Holding

The increase of the slaughtering fee is justified and constitutes a fee, not a tax.

Summary

The Delhi Municipal Corporation raised the slaughtering fee from Rs.0.25 paise to Rs.2 for small animals and from Rs.1 to Rs.8 for buffaloes in 1968. Butchers challenged the increase, claiming it was disproportionate to the cost of services and therefore a tax, not a fee. The High Court, relying on a budget item showing only Rs.2.56 lakh expenditure, held that even a doubled fee would cover costs and quashed the increase as a tax. On appeal, the Supreme Court examined the distinction between a fee and a tax, emphasizing that a fee need only have a causal relationship with services rendered and need not be strictly proportional or shown in a separate fund. It observed that the corporation’s actual expenditures on supervision, vehicles, staff, depreciation and other items were far greater than the budget line considered by the High Court. Consequently, the Court held the eight‑fold increase was justified, characterising it as a fee, and allowed the appeal, setting aside the High Court’s decision and dismissing the writ petitions with costs.

Issues considered

Whether the enhanced slaughtering charge constitutes a fee or a tax under the Constitution.
Whether the fee is proportionate to the cost of services and supervision provided by the municipal corporation.
Whether the municipal corporation can raise the fee without a specific legislative mandate.
Whether the fee must be directly linked to expenditure shown in a specific budget item.

Subjects

feetaxmunicipal corporationslaughterhousepublic financeconstitutional lawArt.133proportionalityservice charge

Judgment

999
MUNICIPAL CORPORATION OF DELHf
AND OTHERS A
v.
MOHD. YASIN ETC.

April 28, 1983 B
(D. A. DESAI AND 0. CHINNAPPA REDDY, JJ.)

Tax and fee, contradistinction-Fees for slaughtering animals at slaughter
houses enhanced by the Municipal Corporation, eightfold Legality of the enhance-
meni-Whether the enhanced fee for slaughterinu animals was wholly dispropor~
tionate to the cost of the services and supervision and the,.efore, not a fee, c
but a tax.

As per the rates fixed in the year 1953 by the Municipal Corporation of
:,Delhi, the slaughtering fees were 0.25 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 31.1.1968, the Corporation purported to enhance the fi
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. 4,24,494/-. The budget Of the Coi::poration under item
XIV-B showed a sum of Rs. 2,56,000 as the expenditure involved in connection
with the slaughter houses. Comparing the amount of actual realisatioh of fee
,at the rates permitted by the court with the an1ount of expenditure as revealed
by the budget and excluding from consideration all expenditure not shown in
the budget from item XIV B, the 1.J:igh Court came to the conclusion that even
if the original fee was'doubled the amount realised would be more than suffi-
cient 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: 1:1 The increase of the slaughtering fee from 0.25 p to Rs. 2.00
per animal in the case of small animals and from rupee 1.00 to Rs. 8.00 in
_.-L ,- the case of large animals was wholly justified, in the circumstan<;es of the case.
[1008 C-D]

1:2 True, the Municipal Corporation has realised a sum of Rs. 4,24,494
bf way of fees at the rate of Re. 00.50 per animal in the case of sheep, goats
1()1)6 §UPREME cOURT REPoRTS (19MJ ~ S.C.R.
and pigs and Rs. 21per animal in the case of buffalOfS, whereas the budget of
the M.C.D. showed under item XIV-B that an amount of Rs. Z,56,000 was
A expended in connection with slaughter houses. The items of expenditure
covered by item XIV-B of the Municipal Budget are evidently those items of
cx~nditure which are incurred directly and exclusively in connection with
slaughter houses. ,_.There al't' 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
B removaJ of filth from slaughter houses, conservancy, petrol oil etc., the expendi-
ture incurred in connection with the maintenance of supervisory staff like a
full time Veterih!lry Officer, Municipal Health Officer, Deputy Health Officer
and Zonal Head Officers, the cost Of depreciation of the buildings and fittings
in slatight~r houses, expansion and improvement of slaughter houses for utilities
etc. but actually debited to other heads of account under the Municipal budget.
c Appatently, the High CdUrt was under an erroneous impression that the fees
collected shdUld 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-BJ

2. Vicissitudes of time and necessitudes of history contribute to changes
of philosophical attitudes, concepts, ideas and ideals and, with them, the mean
D ings 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 titnes. Words and phrases have not only a meaning but aJso a
content, a lifing content, which breathes, and so, expands and contracts. This
is particularly so where the words and phrases properly belong to other disci-
plines. ''Tax" and ''Fee" are such words. They properly belong to the world
E 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-Gj

