Civil Appeal Nos
2120  2125 of 1970
From the Judgment and order dated the 17th April 1970 of the Delhi High Court in Civil Writ Petitions Nos 133  134 of 1968 Kapil Sibal Rameshwar Dial Adarsh Dial and section Mittar for the Appellants
K B Rohtagi for the Respondents
The following Judgment of the Court was delivered by CHINNAPPA REDDY J BY a notification dated 31168 the Delhi Municipal Corporation purported to enhance the fee for slaughtering animals in its slaughter houses from Re 0025p to Rs 200 for each animal in the case of sheep goats and pigs and li from Re 100 to Rs 800 for each animal in the case of buffaloes
The notification was quashed by the High Court of Delhi on the ground that the Corporation was really proposing to levy a tax under the guise of enhancing the fee
The original rates were fixed in March 1953 and the revised rates were to take effect from February 1 1968
Some butchers of the city questioned the revision of rates on the ground that the proposed enhanced fee was wholly disproportionate to the cost of the services and supervision and was in fact not a fee but a tax
The High Court accepted the contention of the butchers on what appears to us a superficial view of the facts and principles
Fortunately the High Court has certified the case as a fit one for appeal under article 133 1c of the Constitution and the matter is now before us
1002 During the pendency of the writ petitions in the High Court by virtue of an interim arrangement the Municipal Corporation was permitted to collect fee at the rate of Re 0050p
per animal in the case of sheep goats and pigs and Rs 200 per animal in the case of buffaloes
As a result the Municipal Corporation realised a sum of Rs 424494 by way of fee for slaughtering animals in its slaughter houses
Now the budget of the Municipal Corporation under item XIV B showed a sum of Rs 256000 as the expenditure involved in connection with the slaughter houses
Comparing the amount of actual realisation of fee at the rates permitted by the Court with the amount of expenditure as revealed by the budget and excluding from consideration all expenditure not show in the budget under item XIV B the High Court came to the conclusion that even if the original fee was doubled the amount realised would be more than sufficient to meet the expenditure involved and there was therefore no warrant at all for increasing the fee eight fold
So it was said the proposed fee was no fee but a tax for which there was no legislative mandate
We shall presently point out the error into which the High Court fell on facts as well as principle
A word on interpretation
Vicissitudes of time and necessitude of history contribute to changes of philosophical attitudes concepts ideas and ideals and with them the meanings of words and phrases and the language itself
The philosophy and the language of the law are no exceptions
Words and phrases take colour and character from the context and the times and speak differently in different contexts and times
And it is worthwhile remembering that word and phrases have not only a meaning but also a content a living content which breathes and so expands and contracts
This is particularly so where the words and phrases properly belong to other disciplines Tax  and Fee  are such words
They properly belong to the world of Public Finance but since the Constitution and the laws are also concerned with Public Finance these words have often been adjudicated upon in an effect to discover their content
Commissioner of Hindu Religious Endowments Madras vs Shri Lakshmindra Thirtha Swamiyar1 is considered the locus classicus on the subject of the contradistinction between tax  and fee
The definition of tax  given by Latham CJ as a compulsory exaction 1003 of money by public authority for public purposes enforceable by law and not payment for services rendered was accepted by the Court as stating the essential characteristics of a tax
Turning to fees it was said a fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency but it was confessed as there may be various kinds of fee it is not possible to formulate a definition that would be applicable to all cases
As regards the distinction between a tax and a fee it was noticed that compulsion could not be made the sole or even a material criterion for distinguishing a tax from fee
It was observed that the distinction between a tax and fee lay primarily in the fact that tax was levied as a part of a common burden while a fee was a payment for a special benefit or privilege
But it was noticed that the special benefit or advantage might be secondary to the primary motive of regulation in the public interest as for instance in the case of registration fees for documents or marriage licences
It was further noticed that Article 110 of the Constitution appeared to indicate two classes of cases where fees  could be imposed 1 where the government simply granted a permission on privilege to a person to do something which otherwise that person would not be competent to do and extracted from him in return heavy or moderate fees ii where the government did some positive work for the benefit of the person and money was taken as a return for the work done or services rendered such money not being merged in the public revenues for the benefit of the general public
