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Judgment
Ramaprasada Rao, CJ.
The writ petitioner is a company incorporated under the Indian Companies Act. It is a textile mill and a private limited company. For the year
1970-71, the petitioner paid Rs. 4, 318. 22 towards property tax, water tax and library cess to the Town Panchayat, Thachanallur, Tirunelveli
district, which is the first respondent in the writ petition. For the year 1971-72, a general revision of the tax payable by the petitioner, among
others, to the Panchayat was undertaken, and the tax was increased from Rs. 4, 318-22 to Rs. 5, 834-79. On representations made by the
petitioner, a fresh assessment was made demanding a sum of Rs. 6,724-32, which comprised of property tax, water-tax and library cess,
reckoned in the ratio of 1:0.50: 0.50. On further representations, the tax was reduced to Rs. 6,081 38. Inter alia this amount represents a sum of
Rs. 1,736.20 towards water tax. While this was the position, another notice of demand was issued on 28th October, 1972, whereby a sum of Rs.
7,059-68 towards all the three taxes was demanded. This included a sum of Rs. 2,942 towards water-tax. It is the admitted case that the tax on
water has been increased from the ratio of 0.50 to 0.75. The increase, according to the Panchayat, was due to the water supply scheme
undertaken by the Panchayat at a cost of Rs. seventeen lakhs which was under execution. The petitioner again protested. In particular, the
petitioner''s case, so far as the increase in water tax was concerned, was that, since the Town Panchayat had at no time provided any water facility
to the petitioner mills and as the water requirements of the entire mills was met from a big well inside the campus, there was no warrant for the levy
of water tax at all. The petitioner has therefore come up to this Court for the issuance of a writ of mandamus as against the Panchayat restraining
them from levying and collecting the sum of Rs. 2, 942, as water-tax under the relevant provisions of the Tamil Nadu Panchayats Act read with
those under the Tamil Nadu Public Health Act.
The first contention of the petitioner is that, even assuming that such a levy is conceivable under the provisions of both the Acts, it is only in the
nature of a fee for services to be rendered and that the levy is premature since no such service has been provided on the date when the impugned
notice of demand was issued and that, in any event, the fee claimed cannot be said to be commensurate with the services which the Panchayat is
likely to render to the petitioner mills.
Without prejudice to the above contentions, it is stated that, as a tax can be imposed only with the authority of law and as Entry 49 among other
Entries, in List II of the Seventh Schedule to the Constitution of India does not enable the State Legislature to levy a tax on water or water supply
by a Public Authority, such a levy is not authorised, and that, even assuming that the Acts referred to above enabled the first respondent to demand
such a tax, such an imposition is beyond the legislative competence of the State Legislature.
It is also specifically alleged that Section 25 of the Public Health Act violates the fundamental right of the petitioner under Articles 14 and 19 of
the Constitution.
In the counter affidavit filed on behalf of the first respondent as well as the second respondent, which is the State of Tamil Nadu, represented by
the Secretary to Government, R.D.L.A. department, the fact that the demand was made as stated in the affidavit is not denied. In so far as water
tax is concerned, reference is made to the proposal to execute a water supply scheme at a total cost of Rs. 17,00,000, and it is stated that, in
order to augment the resources of the Panchayat and for the proper execution and maintenance of such a water supply scheme, it became
necessary to increase the rate of water tax from 50 per cent to 75 per cent. It is further stated that the Panchayat is authorised to levy water tax
with the prior sanction of the Government and that such a sanction has been obtained. (It is not disputed in this case that the water tax levied was
so authorised by the Government). It is also stated that the water supply being intended for the general welfare of the people within the Town
Panchayat and as it is one of the obligations of the Town Panchayat to provide protected water supply, the petitioner cannot deny such a service
voluntarily by himself on the foot that it has enough and copious supply of water from its own well. It is for the petitioner to seek service connection
for water from the Panchayat, but on that ground it cannot deny its liability to pay water tax
It will be convenient to refer to the relevant provisions of the Tamil Nadu Panchayats Act (XXXV of 1958) and the Tamil Nadu Public Health
Act (III of 1939) for, the purpose of appreciating the relative contentions of the parties. Chapter III of the Panchayats Act deals with the functions
and powers of the Panchayat. Section 63 (g) says that it is the duty of the Panchayat to make reasonable provision for carrying out the
requirements of the village or town in respect of the sinking and repairing of wells, the execution, repair and maintenance of ponds or tanks and the
construction and maintenance of water works for the supply of water for Washing and bathing purposes etc Section 64 (j) of the Act deals with
the power of the Panchayat to make such provisions as it thinks fit for carrying out the requirements of the village or town and inter alia refers to
the construction of works of public utility and the provision of other facilities, for the safety, health, etc., of the inhabitants of the village or town.