3. From the decided cases beginning from Commissioner of Hindu
Rtlieious Endowment•, Madras v. Shri IAl<:shmindra Thirtha Swamiyar [1954]
F S.C.R. 1005 till date, it is clear that : (l) There is no generic difference between
a tax and fee, though broadly a tax is a com;>"ulsory exaction as part of a
Ctftnmon burden, without promise of any special advantages to cla*s of tax•
11ayerJ1 Whereas a f4!e is a payment for services rendered; benefit provided oi'
privilege conferred; (ii) Compulsion is not the hall mark of the distinction
between a tax and foe; (iii) That the money collected does not go into a sepl•
rate fund but goes into the Consolidated Fund does not also necessarily iriake
G a levy tax.; (iv) Though a fee must have relation to the services rendered, or the
advantage conferred, such relation need l'.lol be dirtct; a mere· CEl'Sttal 'relation
may be enough; (V) Further neither tlie incidence of the fee nor the service
filndercd rteod be uniform; (vi) That others besides those paying the fees are
als<J lienefited does not detract from the character of the fee; (vii) In fact the
spM&l benefit or advantage to the payers of the fees may even be secondftty as
Cdnipated 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 neces~
sacy nor expedient to mish too meticulousl1 the coil df thC services rendered
'llftlNICJPAL coRPN. v. MOHD. llAsIN (CJhilfllllppa Reddy, J.) iooi
etc. lli&inst tho amount of feos collected so as to 0V<!Dl7 balance the two and
(ix) A cOrrelationship ia all that. is necessary. Qi#d pro quo in the 1trict aense A
is ncit the only true fndex Of a fee; nor is it necessarily absent in a tax.
1 [ 1006 E-H, 1007 A-Bl

Commissioner of H. R. ll C. E., Madras v. Shri Labhmindra Thritha
Swamiyar, [19541 S.C.R. 1005; H. H. Sudhundra v. Commissioner for Hin®
Religious am/ Charitable Endowments, [1963] Supp. 2 S.C.R. 302; Hingir-Rampur B
Coal Co. ltd. and Others v. Tht Staie of Orissa and Others, [1961] 2 S.C.R. 537;
H.1l. SWdnllji v. CorlttnissloHet Hindu Religious & Chariiable Endowinlmts Dept.
and Others, [1980] I S.C.R. 268; S'uthern Pharmaceuticals & Chemicals, Trtchur
and Others etc. v. State of Xerala and Others, [198211 S.C.R. 519' referred to.

CIVIL APPELLATE JuR1SDICTION : Civil Appeal Nos. 2120 & 2125 C
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. .
D
Kapi/ Sibal, Rameshwar Dial, Adarsh Dial and S. Mitlar for
the Appellants. ·

K. JJ. Rohtagi for the Respondents.

The following Judgment of the Court was delivered by E

CHINNAPPA REDDY, J. By a notification dated 31.1.68, the
Delhi Municipal Corporation purported to enhance the fee for
slaughtering animals in its slaughter houses from Re. 00.25p to
Rs. 2.00 for each animal, in the case of sheep, goats and pigs, and F
from Re. 1.00 to Rs. 8.00 for each animal, in the case of buffaloes.
- ' 'l'he 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 I,
1968. Some butchers of the city questioned the revision of rates on
G
tlle ground that the proposed enhanced fee was wholly .dispropor·
tlonate 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, ihe l'.tigh Court has certified tlie case
H
as a fit one for appeal under Art. 133 (I)(c) of the Constitution and
the matter is now before us.
. ·· "[f9&3t 2 S.C.fl.

Durit\g tlie pendency of tlie writ petitions in the High Court,
A by virtue of an interim arrangement, the Municipal-Corporation was
permitted to collect fee at the rate of Re. 00.50p. per animal in
the case of sheep, goats and pigs and Rs. 2.00 per animal in the case
of buffaloes. As a result, the Municipal Corporation reelise'd a sum
of Rs. 4,24,494 by Way of fee for slaughtering animals in its slaughter
B houses. Now, the budget of the Municipal Corporation under item
XIV-B showed a sum of Rs. 2,56,0cO 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
c 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 legis-.
lative mand1te. We sh1ll pr~sent\y point out the error into which
D
the High Court fell on facts as well as principle.

