My photo




Thursday, February 5, 2015

As regard clause (6) of the Circular, prima facie we are of the definite opinion that increasing trade refuse charge by 10% every year from 2009 is highly arbitrary and without any guidelines. In our considered opinion, the automatic increase of trade refuse charges by 10% every year irrespective of the nature of business carried on by the Licencee violates principles of natural justice. We, therefore, hold that respondent shall not recover any increased trade refuse charges with effect from 2009 without giving reasonable opportunity of hearing to the licencee or persons liable to pay such increased charges.


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.1431 OF 2015
                 (Arising out of SLP (C) No. 30485 of 2013)

Kandivali Cooperative Industrial Estate
and another                                  ...Appellant (s)


Municipal Corporation of Greater Mumbai
and others                                   ...Respondent(s)


                        CIVIL APPEAL NO.1433 OF 2015
                  (Arising out of SLP(C)No. 33545 of 2013)

Bulwark Warehousing Company
and others                              ...Appellant (s)
Municipal Corporation of Greater Mumbai
and others                                   ...Respondent(s)

                        CIVIL APPEAL NO.1436  OF 2015
                  (Arising out of SLP(C)No. 35558 of 2013)

Wadi Bunder Cotton Press Co.            ...Appellant (s)
Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)

                        CIVIL APPEAL NO.1434 OF 2015
                  (Arising out of SLP(C)No. 35589 of 2013)

Tulsidas Khimji Warehousing Pvt. Ltd.
and others                              ...Appellant (s)

Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)

                        CIVIL APPEAL NO.1435  OF 2015
                  (Arising out of SLP(C) No. 35593 of 2013)

Narendra & Co. and another              ...Appellant (s)

Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)

                               J U D G M E N T

M.Y. Eqbal, J.:

      Leave granted.

These appeals are directed against  the  common  judgment  and  order  dated
30.7.2013 passed  by  the  High  Court  of  Bombay  in  the  writ  petitions
preferred by the appellants.

By the impugned judgment and  order,  the  High  Court  dismissed  the  writ
petitions preferred by the appellants challenging the  Circular  dated  12th
December, 2011 and the respective entries  made  in  the  schedule  appended
thereto issued by the Respondent-Municipal Corporation of Grater  Mumbai  as
also the respective  entries  in  the  schedule  appended  thereto,  thereby
questioning the levy of 'trade refuse charges' and the rates thereof.

The appellants are traders, carrying on  activities  of  warehouse  keepers,
godown keepers,  bank  mukadam,  carriers  of  stores,  material  and  goods
required to be stored and kept safe from insects, ants,  rodents,  moisture,
rain, heat, fire etc. For this purpose, the appellants  from  time  to  time
have been obtaining trade licences issued under Section 394  of  the  Mumbai
Municipal Corporation Act, 1888 (in short,  'MMC  Act').  According  to  the
appellants, the respondents  recover  'trade  refuse  charges'  (hereinafter
referred to as 'TRC'),  by  making  the  payment  thereof  a  condition  for
renewing the trade licences under the MMC Act on a yearly basis.

Respondent Corporation, vide circular dated 5.6.1999 fixed  the  pattern  of
Trade Refuse Charges (TRC) to be  collected  from  the  owners/occupiers  of
trade premises. On  receiving  various  representations  from  the  traders,
Municipal Commissioner took the decision of modifying  the  earlier  charges
levied on  the  trade  refuse.  Therefore,  the  TRC  were  revised  by  the
Respondent Commissioner vide a circular dated  14.1.2008  w.e.f.1.1.2008  by
almost 300% of the trade licence fees. It was further stated that  the  same
was required to be collected once in a year along with the Licence  fees  at
the time of renewal of licences issued  under  section  394  of  the  Mumbai
Municipal Corporation Act, 1888. The appellants and  several  other  parties
made representations and preferred writ petitions urging reconsideration  of
the rates, which were disposed of by the  Bombay  High  Court  by  an  order
dated 12.4.2010 upon the statement being made on behalf of  the  respondents
that they would reconsider the rates of TRC.

Respondent Corporation gave a hearing to the representations and  instructed
the department concerned to submit the detailed  report.  A  Core  Committee
was constituted which submitted its report in  2010.   On  consideration  of
Core Committee report, TRC were modified  by  the  impugned  Circular  dated
12.12.2011. The circular stipulated that the TRC  would  be  collected  with
retrospective effect from 1.1.2008 onwards.

Although there was very significant  reduction  in  rates  of  trade  refuse
charges to be collected, the appellants,  being  dissatisfied,  again  moved
the Bombay High Court by way of writ petitions, contending that they  merely
receive goods from the customers for  purposes  of  safe  custody  and  upon
receipt of the prescribed charges, return such goods  to  the  customers  in
the same  conditions.   For  this  purpose,  they  provide  adequate  space,
security and safeguards against fire, rain, water,  etc.   In  the  process,
neither any solid  waste,  nor  any  trade  refuse  is  generated.   In  the
circumstances, it is their case that levy of TRC  upon  them  and  that  too
with  retrospective  effect  i.e.  from  2008  is  illegal,  arbitrary   and
The appellants further contended that they do not generate any trade  refuse
and, therefore, question of payment of TRC does not arise.

