ALLAHABAD HIGH COURT Kendriya Nagrik Samiti, Kanpur Vs. Jal Sansthan Civil Misc. Writ Petn. Nos.817, 656, 704 and 807 of 1981 and 122, 147,199 an d 246 etc of 1982 (K.N. Seth and R.R. Rastogl, JJ.) 28.05.1982 JUDGEMENT K.N. Seth, J. 1. By these petitions the petitioners have prayed for a writ, order or direction in the nature of certiorari quashing Notification No.1935/IX 2-122- 79 dated March,11, 1981, issued by the State Government levying water tax and sewerage tax at 12+ per cent and 3 per cent respectively and the bills issued to the petitioners on the aforesaid basis. The petitioners have also prayed for a writ , order or direction in the nature of mandamus restraining respondent No.1 from realizing the taxes at the aforesaid rates. They have also prayed for a writ, order or direction in the nature of mandamus commanding the Nagar Mahapalika to r educe the general tax to the extent to make the total taxes i.e. general tax, water tax and sewerage tax to 25 percent of the annual letting value and respondent N o.1 to reduce the rate of excess water supply. 2. For the sake of convenience writ petition No.817 of 1981 is treated as the lea ding case. In this petition petitioners No.1 is a registered society whose main fu nction is to look after the interest of the citizens of Kanpur particularly their civi c amenities and rights Petitioners Nos.2 to 9 are landlords and owners of the ho uses situate in different localities Of Kanpur. 3. Prior to the enactment of the Uttar Pradesh Water Supply and Sewerage Act, 1975, (U.P. Act No.43 of 1975) (hereinafter referred to as the Act), under which Jal Sansthans have been constituted, property tax which included a general tax, water tax and drainage tax was levied under Section 173 of the Nagar Mahapali ka Adhiniyam. The general tax was levied at the rate of 17+ per cent, water tax at 6+ per cent and drainage tax at 1+ per cent of the annual value of the building or land or both. Under the Act amongst the functions entrusted to a Jal Sanstha n are: (i) to plan, promote and execute schemes of and operate an efficient syste m of water supply; and (ii) to plan, promote and execute schemes of, and operat e, sewerage, sewage treatment and disposal and treatment of trade effluents. Un der Section 52 of the Act a Jal Sansthan is empowered to levy water tax and sew erage tax. Under the impugned notification issued by the State Government wat er tax has been levied at 12+ per cent and sewerage tax at 3 per cent. Responde nt No.1 has also revised the tariff for excess water supply. Bills have been subm itted to the petitioners at the revised rates. 4. Learned counsel for the petitioners contended that Section 52 of the Act whic h empowered a Jal Sansthan to levy water tax and sewerage tax, was ultra vires on the around of legislative competence. It was urged that no tax can be levied o r collected except by authority of law as provided by Article 265 of the Constitu tion and since the taxes in question do not fall within the legislative field of any of the items in List II of the Seventh Schedule, they are invalid. According to th e learned counsel Entry No.17, which is the only head under which the State leg islature is competent to legislate on the subject of water supply etc., is not an en try relating to tax and under the residuary Entry 66 only fee can be levied and n o tax. This argument ignores Entry 49 which empowers the State legislature to i mpose 'taxes on lands and buildings', The subject matter of water tax is not wate r. Under Section 52 of the Act water tax as also sewerage tax is levied on the ass essed annual value of the premises. It is in reality a tax on land and buildings th ough called water tax. This matter came up for consideration before this Court i n Raza Buland Sugar Co, Ltd v. Municipal Board, Rampur 1 Dealing with Secti on 128(1)(x) of the U.P. Municipalities Act, which empowers a municipality to i mpose 'a water tax on the annual value of buildings or lands or of both', a Bench of this Court held that water tax is in substance a tax on lands and buildings. Th e same reasoning applies to sewerage tax. The case was taken up in appeal to th e SC (Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur,)2 but the decis ion of this Court that water tax is covered by Entry 49 was not challenged in ap peal before the Supreme Court. The same view was taken in Nizam Sugar Facto ry Ltd. v. City Municipality, 3 5. It was next contended that Jal Sansthan is only a 'local authority' and not a Lo cal Self Government body like a Municipal Board. Such a body, which lacks the character of a Local Self Government body is not competent to levy any tax. It can be done by the State, which is empowered to levy tax in exercise of its sove reign power, or by a Local Self Government body to whom the power of the Stat e may be delegated. 