Civil Writ Petition No. 19714 of 2006 (O&M) -1- IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH Civil Writ Petition No. 19714 of 2006 (O&M) Date of Decision : September 3, 2008 The Sukhjit Starch & Chemicals Ltd., Sukhjit Road, Phagwara ..........Petitioner Versus State of Punjab & others. ......Respondents CORAM : HON'BLE MR. JUSTICE VINOD K. SHARMA Present : Mr.S.C. Nagpal, Advocate for the petitioner. S/sh. N.S. Dandiwal, Vikas Mohan Gupta, Charan Jit Sharma, Harsh Aggarwal, Chander Mohan Sharma, M.K. Garg, Rajesh Kumar Girdhar, Mr. Amit Arora for Mr. Pritam Saini, Tribhawan Singla, D.D. Bansal, B.S. Sidhu, Amit Goel, R.P. Dhir, Karan Singh Malik, Kranti Dhir, K.S. Dadwal, Ddheeraj Jain, Vinod K. Kataria, Rajesh Gumber and Ashok Aneja for petitioners in connected cases. Mr. R.L. Gupta, Addl. A.G., Punjab. Mr. A.P. S. Mann, Advocate Mr. J.S. Sethi, Advocate for Punjab Water Supply & Sewerage Board. Mr. Harsimran Singh Sethi, Advocate. Ms. Anju Sharma, Advocate for Mr. Pankaj Bhardwaj, Advocate. Mr. Deepak Thapar, Advocate. **** Civil Writ Petition No. 19714 of 2006 (O&M) -2- 1. Whether Reports of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reports or not ? 3. Whether the judgment should be reported in Digest. **** VINOD K. SHARMA, J. (ORAL) This order shall dispose of CWP No. 19714 of 2006 titled the Sukhjit Starch & Chemicals Ltd., Sukhjit Road, Phagwara Versus State of Punjab & others, CWP No. 7006 of 2005 Harbinder Singh and others Versus State of Punjab & others, CWP No. 9656 of 2006 Kuldeep Kumar and others Versus State of Punjab & others, CWP No. 11287 of 2005 Ahok Joshi and others Versus State of Punjab & others, CWP No. 11308 of 2006 Gurbachan Singh and others Versus State of Punjab & another, CWP No. 12727 of 2005 Pyare Lal Joshi & others Versus State of Punjab & another, CWP No. 12860 of 2005 Tilak Raj and others Versus State of Punjab & others, CWP No. 12954 of 2005 Tarlok Chand Jain Versus State of Punjab & another, CWP No. 13689 of 2005 Hem Raj Goyal and others Versus State of Punjab & others, CWP No. 15763 of 2005 Pragati Sheel Naujawan Sabha Versus State of Punjab & another, CWP No. 16350 of 2005 Harkaran Singh and others Versus State of Punjab & another, CWP No. 17747 of 2006 Vinod Kumar and others Versus State of Punjab & others, CWP No. 17921 of 2005 Red Cross Sr. Citizens Day Care Versus State of Punjab & others, CWP No. 18228 of 2006 Shiv Raj and others Versus State of Punjab & another, CWP No. 18853 of 2005 Surinder Kaur and others Versus State of Civil Writ Petition No. 19714 of 2006 (O&M) -3- Punjab & another, CWP No. 1901 of 2006 Ramesh Chander and others Versus State of Punjab & another, CWP No. 19478 of 2005 Anil Pabbi and others Versus State of Punjab & another, CWP No. 19983 of 2006 Wahid Sandhar Sugars Ltd. Versus State of Punjab & others, CWP No. 20089 of 2006 JCT Ltd. Versus State of Punjab & others, CWP No. 20194 of 2005 Ramgaria Sewa Society and another Versus State of Punjab & others, CWP No. 2674 of 2006 Hardip Singh and others Versus State of Punjab & another, CWP No. 2833-2007 Kuldip Rai others Versus State of Punjab & another, CWP No. 2843-2007 Rajesh Chopra and Anr.Versus State of Punjab & another, CWP No. 3051 of 2006 Om Parkash Aggarwal and others Versus State of Punjab & others, CWP No. 3412 of 2006 Mohan Lal Versus State of Punjab & others, CWP No. 4479 of 2006 Smt. Sarita Bhardwaj & Ors.Versus State of Punjab & others, CWP No. 4772-2007 Harvinder Singh and others Versus State of Punjab & others, CWP No. 5345 of 2006 Manjit Singh and others Versus State of Punjab & others, CWP No. 5670 of 2006 Gurmit Singh & Ors.Versus State of Punjab & another, CWP No. 5986 of 2006 Om Parkash & Others Versus State of Punjab & another,CWP No. 6064-2007 Gurpal Chand & others Vs. State of Punjab & Others, CWP No. 6341-2007 Hargulal Dhawan and others Versus State of Punjab & others, CWP No. 6462 of 2006 Raghunath Dass Sharma & Ors.Versus State of Punjab & another, CWP No. 697 of 2006 Kuldip Chand & Ors.Versus State of Punjab & another, CWP No. 7651 of 2006 R.S.D. College Ferozepur City & Anr.Versus State of Punjab & others, CWP No. 8455 of 2006 Prem Parkash & Ors.Versus State of Punjab & Civil Writ Petition No. 19714 of 2006 (O&M) -4- another, CWP No. 9169 of 2005 Ghamdhur Singh & others Vs. State of Punjab and Another, CWP No. 10440 of 2005 Simsi Dhir & Ors. Versus State of Punjab & another and CWP No. 10823 of 2006 Dev Sharma and Ors. Versus State of Punjab & others. Versus State of Punjab & another, as common questions of law and fact are involved in all these