The High Court by the impugned common order dismissed the writ petitions  of
the  appellants  holding  that  there   is   nothing   illegal,   arbitrary,
unreasonable or unconstitutional in the levy of TRC by the respondents.   It
was observed that the question as to whether the appellants generate  'trade
refuse' or not is a disputed question of fact, which cannot  be  adjudicated
in proceedings under Article 226 of the Constitution  of  India.   The  High
Court did not find any merit in the contention  that  the  levy  of  TRC  is
invalid, because according to the Appellants there is no  element  of  'quid
pro quo'.   The Appellants are certainly benefited, in as much as they  have
been called upon to pay TRC at reduced  rates  with  effect  from  the  year
2008. No retrospectivity is involved in the implementation of  the  Circular
dated  12th  December,  2011.  If  the  contention  is  upheld,  it  is  the
appellants who would suffer a higher TRC.  The High Court has  further  held
that provisions of Sections 368(5) and 394(5) read with Section 479  of  the
MMC Act entitle the respondents to impose  restrictions  and  conditions  at
the time of grant of licence. The same principle will be applicable even  at
the stage  of  renewal  of  licences.  At  this  juncture,  we  consider  it
appropriate to reproduce the reasoning of the High Court in this regard:

"The linkage which is challenged by the appellants in the  present  petition
is more concerned with the manner of recovery of TRC and not  competence  of
the respondents to recover TRC. In deciding the manner, we  are  once  again
of the opinion that this is a policy matter  and  sufficient  free  hand  is
required to be conceded to the respondents in formulation  of  such  policy.
The respondents are right in submitting that it is not possible  to  monitor
each and  every  establishment  for  purposes  of  determining  the  precise
quantity and quality of 'trade refuse' generated. So  also  the  respondents
are right  in  contending  that  there  is  nothing  illegal,  arbitrary  or
unconstitutional in respondents recovering TRC at the stage  of  renewal  of
licences. From the averments made by the appellants themselves,  it  appears
that this has always been the manner in  which  the  respondents  have  been
collecting TRC. In matters of policy, merely because some  other  system  of
collection may be better,  is  no  ground  to  exercise  power  of  judicial
review. As long as it is not demonstrated that the manner of  collection  is
ex-facie, absurd, unreasonable  or  disproportionately  oppressive,  we  are
unable to uphold the seventh challenge as to the linking.  We  find  nothing
absurd, unreasonable or disproportionately oppressive in the policy  adopted
by the respondents or the manner of collection of TRC."

Being aggrieved, the appellants call in  question  the  correctness  of  the
common judgment and order passed by the  High  Court  in  a  batch  of  Writ
Petitions dated 30.7.2013.

  Mr. Shyam Divan, learned senior counsel appearing  for  the  appellant  in
SLP No.30485 of 2013, assailed the impugned  Circular  dated  11.10.2011  as
being illegal, ultra vires and  unconstitutional.  Learned  counsel  submits
that the respondents cannot  demand,  levy  or  recover  any  tax,  cess  or
compulsory exaction without authority of law as mandate  under  Section  265
of the Constitution.  According  to  the  learned  counsel,  Section  368(5)
empowers the Commissioner  to  fix  the  charges  only  when  the  owner  or
occupier  of  trade  premises  seeks  permission  to  deposit  trade  refuse
temporarily upon any place appointed by the Commissioner in this behalf  and
upon such permission granted by the Commissioner.  It was  urged  that  none
of the members of  appellant  had  ever  sought  such  permission  from  the
Commissioner and, therefore, the question of levy of  trade  refuse  charges
under Section 368(5) of the Act does not arise.  According  to  the  learned
counsel any compulsory exaction whether it be a fee  or  tax  or  any  other
levy must be backed by law.  The Circular dated  12.12.2011  imposing  trade
refuse charges is irrational and arbitrary.