6. In order to judge the merit of the argument we may refer to the authority unde r which bodies like Municipal Boards, District Boards etc. are created as also th e relevant provisions of the Act. Entry 5 of List II of the Seventh Schedule emp owers the State Legislature to legislate on the subject of 'Local Government, tha t is to say, the constitution and powers of Municipal Corporations, Improvement Trusts, District Boards, Mining Settlement Authorities and other local authoriti es for the purpose of Local Self Government or village administration. Local aut horities are placed on the same footing as Municipal Corporations, Improvemen t Trusts etc. for the purpose of Local Self Government or village administration. It is universally accepted that such self governing units must have resources for their own administration and for implementing the duties cast on them. There a re only two methods by which money can be made available to such units. One is for the State to make grants and the other is to authorize them to raise funds b y levying fees and taxes. It is the second method which is normally followed. L egislatures in India generally invest these local self governing units with powers of taxation. 7. A Jal Sansthan is a Local Self Govt. body like Municipal Corporation as is ev ident from the provisions of the Act itself. Jal Sansthan as defined in Section 2( 9) of the Act "means a local authority constituted by the State Government unde r Section 18 to perform its functions under this Act in one or more local areas." The expression 'local authority' has been defined in Section 3(31) of the General Clauses Act to mean "Municipal Committee, District Board, body of Port Com missioners or other authority legally entitled to, or entrusted by the Government with the control or management of a municipal or local fund." That expression i s defined in the Uttar Pradesh General Clauses Act under Section 4(25) as follo ws:- " 'Local authority' shall mean a Municipal Board or Nagar Mahapalika, N otified Area Committee, Town Area Committee, Zila Parishad, Cantonme nt Board, Kshettra Samiti, Gaon Sabha or any other authority constituted for the purpose of Local Self Government or village administration or leg ally entitled to or entrusted by the State Government with the control or management of municipal or local fund:" It is thus obvious that Jal Sansthan, which is a local authority constituted by the State Government under Section 18 to perform its functions under the Act, is to be treated at par with Municipal Corporation etc. for the purpose of Local Self Government. 8. Other provisions in the Act lend support to this conclusion. Jal Sansthans are constituted under Section 18 of the Act. It is a body corporate having perpetual succession and a common seal. By subsection (5) of Section 18 it is deemed to be a local authority. Section 20 of the Act provides for the constitution of Jal Sa nsthan. Its Chairman is the Nagar Pramukh of the Nagar Mahapalika (ex officio ), and its members are:- "(a) a General Manager, to be appointed by the Nigam with the approval of the State Government who shall be a qualified engineer having admini strative experience and experience of water supply and sewerage works. (b) a Joint Director of Medical and Health Services to be nominated by th e Director of Medical and Health Services, Uttar Pradesh; (c) three Sabhasads of the Nagar Mahapalika nominated by the State Gov ernment; (d) two representatives of the Nigam; (e) the Director of Local Bodies, Uttar Pradesh; (f) The Mukhya Nagar Adhikari of the Nagar Mahapalika". Section 24 of the Act lays down the functions of a Jal Sansthan which are:- "(i) to plan, promote and execute schemes of and operate an efficient syst em of water supply; (ii) where feasible, to plan, promote and execute schemes of, and operate. sewerage, sewage treatment and disposal and treatment of trade effluents ; (iii) to manage all its affairs so as to provide the people of the area within its Jurisdiction with wholesome water and where feasible, efficient sewer age service; (iv) to take such other measures, as may be necessary, to ensure water su pply in times of any emergency; (v) such other functions as may be entrusted to it by the State Governmen t by notification in the Gazette." Section 25 enumerates the powers of a Jal Sansthan, By Section 41 it is provide d that every Jal Sansthan shall have its own fund which shall be deemed to be a Local fund and to which shall be credited all moneys received by or on behalf o f the Jal Sansthan. The functions entrusted to a Jal Sansthan are similar in natur e to the functions entrusted to like Municipal Corporations, District Boards, To wn Areas etc. The functions entrusted to these Bodies are principally the functio ns of the State. The State cannot successfully discharge all its functions and con sequently it became inevitable to delegate some of its functions to other instrum entalities which were created for that purpose and power was conferred on such self governing units to raise resources to carry out their obligations. 9. To provide water supply services and sewerage services amongst others form part of the duties of the Mahapalikas. Municipal Boards and other such bodies. A body or authority performing these duties must be held to be constituted for th e purpose of Local Self Government. Prior to the enforcement of the Act the fun ctions now entrusted to a Jal Sansthan were discharged by a Mahapalika which i s indisputably Local Self Government body. A local authority like a Jal Sanstha n would not be different in character when discharging the same functions. 