JUDGMENT
Dipak Misra, J.
1. Invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India the petitioner, Secretary, Catholic Diocese of Indore, has prayed for declaring the Sections 21(2), 27, 28 and 29 of the M.P. Societies Registrikaran Adhiniyam, 1973 (hereinafter referred to as ‘the Act’) as amended by the M.P. (Sanshodhan) Act (No. 29 of 1998), Rule 4 of M.P. Societies Registrikaran Adhiniyam, 1998 (for brevity ‘the 1998 Rules’) and Schedule to the said Rule as unconstitutional and to issue a further direction to the respondent No. 2, Registrar of Firms and Societies, to refund the amount that has been levied for grant of permission as contemplated under Section 21(3) read with Schedule to Rule 4.
2. The facts in a nut shell are that the petitioner is the Secretary of Catholic Diocess, a society registered under the Act and is represented by its Secretary. The object of the society is to support and maintain the Roman Catholic Bishop and Clergy of the Diocese of Indore and Roman Catholic religious, charitable and educational purposes throughout the diocese of Indore. The membership of the Society is restricted to the members of Catholic clergy and Catholic religious congregation. It is averred that main purpose of the society, as is evident from the bye-laws, is to perform and encourage the services of humanity as per Christian religion of the Roman Catholic faith. As pleaded, for carrying out the activities of society the Diocese desired to purchase the land bearing Khasra Nos. 265/1,266/1 and 266/1 (KA) situated in village Chhota Bangadada, Tahsil Indore from certain persons. By the resolution of the Diocese, the petitioner was authorized to do the needful in the matter. A copy of the resolution has been brought on record as Annexure-5. The petitioner entered into an agreement for purchase of the said property with the land owners on 12-4-1999. Each agreement provided for sale consideration of Rs. 4,25,000/- per acre.
3. It is contended that as per the provisions of the Act every society is required to obtain prior permission before purchase of immovable property. As there is a postulate to deposit the fees it was so imposed by the respondent No. 2 which compelled the petitioner to deposit a fee of Rs. 76,501/- which was done under protest by challan as per Annexure-9. After the said deposit was made the respondent No. 2 granted permission under Section 21 on 1-6-1999, as per An-nexure-11. In pursuance of such permission the sale deed has been executed in favour of the petitioner on 12-6-1999 and 14-6-1999.
4. It is contended that the provisions that deal with the levy of fees are unconstitutional as the State Legislature does not have the competence to levy such fees. It is put forth that the fees as prescribed is a tax and is a colourable exercise of power. It is further urged that no fee can be charged for permission of sale of property of the society inasmuch as necessary ingredients for authorizing a valid and legal levy of fee are absent. In the absence of quid pro quo between levy of fee and the service provided the imposition is impermissible. It is urged that no service is provided by the respondent No. 2 to any of the society to justify the levy of fee. Reference has been made to Section 28 to highlight that there is provision for submission of audit statement of income and expenditure of the society to the Registrar along with the balance sheet and the aforesaid section does not contemplate any further audit or inspection. Therefore, the schedule is not for the purpose of undertaking special audit under Section 28(2). It is asseverated that the imposition of such fee is unreasonable, harsh, arbitrary, excessive, unequitable and discriminatory and violates Article 14 of the Constitution of India. It is also set forth that such a levy is beyond the rule making power of the State and, therefore, the same deserves to be lanceted.
5. A counter affidavit has been filed by the respondents contending, inter alia, that the State Legislature has the exclusive competence and authority to legislate on the subject in respect of registration and other affairs relating to Literary. Scientific, Educational, Religious, Charitable or other societies and, therefore, the assertion made with regard to legislative competence is without any substratum. Reference has been made to various provisions of the Act to highlight the role of the State Government. It is put forth that powers vested with the Registrar to undertake special audit by persons authorized by him by general or special order in writing in that behalf to audit the accounts of any society. It is also his statutory obligation to see that the societies function properly and it is the responsibility and liability of the State Government to inspect any of the documents/records filed with the Registrar under the Act and that is why the payment of fee has been prescribed. It is contended that main challenge in the writ petition is with regard to the Schedule to the Rule which imposes levy but the said levy is legally sustainable inasmuch as the State Government has decentralized the work of registrikaran at every Divisional Headquarter and independent office headed by an officer of the rank of Assistant Registrar has been established and pursuant to the aforesaid change most of the work and functions of the society are supervised, regulated and controlled by and through the said divisional office. The aforesaid change on one hand has lessened the hardships of the society and has provided convenient facility and approach but at the same time increased the establishment expenses in this regard. The maintenance, preservation and proper keep-up of all the records require substantial expenses and since cost of all these activities has gone up quite high the financial burden has fallen on the State Government. A chart showing regular and continuous increase in the establishment expenses has been brought on record as Annexure-R-1.