A word on interpretation. Vicissitudes of time and necessi-
tudes of history contribute to changes of philosophical attitudes,
concepts, ideas and ideals and, with them, the meanings of words
E and phrases and the language itself. . The philosophy and the. langu-
age 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 words and phrases have not only a meaning but also a coutent,
·a living content which breathes, and so, expands and contracts. This
F 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 iheir
G content.

. Commissionet of Hindu Religious Endowments, Madras v. Shri
Lakshmindra Thirtha Swamiyar(l) is conside_red the locus classicus on
the subject of .the contradistinction b_etween 'tax' and 'fee'. The
H definition of 'tax' given by Latham, C.J. as ''a compulsory exaction

(I) (1954] S.C.R. IOOS.
MuNICIPAL coRPN, v. MOHD. YASIN (Chinnappa JI.eddy, J.) ioo3
of money by public authority for public purposes enforceable by law
and not payment for services rendered" was accepted, by the Court A
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 indjviduals by some governmental ageney", 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
B
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 criterien 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 c
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 D
·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 d.one or
services rendered, such money not being merged in the public reve· E
nues for the benefit of the general public. It was however made
clear that the circumstance that all the collections went to the Con·
solidat~d 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 bad,
for legislative purposes, made a distinction between a tax and a fee. F
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 G
respect to any of those matters.

In HH Sudhandra v. Commissioner Jot Hindu Religious & Chari•
,,.;_· table Endowments(!), the Court reiterated the principle that a levy in
H

(1) (1963] Supp. 2 S.C.R. 3()2,
iao4 · ~iil*EME COUR.T ltl!POil'rs ti9h} 1s.c.~.
the nature of a fee did not ·cease to be df that cMraeter merely
A be~ause there was any element of cotttpulsi011 or coerciveness ;tireserit
in it, and aided.

"Nor is it a postulate of a fee that it must have direct
.
relation tel the actual services rendered by the a:rithority
to individual who obtains the benefit of the service. tf
B 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 reaoonable
relation hlltween 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."

D In Hingir-Rampur Coal Co. Ltd. & Ors. v. The State of Ori:J~a
and 9rg.;(1) the Court while reiterating that there was an e!etnent of
quid pto quo between the person paying the fee and the authority
imposing it, said :
y

E "If specific services are r~hdered 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 oess is levied again!ll the
said area or the said class of persons or trade or business,
the cess is distinguishable from a tax and is described
F 11s·a foe."

Later it was said :

"It is true that when the lagislature levies a fe!
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 distltictly and primarily meant for the
be'nllf!t·of a specified class or area the fact that in belie•
fitt!ng the specified class or area the State as a whole may

(1) [1961) 2 S.C.R. S31,
).lU};ICJl'AL CORPN. v. 14PJIP, ra&JN (ChillnfJ,p!'a Reddy. J.) 1.0QS .

ulti~tely 1md ind,irectly be l>enefitt~d wo11Jd not detpi,ct
from the chiiracter of the levy as a fee. WIJ.ere. 4owever, A
the specilic. service is inl!istinguishable fr9m public
iervice, and in essence is directly a part of it, di~rent
considerations may arise. In such a case, it is necessary
t!> enquir.e wlJ.at is th!l primary object of tile levy 1111d the
essential purpose wbich it is inten4ed to ~hi~vi:. I~ B
primary object and the esseJl.tial p11rpose 1UUSt be di~ti11·
guished from its ultimate or incidental results or conse·
q11ences. That is tile tr~ test in <Jeter1Uiniu~ the cJiara~
ter of the levy,"

In H.IJ. Swamiji v. Commissioner, l{ind!t J?.~ligio~ & Chari·
c
table Endowments Depgrtment and Ors.,( 1) Chandrach11d, Cl. speaking
for the Col)stitution Beil.ch, emphasjsed the necessity as· well as the
sufficiency of a broad correlationship between the services rendered
and the rees charged and discounted the :,ttempts to go illto minutiae
to discover meticulously whether or not there was matheiµatical l>
equality. He said, "For the purpose of finding whether there is a
correlationship between the services rendered to ·t)le fee payers
and the fees charged to them, it is necessary to know the cost
incurred for organising and rendering the services, l!ut matters
involving consideration of such 11 correlationship are not required
to be proved by a mathematical formula. ·What has to be
I
seen is whether there is 11 fair correspondence between tile 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 paf!iculars been supplied, to a
Jabori.ous and fruitless inquiry into minute details of the Comlllissi•
oner'1 departmental budget. A vivisection of the aJ!lounts spent by
'
the Commissioner's establishment at different places fqr various pur~
poses and the ad-hoc allocation by the Court of different amounts to
different heads would at best have been speculative. It woµld have
G
6een no more possible for the High Court if th~ inforllll1tio11 were
before it, t!ian it would be"possible for us if t~. information were
before us. to find 011t what pat'! of the expenses in\alrre<). by the
Commissioner's establishme11t at various pl.flees and. wha.t part of t.he
~·. salary of \\is staff at those places should be allocated IP the f1,1nctions
- ' - ~
H