10. As stated earlier, such self- governing units must have resources to carry out the functions entrusted to them and for that purpose they are clothed with authority to levy fees and taxes. In fa ct it is inherent in a Local Self Government body since it is the agency or instru mentality of the State. Section 52 of the Act, which empowers a Jal Sansthan to levy the taxes specified therein, cannot therefore, be said to be constitutionally i nvalid. 11. Validity of Section 52 was also challenged on the ground of excessive deleg ation. It was urged that no guidelines have been provided by the legislature. The argument is wholly untenable. After referring to earlier decisions on the subject , Wanchoo, C.J., in the Municipal Corporation of Delhi v. Birla Cotton Spinnin g and Weaving Mills, Delhi 4 delivering the majority judgment observed as foll ows (at p. 1244): "A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential l egislative function consists of the determination of the legislative policy a nd its formulation as a binding rule of conduct and cannot be delegated b y the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The legislature must retain in its own hands the essential le gislative functions and what can be delegated is the task of subordinate le gislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a st andard is laid down, the courts should not interfere. What guidance shoul d be given and to what extent and whether guidance has been given in a p articular case at all depends on a consideration of the provisions of the pa rticular Act with which the Court has to deal including its preamble. Furt her it appears to us that the nature of the body to which delegation is mad e is also a factor to be taken into consideration in determining whether th ere is sufficient guidance in the matter of delegation." Dealing with the form of guidance the learned Chief Justice observed (p. 1244) : "It will depend upon the circumstances of each statute under consideratio n; in some cases guidance in broad general terms may be enough; in othe r cases more detailed guidance may be necessary. As we are concerned in the present case with the field of taxation, let us look at the nature of gui dance necessary in this field. The guidance may take the form of providin g maximum rates of tax up to which a local body may be given the discre tion to make its choice or it may take the form of providing for consultati on with the people of the local area and then fixing the rates after such co nsultation. It may also take the form of subjecting the rate to be fixed by t he local body to the approval of Government which acts as a watch- dog on the actions of the local body in this matter on behalf of the legislat ure. There may be other ways in which guidance may be provided. But th e purpose of guidance, whatsoever may be the manner thereof, is to see t hat the local body fixes a reasonable rate of taxation for the local area con cerned. So long as the legislature has made provision to achieve that reas onable rates of taxation are fixed by local bodies, whatever may be the m ethod employed for this purpose- provided it is effective- it may be said that there is guidance for the purpose of fixation of rates of taxation.'' Hidayatullah, J., who gave a concurring judgment, observed (at p. 1253): "The doctrine that Parliament cannot delegate its powers, therefore, must be understood in a limited way. It only means that the legislature must no t efface itself but must give the legislative sanction to the imposition of th e tax and must keep the control in its own hands. There is no specific pro vision in the Constitution which says that the Parliament cannot delegate to certain specified instrumentalities the power to effectuate its own will. The question always is whether the legislative will has been exercised or not. Once it is established that the legislature itself has willed that a partic ular thing be done and has merely left the execution of it to a chosen instr umentality (provided that it has not parted with its control) there can be n o question of excessive delegation. If the delegate acts contrary to the wis hes of the legislature the legislature can undo what the delegate has done. " In the light of these observations we may examine the provisions of Section 52 of the Act. The opening words of the section 'for the purposes of this Act' give a clear direction about the object of the tax. Jal Sansthan is empowered to raise re sources by way of tax for carrying out the purposes of the Act. It cannot be done for any other purpose unconnected with the Act. The limit to which tax may be levied has also been specified by providing that the water tax and sewerage tax may be levied on the assessed annual value of the premises. The source of reve nue is thus clearly indicated. A further safeguard has been provided by laying d own that the recommendations of the Nigam has to be considered by the Govern ment before notifying the levy of taxes. Reasonableness of the tax has also