6. It is contended that the societies registered under the 1973 Act the work for promotion of Science, Education, Literature or Fine Arts or for defusing useful knowledge and political education and establishment and maintenance of various socio-literary amenities like Library, Reading room, Art Galleries, Public Museums and for promotion of social welfare, religious and charitable purposes. The State Government has recognized a contribution in all round and proper development of society and, therefore, large number of societies particularly minority societies are given governmental aids by various departments of the State Government. A chart showing figures of such grants given by various departments has been brought on record as Annexure-R-2.
7. It is put forth that the societies are funded through various donations, aids and grants that is meant for social charitable objects. The scheme of the Act clearly con templates that society is bound in law to utilize its funds and assets for the furtherance of the object and purpose for which. society has been established without any kind of deviation. For the aforesaid purpose the condition of prior permission in writing has also been provided in Section 21 so that reasonable check may be imposed on sale and purchase of immovable property by the societies. Registrar has been empowered to ensure that purchase/sale of the property is made for the purpose and object of the society and funds are not being misutilized. It is urged that the members of the office bearers of the society do not have the personal stakes in the society and, therefore, possibility of misutilization of the funds of the society for their individual gains cannot be ruled out. It is set forth that the governing body of the society may enter into sham transaction of purchase of immovable property and exorbitant price causing loss to the society for their individual gains or vice versa. Hence, the prior permission has been prescribed for the purpose of grant of permission. Registrar is required to check and verify the bona fides of the transaction and to ensure that money is being utilized for the real need of the society. To ensure and verify all these aspects the Registrar is required to do or got done by conducting necessary enquiry through its officers or other agencies. This amount is spent on rendering of substantial service. It is further put forth that the Registrar has the statutory obligation to verify and ascertain about the investment and utilization of funds and, therefore, prescription of fee is regulatory in nature and the Registrar renders various facilities and services to all the societies. It is urged that the Registrar and other officers by carefully scrutinizing the financial working of the society to ensure the proper utilization of funds in the larger interest of the members of the societies and to subserve the very purpose for which the society has been constituted. The Registrar regulates and supervises the functioning of the society to ensure that the society works within the bounds and purpose and objects and thereby prevents rnisutilization.
8. A rejoinder has been filed by the petitioner stating, inter alia, that the societies registered under the Act constitute a separate class and hence, there has been discrimination. The rules also provide for only one fixed slab and do not give jurisdiction to the Registrar to consider any other facet. The respondents have taken inconsistent stands inasmuch as fee can be Justified on the basis it provides quid pro quo to the person paying it or that it is regulatory fees charged for grant of licence. It is stated that return does not show as to what services are provided to the societies by decentralization of the office of Registrar. Increase in manpower does not automatically bring increase in quality or speed of service to the public. The respondents have not submitted any material to show how the societies have been benefited by decentralization. On the contrary, applications are still required to be submitted at Bhopal only. It is stated that the return mentions that cost of decentralization is to be borne by the State Government and the levy impugned is for to reduce the financial burden of the State Government. It is also stated that when the levy is Intended to go in general coffer of the State Government then it would be tax and not the fee. It is also averred that stand in the return that registration of societies confers special status and they get various aids is irrelevant inasmuch as the challenge is not to the fees charged for registration of societies.