It was however made clear that the circumstance that all the collections went to the Consolidated Fund of the State and not to a separate fund may not be conclusive
The Court finally observed that there was really no generic difference between the tax fees though the Constitution had for legislative purposes made a distinction between a tax and a fee
While there were entries in the legislative lists with regard to various forms of taxes there was an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of matters that was included in it
The implication seemed to be that fee had special reference to governmental action undertaken in respect to any of those matters
In HH Sudhandra vs Commissioner for Hindu Religious  Charitable Endowments1 the Court reiterated the principle that a levy in 1004 the nature of a fee did not cease to be of that character merely because there was any element of compulsion or coerciveness present in it and aided
Nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to individual who obtains the benefit of the service
If with a view to provide a specific service levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering services the levy would be in the nature of a fee and not in the nature of a tax   but a levy will not be regarded as a tax merely because of the absence of unity in its incidence or because of compulsion in the collection thereof nor because some of the contributories do not obtain the same degree of service as others may
 In Hingir Rampur Coal Co Ltd  Ors
vs The State of Orissa and Ors1 the Court while reiterating that there was an element of quid pro quo between the person paying the fee and the authority imposing it said If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee Later it was said It is true that when the legislature levies a fee for rendering specific services to a specified area or to specified class of persons or trade or business in the last analysis such services may indirectly form part of services to the public in general
If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in ben fitting the specified class or area the State as a whole may 1005 ultimately and indirectly be benefitted would not detract from the character of the levy as a fee
Where however the specific service is indistinguishable from public service and in essence is directly a part of it different considerations may arise
In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve
Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences
That is the true test in determining the character of the levy In HH Swamiji vs Commissioner Hindu Religious  Charitable Endowments Department and Ors1 Chandrachud CJ
speaking for the Constitution Bench emphasised the necessity as well as the sufficiency of a broad correlationship between the services rendered and the fees charged and discounted the attempts to go into minutiae to discover meticulously whether or not there was mathematical equality
He said For the purpose of finding whether there is a correlationship between the services rendered to the fee payers and the fees charged to them it is necessary to know the cost incurred for organising and rendering the services
But matters involving consideration of such a correlationship are not required to be proved by a mathematical formula
What has to be seen is whether there is a fair correspondence between the fee charged and the cost of services rendered to the fee payers as a class
The further and better particulars asked for by the appellants under VI rule 5 of the Civil Procedure Code would have driven the Court had the particulars been supplied to a laborious and fruitless inquiry into minute details of the Commissioner s departmental budget
A vivisection of the amounts spent by the Commissioner s establishment at different places for various purposes and the ad hoc allocation by the Court of different amounts to different heads would at best have been speculative
It would have been no more possible for the High Court if the information were before it than it would be possible for us if the information were before us
to find out what part of the expenses incurred by the Commissioner s establishment at various places and what part of the salary of his staff at those places should be allocated to the functions 1006 discharged by the establishment in connection with the services rendered to the appellants
We do not therefore think that any substantial prejudice has been caused to the appellants by reason of the non supply of the information sought by them In Southern Pharmaceuticals  Chemicals Trichur  Ors etc
vs State of Kerala  Ors etc
1 APSen J speaking for the Court noticed the broadening of the Court s attitude and observed It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure for rendering the services is not by itself decisive
That is because the Constitution did not con template it to be an essential element of a fee that it should be credited to a separate fund and not to the consolidated fund
It is also increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee
It is needle to streess that the element of quid pro quo is not necessarily absent in every tax 
The Traditional Concept of Quid Pro Quo Is Undergoing
A Transformation
 What do we learn from these precedents We learn that is no generic difference between a tax and a fee though broadly a tax is a compulsory exaction as part of a common burden without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered benefit provided or privilege conferred 