cases. For the sake of brevity, facts are being taken from CWP No. 19714 of 2006 titled the Sukhjit Starch & Chemicals Ltd. Versus State of Punjab & others. The petitioner Company registered under the Companies Act through its Joint Managing Director has challenged the constitutional validity of Notification No. 2/2/2003-3LGIV/6514 dated 2nd May, 2003 and letter dated 19.8.2003 attached as Annexures P-5 & P-6 issued by respondent No.1 in exercise of powers conferred under Section 62-A(2) of the Punjab Municipal Act, 1911 (hereinafter referred to as “Act”) read with Section 19 of the Punjab General Clauses Act, 1898 increasing the sewerage and water charges to more than sixty times of the existing rates. The petitioners have also challenged the water and sewerage bills issued by respondent No.3 i.e. the Municipal Council, Phagwara. The petitioner has also prayed that respondent No.3 be directed to issue fresh bills for the period from 1.7.2005 to 30.11.2006 at the rates which were in force prior to issuance of impugned notification. It is also claimed that the outstanding amount be not charged with retrospective effect nor any surcharge or interest be claimed as the amount due has already been paid. The facts leading to the filing of the writ petition are that the Civil Writ Petition No. 19714 of 2006 (O&M) -5- Municipal Council Phagwara issued bills for the period commencing from 1.12.2004 to 30.6.2005, in the sum of Rs. 28,980/-. The said bill was paid by the petitioner. It is the case of the petitioner that the petitioner is liable to pay sewerage charges @ 4,140/- per month. The petitioner company is not taking any water supply from respondent No.3 and is only discharging the water after treatment in the treatment plant. The bill dated 1.2.2006 for a sum of Rs. 26,27,280/- has been issued to the petitioner for the period commencing from 1.3.2005 to 31.12.2005 on account of hike in the sewerage charges. The copy of the bill has been attached as Annexure P-2 with the writ petition. The petitioner filed representation on 13.2.2006 pointing out that sewerage charges upto date i.e. 30.6.2005 already stood paid and the bill, therefore, was wrongly sent on the basis of wrong calculation. It was claimed that the hike was unwarranted, illegal, baseless, arbitrary and without providing any further facilities or improving the existing facilities. It was claimed in the reply that the notification on the basis of which the bill dated 1.2.2006 was sent stood stayed by the High Court. It is further the case of the petitioner that when it approached respondent No.3, it was informed that the rates of water supply and sewerage charges have been increased in pursuance to the Notification No. 2/2/2003-3LGIV/6514 dated 2nd May, 2003 issued by the State of Punjab. The petitioner claimed that the exorbitant increase made by the respondent is arbitrary, unfair, unreasonable and same is based on irrelevant, irrational basis, thus, it is claimed that the notification deserves to be struck down. Civil Writ Petition No. 19714 of 2006 (O&M) -6- It is also the case of the petitioner that sewerage and water charges have been imposed without complying with the procedure as laid down under Section 62 of the Act. The Writ petition has been opposed by the respondents by pleading that the Government of Punjab issued a notification for revision of user charges for water supply and sewerage. It is the case of the respondent State that a provision was made for levying charges at flat rate for unmetered water connections as well as for metered connections. While the sewerage charges were to be levied as per connection option was also given to the consumers who were having, less than 1 Kanal plot to go in for meter connection since it was made mandatory to have a meter for a plot of 1 Kanal and above. It is also the case of the respondents that fee was being charged on account of revision of water charges and sewerage tariff as per Punjab Municipal Act, 1911. Since Section 62-A of the Act provides for procedure for imposing taxes. It was claimed that the tax here is synonym of fee, cess or duty. It was claimed that the differentiation has to be made between tax and fee. The reference has been made to certain judgments in this context. It was also the stand of the State that element of compulsion or coerciveness is present in all kinds of imposition even in respect of fee, but the real distinction between a tax and fee lies primarily in the fact that the tax is levied as a part of common burden while a fee is a payment for special benefit or