STATE OF HIMACHAL PRADESH AND ORS. versus M/S. SHIVALIK AGRO POLY PRODUCTS AND ORS.

Citation: [2004] SUPP. 4 S.C.R. 393 · Decided: 14-09-2004 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Appeal(s) allowed

Judgment (excerpt)

ST A TE OF HIMACHAL PRADESH AND ORS. 
v. 
MIS. SHIV ALIK AGRO POLY PRODUCTS AND ORS. 
SEPTEMBER 14, 2004 
[R.C. LAHOTI, CJ., G.P. MATHUR AND C.K. THAKKER, JJ.] 
Registration Act-Sections 78 & 79-Notifications issued by State 
Government-Fixing registration fee for registration of documents-On a 
graduated form on the basis of value of subject matter of the instrument-
Held, legal and valid. 
Tax and fee-Collection of Registration fee-Held, a fee and not tax-
The relationship between the levy and services rendered cannot be of 
mathematical exactitude-Further Held, the vagaries in its distribution 
amongst the class do not detract from the concept of a fee. 
The Respondents were allotted an industrial plot by the Himachal 
Pradesh Housin~ Board for establishing an industrial unit. Respondents 
were sanctioned two loans by Himachal Pradesh Financial Corporation 
and Himachal Pradesh Mineral and Industrial Development Corporation · 
respectively and in order to secure the loan, they were required to 
mortgage and hypothecate the fixed assets of their leasehold rights in 
the industrial plot and the machinery installed therein with the aforesaid 
Corporation for which a deed of simple mortgage was required to be 
executed. At the time of the execution of the mortgage deed, they were 
required to pay stamp duty and registration charges in accordance with 
· the notification issued under sections 78 and 79 of the Registration Act 
by the State of Himachal Pradesh. The Respondents filed a suit seeking 
a declaration that the notification issued by the State of Himachal Pradesh 
under Section 78 of Registration Act be declared void and ultra vires 
and for recovery of registration fee for registering the mortgage deed. 
Civil Court decreed the suit and declared the notification issued by 
the State Government prescribing the registration fee to be null and 
A 
B 
c 
D 
E 
F 
G 
void and also passed a decree for refund in favour of the plaintiffs, 
which was affirmed in appeal by the District Judge and also in Second 
Appeal by the High Court. The main ground on which the suit has been 
decreed is that the State had not led any evidence to show that the H 
393 
394 
SUPREME COURT REPORTS (2004) SUPP. 4 S.C.R. 
A 
amount realised by way of registration fee is deposited under a separate 
head and that it is exclusively utilised for the maintenance of the 
registration department. In absence of any evidence, the conclusion was 
inevitable that the amount realised was put in the Consolidated Fund of 
the State Government and was being utilised by the Government for 
B 
general purposes. 
In appeal to this Court, the appellants contended that the notification 
had been issued by the State Government in exercise of the statutory 
power conferred by Sections 78 and 79 of Registration Act and, therefore, 
it was a sovereign function of the State for which no suit was 
C 
maintainable; that the notification was perfectly legal and valid; that 
the registration fee had been charged in accordance with the schedule 
of fee fixed by the State Government in the notification for the 
registration of documents and that the registration fee charged was 
perfectly justified. 
D 
E 
F 
G 
H 
Allowing the Appeal, the Court 
HELD : 1. The consistent view now is that there is no generic 
difference between a tax and a fee which are both compulsory exaction 
of money by public authorities. The co-relationship between the levy 
and the services rendered should be one of general character and not of 
mathematical exactitude. Further, the broad and general co-relationship 
between the totality of the fee on the one hand and the totality of the 
expenses of the services on the other, will be sufficient to justify the levy. 
The levy will not fail only on the ground that the measure of its 
distribution on the persons or incidence is disproportionate to the actual 
services rendered by them, the true test being the comprehensive level 
of the value of the totality of the services set off against the totality of 
the receipts. The character of the fee is -thus established. The vagaries 
in its distribution amongst the class do not detract from the concept of 
a fee as such. (405-H; 406-A, B, CJ 
Commr, HRCE, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri 
Shirur Mutt, AIR (1954) SC 282, relied on. 
Sreenivasa General Traders v. State of A.P., AIR (1983) SC 1246; 
MCD and Ors. v. Mohd. Yasin, AIR (1983) SC 617; Krishi Upaj Mandi 
Samiti and Ors. v. Orie

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