The Panchayats Act, as such, does not enumerate or enunciate as to what a water tax is, though Sections 120, 121 and 122 refer to house tax,
profession tax and vehicle tax.
The Tamil Nadu Public Health Act, 1939, which is applicable to the entire State, and which is admittedly applicable to the Town Panchayat in
question, defines a local authority as well as an urban local authority. ''Local authority'', as defined in Section 3(20) means, in any area In a district
as defined in the Madras Local Boards Act, 1920, which is comprised within the jurisdiction of a Panchayat (constituted under the Madras Village
Panchayats Act, 1950), the Panchayat concerned. ''Urban local authority'', as defined in Section 3(36) would include any Panchayat notified by
the Government as an urban local authority for the purpose of the Act. Chapter III of the Public Health Act specifically deals with water supply.
Section 17 authorises the local authority (in this case the first respondent) if the Government so directs, to provide or arrange for the provisions of
a sufficient supply of drinking water for consumption by the inhabitants of the area within its jurisdiction. Such water supply, as far as practicable,
should not only be adequate, but should also be continuous throughout the year besides being wholesome and fit for human consumption. Section
18 contemplates the local authority undertaking such water works, if so directed by the Government. In fact, Section 18 (2)(a) enables the local
authority with the Sanction of the Government to construct water works for such supply of water, etc. Section 25, which is the charging section,
reads as follows, --
(1) Any local authority may, with the previous sanction of the Government, and shall, if so directed by them, levy within its area or any part
thereof any tax which may be necessary for providing water supply in such area or part;
(2) Any tax levied under Sub-section (1) may be a new tax levied on such basis assessed and realised in such manner as may be sanctioned or
directed by the Government, or may be a tax or additional tax levied under any head of taxation specified in any law for the time being in force
governing the local authority concerned in which case all the provisions of such law relating to the incidence, assessment or realisation of a tax
under such head or in any manner connected therewith shall be applicable to the tax or additional tax with such modifications and restrictions, if
any, as may be prescribed;
(3)(a) The rates at which any tax may be levied under this section shall be determined by the local authority with the previous sanction of the
Government in case the tax is levied by the local authority of its own motion and by the Government, in case the tax is levied at their discretion.
(b) The local authority may, with the previous sanction of the Government, and shall, if so directed by them, alter the rates at which any such tax is
to be levied.
(4)(a) Every local authority levying a tax under this section shall earmark the net revenue therefrom for expenditure on the execution, maintenance
and improvement of works of water supply in the local area or part thereof within which it is levied.
(b) Such revenue shall be expended in accordance with such orders as may be issued by the Government in this behalf.
(5) Nothing contained in this section shall be deemed to affect the power of the Corporation of Madras to levy a water and drainage tax u/s 99 (1)
(b) of the Madras City Municipal Act, 1919, or of any municipality governed by the Madras District Municipalities Act, 1920, to levy a water and
drainage tax u/s 81 (1)(b) of that Act or of any local board governed by the Madras Local Boards Act, 1920 to levy an additional house tax;
under Rule 19 of Schedule IV to that Act for any purpose specified in that Rule.
This is the charging Section which enables the local authority, with the sanction of the Government, to levy such water tax which may be necessary
for providing water supply in the concerned area. Section 20 (6) says that, if a water tax is levied u/s 25, the cost of carrying out the water works
relatable to such area shall be borne by the local authority concerned.
The first challenge on the demand for water tax is on the ground that it is in the nature of a fee and not a tax. It is by now well-established that a
fee in different from a tax. In the case of a fee an element of quid pro quo is always present, and the fee should reasonably be commensurate with
the service rendered by the fee levying authority. If such a fee is ex facie disproportionate and arbitrary, then Courts will not hesitate to interfere
and declare such a levy as an unauthorised one. Tax, however, connotes a totally different concept. It should be an imposition authorised by law
and levied by the appropriate statutory authority. It takes into its told all impositions made by the appropriate authority, when authorised by the
appropriate legislature. It may be against the person, privilege, occupation or enjoyment of the people, as the essential purpose of such imposition
is to augment public revenue. The only test to find out whether a tax is legal or not is to see whether under the appropriate legislation, a provision
for such a charging section has been made, and, if it is so found, then the imposition of such a tax slopes from the legislative competence of the
State.