11.   Mr. Divan, learned senior counsel, submitted that  the levy of TRC  is
contrary  to  the  judgment  of   Bombay   High   Court   in  Doran  Bomanji
Ghadiali vs. Jamshed Kanga and others, AIR  1992 Bombay  page  13    whereby
 the   High   Court   has  held  that the only charge that can be levied  on
traders is to the limited extent provided under Section 368(5) of  the  Act.
The Court further held that the fee imposable by Section  479  of  the  said
Act must relate to licence or written permission for  any  purpose  required
under the Act and, therefore, the charge could only  be  for  permission  to
deposit the trade refuse temporarily at a particular  place  and  would  not
apply to traders not seeking such permission to dump  their  refuse  at  any
place.  Learned counsel drew our attention to various sections  of  the  Act
and submitted that the manner in which the imposition  or  levy  of  charges
contemplated under Section 368(5) of  the  Act,  is  ultra  vires.   Learned
counsel relied upon the decision in the case of Ahmedabad Urban  Development
Authority vs. Sharadkumar Jayantikumar Pasawalla, (1992) 3  SCC  285,  which
was subsequently followed in the case of Gupta Modern  Breweries  vs.  State
of J& K, (2007) 6  SCC  317  and   Leelabai  Gajanan  Pansare  vs.  Oriental
Insurance Co. Ltd., (2008) 9 SCC 720.
12.   Mr. Chander Uday Singh, learned senior counsel,  appearing  on  behalf
of appellants in SLP (C)  Nos.  35558,  35589  and  35593  of  2013,   after
referring  relevant  provisions  of  Municipal  Corporation  Act,  made  the
following submissions:-

(i). The appellants are engaged in the warehousing business and they do  not
generate any trade refuse, thus entitling the Respondents to levy  the  TRC.
Neither they are conducting any manufacturing activity due  to  which  solid
waste can be generated and, hence, the term TRC has been misinterpreted  and
equated to garbage. It was  asserted  that  the  Appellants  merely  receive
goods from the customers for the purpose of safe custody  and  upon  receipt
of the prescribed charges, return such goods to the customers  in  the  same
condition. Therefore, the Respondents are wrong in treating  every  kind  of
refuse as 'trade refuse' and on the  said  incorrect  premise  imposing  TRC
upon the appellants. 'Trade refuse' should mean and imply some  solid  waste
generated by an industry involved  in  manufacturing  process  and  in  this
regard reliance is placed upon sub-clauses (a) and (b) of  Section  367  and
sub-sections (1) and (5) of Section 368 of the MMC  Act  and  as  the  terms
"refuse" and  "trade  refuse"  have  been  dealt  with  separately  this  is
indicative that every kind of refuse cannot be qualified as "trade refuse".

(ii).  It was pointed  out  that  Respondents'  own  inspection  reports  of
warehouses show that those warehousers only  generated  dust,  tree  leaves,
etc. and in a quantity of only one and a half to two baskets.  This  cannot,
by any stretch of imagination, be treated as trade  refuse  since  the  dust
and tree leaves are blown into  the  warehouses  by  the  wind  and  not  on
account of any activity being carried  out  by  the  warehousers/appellants.
Further, under Section 370 of the MMC  Act  it  will  be  incumbent  on  the
occupier of any premises situate in any portion of the city  for  which  the
Commissioner has not given a public notice under  Section  142  (a)  and  in
which there is no water closet or privy connected to  municipal  drains,  to
cause all excrementitious and polluted to be collected and  to  be  conveyed
to the nearest receptacle /depot provided for  this  purpose  under  Section
367 (b) and not (a). Pertinently, 367 (a) deals  with  dust,  ashes,  refuse
and rubbish and 367 (b) deals with trade  refuse.  Thus  "trade  refuse"  is
obnoxious refuse and cannot and ought not be equated with  refuse  generated
in any trade /business  establishment.  It  is  submitted  that  this  vital
difference has been ignored and TRC is being unlawfully sought to be  levied
upon the appellants who generate no "trade refuse at all".

(iii). It was the contention of the learned  counsel  that  the  appellants,
who are engaged in the warehousing  business,  do  not  generate  any  trade
refuse and in the event TRC constitutes a 'tax' there is  no  taxable  event
for imposition of tax in the form of TRC. Alternatively, if  TRC  is  to  be
regarded a 'fee', then, on account of the circumstance that  the  appellants
generate no trade refuse at all, there is no element of 'quid pro  quo'  and
hence levy of fee in the form of TRC is illegal and invalid.

