was a fee and not a tax and that the increase in the license fee was excessive and unreasonable and had no correlation to the object for which it was being realised and the services that were proposed to be rendered.

Finding of the Court:

The Court held that the imposition under Section 443 read with Section 548 (2) of the Calcutta Municipal Act 1951, as applied in the case of a cinema-house, was a license-fee and not a tax, and the amount demanded in excess of what was being paid before the impugned notice was excessive and unreasonable and for which no quid pro quo had been established on behalf of the Corporation. The Court further held that the increased demand was therefore illegal and must be struck down. The Court also held that if the said imposition was considered to be a tax still it was bad, firstly, because there had been an improper delegation of legislative power and secondly because by reason of an unrestricted power being delegated to a non-legislative body, there had been an infringement of the fundamental rights of the petitioner under Article 19 (1) (g) of the Constitution.

Issues: 1. Whether the imposition under Section 443 read with Section 548 (2) of the Calcutta Municipal Act 1951, as applied in the case of a cinema-house, was a license-fee or a tax? 2. Whether the increase in the license fee was excessive and unreasonable and had no correlation to the object for which it was being realised and the services that were proposed to be rendered? 3. Whether there had been an improper delegation of legislative power? 4. Whether there had been an infringement of the fundamental rights of the petitioner under Article 19 (1) (g) of the Constitution?

Ratio Decidendi: 1. The Court held that the imposition under Section 443 read with Section 548 (2) of the Calcutta Municipal Act 1951, as applied in the case of a cinema-house, was a license-fee and not a tax, because: a) Section 443 made it incumbent for any person running a cinema-house to obtain a license. b) Section 548 (2) was a residuary provision which dealt with cases where the Act or any rule or bye-law had not laid down or prescribed such amounts. c) In such cases, the Corporation was granted unlimited power to charge license fee at such rate as it may think fit. d) It was this power of the Corporation to fix a license fee without limit that was really being challenged in this application. 2. The Court held that the increase in the license fee was excessive and unreasonable and had no correlation to the object for which it was being realised and the services that were proposed to be rendered, because: a) There was no evidence to show that the quantum of tax was so high as to make it impossible for the petitioners to carry on business. b) The Corporation had not established any quid pro quo for the increased license fee. 3. The Court held that there had been an improper delegation of legislative power, because: a) Section 548 (2) gave unlimited right to the Corporation to lay down the rate of license fee. b) This amounted to a surrender of legislative function, in that no policy had been laid down or indicated. c) The Corporation could levy a tax in the nature of income-tax and charge people 15 annas in the rupee upon their profits. 4. The Court held that there had been an infringement of the fundamental rights of the petitioner under Article 19 (1) (g) of the Constitution, because: a) The arbitrary and unrestricted provision contained in the impugned section affected the rights guaranteed to a citizen to carry on trade or business. b) The Corporation could, even though acting under the guise of levying a licence-fee, make the fee as high as it liked without any limit and without any indication in the Act as to the ceiling of any such imposition.

Final Decision: The Court made the rule and the other rules which had been heard with it, absolute and quashed the impugned resolution of the Corporation dated 14-8-1958 and the notices served on the petitioners in these cases in so far as they related to an increase in the license fee payable by a Writ of Certiorari. The Court also issued a Writ in the nature of Mandamus directing the respondents not to give effect to the same. However, the Court clarified that this would be without prejudice to the right of the respondents to realise the license fees at the rate that they were being realised previous to the impugned notices.