Compulsion is not the hall mark of the distinction between a tax and a fee
That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax
Though a fee must have relation to the services rendered or the advantages conferred such relation need not be direct 
a mere causal relation may be enough
Further neither the incidence of the fee nor the service rendered need be uniform
That others besides those paying the fees are also benefited does not detract from the character of the fee
In fact the special benefit or advantage to the payers of the fees may even be secondary as com 1007 pared with the primary motive of regulation in the public interest
Nor is the Court to assume the role of a cost accountant
It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc
against the amount of fees collected so as to evenly balance the two
A broad correlationship is all that is necessary
Quid pro quo in the strict sense is not the one and only true index of a fee nor is it necessarily absent in a tax
What do we have in the present case  True the Municipal Corporation has realised a sum of Rs 424494 by way of fees at the rate of Re 0050p
per animal in the case of sheep goats and pigs and Rs 200 per animal in the case of buffaloes whereas the budget of the Municipal Corporation showed under item XIV B that an amount of Rs 256000 was expended in connection with slaughter houses
But as explained in the affidavit of Dr A C Ajwani Deputy Health officer Public Health of the Municipal Corporation of Delhi the amount of Rs 256000 covers only those items of expenditure as are reflected in item XIV B of the Municipal Budget
The items of expenditure covered by item XIV B of the municipal budget are evidently those item of expenditure which arc incurred directly and excessively in connection with slaughter houses
In addition there are several other items of expenditure connected with slaughter houses but which are not included in item XIV B
To name a few 
there is the expenditure involved in the purchase maintainance and the use of trucks and other vehicles for the removal of filth and refuse from slaughter houses
These expenses though attributable to slaughter houses are debited in the municipal budget under other heads such as transport conservancy petrol and oil etc
There is also the expenditure incurred in connection with the maintainance of supervisory staff like a full time Veterinary officer and a Municipal Health officer Deputy Health officer Zonal Health officer etc a considerable part of those duties are connected with slaughter houses
There is then the cost of depreciation of the buildings and fittings in the slaughter houses
There is also the provision for expansion and improvement of slaughter house facilities
There are several other items of expenditure the whole or part of which is attributable to slaughter houses
Unfortunately the High Court refused to look at any of these formidable items of expenditure on the ground that the Corporation could not ask the Court to look at any figures other than the figure mentioned under item XIV B of the municipal budget
Aparently the High Court was under the impression that the fees collected should be shown to be related to 1008 expenditure incurred directly and exclusively in connection with the slaughtering of animals in its slaughter houses and also shown as such in the municipal budget
This was a wholly erroneous approach in the light of what we have said earlier
We have explained earlier that the expenditure need not be incurred directly nor even primarily in connection with the special benefit or advantage conferred
We have also explained that there need not be any fastidious balancing of the cost of the services rendered with the fees collected
It appears to have been common ground before the High Court that the price of meat had gone up about 10 to 12 times since the rates were original fixed
If so one wonders how the Municipal Corporation could be expected to effectively discharge its obligations in connection with the supervision of the slaughtering of animals in the slaughter houses maintained by it by merely raising the rates two fold and three fold
The increase from Re 0025p to Rs 200 per animal in the case of small animals and from Re 100 to Rs 800 in the case of large animals appears to us to be wholly justified in the circumstances of the case
The appeal is therefore allowed with costs the judgment of the High Court set aside and the Writ Petition filed in the High Court dismissed with costs
SR Appeal allowed


Summary:
As per the rates fixed in the year 1953 by the Municipal Corporation of Delhi the slaughtering fees were 025 paise for each animal in the case of sheep goats and pigs and rupees one for each animal in the case of buffaloes
By a Notification dated 3111968 the Corporation purported to enhance the slaughtering fee in both the categories eightfold with effect from February 1 1968
Some butchers of the city questioned the revision of rates on the ground that the proposed enhanced fee was wholly disproportionate to the cost of the services and supervision and was in fact not a fee but a tax