been ensured by fixing the maximum limits. In our opinion all the tests laid down by the SC in the case of the Municipal Corporation of Delhi (supra) are fully satisf ied. 12. We may at this stage refer to the recent decision of the SC in Avinder Singh v. State of Punjab, 5 In that case Section 90 of the Punjab Municipal Corporatio n Act came for consideration. After analyzing that provision the SC observed (at p. 328): "Thus, the impugned provision contains a severe restriction that the taxati on livable by the Corporation, or by the Government acting for the Corpo ration, shall be geared wholly to the goals Of the Act. The fiscal policy of Section 90 is manifest. No tax under guise of Section 90(2)(b) can be cha rged if the purposes of the Act do not require or sanction it. The expressio n 'purposes of this Act' is pregnant with meaning. It sets a ceiling on the t otal Quantum that may be collected. It canalizes the objects for which the fiscal levies may be spent. It brings into focus the functions, obligatory o r optional, of the municipal bodies and the raising of resources necessary for discharging those functions- nothing more, nothing else." 13. The power of the legislature to tax may be delegated to any of its instrument alities, It is not necessary that the instrumentality must be a Local Self Govt. bo dy as contended by Sri Jagdish Swarop. Assuming for the moment that a Jal San sthan is not a Local Self Government body still the delegation to it of power to t ax must be upheld as valid. In Banarsi Das Bhanot v. State of Madhya Pradesh, 6 the SC observed that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is t o be charged in respect of different classes of goods, and the like In the Corpor ation of Calcutta v. Liberty Cinema, 7 it was held that the fixation of the rates of taxes is not of the essence of legislative power of taxation and the fixation of ra tes of taxes may be legitimately left by a statute to a nonlegislative authority. In the case of the Municipal Corporation of Delhi (supra) the judgment of Hidayat ullah, J. indicates that the delegation can be to any chosen instrumentality. Shah , J., who gave the dissenting judgment, also observed that power to make subsid iary or ancillary legislation may however be entrusted by the legislature to anot her body of its choice, provided there is enunciation of policy, principles, or stan dards either expressly or by implication for the guidance of the delegate in that behalf. In M/s. Sitaram Bishambhar Dayal v. State of U. P.,8 (at p. 1169) Hegd e , J. observed:- "It is true that the power to fix the rate of a tax is a legislative power but i t the legislature lays down the legislative policy and provides the necessit y guidelines, that power can be delegated to the executive." Once the legislative policy is indicated and proper guidelines have been provide d, the matters of details can be delegated to any instrumentality of the State incl uding the executive. If that be so, the delegation to a Jal Sansthan cannot be stru ck down on the ground that it is only a local authority. 14. It was next contended that by virtue of entry 49 the Nagar Mahapalika is em powered to levy property tax on the annual value of the buildings or land. Jal Sa nsthan, which operates in the same area, could not be validly empowered to lev y tax on the annual value of the buildings or land or both as that would amount t o double taxation. The argument is misconceived. Under Section 173 of the Nag ar Mahapalika Adhiniyam the Mahapalika is empowered to levy property tax on buildings and lands in the city. The property taxes are enumerated as (a) a gene ral tax; (b) a water tax; (c) a drainage tax; and (d) a conservancy tax. With the e nforcement of the Act by virtue of Section 33 of the Act all the existing water su pply services and the existing sewerage services, sewage works and sewage far ms including all plants, machinaries, water works, pumping stations etc. vest an d stand transferred to the Jal Sanathan and are subject to its control. The Nagar Mahapalika is now no longer concerned with water supply services and sewerag e services. These services are now provided by the Jal Sansthan. Since the Jal S ansthans are now entrusted with these services they have been empowered to le vy taxes in respect thereof and the Nagar Mahapalika are not now competent to levy water tax and sewerage tax. It, therefore, cannot be successfully contended that there is any double taxation though the general tax imposed by the Mahapal ika and water tax and sewerage tax imposed by the Jal Sansthan fall under the l egislative field of taxation on lands and buildings' and are levied on the annual value of the buildings or land or both. They do not suffer from the vice of doubl e taxation. Moreover as observed by the SC in the case of Avinder Singh (supra) "there is nothing in Article 265 of the Constitution from which one can spin out the constitutional vice called double taxation......... If on the same subject matte r the legislature chooses to levy tax twice over there is no inherent invalidity in t he fiscal adventure save where other prohibitions exist." Earlier the SC in Mathr