9. It is further contended that the Government aids are given for particular activities and not because that they are registered societies. It is also submitted that sufficient precaution is taken by the Department which gives financial assistance to see the funds are not misutilized. The State grant to the schools run by several Diocese is only marginal. Bhopal, Ujjain, Satna or Sagar Dioceses do not receive any grant for any school. However, Indore Diocese received partial grant for only 7 out of 28 schools. It is also stated that requirement of obtaining permission prior to acquiring or transferring of any property had already existed in Section 21 prior to amendment. The petitioner does not object to requirement of obtaining permission of the Registrar prior to transfer but is only objecting levy of 2% or 5% of price of such transfer. It is also submitted that return does not state as to how much amount was spent in making inquiries through offices or other agencies. It is also stated even if fees is sought to protect by the respondents as a regulatory manner, it is liable to be struck down. The nature and extent of enquiry by the Registrar does not depend upon the price of the property proposed to be transferred. It is also stated that Act does not provide that any transaction of property made without obtaining permission shall be void. However, Rule 5 of the Rules provide that if properly is transferred without permission than penalty equivalent to the amount double the fees is required to be deposited and such double deposit is not in consonance of language of Section 21 of the Act. It is demonstrable that requirement of fees is nothing but a revenue raising exercise.
10. As far as stand regarding societies registered under the Act constitute a separate class is concerned it is submitted that public charitable trusts registered under M.P. Public Trust Act also perform charitable activities and receive financial assistance from official and private donors yet no levy is imposed on them as is done in the cases of societies. It is also averred that since societies perform activities which are beneficial to public, therefore, no fees should be levied. It is reiterated that levy of fees is ex facie unreasonable and excessive and hence, even as a regulatory fee is liable to be struck down.
11. We have heard Mr. P. C. Bagadia, learned senior counsel, Mr. Kishore Shrivastava, learned Sr. Counsel, Mr. Piyush Dharmadhikari, and Mr. Ankur Shrivastava, learned Counsel for the petitioner and Mr. P. N. Dubey, learned Deputy Advocate General for the respondent-State.
12. It is submitted by learned Counsel for the petitioner that if the imposition under Sections 21, 27, 28 and 29 of the Act is not a fee but a tax. It is also contended by him that even if it is a fee either compensatory or regulatory, the extent of levy is excessive and arbitrary. It is further urged that Registrar has been delegated the power to levy fees by only fixing a maximum but without giving any guidance on how it is to be imposed and, therefore, it confers unguided discretion on the Registrar. It is further contended by him the requirement of seeking prior permission to transfer the property under Section 21 is discriminatory as such requirement is in several other laws where no fees is charged. It is further submitted that it is an imposition without quit pro quo. It is not saved as regulatory fee because its concept is restricted to licences and does not extend to grant of permission. It is further submitted that in lieu of the fee charged, no service whatsoever is provided to the societies. It is also contended that it is well settled that any kind of fee should not be excessive and arbitrary. It is their further submission that levy of 2% and 5% on purchase or sale price merely for grant of permission to purchase or sale is excessive and arbitrary and has no nexus with any kind of processing or inquiry for grant of permission.
13. It is submitted by Mr. P. N. Dubey, learned Deputy Advocate General for the State that the grounds on which the provisions are sought to be assailed are totally without substratum and substance. The Registrar has the authority to regulate the functioning of the societies as they are registered and receiving grant. Any sham transaction requires to be curbed. Grant of permission is only to see that the property does society intend to purchase or sell, for grant of permission certain inquiries are to be done. Certain steps are to be taken and hence, levy is justified. Quite apart from the above, submits Mr. Dubey, that the immediate quid pro quo is no relevant inasmuch as Registrar has to spend a lot for maintaining supervision of the society and to provide facilities which are imperative to be done under the Act. It is further contended by Mr. Dubey that to have a definite amount the percentage has been fixed and it is a fee all the way. it is urged by him that if a meagre percentage has been fixed, by no stretch of imagination, it can be said to be excessive or arbitrary. It is further canvassed by him that the society registered under this Act cannot be equated with trusts or other bodies which come under the other statutes. There is no similarity in their functioning and the concept of parity or similarity is not attracted and, therefore, there is no discrimination.
14. Though various provisions have been assailed the real grievance as has been fairly accepted by the learned Counsel for the parties pertains to Schedule to Rule 4 of the Rules. But prior to that we would like to reproduce Section 21 of the Act. The said provision reads as under:
21. Society not to acquire or sell or transfer immovable property without prior permission of Registrar.- (1) No immovable property shall be acquired or transferred by sale, gift or otherwise by the society without the prior permission of the Registrar in waiting.
(2) The property acquired or transferred shall not be utilized for any object other than the object of the society unless permission from the Registrar has been obtained and in case of gift written consent of the donor has also been obtained.
