Hon'ble Mahendra Dayal,J.
Heard learned counsel for the parties.
The petitioner is a company Pradeshiya Industrial & Investment Corporation, U.P. Lucknow (PICUP). The said company have constructed a building at Vibhuti Khand Gomit Nagar, Lucknow in the year 1986 and the same was completed in the year 1991. Thereafter Lucknow Jal Sansthan raised a bill, which was not paid by the petitioner and as such demand notice was issued.
Being aggrieved by the inaction of the Lucknow Jal Sansthan for issuing demand notice the instant writ petition has been filed inter alia on the grounds that during the course of construction nor a single drop of water was taken from the pipeline laid down by the Lucknow Jal Sansthan and neither any request was made to them for grant of fresh water connection and as such no charges can be levied.
Notices were issued.
Counter affidavit has been filed.
During the pendency of the instant writ petition an identical issue was raised before the Apex Court and the Apex Court has passed the following orders :
".....10. From a perusal of Article 285 it is clear that no property of the Union of India shall be subject to tax imposed by the State, save as Parliament may otherwise provide. The question is whether"the charges for" supply of water and maintenance of sewerage is in the nature of a tax or a fee for the services rendered by the jal Sansthan. There is a distinction between a tax and a fee, and hence one has to see the nature of the levy whether it is in the nature of tax or whether it is in the nature of fee for the services rendered by any instrumentality of the State like the Jal Sansthan. There are no two opinions in the matter that so far as supply of water and maintenance of sewerage is concerned, the Jal Sansthan is to maintain it and it is they who bear all the expenses for the maintenance of sewerage and supply of water. It6 has to create its own funds and therefore, levy under the Act is a must. In order to supply water and maintain sewerage system, the Jal Sansthan has to incur the expenditure for the same. it is in fact a service which is being rendered by the Jal Sansthan to the Railways, and the Railways cannot take this service from the Jal Sansthan without paying the charges for the same. Though the expression tax has been used in the Act of 1975 but in fact it is in the nature of a fee for the services rendered by the Jal Sansthan. What is contemplated under Article 285 is taxation on the property of the Union. In our opinion the Jal Sansthan is not charging any tax on the property of the Union; what is being charges is a fee for services rendered to the Union through the Railways. Therefore, it is a plain and simple charge for service rendered by the Jal Sansthan for which the Jal Sansthan has to maintain staff for regular supply of water as well as for sewerage system of the effluent discharged by the railway over their platforms or from their staff quarters. it is in the nature of a fee for service rendered and not any tax on the property of the Railways.
11. The distinction has to be kept in mind between a tax and a fee. Exemption under Article 285 is on the levy of any tax on the property of the Union by the State, and exemption is not for charges for the services rendered by the State or its instrumentality which in reality amounts to a fee. In this connection, a reference was to the decision of this Court in Sea Customs Act (1978), S. 20(2), in re. This was a case in which a reference was made by the President of India with regard to levy of customs and excise duties on the State under Article 289 of the Constitution of India wherein Sinha, C.J., Gajendragadkar, Wanchoo and Shah, JJ. answered the question at para 31 as follows : (AIR p. 1777)"
31. For the reasons given above, it must be held that the immunity granted to the States in respect of Union taxation does not extend to duties of customs including export duties or duties of excise. the answer to the three questions referred to us must, therefore, be in the negative.
23. In this case what is being charges is for service rendered by the Jal Sansthan i.e. an instrumentality of the State under the Act of 1975. Section 52 of the Act states that the Jal Sansthan can levy tax, fee and charge for water supply and for sewerage services rendered by it as water tax and sewerage tax at the rates mentioned therein. Though the charge was loosely termed as "tax" but as already mentioned before, nomenclature is not important. In substance what is being charges is fee for the supply of water as well as maintenance of the sewerage system. Therefore, in our opinion such service charges are a fee and cannot be said to be hit by Article 285 of the Constitution. In this context it is to be made clear that what is exempted by Article 285 is a tax on the property of the Union of India but not a charge for service which are being rendered in the nature of water supply, for maintenance of sewerage system. Therefore, in our opinion, the view taken by the Division Bench of the Allahabad high Court is correct that the charge is a fee, being service charges for supply of water and maintenance of sewerage system, which cannot be said to be tax on the property of the Union. Hence it is not violative of the provisions of Article 285 of the Constitution."
Learned counsel for the petitioner submits that as the law laid down by the Apex Court in above mentioned paragraph nos. 10, 11 and 23, is also extended to the petitioner.
Accordingly, we dispose of the writ petition with a direction to the Jal Sansthan, Lucknow to refund the amount, which has been paid to the petitioner, if there is no legal impediment or any outstanding against the petitioner.
Accordingly, writ petition is disposed of.
Order Date :- 7.3.2014/Anurag/-