(!) [1980j 1 S.C.R,. 3~~.
\006 · SUPREME CoURT REPORTS [1983} 2 s.c.R.

discharged by the- establishment in connection with the services
,A randered to the appellants. We do not therefore think that any ·t
substantial prejudice has been caused to the appellants by reason of
the non-supply of the information sought by them,"

In Southern Phamaceuticals & Chemicals Trichur & Ors. etc. v.
State of Kera/a & Ors. etc,, (1) A.P.Sen, J. speaking for the Court
B 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 pri-
vilege or licence, are taken to the consolidated fnnd of the
c State and are not separately appropriated towards the ex-
penditure for rendering the se_rvices 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
D that _the element of quid pro ql'o 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
E 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: '>- -
F 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
G
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-
H

[I) [1982] S,C.R. 519,
Wl!IIClPAL CORPN. V.J•IOl;ID. Y.\.SIN lChinnappa Reddy, J.) 1007

pared witht the primary motive of regulation in the public interest.
J Nor is the Court to assume the role of a cost accountant. It is A
neither necessary nor expedient to weigh too meticulously the cost of
the services re11dered etc. against the amount of fees collected so as
to evenly balance the two. A broad correJationship is all that is ne·
cessary. 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.
B
What do we have in the present case? True, the· Municipal
Corporation ·has realised a sum of Rs. 4,24,494 by way of fees at
• the rate of Re. 00.50p. per animal in the case of sheep, goats and pigs
and Rs. 2.00 per animal in the case of buffaloes, whereas the budget
of the Municipal Corporation showed under item XIV·B that an
c
amount of Rs. 2,56,000 was expended in connection with slaughter
houses. But as explained in the affidavit of Dr. A. C. ~jwani Deputy
Health Officer (Public Health) of t)le Municipal Corporation of Delhi,
the amount of Rs. 2,56,000 covers only thos~ items of expenditure as
are reflected in item XIV-B of the Municipal Budget. The items of D
of expenditure covered by item XIV-B of the municipal budget are
evidently those item of expenditure which are incurred directly and
exculsively 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~
E
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 F
supervisory staff like a full time Veterinary Officer, and a Municipal
Health Officer, Deputy Health Officer, Zonal Health Officer etc., a
considerable part of whose duties are connected with slaughter
houses. There is then the cost of depreciation of the buildings ar.d
fittings in the slaughter houses. There is also the provision for ex·
pansion and improvement of slaugter house facilities. There are G
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
H
the municipal budget. Aparently the High Court was· under the
impression t!mt the fees collected should be s)lown to be related to
1008 ' ' ' '' SUPREME COURT REPORTS·. '· [19S3J :2 S.C.R.

expenditure incurred directly and exclusively ip connectioiL with th<;
A slaughtering of animals in its &laughter houses and also, shown as
such in · the municipal budget. This was a·· wholly · erroneous
-·-r I:
approach, in the light of what we· have said earlier. We have ex•
plained earlier that the expenditure need not be incurred directly nor
even primarily in connection. with the· special . benetit or. adv1111tage
. conferred. .We have also explained. that there !leed. not be any
B fastidious balancing of the cost of the services rendered with the fees
· collected. It appears to have been common ground before th~ High
Court that the price of !Peat had. gone up·. about IO to J2 times since
·the rates were original fixed. If so~:one wonders how the. Municipal __j__ _.
Corporation coiild be expected to effectively discharge its obligations
in connection. with the supervision of th~ slaughtering· of animals in
c the slaughter houses maintained by it by merely raising the rates ' '

two-fold and three-fold. ·· The increase· from Re. 00.25p to ·Rs: 2.00
·per animal in the case of small animals and from_ Re. l.OO to Rs. 8.00
in the case of large aninials appears to us to be wholly justified in
the circumstances of the case, · The appeal is therefore, allowed with
i:osts the judgment of the Higl1Court set aside an,d the Writ Petition_
D filed ill _the High Court dismissed with costs. •

S.R. , ·.Appeal allowed. .
' '

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'<,

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