(iv). It was submitted that the linking of payment of TRC  with  renewal  of
trade licences under section 394 of the MMC Act, is  illegal,  invalid  and,
therefore, renewal of trade licences under section 394 of the MMC Act  ought
to be granted, irrespective of whether the appellants pay TRC  or  not.  The
TRC being levied in addition to the normal licence fees for issue  of  trade
licences under Section 394 of the MMC Act, there is double  charging,  which
is  wholly  arbitrary  and  unreasonable  and  without  authority  of   law,
particularly, qua the Appellants, who do not generate  any  'trade  refuse'.
It was, therefore sought to be submitted, that the levy  and  collection  of
TRC cannot be linked to the renewal of an annual trade  licence  granted  to
the  Appellants  for  conducting  warehousing  activity  when  there  is  no
statutory  provision  enabling  such  linkage;  and   in   the   facts   and
circumstances  and  absence  of   any   specific   authority   to   levy   a
retrospective charge or fee, Respondent No.1 could not levy TRC with  effect
from 1.1.2008 when a solemn assurance was made by  Respondent  No.1  to  the
Bombay High Court that there would be no linkage  between  TRC  and  licence
fees collected at the stage of renewal. Under Section 471 of  the  MMC  Act,
Respondent No.1 is entitled to impose penalty for contravention  of  Section
368 (1) to (4) and under Section 472 of the  Act,  the  Respondent  No.1  is
entitled to impose penalty for continuing offence in  contravention  of  any
provision of Section 368 (1) to (5). When penalty  provisions  are  provided
under the Act, payment of TRC has been without any  basis  or  justification
whatsoever sought to be linked with renewal of the Trade Licence,  which  is
impermissible and bad in law. Furthermore, only valid trade licence  holders
are being charged TRC.  It  becomes  pertinent  to  note  that  after  1976,
Respondent No.1 has stopped issuing  warehousing  licences  in  the  Greater
Mumbai Area. Therefore, the burden on TRC is only  being  applied  to  valid
licence holders and not to others who are carrying on the trade without  any

(v). It was again pointed out that the Respondents have  completely  ignored
their own Circular No.  ChE/280/SWM  dated  06.04.2010  which  categorically
states that for the year 2010, TRC will be levied on the  basis  of  licence
fees of the licence issued by the Shops & Establishment  Department  of  the
MMC and that the Respondents will delink TRC from  licence  fees  in  future
and new TRC levy pattern will be  introduced.  The  TRC  is  now  wrongfully
charged on the basis of sq. mtr. footage of area of premises and is in  fact
more than the licence fees which is wholly illogical, irrational,  arbitrary
and without any authority of law. The policy adopted by the Respondents  and
the manner of  collection  of  TRC  (whether  charged  based  on  number  of
employees   or   square   meter   area)   is   absurd,   unreasonable    and
disproportionately oppressive, without Application of mind  and  incompetent
and without the authority of law.

(vi). Lastly, it was contended that any compulsory execration  of  money  by
the Government for a tax or a cess has to be  strictly  in  accordance  with
law and there should be a specific provision for the same and  there  is  no
room for intendment and nothing is to be read or nothing is  to  be  implied
and one should look fairly to the language used. Our attention was drawn  to
the decision of this Court in Consumer Online Foundation vs. Union of  India
(2011) 5 SCC 360.  In this behalf it was sought  to  be  pointed  out,  that
Imposition of levy/charges by Respondent No.1 is in the nature of a tax  and
not a  fee  and  hence  such  imposition  without  backing  of  statutes  is
unreasonable and unfair. Learned counsel also  drew  our  attention  to  the
decisions of this Court in the cases of Gupta Modern Breweries vs. State  of
J&K & Ors. - (2007) 6 SCC 317 and B.C. Banerjee & Ors. vs. State of  M.P.  &
Ors. (1970) 2 SCC 467.

13.   Mr. L. Nageswar Rao, learned Additional  Solicitor  General  appearing
for the respondents, firstly contended that the constitutional  validity  of
Section 368(5) of the Act was never challenged by any of the  appellants  as
being ultra vires to the Constitution. The appellants have  only  prayed  in
the  writ  petitions  for  issuance  of  appropriate  writ   directing   the
respondents to cancel and/or withdraw  the  Circulars  dated  14.1.2008  and
11.10.2011 and also to withdraw the notice dated 9th  June,  2014.   Learned
counsel submitted that the appellants challenged  the  circular  by  arguing
that the manner of collection of trade refuse charges was contrary  to  law.
The competence of the  authority  to  demand  and  levy  TRC  has  not  been
challenged at any point of time. Distinguishing the  imposition  of  fee/TRC
and tax, learned counsel put heavy reliance on the  ratio  decided  by  this
Court in the case of  The Commissioner, Hindu  Religious  Endowment,  Madras
vs. Sri Lakshmindra Tirtha Swamiar of  Shirur  Mutt,  (1954)  1   SCR  1005.
Mr. Rao referred to  the  Core  Committee  Report  and  submitted  that  the
validity of guidelines provided therein cannot  be  tested  on  any  ground.
Learned counsel put reliance on a decision in the  case  of  Corporation  of
Calcutta & Anr. vs. Liberty  Cinema,  Assam,  (1965)  2  SCR  477.   Learned
counsel also made submission on the object and  purpose  of  collection  and
submitted that absolute equality is impossible for the purpose  of  levy  of
fee or charges. Learned counsel referred the decision of this Court  in  the
case of Gulabchand Bapalal Modi vs.  Municipal  Corpn.  of  Ahmedabad  City,
(1971) 1 SCC 82, Union of India vs.  Nitdip  Textile  Processors  (P)  Ltd.,
(2012) 1 SCC 226.