privilege. In all kinds of imposition, public interest is the basis but in a fee it is some special benefit which the individual receives and in Civil Writ Petition No. 19714 of 2006 (O&M) -7- the present case, it is the services provided by the Municipal Council, which provides basic amenities to the persons having dwelling unit. It was further claimed that fee is sort of return for consideration for services rendered. The stand of the State is that levy of fee is to be correlated to the expenses incurred by the Government in rendering services. The stand of the respondent further is that though the Constitution prohibits the imposition of tax without authority but in respect of fee the petitioners who are deriving benefits from the services rendered by the Municipal Council / Committee are liable to pay the user charges for water and sewerage. Thus, claimed that the revision in the user charges by notification dated 2.5.2003 is justified on the ground that the respondents are only charging fee and not imposing any tax as submitted by the petitioner. This plea is totally misconceived as the case set up is that tax has been imposed under Section 62-A of the Act. In CWP No. 7006 of 2005, it is claimed that before the notification to impose the revised user tariff was issued wide publicity through Munadi, distribution of pamphlets and displaying the pamphlets on all prominent places in City of Moga giving an option to the public to have metered or unmetered supply was undertaken. It was claimed that after the complaints were dealt with and after complying with Section 62 of the Act, the notification was issued. The copy of the notification dated 27.2.2004 is placed on record as Annexure R-1, wherein it has been mentioned that the notification dated 2.5.2003 is kept in abeyance with immediate effect till further orders. Civil Writ Petition No. 19714 of 2006 (O&M) -8- On merits, the allegations levelled in the petition have been simply denied. The facts are not relevant as notification issued by the State Government under Section 62-A is under challenge. In order to appreciate the controversy raised in the petition, it would be appropriate to reproduce Sections 61, 62 and 62-A of the Punjab Municipal Act, which read as under :- “61. Taxes which may be imposed. – Subject to any general or special orders which the State Government may make in this behalf, and to the rules, any committee may, from time to time for the purposes of this Act, and in the manner directed by this Act, impose in the whole or any part of the municipality any of the following taxes, namely: - (a) A tax payable by the owner of building and lands not exceeding fifteen per cent of the annual value. […..] Provided that in the case of lands and buildings occupied by tenants in perpetuity, the tax shall be payable by such tenants; (b) a tax on persons practicing any profession or art or carrying on any trade or calling in the municipality; Explanation.- A person in the service of the Government or person holding an office under the State Government or the Central Government or a local or other public authority shall be deemed to be practising a profession within the meaning of Civil Writ Petition No. 19714 of 2006 (O&M) -9- this sub-clause. (c ) a tax payable by the owner, on all or any vehicles other than motor vehicles animals used for riding, draught or burden, and dogs, when such vehicles, animals used as aforesaid, and dogs are kept within the , municipality; (d) a tax, payable by the employer, on menial domestic servants; (e) a tax, payable by the occupier of any buildings in respect of which the committee has, in exercise of the powers conferred by Sections 159 to 165 of this Act, undertaken the house scavenging; (ee) in addition to the tax imposed under clause (a), scavenging tax, payable by the occupier, on buildings and lands of such percentage of the annual value thereof as the State Government may, by notification, declare to be reasonable for providing for the collection, removal and disposal by the committee of all filth and polluted an obnoxious matter from latrines, urinals, cess-pools and for efficiently maintaining and repairing the municipal drains constructed or used for the reception or conveyance of such filth or polluted and obnoxious matters: (f) a tax payable by persons presenting building applications to the committee: Provided that a committee shall not impose any Civil Writ Petition No. 19714 of 2006 (O&M) -10- tax without the previous sanction of the State Government when- (i) it consists of members less than three-fourths of whom have been elected; or (ii) its cash balances have, at any time within the three months preceding the date of the passing of the resolution imposing the tax, fallen below Rs.20,000 or one-tenth of the income accrued in the previous financial year whichever amount shall be less. (2) Save as provided in the foregoing clause, with the previous sanction of the State Government any other tax which State Legislature has power to impose in the State under the Constitution. 