Case Note & Summary
The case arose from appeals before the Supreme Court against the judgment of the Allahabad High Court dated April 21, 1995, which held that the State of U.P. and its development authorities lacked power to levy development fee under the U.P. Urban Planning and Development Act, 1973. The High Court had also found that demands for malva charges (stacking charges) and water charges were violative of principles of natural justice and directed that an opportunity of hearing be given before levying those charges. The development authority was constituted under the Act for a development area. When the respondents filed plans for grant of sanction, a demand was made for deposit of development fee. The respondents challenged these demands, leading to the High Court's declaration that no provision in the Act or Rules empowered the levy of development fee. The State and the development authority appealed to the Supreme Court. The core legal issue was whether the development authority had statutory power to levy development fee. The appellants contended that Sections 14 and 56(2) of the Act, read with regulations and directions under the predecessor Uttar Pradesh (Regulation of Building Operations) Act, 1958, empowered the levy as a fee for services rendered. The respondents argued that there was no express provision and that Sections 33 and 41 were insufficient, relying on Ahmedabad Development v. Pasawalla. The Supreme Court examined the statutory scheme, including definitions in Section 2 and provisions of Sections 3, 4, 7, 14, 33, 41, 56, and 59. It held that the development authority was enjoined to undertake planned development and provide amenities under the Act; it could either itself provide the amenities or require the developer to deposit the amount, furnish a bank guarantee, or mortgage property as security for providing amenities as a condition of sanction. The Court reiterated that levy of a fee is a compulsory exaction for services rendered as quid pro quo, and that Article 265 of the Constitution requires authority of law for any tax, which was satisfied here because the statute delegated power to the rule-making authority to regulate collection and payment. The Court distinguished Ahmedabad Development v. Pasawalla on the ground that in that case there was no express provision for levy of developmental charges and reliance was placed on the doctrine of ejusdem generis, whereas in the present case Sections 14 and 56(2) read together provided the necessary power. The Court also referred to The Hingir-Rampur Coal Co. Ltd. v. The State of Orissa for the principle that fee requires quid pro quo. The Supreme Court concluded that the High Court was clearly in error in holding that there was no provision under the Act or Rules to levy development fee, and held that the Act specifically gives such power. The judgment primarily addressed the development fee issue; the High Court's direction regarding natural justice for malva and water charges remained undisturbed in the available text.
Headnote
A) Local Government - Development Authority - Levy of Development Fee - U.P. Urban Planning and Development Act, 1973, Sections 14, 33, 41, 56(2), 59 and Uttar Pradesh (Regulation of Building Operations) Act, 1958, Section 14 - The High Court declared that the development authority had no power to levy development fee under the 1973 Act. The Supreme Court examined the scheme of planned development under Sections 2, 3, 4, 7, 14, 33, 41, 56 and the predecessor regulations, and held that the Act specifically gives power to the development authority to levy development fee as a condition for granting sanction for development. Held that the High Court was clearly in error in holding that there is no provision under the Act or the Rules to levy the development fee. (Paras Not mentioned) B) Constitutional Law - Taxation - Article 265 of the Constitution of India - Fee as compulsory exaction for services rendered as quid pro quo - The court observed that levy of fee is a compulsory exaction for services rendered as quid pro quo and that no tax can be levied without authority of law under Article 265. The court found that the statute, instead of prescribing the rate of developmental charges itself, gave power to the rule-making authority to regulate collection and payment, which constituted sufficient authority of law. Held that the levy of development fee is valid and not violative of Article 265. (Paras Not mentioned) C) Precedent - Distinguishing Ahmedabad Development v. Pasawalla - Doctrine of Ejusdem Generis - The Supreme Court held that the ratio in Ahmedabad Development v. Pasawalla, (1992) 3 SCR 328 had no application to the facts of this case because in that case there was no express provision for levy and demand of developmental charges, and reliance on ejusdem generis was impermissible; here Sections 14 and 56(2) read together provide the right and power. Held that Ahmedabad does not bar the development fee levy. (Paras Not mentioned)
Issue of Consideration
Whether the U.P. Urban Planning and Development Act, 1973 and the rules/regulations made thereunder empower the development authority to levy development fee, and whether the Allahabad High Court was correct in declaring that no such power existed.
Final Decision
The Supreme Court held that the U.P. Urban Planning and Development Act, 1973 specifically gives power to the development authority to levy development fee as a condition for sanction of development plans, and that the Allahabad High Court was clearly in error in holding that there is no provision under the Act or Rules to levy the development fee.
Law Points
- Levy of fee is a compulsory exaction for services rendered as quid pro quo
- No tax can be levied without authority of law under Article 265
- Development authority empowered to levy development fee under U.P. Urban Planning and Development Act
- 1973 read with regulations
- Doctrine of ejusdem generis cannot supply power to levy fee where no express provision
- High Court erred in holding no provision for development fee