The contention of Mr. Manivannan, learned Counsel for the petitioner, is that, as the Panchayats Act, by itself, does not provide for the
imposition of water tax, the power said to be derivable by invoking Section 25 of the Public Health Act which is a different Act, is neither
reasonable nor plausible. As it is common to legislate by incorporation, the provisions of the Public Health Act, by reason of such incorporation
have become inbuilt into the provisions of the Panchayats Act as well. We have already referred to the relevant provisions of the Public Health Act
which enable the levy of water tax (Section 25). It is not in dispute in this case that the Government has sanctioned the levy and that sanction was
prompted because of the fact that water works of a substantial magnitude, costing about Rs. Seventeen lakhs, has been undertaken by the
Panchayat, first respondent. The Public Health Act defines ''local authority'' as including the Panchayat concerned, governed by the Tamil Nadu
Village Panchayats Act. It, therefore, follows that the first respondent can impose water tax, notwithstanding the fact that no specific provision for
the imposition of such tax has been expressly made, as is provided for in Sections 99 to 102 of the Tamil Nadu City Municipal Corporation Act,
1919, or u/s 81 of the Tamil Nadu District Municipalities Act. The question whether it is a fee or tax is thus answered by the fact that it is a tax,
because the levy or imposition is eo nomine termed as ''tax'' and not as ''fee''. As early as Municipal Commissioners v. Parthasarathi I.L.R.(1888)
Mad. 341. where a public levy was imposed, in similar circumstances, it was pointed out that the sole Judge was the local authority.
In Municipal Council Vs. Nidamarti Jaladurga Prasadarayudu, . Varadachariar, J., observed:
Under what circumstances a water and drainage tax should be permitted to be levied in connection with works to come into existence in the future
is a matter for the discretion of the Municipal body and of the Government and not a matter affecting the legality of the levy of the tax, if the
Municipal body chose to levy the tax.
We are unable to accept that, in such circumstances, the impost should be treated as a fee. It is in public interests that water tax is levied.
In a Bench decision of this Court in The Corporation of Madras Vs. R. Sundaram and Another, . Veeraswami, CJ., forcibly expressed himself
thus --
It is well-settled principle that, where a public body is vested with a power or discretion, it is for exercise and not for inaction, and it is especially
so, when the power or discretion has been vested for the benefit of those who will be affected by its non-exercise.
It was further observed that, merely because property tax is levied inclusive of water and drainage tax, though no facilities have been provided for,
it cannot be regarded as illegal and no owner of property can, on that as sumption, withhold any part of the tax as if it were attributable to water
and drainage not provided for in the area in which the property is situate.
We are, therefore, unable to agree with the contention that the executory nature of the waterworks would not enable the Panchayat to demand
the impost, provided it derives such authority to make the demand on the inhabitants within the Panchayat and so long as it has been sanctioned by
the Government and if such waterworks are undertaken for the benefit of the inhabitants of the area
The Legislature was competent to provide for the imposition of such water-tax by virtue of the Entries in List II of the Seventh Schedule to the
Constitution. We are here concerned with Entry 49 in List II which speaks of taxes on lands and buildings. On the language of the Entry, the
contention of Mr. Manivannan is that provision of water is something which is independent of land and building and that, therefore, water-tax as
such cannot be compartmentalised as if it were a tax on land and building. There is an inherent fallacy in this contention. We have already seen that
water-tax is always made relatable to land or building. In fact, the rate per cent of water-tax is reckoned with reference to the quantum of propery
tax on the land or building in question within the Panchayat, Municipality or Corporation. Though the expression ""water-tax"" is loosely adopted, as
if it were a tax on water, in substance and in effect it is a tax on land and building and the owners of such lands and buildings.
In (Morris) AIR 1930 129 (Privy Council) . a bridge tax was upheld by the Privy Councils as a land tax, because the nexus between the tax
and the land and building was so demons-trably appreciable. Even so, therefore when water-tax is imposed in order to subserve public interests
and in exercise of a public duty or obligation, so as to subserve the needs of the inhabitants of the Panchayat, who own lands and buildings in that
area; then also it cannot be disputed that it is not a tax on land and building. A Division Bench of the Andhra Pradesh High Court in Nizam Sugar
Factory Ltd. Vs. City Municipality, Bodhan and Another, ; has squarely held that water-tax on land and building would come under Entry 49 in
List II of the Seventh Schedule to the Constitution. We respectfully agree with the view of the learned Judge.