2(A) Notwithstanding anything contained in this Act, on an with effect from the commencement of the Punjab Municipal (Amendment) Act, 2002, no octroi shall be levied, except on electricity; Nothing in this section shall authorize the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution. Provided that a committee which immediately before the commencement of Constitution was lawfully levying any such tax under this section as then in force may continue to levy that tax until provision to the contrary is made Parliament. Explanation: - In this section “tax” includes any duty, cess or fee. Civil Writ Petition No. 19714 of 2006 (O&M) -11- 62. Procedure to impose taxes: - (1) A committee may, at a special meeting pass a resolution to propose the imposition of any tax under Section 61. (2) such a resolution has been passed the committee shall publish a notice, defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted. (3) Any inhabitant objecting to the proposed tax, within thirty days from the publication of the said notice, submit his objection in writing to the committee; and the committee shall at a special meeting take his objection into consideration. (4) if the committee decides to amend its proposals or any of them, it shall publish amended proposals along with a notice indicating that they are modification of those previously published for objection. (5) Any objections which may within thirty days be received to the amended proposals shall be dealt with in the manner prescribed in sub- section (3). (6) When the committee has finally settled its proposals it shall, if the proposed tax falls under clauses (b) to (f) of sub-section (1) of section 61 direct that the tax be imposed, and shall forward a copy of its order to the effect through the Deputy Commissioner, to the State Government and if the proposed tax falls under Civil Writ Petition No. 19714 of 2006 (O&M) -12- any other provision it shall submit its proposals together with the objection if any made in connection therewith to the Deputy Commissioner. (7) If the proposed tax falls under clause (a) sub-section (1) of Section 61, the Deputy Commissioner, after considering the objections received under sections (3) and (5) may either refuse to sanction the proposals or return them to the committee for further consideration, or sanction them without modification or with such modification or with such modification not involving an increase of the amount to be imposed, as he deems fit, forwarding to the State Government a copy of the proposals and his order of sanction; and if the tax falls under sub-section (2) of section 61, Deputy Commissioner shall submit the proposals and objections with his recommendations to the State Government. (8) The State Government on receiving proposals for taxation under sub-section (2) may sanction or refuse to sanction the same or return them to the committee for further consideration. (9) [--] (10) a) When a copy of order under sub- sections (6) and (7) has been received, or b) when a proposal has been sanctioned under sub-section (8) the State Government shall notify the imposition of the tax in accordance with such order or proposal, and shall in the notification specify a date not less then one month from the date of Civil Writ Petition No. 19714 of 2006 (O&M) -13- notification, on which the tax shall come into force. (11) A tax leviable by the year shall come into force on the first day of January or on the first day of April or on the first day of July, or on the first day of October in any year and if it comes into force on any other than the first day of the year by which it is leviable shall the leviable by the quarter till the first day of such year then next ensuing. (12) A notification of the imposition of a tax under this Act shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the Act. 62-A. Power of Government in taxation: (1) The State Government may, by special or general order notified in the official Gazette, require a Committee to impose any tax mentioned in section 61, not already imposed are such rate and within such