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HIGH COURT OF ALLAHBAD
M. L. CHATURVEDI, J.
Lala Raj Kishore
Versus
District Board of Seharanpur
Civil Misc. Writ No. 55 of 1954
Decided On : 04-05-1954
DISTRICT BOARDS ACT - S. 174(1), 174(2)(K) - LICENCE FEE - VALIDITY - TAX OR FEE - DISTINCTION - BURDEN OF PROOF - ALTERNATIVE REMEDY - WRIT PETITION - MAINTAINABILITY - APPEAL - S. 186 - SCOPE - INTERPRETATION OF STATUTES - EJSUDEM GENERIS - S. 106 - CHARGING SECTION - REASONABLENESS OF FEE - FACTUAL INQUIRY - ACCOUNT BOOKS - NON-PRODUCTION - ADVERSE INFERENCE.
Fact of the Case:
Petitioners, owners of machines for hulling rice, flour mills, oil crushers, and sugar-cane crushers, challenged the validity of bye-laws framed by the District Board of Shaharanpur under S. 174(2)(K) of the U.P. District Boards Act, 1922, imposing a license fee on their machines. The petitioners contended that the fee was a tax in the guise of a license fee and was imposed to raise the general revenues of the Board, not to regulate the trade.
Finding of the Court:
The Court held that the license fee imposed by the bye-law was ultra vires the District Board. The Court found that the amount of the fee was not fixed with the object of meeting merely the expenses of regulating the trade or of meeting the expenses that became necessary by virtue of the framing of these bye-laws, but that the fee was fixed with a view to enhance the general revenues of the District Board.
Issues: 1. Whether the license fee imposed by the bye-law was a tax or a fee? 2. Whether the petitioners had an alternative remedy by way of a regular suit, precluding the maintainability of the writ petition? 3. Whether an appeal lay to the District Magistrate under S. 186 of the District Boards Act, challenging the validity of the bye-law? 4. Whether S. 174(1) of the District Boards Act authorized the Board to impose taxes or fees under the bye-laws passed thereunder? 5. Whether S. 106 of the Act, the general charging section, authorized the Board to impose a fee without any limit or judicial scrutiny of its reasonableness? 6. Whether the petitioners had discharged the burden of proving that the fee was a tax, not a fee?
Ratio Decidendi: 1. The Court distinguished between a tax and a fee, holding that a tax is a compulsory contribution to public authorities to meet general expenses of Government, while a fee is a payment primarily in the public interest for special services that people must accept. The Court held that the license fee in question was a tax, not a fee, as it was imposed to raise general revenues, not to regulate the trade. 2. The Court held that the existence of an alternative remedy by way of a regular suit did not preclude the maintainability of the writ petition, as the case involved a general question of public importance and the petitioners had been subjected to criminal prosecutions for non-payment of the fee. 3. The Court held that S. 186 of the District Boards Act provided for an appeal against an order or direction made by a Board under a bye-law passed under S. 174(2)(K), but it did not provide for an appeal challenging the validity of the bye-law itself. 4. The Court held that S. 174(1) of the District Boards Act authorized the Board to make bye-laws for promoting or maintaining the health, safety, and convenience of the inhabitants and for the furtherance of the administration of the district, but it did not authorize the Board to impose taxes or fees. 5. The Court held that S. 106 of the Act, the general charging section, authorized the Board to charge a fee to be fixed by the bye-law for any license, sanction, or permission, but it did not authorize the Board to impose a fee beyond the reasonable restrictions imposed under Art. 19(1)(f) of the Constitution. 6. The Court held that the petitioners had discharged the burden of proving that the fee was a tax, not a fee, by showing that the District Board had not incurred any significant expenses in regulating the petitioners' trade and that the amount of the fee bore no relation to the expenses that were likely to be incurred.
Final Decision: The Court issued a writ of mandamus commanding the District Board to refrain from enforcing Bye-law No. 6 of the impugned Bye-laws against any of the petitioners.
2. On 17-1-1948 the District Board of Shaharanpur (respondent No. 1) approved certain draft bye-laws by means of a resolution and directed their publication in papers. They were published in the Hindi Weekly called "Hindu", and in the English Weekly called the "Peoples General of Shaharanpur". After the publication, the matter came up before the Board on 11-11-1948 when the Board finally approved the bye-laws and resolved that they should be submitted to the Commissioner for his sanction. The Commissioner sanctioned them and the bye-laws were published in the U.P. Gazette dated 28-5-1949, when they came into operation.
These bye-laws were purported to have been framed under S. 174(2)(K) of the U.P. District Boards Act, and they directed the levy of a licence fee of Rs. 500/- per year on sugar factories propelled by petrol, steam or electricity, a fee of Rs. 100/- per year on crushers propelled by petrol, steam or electricity, a fee of Rs. 100/- on centrifugal machines propelled by engines, and a fee of Rs. 50/- each on certain flour mills, oil mills, rice making machines, sawing machines, cotton cloth mills and certain other machines.
3. Under bye-law No. 1 the word "factory" was to include sugar factory, flour mills, oil machines, rice making machines, cotton machines and sawing machines. Sugar factory was said to include any factory in which sugar was prepared from sugar-cane juice or from molasses or in which Gur is prepared from shira and which was worked by electricity, steam or oil, or by manual labour by the old Khanchi or Bojha system or by centrifugal machines.
Flour mills, oil, cotton, rice-making and sawing machines were to mean all such machines where work was done by electricity or petrol or water or wind or any other mechanical contrivance. The machines worked by all the different petitioners came within the definition of factory.
Bye-law No. 3 prohibited the starting, establishing or maintaining of any factory within the rural area of Shaharanpur district, unless a licence had been granted on payment of the prescribed fee.
Bye-law No. 4 made the Secretary of the District Board as the Licensing Officer for the purposes of these bye-laws and an appeal against his decision was to lie to the President of the District Board. Certain conditions for the grant of the licence were imposed by bye-law No. 5 and the licence fee mentioned above was imposed by bye-law No. 6.
Bye-law No. 7 provided for the procedure for making an application; bye-law No. 8 provided the period during which a licence was to remain in force and bye-law No. 9 authorised the Licencing Officer to suspend a licence.
At the end the penalty for disobedience of the bye-laws was provided, which could extend to Rs. 100/-, and, in the event of a continuing breach, might extend to Rs. 5/- for every day after the first conviction during the period that the offender was proved to have persisted in the continuance of the offence.
4. The petitioners had been paying the licence fee since the date of its imposition in 1949 for about four years, when disputes arose and the petitioners and other factory owners refused to pay the licence fee. The present petition was filed in this Court on 4-2-1954, and the prayers contained in this petition are that a writ or direction in the nature of certiorari be issued quashing bye-law No. 1 mentioned, above, that a writ or direction in the nature of mandamus be issued to the respondents restraining them from enforcing bye-law No. 6 and that another writ or direction in the nature of mandamus be issued directing respondent No. 1 not to prosecute the petitioners for omitting to take
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