In a recently reported decision the Rajasthan High Court has declared the increase in the meter testing fee sought to be carried out by the Jaipur Vidyut Vitran Nigam Ltd. as invalid and illegal. The High Court took note of the settled law on the distinction between a 'fee' and a 'tax' to declare that there was no additional service being rendered by the additional fee sought to be collected and therefore the increase was actually a tax being camouflaged as a fee and thus invalid being tested on the parameters of a fee.
The meter testing fee was earlier being imposed by a notification issued by the Rajasthan Government in 1977 and was sought to be increased by a notification issued in 1994 which was challenged before the High Court. In these circumstances, the High Court declared as under;
10. The following elements can be abstracted for declaring a levy as “a fee”:i) Fee is only a particular form of taxing power of the State;(ii) Fee is a charge for a special service rendered to individuals or a class by some governmental agency; (iii) Fee is a payment for a special benefit or privilege;(iv) A fee is a sort of return or consideration for services rendered; and(v) Thus, a quid-pro-quo should exist between the fees being charged and the service being rendered. However, it is not necessary to establish the quid pro quo with arithmetical exactitude. What is essential is that a close proximate relationship should be shown between the fee being charged and the service being rendered. It is further essential that a good and substantial portion of the fee should be shown to have been expended for the purpose for which the fee is levied. Thus, the quid pro quo should be established broadly and reasonably.
11. In the present case, admittedly the electrical installations which needed to be inspected and tested remained the same. Moreover, the service being rendered by the Electrical Inspector continued to be the same. Further, there is nothing to prove that either a better service or a new service was being provided to the petitioner by the Nigam. Thus, there is nothing to demonstrate the existence of quid pro quo between the increased fee being levied and the service being rendered by respondent Nos.1 & 2. Thus, there is no plausible explanation for the tremendous increase in the fee prescribed by the notification dated 31.12.1994. Hence, the notification dated 31.12.1994 does not meet the requirements of a legitimate fee. Thus, in fact, “a tax” is being camouflaged as “a fee”. Since neither the Act, nor the Rules empower the State Government to impose a tax, the notification dated 31.12.1994 is clearly in violation of Article 265 of the Constitution of India. Hence, the notification dated 31.12.1994 is unsustainable in the eyes of law.
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