14.         Before appreciating the rival contentions made by  the  parties,
we  would  like  to  refer  the  relevant  provisions  of  Bombay  Municipal
Corporation Act, 1988.  Section 3 (yy) defines the word  'trade  refuse'  as
"3(yy)   "Trade  refuse"  means  and  includes  the  refuse  of  any  trade,
manufacture or business."

15.      Section  367  empowers  the  Commissioner  to  make  provision  for
providing receptacles, depots and places  for  temporary  deposit  or  final
disposal of waste articles including trade refuse.  Section  367  is  quoted

"367. Provision and  appointment  of  receptacles,  depots  and  places  for
refuse, etc.,

The  Commissioner  shall  provide  or  appoint  in  proper  and   convenient
situations public receptacles, depots and places for the  temporary  deposit
or disposal of-
(a) dust, ashes, refuse and rubbish;
(b) trade refuse;"

16.     Section 368 lays down the provisions with  regard  to  the  duty  of
owners and occupiers for the purpose of collecting and depositing dust  etc.
 Sections 368, 394 and 479, which are under consideration in these  appeals,
read as under:-

"368. Duty of owners and occupiers to collect and deposit dust, etc. ,
(1) It shall be incumbent on the owners and occupiers  of  all  premises  to
cause all dust, ashes, refuse, rubbish and  trade  refuse  to  be  collected
from their respective premises and to be deposited  at  such  times  as  the
Commissioner, by public notice, from time to time prescribes in  the  public
receptacle, depot or place provided or appointed under  the  last  preceding
section or the temporary deposit or final disposal thereof

(2) ......

(5) Notwithstanding anything contained in this  section,  if  the  owner  or
occupier 'of any trade premises desires permission to deposit trade  refuse,
collected daily or periodically from  the  premises,  temporarily  upon  any
place appointed by the Commissioner in this behalf,  the  Commissioner  may,
on the application, and on payment of such charges as the  Commissioner  may
from time to time, fix, allow the applicant  to  deposit  the  trade  refuse

"394. Certain articles (or animals) not to  be  kept,  and  certain  trades,
processes and operations not to be carried on without a licence; and  things
liable to be seized destroyed, etc., to prevent danger or nuisance.-

 (1) Except under and in accordance with the terms  and  conditions  of  the
licence granted by the Commissioner, no person shall-

 (a) keep, or suffer or allow to be kept, in or upon any premises,

 (I) any article specified in Part I of Schedule M; or,

 (II) any article specified in Part II of  Schedule  M,  in  excess  of  the
quantity therein specified as the maximum quantity (or  where  such  article
is kept  along  with  any  other  article  or  articles  specified  in  that
Schedule,  such  other  maximum  quantity  as  may  be   notified   by   the
Commissioner) of such article which may at any one time be kept in  or  upon
the same premises without a licence;

(b) keep, or suffer or allow to be kept, in or upon any premises,  for  sale
or for other than domestic  use,  any  article  specified  in  Part  III  of
Schedule M;

(c) .................


(e) carry on or allow or suffer to be carried on, in or upon any  premises.-

 (I) any of the trades specified in Part IV of Schedule M,  or  any  process
or operation connected with any such trade;

 (II) any trade,  process  or  operation,  which  in  the  opinion  of,  the
Commissioner, is dangerous to life, health or property, or likely to  create
a nuisance either from its nature or by reason of the manner  in  which,  or
the conditions under which, the, same is, or is proposed to be carried on;

(f) carry on within [Brihan Mumbai] or use or allow to be used any  premises
for, the trade or operation of a carrier.




(5) It shall be in the discretion of the Commissioner.-

 (a) to grant any licence referred to in sub-section (1),  subject  to  such
restrictions or conditions (if any,) as he shall think fit  to  specify,  or
(b) for the purposes  of  ensuring  public  safety,  to  withhold  any  such

Provided that, the Commissioner when  withholding  any  such  licence  shall
record his reasons in writing for such withholding and  furnish  the  person
concerned a copy of his order containing the reasons for such withholding:

Provided further that, any person aggrieved by an order of the  Commissioner
under this sub-section may, within sixty days of the  date  of  such  order,
appeal to the Chief Judge of the Small Cause Court, whose decision shall  be

"479. Licences and written permission to specify  condition  etc,  on  which
they are granted:-

(1) Whether it is  provided  in  this  Act  that  a  licence  or  a  written
permission Licences and may be  given  for  any  purpose,  such  licence  or
written permission shall specify the  wntten.  period  for  which,  and  the
restrictions and conditions subject to  which,  the  same  is  granted,  and
shall be given under the signature of the Commissioner or of  a  munici  pal
officer empowered under section 68 to grant the same.




17.   From a conjoint reading of the provisions quoted hereinbefore,  it  is
manifestly clear that the Commissioner may from  time  to  time  inter  alia
specify conditions and  restrictions  while  granting  trade  licence.   The
Commissioner may notify the charges including trade refuse charges  i.e.  to
be collected from the trade licencees.