During the pendency of the writ petitions in the High Court by virtue of an interim arrangement the appellant was permitted to collect slaughtering fees at double the rates fixed in 1953 and as a result thereof the Corporation realised a sum of Rs 424494 
The budget of the Corporation under item XIV B showed a sum of Rs 256000 as the expenditure involved in connection with the slaughter houses
Comparing the amount of actual realisation of fee at the rates permitted by the court with the amount of expenditure as revealed by the budget and excluding from consideration all expenditure not shown in the budget from item XIV B the High Court came to the conclusion that even if the original fee was doubled the amount realised would be more than sufficient to meet the expenditure involved and therefore there was no reason at all for increasing the fee eightfold and so the proposed fee was no fee but a tax for which there is no legislative mandate
Hence the appeal by special leave
Allowing the appeal the Court  HELD 11 The increase of the slaughtering fee from 025 P to Rs 200 per animal in the case of small animals and from rupee 100 to Rs 800 in the case of large animals was wholly justified in the Circumstances of the case
1008 C D 12 True the Municipal Corporation has realised a sum of Rs 424494 way of fees at the rate of Re 0050 per animal in the case of sheep goats 1000 and pigs and Rs 2 per animal in the case of buffaloes whereas the budget of the MCD showed under item XIV B that an amount of Rs 256000 was expended in connection with slaughter houses
The Items of expenditure covered by item XIV B of the Municipal Budget are evidently those items of expenditure which are incurred directly and exclusively in connection with slaughter houses
There are several other items of expenditure the whole or part of which is attributable to slaughter houses like the expenditure involved in the purchase maintenance and the use of trucks and other vehicles for the removal of filth from slaughter houses conservancy petrol oil etc
 the expenditure incurred in connection with the maintenance of supervisory staff like a fulltime Veterinary officer Municipal Health officer Deputy Health officer and Zonal Head officers the cost of depreciation of the buildings and fittings in slaughter houses expansion and improvement of slaughter houses for utilities etc
but actually debited to other heads of account under the Municipal budget
Apparently the High Court was under an erroneous impression that the fees collected should be shown to be related to expenditure incurred directly and exclusively in connection with the slaughtering of animals in its slaughter houses and also shown as such in the Municipal budget
1007 B H 1008 A B 2
Vicissitudes of time and necessitudes of history contribute to changes of philosophical attitudes concepts ideas and ideals and with them the meanings of words and phrases and the language itself
The philosophy and the language of the law are no exceptions
Words and phrases take colour and character from the context and the times and speak differently in different contexts and times
Words and phrases have not only a meaning but also a content a living content which breathes and so expands and contracts
This is particularly so where the words and phrases properly belong to other disciplines
Tax and Pee are such words
They properly belong to the world of public finance but since the Constitution and the laws are also concerned with Public Finance these words have often been adjudicated upon in an effort to discern their content
1002 D G 3
From the decided cases beginning from Commissioner of Hindu Religious Endowments Madras vs Shri Lakshmindra Thirtha Swamiyar  till date it is clear that i There is no generic difference between a tax and fee though broadly a tax is a compulsory exaction as part of a common burden without promise of any special advantages to classes of tax payers whereas a fee is a payment for services rendered benefit provided or privilege conferred ii Compulsion is not the hall mark of the distinction between a tax and fee iii That the money collected does not go into a separate fund but goes into the Consolidated Fund does not also necessarily make a levy tax iv Though a fee must have relation to the services rendered or the advantage conferred such relation need not be direct a mere casual relation may be enough v Further neither the incidence of the fee nor the service rendered need be uniform vi That others besides those paying the fees are also benefited does not detract from the character of the fee vii In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest viii Nor is the court to assume the role of a Cost Accountant
It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered 1001 etc
against the amount of fees collected so as to evenly balance the two and ix A correlationship is all that is necessary
Quid pro quo in the strict sense is not the only true index of a fee nor is it necessarily absent in a tax
1006 E H 1007 A B Commissioner of HR  CE Madras vs Shri Lakshmindra Thritha Swamiyar   H H Sudhundra vs Commissioner for Hindu Religious and Charitable Endowments 1963 Supp 2 SCR 302 Hingir Rampur Coal Co Ltd and others vs The State of Orissa and others 196 2 SCR 537 H H Swamiji vs Commissioner Hindu Religious  Chariiable Endowments Dept and others  Southern Pharmaceuticals  Chemicals Trichur and others etc
vs State of Kerala and others  referred to