CORPORATION OF CALCUTA AND ANOTHER versus LIBERTY CINEMA

Citation: [1965] 2 S.C.R. 477 · Decided: 14-12-1964 · Supreme Court of India · Bench: A.K. SARKAR · Disposal: Appeal(s) allowed

Cited by 26 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
CORPORATION OF CALCUTIA AND ANOTHER 
v. 
LIBERTY CINEMA 
December 14, 1964 
477 
B 
[A. K. SARKAR, K. SuBBA RAo, RAGHU.BAR DAYAL, N. RAJA-
GOPALA AYYANGAR AND J. R. MUDHOLKAR, JJ.] 
Calcutta Municipal A.ct (33 of 1951), ,. 413 and 548-Licen.re fee 
on cinema houses-whether tax or fee for rendering service-Validity of 
levy and s. 548. 
Under a. 413 of the Calcutta Municipal Act, 1951, no person shall 
c 
without a licence granted by the Corporation of Calcutta, keep open any 
cinema house for public amusement in Calcutta. 
Under s. 548(2), far 
every licence under the Act, a fee may be charged at such rate as may 
from time to time be fixed by the Corporation. In 1948, the appellant 
(Corporation) fixed fees on the basis of annual valuation of the cinema 
house. 
The respondent, who was the owner and licencee of a cinema 
theatre, had been paying a licence fee of Rs. 400 per year on that basil!. 
In 1958, the appellant, by a Resolution, changed the basis of assessment 
D 
of the fee. 
Under the new method the fee was to be assessed at ratee 
prescribed per show according to the sanctioned seating capacity of the 
cinema house; and the respondent had to pay a fee of Rs. 6,000 per year. 
The respondent, therefore, moved the HiJ!h Court for the issue of a writ 
quashing the resolution and the application was allowed. 
In the appeal to the Supreme Court the appellant contended that : 
(i) the levy was a tax and not a fee in return for services and (ii) •· 
E 
548 ( 2) does not suffer from the vice of excessive delegation; while the 
respondent contended that 
( i) the levy was a fee in return for services 
to be rendered and not a tax, and as it was not commensurate with the 
costs incurred by the Corporation in providing the services, the levy was 
invalid; (ii) if s. 548 authorised the levy of a tax, as distinct from a fee in 
return for service rendered, it was invalid, as it amounted to an illegal 
delegation of legislative functions to the appellant to fix the amount of 
a tax "without any guidance for the purpose and (iii) the levy was invalid 
F 
as violating Art. 19(1) (f) and (g) of the Constitute. 
HELD (per Sarkar, Raghubar Dayal and Mudholkar JJ) : (i) The 
levy was not a fee but a tax. (490 Fl 
1k Act does not intend to use the word "fee" as referring only to 
a levy in return for services, for, the levies authorised by some other sec-
tions of the Act are really "taxes", though called "fees". Besides, the 
words used are "fee for the licence" and these words do not necessarily 
G 
mean a "fee in return for services" as is apparent from Arts. 
110(2) 
and 199(2) of the Constitution, where both expressions are used indicat-
ing that they are not the same. [483 G-H] 
The word "fee" in s. 548 must be read as referring to a tax as any 
other reading would make the section invalid, and in interpreting a statute, 
it ought to be made valid if possible. [484 B-C] 
The decisions of this Court establish that in order to make 
H 
a levy a fee for services rendered, the levy must confer special benefit on 
the persons on whom it is imposed. The levy under s. 548(2) ill not a 
"fee in return for services" as the Act does not provide for any services 
of a special kind being rendered, resulting in benefits to the person on 
478 
SUPREME 
COURT 
Jll!PORTS 
(1965] 2 S.C.R. 
whom it is imposed. S. 527(43) permits by-laws to be framed for regulat-
A 
ing the inspection, supervision and control, 
amolli others, of cinema 
houses; but it is not obligatory to make such by-laws and therefore, there 
may be no services to render. 
Even the by-law made provides only for 
inspection, and the work of inspection done by the appellant was only 
to see that the terms of the licence were observed by the licensee. It waa 
not a service to him, and so, no question arises of correlating the amount 
of levy to the coots of any service. The levy therefore is not a fee and 
must be tax. (485 B.C, F; 488 E; 490 P,.F] 
B 
The Commissioner, Hindu Religious Endowments, Madras Y. Shrl 
Lakshmindra Thirtha Swamiar of Sirur Mutt, (1954) S.C.R. 1005, H. H. 
Sudhindra Thirtha SwarnJar v. Commissioner for Hindu Religious and 
Charitable Endowments, (1963] Supp. 2 S.C.R. 
302 and The 
Hinglr 
Rampur Coal Co. Ltd. v. The State of Orissa and Ors. (1961] 2 S.C.R. 
537, referred to. 
Whether a particular levy is a fee or a tax has to be decided only by 
C 
reference to the terms of .the section. 
Its pooition in the Act cannot 
determine its nature ; an 

Excerpt shown. Read the full judgment & AI analysis in Lexace.