18.     In exercise of power conferred upon the Commissioner under  the  MMC
Act, a Circular was issued on  14.1.2008  raising  the  TRC  by  almost  300
percent of the trade licence fees with the stipulation that  the  TRC  would
be collected at the time of renewal of the licence under Section 394 of  the
Act which were due to expire in December, 2009. As noticed  above  the  said
Circular dated 14.1.2008 was challenged before the Bombay High Court by  way
of writ petitions.   When the writ petitions  were  taken  up  for  hearing,
learned counsel appearing for the respondent-Corporation informed the  Court
that the rate of trade  refuse  charges  is  under  reconsideration  by  the
Authority.  On the  basis  of  submissions  made  by  the  counsel  for  the
Corporation, the writ petitions were disposed of as the  grievances  of  the
traders were satisfied.

19.   In December, 2011,  the  respondents  after  re-consideration  of  the
tariff fixed in the  earlier  circular  came  with  another  Circular  dated
11.10.2011 whereby the TRC rate was  revised  effective  from  1st  January,
2008.  Perusal of the revised rates appended thereto  would  show  that  the
rates have been significantly reduced  in  respect  of  different  types  of
business.  Instead of quoting the revised  rates  we  would  like  to  quote
hereinbelow the modified circular dated 11.10.2011. The English  translation
of the Circular reads as under:-

                     (Solid Waste Management Department)
                             No. Pra.A/11384/SWM
                              Dated 11.10.2011
Subject:-: Revision/Modification in the trade refuse charge.

      For the purpose of recovering  Trade  refuse  charge  by  Solid  Waste
Management Department  in  Municipal  Corporation  of  Greater  Mumbai,  the
Mayor's Council  gave  approval  vide  Resolution  No.14  dated  15.4.99  to
recover the said charge in certain  multiplication  of  licence/registration
charge without making any category of  the  business.   According   to  that
procedure, the orders were  issued  vide  Circular  Pra.  A/17785/SWM  dated
14.1.2008,  regarding  entrusting  the  responsibility  on   (1)   Licencing
Department (2) Shops & Establishment Department (3)  health  department  and
(4) Market Department,  by  co-relating  the  expenses   incurred  then  for
disposal  of the waste  and  the  multiplication  of  licencing/registration
charges and also to recover 'Trade refuse charges' at the  time  of  renewal
of licence and deposit the same under the head  'Miscellaneous  Charges'  of
Income under Financial Budget Head of Solid Waste Management Department.

      However,  considering  the  complaints/  representations  as  well  as
certain other aspects regarding Trade  refuse  charge,  meetings  were  held
with the  officials  of  1)  Licencing  Department,  Shops  &  Establishment
Department (3)  health  department  and  (4)  Market  Department  and  after
detailed deliberations it was proposed to carry out  suitable  modifications
in Trade  refuse  charges  for  which  the  business  people  were  examined
regarding the Trade refuse charge.  The examination  reports  received  from
all the department levels were carefully studied and  the  aspects  such  as
the Trade refuse charge  being  levied  on  the  business,  the  expenditure
incurred for disposal of the waste generated  by  them  were  examined,  and
accordingly Hon'ble Municipal  Commissioner  has  given  approval  vide  No.
MGC/F/5874 dated 2.9.2011 to charge  Trade  refuse  charge  accordingly  and
following decision was taken.

As the Trade refuse  charge  being  levied  by  the  Shops  &  Establishment
Department in proportion with  the  waste  generation,  hence   it  will  be
continued as per the circular No. Pra.A/6123 dated 05.06.1999.

The businesses for which the complaints about the Trade refuse charge  being
more and in respect of whom changes in the Trade  refuse  charge  have  been
made in accordance with their waste generation  from  the  year  2008,  have
been indicated in 'schedule B-1".

Trade refuse charge for the halls used for marriages and  parties  is  being
introduced now.  The solid waste generated in  halls  of  schools,  colleges
and the functions in layout R.G. Plots of  the  housing  societies,  is  not
included in commercial tax.

In respect  of the business who do not agree with the revised  Trade  refuse
charge, applications may be accepted  from  them   in  enclosed  format  and
after examining the same, a report be sent to the concerned  Asst.  Engineer
(S.W.M.) for submitting  to Chief Engineer (S.W.M.).

In respect of the business where there  are  more  than  one  licences,  the
Trade refuse charge will be levied on the licence  of  which  the  fees  are
more than other licences.

Trade refuse charge will be increased by 10  percent  every  year  from  the
year 2009.