(3) The application for permission tinder Sub-sections (1) and (2) shall be in such form with such documents together with such fee as may be prescribed.
(4) Where the society violates the provisions of Sub-section (1) or (2), the society shall be liable to deposit such amount as may be prescribed within three months from the date of notice issued by the Registrar and if the society fails to deposit the amount within the aforesaid time, the society shall be treated as defunct under Section 34.
15. Though the said provision has been challenged, much emphasis has not been laid on the same inasmuch as the State Legislature can always make a provision for grant of permission for sale or transfer of immovable property. Such a ban cannot be objected to by the society, for the society has an object and purpose and meant for collective good. The grant of permission, in our considered opinion, does not violate any provision of the Constitution and by no stretch of imagination the said aspect can be held to be unconstitutional. Similarly, the assail to Sections 27, 28 and 29 of the Act is really not tenable as the same also has to be controlled by the Registrar in respect of the society.
16. The real assail as we perceive is the fixation of fee in schedule to Rule 4. The Rule 4 reads as under:
(4) Fees.- The fee payable- under the provisions of the Act shall be as specified in Schedule and shall be deposited into the Government Treasury and a copy of Treasury Challan shall be submitted to the Registrar, such fee may be also be deposited in the Office of the Registrar after obtaining the receipt thereof.
17. Schedule to Rule 4 provides maximum fees for registration of society, registration of Mahila Mandal, registration of Yuvak Mandal, application for permission under Sub-section (3) of Section 21, for permission to purchase and sale, for gift, for Sub-section (2) of otherwise utilizing of immovable property. On a perusal of fee structure we find the real issue involved in this case is Item No. 5. We proceed to reproduce the same.
(5) Under Sub-section (3) of Section 21
(a) Application under Sub-section 2% of Purchase
(1)-(i) for permission to purchase
and sale 5% of Sale
(ii) for each gift Rs. 5000.00
(b) For Sub-section (2) otherwise 10% of the cost of
plan or
utilizing of immovable property Rs. 10000/-
whichever is more
Out of item No. 55 what arises for assail is fixation for the amount for permission to purchase and sale. Hence, we shall proceed to deal with the said facet alone.
18. It is submitted by Mr. Bagadia, learned senior counsel that true nature of the levy is not the fee but has the character of tax. There is no quid pro quo. It is further submitted that no service is provided to the society. Learned senior counsel further submitted that levy is excessive and disproportionate and has no correlation with the purpose and it suffers from the vice of arbitrariness. It is argued by him that in the case at hand levy of 2% and 5% merely for grant of permission to purchase or sale is on the face of it excessive and arbitrary. It is also put forth that prescribing maximum is not guidance and as no minimum has been provided the rule is unsustainable. Learned senior counsel has further submitted that the stand taken by the State Government that the revenue is generated by imposition of fee to give service to the society is unacceptable. It is urged that augmentation of revenue has nothing to do with the grant of permission on the base of purchase or sale price. It is also proponed by him that the concept of regulatory fee is not applicable to the society as it renders beneficial service to the community. Learned Counsel has placed reliance on the decisions rendered in the cases of the Commissioner v. Lakshmindra Tirth , Kewal Krishna v. State of Bihar v. Rajani Ranjan 1994 Supp (2) SCC 567, Krishi Upaj Mandi Samiti v. Orient Paper , Calcutta Municipal Corporation v. Shrey Mercantile Pvt. Ltd. , Corporation of Calcutta v. Liberty Cinema ; Municipal Council Madurai v. R. Narayanan , VAM Organic v. State of U.P. , State of Tripura v. Sudhir Ranjan Nath , Secunderabad Hyderabad Hotel Owners Association v. Hyderabad Municipal Corporation , A.P. Paper Mills v. Government of A.P. and A. N. Parsuram v. State of Tamilnadu , to bolster the submission that it is not a fee but a tax. Learned Counsel has also referred to us many citations to show that it cannot be a regulatory fee and if it is, the same is excessive.
