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High Court Of Calcutta
S. B. SINHA, HRISHIKESH BANERJI
STATE OF WEST BENGAL - Appellant
Versus
SHREY MARCENTILE PVT.LTD. - Respondent
W. P. 1394 Of 1997
Decided On : 07/07/2000
CALCUTTA CORPORATION (TAXATION) REGULATIONS, 1989 - vires - mutation fee - regulatory fee - compensatory fee - quid pro quo - distinction - test - levy of fees for recording of transfer or devolution of title of any land or building - Calcutta Municipal Corporation Act, 1980 (West Bengal Act 32 of 1980), Ss. 170, 183(5), 602.
Fact of the Case:
The Calcutta Corporation (Taxation) Regulations, 1989 were challenged on the ground that the mutation fee imposed by the Regulations was not a regulatory fee but a tax and, therefore, beyond the legislative competence of the State Legislature. The petitioners contended that the fee was not proportionate to the services rendered and that it was levied for the benefit of the Corporation and not for the benefit of the applicants for mutation.
Finding of the Court:
The Court held that the mutation fee was not a regulatory fee but a tax. The Court distinguished between a regulatory fee and a compensatory fee, holding that a regulatory fee is levied for the purpose of regulating an activity and does not require a quid pro quo, while a compensatory fee is levied for a specific service rendered and must be proportionate to the cost of the service. The Court held that the mutation fee was not levied for the purpose of regulating any activity but was simply a revenue-raising measure. The Court also held that the fee was not proportionate to the services rendered, as it was levied on a flat rate basis and did not take into account the value of the property being transferred.
Issues: 1. Whether the mutation fee imposed by the Calcutta Corporation (Taxation) Regulations, 1989 was a regulatory fee or a tax? 2. Whether the mutation fee was proportionate to the services rendered?
Ratio Decidendi: 1. A regulatory fee is levied for the purpose of regulating an activity and does not require a quid pro quo, while a compensatory fee is levied for a specific service rendered and must be proportionate to the cost of the service. 2. The mutation fee was not levied for the purpose of regulating any activity but was simply a revenue-raising measure. 3. The mutation fee was not proportionate to the services rendered, as it was levied on a flat rate basis and did not take into account the value of the property being transferred.
Final Decision: The Court held that the mutation fee imposed by the Calcutta Corporation (Taxation) Regulations, 1989 was not a regulatory fee but a tax and, therefore, beyond the legislative competence of the State Legislature. The Court quashed the Regulations.
( 1 ) THE vires of Calcutta Corporation (Taxation) Regulations, 1989 hereinafter referred to as the said regulation published in Calcutta Gazette on 1st February, 1990 is in question in these appeals. The relevant clauses of the said Regulation read thus :-" Fees for recording of transfer or devolution of title of any land or building under sub-section (5) of section 183 of the Act shall be as per Schedule below :-schedule (1)in the case of transfer/agreement for sale or cost of acquisition or in the case where there is certificate or in the case of testamentary succession-amount of fee in rupees (a)if the price-value of the property declared, does exceeded rupees fifty thousand 0. 5% of the price value (b)where such price/value exceeds rupees fifty thousand but does not exceed rupees one lakh 1% of the price value (c)where such price-value exceeds one lakh but does not exceed three lakh 1. 5% of the price value. (d)where such price/value exceeds rupees three lakhs but does not exceed rupees five lakhs 2% of the price value (e)where such price-value exceeds five lakhs 2. 5% of the price value (2) In the case of transfer by a deed of lease/sub-lease/assignment or such other similar instrument, the amount to be paid will be at the same rates as at (1) above, on the value shown in the document for Stamp Duty: provided that in calculating the amount of free to be paid under (1) or (2) above any fraction of a rupee amounting to fifty paise or more shall be rounded off to the nearest rupee. (3)in the case of intestate succession-amount of fee (a)if the last decided annual valuation does not exceed rupees three thousand Rs. 25 (b)if such valuation exceeds rupees three thousand but does not exceed rupees six thousand Rs. 50 (c)if such valuation exceeds rupees six thousand but does not exceed rupees ten thousand Rs. 100 (d)if such valuation exceeds rupees ten thousand but does not exceed rupees fifteen thousand Rs. 200 (e)if such valuation exceeds rupees fifteen thousand Rs. 250 (4) In case of thika tenant but owner in a Bustee hut premises. "
( 2 ) THE learned trial Judge in the judgment under appeal held :-"mutation, simply put, is the process of change of the name of the owner in the books of the Municipal Authorities. Under the aforesaid section notice of transfer of ownership is to be given, and if notice is not given, the erstwhile owner will be liable for order as owner notwithstanding transfer of ownership"
( 3 ) KEEPING in view the distinction between a tax and a fee, the learned trial Judge held that in view of the Constitution Bench decision in the case of Ratilal Panachand Gandhi and Ors. v. State of Bombay and Ors. reported in AIR 1954 SC 388 and Sri Jagannath Ramanuj Das and Anr. v. State of Orissa and Anr. reported in AIR 1954 SC 400, the subsequent two Bench judgments in Sreenivasa General Traders v. State of A. P. reported in AIR 1983 SC 1246 and P. Kannadasan and Ors, v. State of T. N and Ors. reported in 1996 (5) SCC 670 cannot be said to be a good law. The learned trial Judge also relied upon a decision of the apex Court in Secunderabad Hyderabad Hotel Owners Assocn. v H. M. C. reported in AIR 1999 SC 635 and held that mutation fee cannot be said to be a tax of some nature and that the impugned regulation has failed to satisfy the requirements to levy fee vis-a-vis the doctrine "quid Pro Quo".
( 4 ) MR. P. K Roy, the learned counsel appearing on behalf of the Calcutta Municipal Corporation and Mr Samar Dutta, the learned senior standing counsel appearing on behalf of the State of West Bengal, submitted that the impost being a regulatory fee, the element of "quid Pro Quo" is not attracted. Strong reliance in this connection has been placed on Corpn. of Calcutta v. Liberty Cinema reported in AIR 1965 SC 1107, Govt. of Madras v. Zeinth Lamp and Electrical Ltd. reported in 1973 (1) SCC 162 and Municipal Corpn. , Baroda v. Babubhai reported in AIR 1989 SC 2091.
( 5 ) MR. Pradip Ghosh, the learned couns
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