In respect of the businesses who  have  paid  the  Trade  refuse  charge  at
less/more rate than the  rate  mentioned  in  the  circular,  it  should  be
adjusted at the time of recovering,  Trade refuse tax  from  the  next  year
with effect from 2008.  In respect of the  business  whose  rates  of  Trade
refuse charge have not been increased/decreased or those business  who  have
so far not paid the Trade refuse charge, the same should be  recovered  from
them immediately at the rate indicated in the Circular of 2008.

     All the concerned department heads will take note of this circular  and
take further action.


                                                     Chief Engineer (S.W.M.)


                                                  Licencing Superintendent."

20.   The Bombay High Court, while passing  the  impugned  order  dismissing
the writ petitions came to the conclusion that the  MMC  Act  confers  power
upon the authorities of the respondents to impose conditions at the time  of
grant of trade licence and also to recover trade refuse charges.   The  High
Court observed:-

"21. The provisions of sections 368(5) and 394(5) read with Section  479  of
the MMC Act, in our view, entitle the  respondents  to  impose  restrictions
and conditions at the time of grant of licence. The same principle  will  be
applicable even at the stage of renewal of licences. The  linkage  which  is
challenged by the appellants in the present petition is more concerned  with
the manner of recovery of TRC and  not  competence  of  the  respondents  to
recover TRC. In deciding the manner, we are once again of the  opinion  that
this is a policy matter and sufficient free hand is required to be  conceded
to the respondents in formulation of such policy. The respondents are  right
in  submitting  that  it  is  not  possible  to  monitor  each   and   every
establishment for purposes of determining the precise quantity  and  quality
of  'trade  refuse'  generated.  So  also  the  respondents  are  right   in
contending that there is nothing illegal, arbitrary or  unconstitutional  in
respondents recovering TRC at the stage of renewal  of  licences.  From  the
averments made by the  appellants  themselves,  it  appears  that  this  has
always been the manner in which the respondents have  been  collecting  TRC.
In matters of policy, merely because some other system of collection may  be
better, is no ground to exercise power of judicial review. As long as it  is
not  demonstrated  that  the  manner  of  collection  is  ex-facie,  absurd,
unreasonable or disproportionately oppressive, we are unable to  uphold  the
seventh challenge as to the linking. We find  nothing  absurd,  unreasonable
or disproportionately oppressive in the policy adopted  by  the  respondents
or the manner of collection of TRC.

22.  We  have  already  held  that  there  is  nothing  illegal,  arbitrary,
unreasonable or unconstitutional in the levy of TRC by the  respondents.  In
these circumstances, we are not inclined to exercise the jurisdiction  under
Article 226 of the Constitution of India in order to assist the  appellants,
who desire to either postpone or avoid payment of TRC and at the  same  time
enjoy the benefits of a renewed licence. Upon  grant  of  renewal,  the  MMC
shall have to initiate fresh proceedings in order to  recover  TRC,  thereby
giving the appellants opportunity to resist or delay in the payment  of  the
same. The extra-ordinary jurisdiction under Article 226 of the  Constitution
of India cannot be exercised for such purposes."

21.   As stated above, the constitutional validity of Section 368(5) of  the
Act has not been  challenged  in  the  writ  petitions.  The  power  of  the
Commissioner in fixing and demanding trade refuse charges  by  the  impugned
Circular have been questioned in all those  writ  petitions  which  are  the
subject matter of these appeals.  The only challenge is the  Circular  dated
11.10.2011 and the respective  entries  in  the  schedule  appended  thereto
issued by the respondents on the ground that the rate fixed in the  schedule
appended to the Circular is wholly irrational  and  full  of  arbitrariness.
The main contention made by the appellants are that  they  do  not  generate
any trade refuse  and,  therefore,  the  rate  fixed  for  levy  of  TRC  is
arbitrary, unreasonable and violative of Articles 14  and  19(1)(g)  of  the
Constitution of India.

22.    Since the constitutional validity of different  provisions  including
Section 368 of the Act was not challenged, we do not think it  necessary  to
go into the vires of the said provisions.  The only issue that needs  to  be
considered is as to whether the fees  or  charge  imposed  by  the  impugned
Circular dated 11.10.2011 is just and proper or suffers from  arbitrariness.

23.   There is no dispute with regard to the settled legal proposition  that
in almost all the  statute  dealing  with  legal  administration,  Municipal
Authorities have inevitably to be delegated the power of taxation.  The  aim
and object of the scheme have to be taken into consideration while  deciding
the question as to  the  excessive  exercise  of  power  in  the  matter  of
collection of fees and charges.