period as may be specified in the notification and the Committee shall thereupon act accordingly. (2) The State Government may require a Committee to modify the rate of any tax already imposed and thereupon the Committee shall modify the tax as required within such period as the State Government may direct. (3) If the Committee fails to carry out any order passed under sub-section (1) or (2) the State Government may by a suitable order notified in the official Gazette impose or modify the tax. The Civil Writ Petition No. 19714 of 2006 (O&M) -14- order so passed shall operate as if it were a resolution duly passed by the Committee as if the proposal was sanctioned in accordance with the procedure contained in section 62.” The impugned notification reads as under :- “ In partial modification of the Notification No.2/56/94-3LGIII/8768 dated 29.07.1994, the Governor of Punjab, in exercise of the powers conferred under Section 62A(2) of the Punjab Municipal Act, 1911 (Punjab Act 3 of 1911) read with Section 19 of the Punjab General Clauses Act, 1898 and all other powers enabling him in this behalf is pleased to rationalize the user charges/tax and direct all the Municipal Councils and Nagar Panchayats in the State of Punjab to implement the revised water supply and sewerage tariff with immediate effect, as under :- (A) USER CHARGES FOR UN-METER CONNECTIONS (DOMESTIC) Plot Size RATE PER CONNECTION PER MONTH (IN RS.) FINANCIAL YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 Above 5 Marla 50.00 55.00 60.00 70.00 100.00 Above 5 Marla and upto 10 Marla 75.00 80.00 90.00 100.00 105.00 Civil Writ Petition No. 19714 of 2006 (O&M) -15- Plot Size RATE PER CONNECTION PER MONTH (IN RS.) FINANCIAL YEAR Above 10 Marla but less than 1 Kanal 100.00 110.00 120.00 130.00 140.00 1 Kanal and above ONLY METERED CONNECTIONS (B) USER CHARGES FOR METERED CONNECTIONS (DOMESTIC) FINANCIAL YEAR RATE (RS. PER KILO LITRE PER MONTH 2003-04 2.00 2004-05 2.60 2005-06 3.20 2006-07 3.50 2007-08 3.80 NOTE : * Meter shall be arranged and installed by consumer at his own cost after proper testing and seal by the concerned local body. Cost of testing and seal will also be born by the consumer. * In case of defect in water meter, the first bill shall be issued on average basis of the last three bills and thereafter if meter is not got repaired by beneficiary at his own cost the rate shall be three times the average charges. * Even consumers less than 1 Kanal plot size have option to go on for metered connection. Plot Size RATE PER CONNECTION PER MONTH (IN RS.) FINANCIAL YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 Upto 5 Marla 50.00 55.00 60.00 70.00 100.00 Civil Writ Petition No. 19714 of 2006 (O&M) -16- Plot Size RATE PER CONNECTION PER MONTH (IN RS.) FINANCIAL YEAR Above 5 Marla and upto 10 Marla 75.00 80.00 90.00 100.00 105.00 Above 10 Marla but less than 1 Kanal 100.00 110.00 120.00 130.00 140.00 1 Kanal and above EQUAL TO WATER CHARGES For own sources of water supply EQUAL TO WATER CHARGES OF METERED SUPPLY (D) COMMERCIAL AND INDUSTRIAL CONNECTIONS :- For institutional commercial and industrial connection, only rates as metered connections shall be charged and sanctioned as per note under (B) and rates will be double the above rates for water supply (Table A & B) and sewerage (Table C). (E) FOR YELLOW CARD HOLDERS : The rates shall be 505 of normal notes applicable upto 5 Marla house. (F) MINIMUM LEVEL OF GUARANTEE : Local Bodies will ensure the quality of water and minimum duration of supply. Billing and collection be privatized in a phased manner. To ensure guarantee of standard of services, Civil Writ Petition No. 19714 of 2006 (O&M) -17- computerization of bills, preparation of website, showing hours of supply, status of complaints is etc. be also introduced. Standby source of power should also be added in addition to existing source.” Mr. S.C. Nagpal, learned counsel appearing on behalf of the petitioner has challenged the imposition of water and sewerage charges primarily on the ground that before imposing the said sewerage and water charges procedure as envisaged under the Act has not been followed. The contention of the learned counsel for the petitioner is that Section 61 of the Punjab Municipal Act gives power to the State Government to impose taxes as detailed thereunder. Section 61(ee) reads as under :- “(ee) in addition to the tax imposed under clause (a), scavenging tax, payable by the occupier, on buildings and lands of such percentage of the annual value thereof as the State Government may, by notification, declare