The subject-matter can also be considered from a slightly different perspective. In The Municipal Council, Madurai Vs. R. Narayanan and
Others, . Krishna lyer, J. (speaking for the Court) in his inimitable style, observed --
In Corporation of Calcutta and Another Vs. Liberty Cinema, . this Court had occasion to warn against reaching any conclusion, when there is a tax
fee conflict, based on collocation of subjects in a statute or the placement of a provision under a certain rubric as clinching. What is telling is the
totality, not some isolated indicium. A short cut is often a wrong cut and a fuller study of the statute to be construed cannot be avoided.
Once a legal nexus between the tax imposed on the land or building on which the water works are undertaken is established, then such a
connection between the land and the tax thereon in a given case gives the clue to judge whether it is a tax on land or building. Undoubtedly, water-
tax, which is inextricably connected with the land within the jurisdiction of the Panchayat, cannot be said to be so dissociated from such land or
building.
In The Anant Mills Co. Ltd. Vs. State of Gujarat and Others, . where water pipes and electric cables were implanted underneath the land, and
the objection was that, because of such interception, such land or property could not be taxed under Entry 49 of the State List, the Supreme Court
observed:
Mr. Tarkunde on behalf of the petitioner-company has urged that under Entry 49 of the State List in the Seventh Schedule to the Constitution, the
State Legislature is empowered to enact a law relating to taxes on lands and buildings. It is submitted that the State Legislature has no competence
under the above Entry to enact a law for levying tax in respect of the area occupied by the underground supply lines. The word ''land according to
the learned Counsel, denotes the surface of the land and not the underground strata. We are unable to accede to the above submission. Entry 49
of List II contemplates a levy of tax on lands and buildings or both as a unit. Such tax is directly imposed on lands and buildings and bears a
definite relation to it. Section 129 makes provision for the levy of property tax on buildings and lands. Section 139 merely specifies the persons
who would be primarily responsible for the payment of that tax. The word ''land'' includes not only the surface of the earth but every thing under or
over it, and has in its legal signification an indefinite extent upward and downward, giving rise to the maxim cujusest solum efus est usque ad coelum
(See pp 163 -- 73 Corpus Juris Secundum). According to Broom''s Legal Maxims, 10th Edn. p. 259. Not only has land in its legal signification an
indefinite extent upwards, but in law it extends also downwards, so that whatever is in a direct line between the surface and the centre of the earth
by the common law belongs to the owner of the surface (not merely the surface, but all the land down to the centre of the earth and upto the
heavens) and hence the word ''land'' which is nomen generatissimum, includes, not only the surface of the earth, but everything under it or over it.
Thus it is seen that when once a levy is authorised under the relevant provisions of both the Panchayats Act and the Public Health Act, it is not
for the owner of the land and building to challenge it on the only ground that such water-supply is not useful to him, having regard to the copious
supply of water from his own well inside the mill campus. So long as a nexus is established between such water-works or water supply undertaken
by the Panchayat, pursuant to its statutory obligations under the Act, and the land or building, and as long as it is in public interest and intended to
serve the generality of the public, then the totality of the purpose and meaning of such levy has to be looked into for finding out whether it would
come under Entry 49 of List II of the Seventh Schedule. We have no hesitation to hold that such tax is nut only authorised, but is also a legal one
and that the Legislature had the requisite competence to impose such a tax in the exercise of their legislative power which is derived from Entry 49
as above. We, therefore, hold that Section 25 of the Public Health Act and the ancillary provisions connected with it in the Public Health Act, and
in turn incorporated in the Panchayats Act, are valid and that they have been validly legislated upon.
For the reasons stated above, we are unable to issue a writ of mandamus as asked for by the petitioner, as a writ of mandamus is a high
prerogative, writ, which is not granted for the mere asking of it. The hypothesis and the basic requirements for the issue of such a writ are that a
public body is refusing to do its public duty or it is acting in excess ot its authority or is openly violating the principles of natural justice. From the
records, it should be apparent that the aggrieved party has a legal right to compel or enforce the performance ot a correlative duty on the part of
the public body. Such a right or duty need not always slope from the provisions of the Constitution, but may be founded on statute or law. Courts
will be reluctant to issue the prerogative writ of mandamus unless the legal right ot the petitioner and the legal duty ot the respondent are of a public
nature. We have already seen that the petitioner has no such legal right to compel the first respondent not to make a demand on him for water tax.
Such a right to impose a levy is not only authorised under the relevant statute, as already referred to but is also a legal duty on the part of the firs,
respondent to make such a demand, that being in public interest to do so.
The writ petition, therefore, fails and is dismissed with costs. Counsel''s fee Rs. 200.