24.   However, it would be appropriate to refer the principles laid down  by
this Court in the case of   The  Commissioner,  Hindu  Religious  Endowment,
Madras vs. Sri Lakshmindra Tirtha Swamiar of  Shirur  Mutt,  (1954)  1   SCR
1005: AIR 1954 SC 282, which according to us will be the complete answer  to
the points raised by  Mr.  Divan  and  Mr.  Singh,  learned  senior  counsel
appearing for the appellants.  In para 44, this Court observed:

"44. Coming now to fees, a 'fee' is generally defined to be a charge  for  a
special service rendered to individuals by  some  governmental  agency.  The
amount of fee levied is supposed to be based on  the  expenses  incurred  by
the Government in rendering the service, though in many cases the costs  are
arbitrarily assessed. Ordinarily, the fees are uniform  and  no  account  is
taken of the varying abilities of different recipients to pay (Vide Lutz  on
"Public Finance" p.  215.).  These  are  undoubtedly  some  of  the  general
characteristics, but as there may be  various  kinds  of  fees,  it  is  not
possible to formulate a definition that would be applicable to all cases."

25.   A fee undoubtedly, is a payment primarily in public interest, but  for
some special services, rendered or some special work done  for  the  benefit
of those from whom payments are demanded.  In  other  words,  fees  must  be
levied in consideration of certain  services  which  the  individual  accept
willingly or unwillingly. It is also  necessary  that  fees  or  charges  so
demanded must be appropriated for that purpose and  must  not  be  used  for
other general public purposes.  Further, indisputably, the  legislature  can
delegate its power to statutory authority, to levy taxes  or  fees  and  fix
the rate in regard thereto.

26.  Elaborating the distinction between the tax and a fee,  this  Court  in
number of decisions held that the  element  of  compulsion  or  coercion  is
present in all impositions, though in different degrees and that it  is  not
totally absent in fees.  The compulsion lies in the  fact  that  payment  is
enforceable by law against a man in spite of his unwillingness  or  want  of
consent and this element is present in taxes as well as in fees.

27.   Since the provisions of  Section  368(5)  of  the  Act  is  not  under
challenge the decisions relied upon by Mr.  Divan  and  Mr.  Singh,  learned
senior counsel appearing for the appellants, will  have  no  application  in
the facts and circumstances of the present case.  Be that as it may,  it  is
well settled that  an  Act  delegating  power  to  the  local  body  without
providing a maximum rate does not by itself render the delegation  excessive
or invalid.

28.    Coming  back  to  the  impugned  Circular,  it  reveals  that   after
considering the complaints and representations  and  certain  other  aspects
regarding trade refuse charges, decisions have been taken by the  authority.
Clause (4) and (6) of the said circular are re-quoted hereinbelow:-

  In respect  of the business who  do  not  agree  with  the  revised  Trade
refuse charge, applications may be accepted from them   in  enclosed  format
and after examining the same, a  report  be  sent  to  the  concerned  Asst.
Engineer (S.W.M.) for submitting  to Chief Engineer (S.W.M.).

Trade refuse charge will be increased by 10  percent  every  year  from  the
year 2009."

29.   So far clause (4) is concerned, provision has  been  made  for  making
application by persons in respect of particular business  who do  not  agree
with the revised trade refuse charge may approach the  authority  by  making
necessary  application  and   on   such   application   or   representation,
appropriate  response  shall  be  given  to  those  persons,  who  have  any
grievance to that effect.  We, therefore,  direct  the  respondent-authority
to follow the procedure mentioned in clause (4) of the circular.

30.    As regard clause (6) of the Circular, prima  facie   we  are  of  the
definite opinion that increasing trade refuse charge by 10% every year  from
2009 is highly arbitrary and without  any  guidelines.   In  our  considered
opinion, the automatic increase of trade refuse charges by  10%  every  year
irrespective of the nature of business carried on by the  Licencee  violates
principles of natural justice. We, therefore,  hold  that  respondent  shall
not recover any  increased  trade  refuse  charges  with  effect  from  2009
without giving reasonable opportunity of hearing to the licencee or  persons
liable to pay such increased charges.

31.   After giving our anxious consideration in the matter, we do  not  find
any reason to differ with the view  taken  by  the  High  Court  in  passing
impugned order.   However, we modify the  impugned  order  only  by  holding
that clause (6) of the Circular increasing trade refuse  charge  by  10  per
cent every year from 2009 is highly arbitrary  and  without  any  guideline.
We, therefore, hold that the increase of trade refuse charge by 10 per  cent
every year irrespective of the  actual  escalation  or  reduction  in  costs
involved or the  nature  of  business  carried  on  by  the  Licencee   etc.
violates  principles  of  reasonableness  as  well   as   natural   justice.
Accordingly, we direct  that  the  respondent-authority  shall  not  recover
increased trade refuse charge at the rate of 10 per cent  with  effect  from
2009.  The actual increase can be ascertained and  realized  in  future  but
not without giving reasonable opportunity of hearing to the licencee or  the
persons liable to pay the said increased charges.

32.   With the aforesaid modification and directions,  these  appeals  stand
disposed of with no order as to costs.

                                                                (M.Y. Eqbal)

(Shiva Kirti Singh)
New Delhi
February 04, 2015

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.