THE SECRETARY TO GOVERNMENT OF MADRAS AND ANR. versus P.R. SRIRAMULU AND ANR.

Citation: [1995] SUPP. 5 S.C.R. 551 · Decided: 22-11-1995 · Supreme Court of India · Bench: S.P. BHARUCHA, FAIZAN UDDIN, S.B. MAJMUDAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

... 
THE SECRETARY TO GOVERNMENT OF MADRAS AND ANR. 
A 
v. 
P.R. SRIRAMULU AND ANR. 
NOVEMBER 22, 1995 
B 
[S.P. BHARUCHA, FAIZAN UDDIN AND S.B. MATMUDAR, JJ.] 
Tamil Nadu Cowt Fees and Suit Valuation Act, 1955-Levy of Court 
fee on ad-valorem scale without upper limit-Validity-Essential characters 
of fee-Feasibility of a fixed maximum chargeable fe~eed for unifonnity 
in scales of Court fees through country-Economic and social policy of C 
State-Court's power to inteifere. 
The respondents No. 1 and 2 challenged the validity of the provisions 
of levy of Court Fees and Suit Valuation Act of 1955 with reference to levy 
of Court Fees ad-valorem working out at the rate of 7 1/2 percent without D 
upper limit by contending that the levy was not only exorbitant but wholly 
arbitrary, unreasonable and unjustified bearing no relationship to the cost 
of administration of justice; that it was not a levy of Court fee but really 
a levy of tax though purporting to be a levy of fee; that the Court fees must 
be related to the cost of administration of justice and cannot be used as a 
means of taxation for the purpose of raising the revenue to the Govern-
ment for its general administration; that the pattern of levy of Court fees 
prior to 1955 was only to levy an ad-valorem fee up to a certain limit and 
thereafter the fee was on a reduced scale and that the scale of fees in other 
States of the country are also on different basis and not on the basis of 
E 
ad-valorem fee without limit. 
F 
The High Court allowed the writ petitions and appeal and struck 
down Article (1) in Schedule (1) to the Tamil Nadu Court Fees and Suits 
Valuation Act, 1955 and Sub-rule (1) of Rule (1) of Order II of the High 
Court Fees Rules 1956 based on Article (1) of Schedule (1) of Madras Act 
No. XIV of 1955, and held them to be invalid in so-far-as they relate to the G 
levy of Court Fees on ad-valorem scale. The High Court held that the levy 
of ad-valorem flat rate of 7 1/2 percent without any upper limit 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 costs or a grossly disproportionate part H 
551 
552 
SUPREME COURT REPORTS. [1995] SUPP. 5 S.C.R. 
A 
of it was imposed on a particular section of litigants. 
B 
In appeal, this Court set aside the judgment of the High Court and 
remitted the matter back to the High Court considering that the appeal 
could not be disposed of without giving opportunity to the respondent to 
file an affidavit or affidavits in reply to the supplemental counter affidavit. 
After remand, the High Court while striking down the provisions held that 
there was no idea of quid pro quo in the levy at the rate of 7 1/2 percent 
flat rate without limit as there was no necessity to raise the Court Fees as 
compensation for the cost of service rendered and to meet any increased 
cost in the administration of civil justice and there was no principle of 
C rationalisation justifying demand at a fixed rate; that considering the 
circumstances the impost inherently bears within it more the concept of 
tax than fee and the levy imposing, as it does, on a particular section of 
litigants is grossly dis- proportionate to the burden and the same is 
unreasonable and arbitrary; that the expenditure incurred by the Govern-
ment could not be debited to the cost of administration of justice which 
D the litigants can be required to compensate and that the expenditure in 
the administration of Criminal Justice is also not debitable to the cost of 
administration of Civil Justice in Court and that the record indicated that 
for the year 1955-56 the State was making a profit varying between 9 to 21 
lakhs. This appeal had been filed against the judgment of the High Court. 
E 
F 
G 
The questions raised for consideration were : (i) what is the nature 
of the Fees taken in Court within the meaning of Entry 3, List II, in 7th 
Schedule of the Constitution; (ii) Whether it is a colourable exercise of 
legislative power, in as much as the State in fact is raising tax under the 
guise of levying a fee because the levy is excessive to such an extent as to 
be a pretence of a fee but it is not a fee in reality? (iii) whether the levy of 
Court Fees on ad valorem basis without an upper limit renders the impost 
a tax; (iv) Whether the impugned impositions are fees. 
Allowing the appeal, this Court 
HELD : 1.1.

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