Summary
The Court upheld the water-tax provisions of the Uttar Pradesh Water Supply and Sewerage Act, 1975. The levy under Section 52 was a tax on lands and buildings within Entry 49 of List II, distinct from consumption charges and fees. Actual use of water or a connection was not essential, subject to the statutory restrictions. The High Court’s refund direction was reversed. Contrary observations treating Section 52 as a fee in Union of India v. State of U.P. were overruled to that limited extent.
Issues
- Whether the water levy was a tax on lands and buildings within State legislative competence or a fee dependent on actual services.
- Whether premises without a water connection could be taxed and the impugned provisions were constitutional.
Provisions considered
- Article 246; Seventh Schedule, List II, Entry 49, Constitution of IndiaThe levy fell within the State’s distinct taxing power over lands and buildings, rather than the non-taxing water entry. (¶¶ 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40)
- Sections 52, 53, 55 and 56, Uttar Pradesh Water Supply and Sewerage Act, 1975The tax attached to premises, measured by assessed annual value, subject to statutory restrictions. Section 56 allocated liability between occupiers of connected premises and owners of unconnected premises. (¶¶ 15, 24, 25, 26, 49)
- Sections 59 and 63, Uttar Pradesh Water Supply and Sewerage Act, 1975Separate provisions for water-consumption charges and fees confirmed that the Section 52 levy was a tax. (¶¶ 16, 27, 48)
Held
- The subject of a tax must be distinguished from its measure. A levy on premises, defined as land or building, did not become a service fee because annual value measured it or water-supply activity motivated its imposition. (¶¶ 18, 19, 20, 21, 22, 23, 24)
- Section 55’s restrictions remained applicable. Subject to them, absence of a connection or actual consumption did not exempt premises from tax: Section 56 expressly provided for recovery from owners of unconnected premises. (¶¶ 25, 26)
- The Section 52 levy was a tax within Entry 49 of List II. Restrictions tied to the availability of water services, differentiation between owners and occupiers, and earmarking revenue did not establish that it was a fee. Modern tax-and-fee jurisprudence did not require a strict individual quid pro quo for every fee. (¶¶ 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47)
- Paragraph 23 of Union of India v. State of U.P. confused Chapter VI’s heading with Section 52’s contents. Its observations characterising that statutory tax as a fee were per incuriam and overruled to that extent; the decision’s distinction concerning charges for services to Railways was explained. (¶ 48)
- The constitutional challenge to Sections 52(1)(a), 55(b)(i) and 56 failed. The authority could recover the outstanding demand with interest at nine per cent per annum. (¶ 49)
Result
Appeals allowed; High Court judgment set aside and the respondent’s writ petition dismissed. Recovery of the balance demand with 9% annual interest permitted; no order as to costs.