CALCUTTA MUNICIPAL CORPORATION AND ORS. versus M/S. SHREY MERCANTILE PVT. LTD. AND ORS.

Citation: [2005] 2 S.C.R. 584 · Decided: 09-03-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Dismissed

Judgment (excerpt)

A 
CALCUTTA MUNICIPAL CORPORATION AND ORS. 
v. 
M/S. SH REY MERCANTILE PVT. LTD. AND ORS. 
MARCH 9, 2005 
B 
[S.N. VARIA VA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
Calcutta Municipal Corporation Act, 1986 (as amended by Calcutta 
Municipal Corporation (Amendment) Act, 1988)-Section 183-Calcutta 
C Corporation (Taxation) Regulations, 1989-Schedule-Mutation fee-,Demand 
of-Charging on ad valorem basis, at different rates depending on value of 
property and cause of transfer-Nature and validity of charging-Held: Levy 
is in the nature of 'tax' and not 'fee', its primary object being augmenting 
revenue and not being regulatory measure-The levy is irrational, arbitrary, 
discriminatory violative of Article 14 of the Constitution and beyond Section 
D 183(5) of the Act-Constitution of India, 1950-Article 14: 
Tax' and 'Fees' -Meaning of and difference between. 
Section 183 of Calcutta Municipal Corporation Act, 1981 was 
amended by Calcutta Municipal Corporation (Amendment) Act, 1988. In 
E terms of the Amendment Act, the Corporation enacted Calcutta 
Corporation (Taxation) Regulations, 1989 providing that fees for recording 
of transfer or devolution of title of any land or building under Section 183 
shall be as per Schedule. The charging as per the Schedule was on ad 
valorem basis at different rates depending on the value of the property 
and the cause of transfer. The question in the present cases is whether 
F the imposition by the Corporation under the Regulations for the process 
of change in the name of the owner in the assessment books of the 
Corporation is in the nature of 'fee' or 'tax'. 
The Courts below had held that imposition in the garb of 'fee' was 
G imposition of 'tax' and the Regulations were arbitrary and violative of 
Articles 14 and 246 of the Constitution of India. Hence the present appeal. 
H 
Dismissing the appeals, the Court 
HELD: 1.1. A charge or fee, if levied for the purpose of raising 
584 
CALCUTTA MUNICIPALCORPN. v. SHREYMERCANTILEPVT. LTD. 
585 
revenue under the taxing power is a "tax". Similarly imposition of fees A 
for the primary purpose of "regulation and control" may be classified as 
fees as it is in the exercise of"police power", but if revenue is the primary 
purpose and regulation is merely incidental, then the imposition is a "tax". 
A tax is an enforced contribution expected pursuant to a legislative 
authority for purpose of raising revenue to be used for public or B 
governmental purposes and not as payment for a special privilege or 
service rendered by a public officer, in which case it is a "fee". Generally 
speaking "taxes" are burdens of a pecuniary nature imposed for defraying 
the cost of governmental functions, whereas charges are "fees" where they 
are imposed upon a person to defray the cost of particular services 
rendered to his account. (596-D-El 
1.2. The main difference between "a fee" arid "a tax" is on account 
c 
of the source of power. Although "police power" is not mentioned in the 
Constitution, it can be relied upon as a concept to bring out the difference 
between "a fee" and "a tax". The power to tax must be distinguished from D 
an exercise of the police power. The "police power" is different from the 
"taxing power" in its essential principles. The power to regulate, control 
and prohibit with the main object of giving some special benefit to a 
specific class or group of persons is in the exercise of police power and 
the charge levied on that class to defray the costs of providing benefit to 
such a class is "a fee". (599-B-CI 
1.3. However in the garb of regulation, any fee or levy which has no 
connection with the cost or expense of administering the regulation car •. 1ot 
be imposed and only such levy can be justified which can be treated as a 
part of regulatory measure. To that extent, the State's power to regulate 
as an expression of the sovereign power has its limitations. It is not plenary 
as in the case of the power of taxation. (599-E-FJ 
Synthetics and Chemicals ltd. v. State of UP., (19901 1 SCC 109, 
followed. 
State of West Bengal v. Kesoram Industries Ltd., (20041 10 SCC 201 
and Commissioner of Central Excise v. Ch ha ta Sugar Co. Ltd., (200413 SCC 
466, relied on. 
E 
F 
G 
2. In the present case, enumeration of obligatory and discretionary 
functions of the corporation in Sections 29 and 30 of Calcutta Municipal H 
586 
SUPREME COURT REPORTS 
[2005] 2 S.C.R. 
A Corporation Act, 1986 under which civic services are render

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