Validity of imposition of levy @ 7½ %.

Veeraswami, C J.-The Supreme Court in Government of Madras v. Zenith Lamps1, allowed certain appeals from a common judgment of this Court, to which one of us was a party and by which the ad valorem flat rate of levy made by Article 1, Schedule I to the Madras Court-fees and Suits Valuation Act (XIV of 1955) in its application to the High Court which was adopted by rule I in Appendix I relating to the High Court-fees Rules 1933 as amended, was struck down as invalid and unconstitutional. This Court held that Court-fees was not a tax, but a fee as normally understood. The Counter-affidavit filed on behalf of the State which was sworn to by one Mr. Kelu Eradi, a Joint Secretary, showed that, according to the figures for 1954-55 and for certain subsequent years, the State was deriving a profit out of Court-fee collected over the expenditure in respect of civil Courts and Administration of Justice; but a supplemental counter-affidavit for the Government and sworn to by one Mr. Shivakumar, a Deputy Secretary and filed at the stage of arguments, exhibited different figures revealing an attempt to cut down the receipts and inflate the expenditure. This Court did not, however, rest its conclusion on this supplemental counter-affidavit and decide the question of correlation as, in its view on the principle of Corporation of Madras v.Spencer and Company2, the ad valorem flat rate of 7½ per cent, without limit as Court-fee would be unreasonable, because where the cost of service had to be distributed between several persons, it would not be equitable and reasonable if the fees were so fixed that the whole cost or a grossly disproportionate part of it was imposed on a particular section of litigants. The Supreme Court, in allowing the appeals before it and remitting the matters to this Court, observed:

“ It seems to us that we cannot dispose of this appeal without giving opportunity to the respondents to file an affidavit or affidavits in reply to the supplemental counter-affidavit dated 11th October, 1966, because if we take the figures as given and explained by the Advocate-General we cannot say that the State is making a profit out of the administration of civil justice. Various items both on the receipts side and the expenditure side have to be carefully analysed to see what items or portion of items should be credited or debited to the administration of civil justice.

It is true, as held by the High Court, that it is for the State to establish that what has been levied is Court-fees properly so-called and if there is any enhancement the State must justify the enhancement.

We are accordingly constrained to allow the appeal and set aside the judgment passed by the High Court and remand the case to it. We direct that the High Court should give an opportunity to the writ petitioners to file an affidavit or affidavits in reply to the affidavit dated nth October, 1966. The High Court shall then decide whether the impugned fees are Court-fees or taxes on litigants or litigation.”

Since then, pursuant to the opportunity given, further affidavits have been filed by the relative petitioners or applicants traversing the supplemental counter-affidavit of the Government.

While we consider this supplemental counter-affidavit in the light of the affidavits countering it, we have to bear in mind the essential distinction between tax and fee, and, when a purported levy of fee is, in fact, an imposition of tax. A levy of fee, like tax, is a compulsory exaction. But, while the latter is raised for support of Government, the former, unlike, tax, is collected as a recompense or quid pro quo for special services rendered to particular individuals in order to meet the cost thereof. A tax is a common burden ; but a fee is a payment for a special benefit or privilege. The Supreme Court in Government of Madras v. Zenith Lamps1, quoted the following, evidently with approval, from the observations of Hegde, J., in The Indian Mica and Micanite Industries Ltd. v. The

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