19. In this context we may refer with profit to the Constitution Bench decision rendered in the case of Jindal Stainless Ltd. and Anr. v. State of Haryana and Ors. wherein it has been held as under:
Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the tax payer to pay. The principle behind the levy of a tax is the principle of ability or capacity. In the case of a tax there is no identification of a specified benefit and even if such identification is there, it is not capable of direct measurement. On the other hand, a fee is based on the principle of equivalence. This principle is the converse of the principle of ability to pay. In the case of a fee or compensatory tax, the principle of equivalence applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. A tax can be progressive. However a fee or a compensatory tax has to be broadly proportional and not progressive. Compensatory tax is based on the principle of pay for the value. It is a sub-class of a fee. A compensatory tax is levied on an individual as a member of a class, whereas a fee is levied on an individual as such. The basic difference between a tax on one hand and a fee/compensatory tax on the other hand is that the former is based on the concept of burden whereas compensatory tax/fee is based on the concept of recompense/reimbursement. For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which has to be reimbursed by compensatory tax or in the form of compensatory tax. In other words, compensatory tax is a recompense/reimbursement.
(quoted from the placitum)
20. In this regard it is fruitful to refer to M/s. Shrey Mercantile Pvt. Ltd. (supra) wherein the Apex Court has held as under:
16. Therefore, the main difference between “a fee” and “a tax” is on account of the source of power. Although “police power” is not mentioned in the Constitution, we may rely upon it as a concept to bring out the difference between “a fee” and “a tax”. The power to tax must be distinguished from an exercise of the police power. The “police power” is different from the “taxing power” in its essential principles. The power to regulate, control and prohibit with the main object of giving some special benefit to a specific class or group of persons in the exercise of police power and the charge levied on that class to defray the costs of providing benefit td such a class is “a fee”. Therefore, in the aforesaid judgment in Kesoram’s case, it has been held that where regulation is the primary purpose, its power is referable in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the Government. But where the Government intends to raise revenue as the primary object, the imposition is a tax. In the case of Synthetics & Chemicals Ltd. v. State of U.P. it has been held that regulation is necessary concomitant of the police power of the State and that though the doctrine of police power is an American doctrine, the power to regulate is a part of sovereign power of the State, exercisable by the competent legislature. However, as held in Kesoram’s case (supra), in the garb of regulation, any fee or levy which has no connection with the cost or expense of administering the regulation cannot be imposed and only such levy can be Justified which can be treated as part of regulatory measure. To that extent, the State’s power to regulate as an expression of the sovereign power has its limitations. It is not plenary as in the case of the power of taxation.
21. In the case at hand the main Section provides for imposition of fee for grant of permission. We have already held that the same is permissible. Registrar is required to regulate and control the properties purchased or sold by the society. It has a laudable object. There cannot be a shadow of doubt that the same is in a way imperative. The question that emerges for consideration is whether the fee prescribed for such purposes is actually regulatory. There can be no shadow of doubt that the transaction is required to be regulated. In the process of regulation there can be production of revenue. Whether the State Government prescribed such fee to raise revenue as a primary object or not or it is tantamount to imposition of tax as advised at the present need not be delved into. As has been held by the Apex Court in the garb of regulation a fee in the garb of regulation, any fee or levy which has no connection with the cost or expense of administering the regulation cannot be imposed and only such levy can be Justified which can be treated as part of regulatory measure. As is evincible, the fee is levied for grant for permission. True it is, some procedural facets are to be gone into. There may be need of inquiry with regard to status of the property. A requirement may be found out that the society is not indulging in sham transaction. There may be need to find out that the property is not in litigation and the society is not put to loss. Some amount may be required for the purpose of procession of the application for grant of permission but we really fail to fathom how the same can have any nexus with the percentage of purchase or sale price. Therefore, we are disposed to think that this is not a regulatory measure because it is connected with the purchase or sale price without any basis or foundation. We repeat at the cost of repetition, a fee can always be prescribed for grant of permission for purchase and sale of the property so that the assets of the society are controlled but levy of fee on percentage basis, as has been prescribed by Rules offends the concept of regulatory fee and also invites the frown of Article 14 of the Constitution of India. Thus we declare the item 15 of the Schedule to Rule 4 of the rules as ultra vires. As we do not intend to address ourselves on any other facet of the said Schedule as that has not really come up for assail in this writ petition, there may be justification for the same, we kept the said aspect open. In view of the aforesaid the amount realised from the society on this score be refunded to it. However, as we have already held a fee can be prescribed on the foundation of reasonability meeting the conception of regulatory measure, the society will be bound to pay the same. The amount, as directed above, be refunded within a period of three months hence.
In the result the Writ Petition is allowed. There shall be no order as to costs.