J. B. MEHTA, N. M. MIABHOY, J.

( 1 ) THIS petition is filed under Article 226 of the Constitution of India. Petitioners are proprietors of hotels situated in the town of Chanasma. Respondent No. 1 is the Municipality of Chanasma constituted under the Bombay District Municipal Act 1901 (hereafter called the Act ). Respondent No. 2 is the State of Gujarat. Petitioners challenge the validity of an impost under which they are required to pay under certain rules and bye-laws to be presently mentioned a certain amount annually as a licence fee for running their hotels. Petitioners pray for a declaration that those rules and bye-laws are illegal and that a writ of mandamus should be issued commanding first respondent not to enforce them. Petitioners also pray for a writ of certiorari for quashing the said rules and bye-laws. They also pray for an injunction restraining first respondent from collecting the fee amount from any of them

( 2 ) WE may at first state a few facts which led up to the presentation of the petition. On 27th of February 1952 the General Body of first respondent passed a resolution adopting proposed rules and bye-laws and for sending them to Government for necessary sanction. The Director of Local Authorities Northern Division sanctioned the rules and bye-laws with some modifications. One of the suggested rules provided for the levy of a tat amongst others on hotels. Amongst the modifications suggested by the Director of Local Authorities has the modification that the word tax in rule I should be substituted by the words licence fee and at all other places wherever that word tax occurred in the rules. With these modifications the rules and bye-laws were brought into force with effect from 1st April 1953. Rule 1 provided for the levy of a licence fee from among others hotels. Rule 3 fixed the licence fee at Rs. 100/per year in respect of hotels. We are told that no protest was made by any one at any of the earlier stages before or at any time after the rules and bye-laws were brought into force. On 29th March 1961 petitioners presented the present petition challenging the validity of the aforesaid levy of fees. The levy has been challenged in the petition on a number of grounds. Mr. Nanavati the learned Advocate for petitioners however confined the challenge at the time of the hearing only on one ground Therefore it is not necessary for us in this judgment to mention the other grounds on which the challenge was based in the petition. It is common ground that the Act provides for different procedures for levying a tax and a fee. It is common ground that the procedure which was followed by first respondent in making the rules and bye-laws was not the procedure provided for levying a tax. The procedure which was followed was that which was provided for levying a fee. Mr. Nanavati submits that though in the rules the levy is designated as a fee in fact it is a tax and that therefore as the tax procedure was not followed the levy is illegal and unsustainable. On the other hand respondents contend that the impost is what it purports to be namely that it is a fee and not a tax. Mr. Nanavati concedes that if the impost is a fee then it would be legal and petition would deserve to be dismissed. On the other hand the learned advocates for respondents concede that if the impost is held to be a tax then it would be illegal and the petition would deserve to be allowed. Having regard to these rival contentions and concessions both the sides are agreed that the crucial question which requires to be decided in the present case is whether the aforesaid impost is a fee as it purports to be or whether in reality it is a tax. It is on a resolution of this controversy that the fate of the present petition depends. Therefore the crucial question which requires to be considered in the petition is whether the aforesaid levy is a fee or a tax.

( 3 ) BEFORE however we mention the facts on the basis of which the rival contentions are sought to

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