a Parshad v. State of Punjab, 9 held that there was no illegality in the East Punj ab General Sales Tax Act and the Punjab Tobacco Vend Fees Act. both of which provide for the levy of lax on the sale of manufactured tobacco, being simultan eously in force or in the simultaneous levy of both the taxes. In Kamta Prasad A ggarwal v. Executive Officer, Ballabgarh 10 the question arose whether levy of a professional tax on a graded scale by the State of Haryana barred a Panchayat Samiti from levying a similar professional tax under the Punjab Panchayat Sami ties and Zila Parishads Act and, whether Article 276 of the Constitution was con travened. The SC observed as follows:- "The power of the State to levy tax is derived from Entry 60 of List II in t he Seventh Schedule of the Constitution. The entry speaks of taxes on pro fessions, trade, callings and employments. The State Legislature may als o by law confer similar authority on a Municipality, District Board. Local Board or other local authority." A similar question came up for consideration before a Full Bench of the Punjab and Haryana High Court in Megha Singh and Co. v. State of Punjab, 11 The que stion in that case was relating to the validity of imposition of tax on the sale of c ountry liquor by Panchayat Samitis which was also taxed under the Punjab Gen eral Sales Tax Act. The validity of the imposition was upheld on the reasoning t hat the legislature is competent to enact two laws providing for two taxes of the same kind though for different purposes. By one law, the legislature may itself i mpose and levy a tax to go into the consolidated fund of the State, and by anoth er law it may authorize a local authority to impose and levy another tax of the sa me kind to augment the local authority's revenues. On the principles set out in t he aforesaid cases it must be held that imposition of water tax and sewerage tax by the Jal Sansthan on the annual value of the premises situate within its area is perfectly valid. 15. The imposition of water lax and sewerage tax at 12+ per cent and 3 per cent respectively was assailed on the ground that these two taxes together with gener al tax exceed the limit of 25 per cent prescribed under Section 173 of the Nagar Mahapalika Adhiniyam. It was urged that since a limit on property tax was pres cribed under the Adhiniyam, water and sewerage taxes could be fixed at such ra te which together with the general tax did not exceed the limit of 25 per cent. W e find no merit in the contention. The limitation placed under the Adhiniyam wo uld not apply to taxes levied by Jal Sansthan which is a separate and distinct loc al entity constituted under a different Act. The taxes imposed under the Act and the general tax imposed under the Adhiniyam are levied to be utilised for differe nt purposes under two different Acts. The validity of tax imposed under one Act cannot be tested with reference to the provisions of the other Act. 16. The rates prescribed for water tax and sewerage tax has been assailed on the ground of unreasonableness. No material has been placed on record to enable t his Court to judge the reasonableness of the rates of the impugned taxes. The on ly assertion made in this connection is that the Jal Sansthan has not put forward any reason for enhancing the water tax from 6+ per cent to 12+ per cent and se werage tax from 1+ per cent to 3 per cent. In the counter- affidavit filed on behalf of the Jal Sansthan it has been averred that the Jal Sans than has made enormous expenditure on the development of water supply and s ewerage system of densely populated city of Kanpur. It has to meet the ever incr easing requirements of the public. Various schemes are being implemented vigo rously. To meet the expenses under various heads it had become necessary in Pu blic interest to prescribe the present rates. The reasons for prescribing the prese nt rates were put forward in the recommendation submitted to the Government which after considering then issued the impugned notification. 17. The test for judging the reasonableness of a tax was pointed out by Hidayatu llah, J. in the case of the Municipal Corporation of Delhi, AIR 1968 SC 1232 at p. 1254 as follows:- "The delegation to the Municipal Corporation of the power to levy taxes a nd fees is for the purpose of its own duties under the Act. The power mus t be reasonably exercised for attainment of those purposes. These purpose s include supply of water, running of transport services, lighting of streets and their maintenance, conservancy, establishment of hospitals and so on . The inter- relation of taxes with expenditure has to be maintained. This relation mu st be reasonable." The rule of bye- laws laid down in Kruse v. Johnson. 12 was approved and it was observed that t o render a tax unreasonable it must be a clearly exorbitant tax which goes so hig h is to be extortionate. There is no material before us which may justify us to pr onounce the impugned taxes as exorbitant or extortionate. Similarly, no material has been brought to our notice to persuade us to hold that the rate at which exce ss water supply is charged is excessive or arbitrary If the petitioners are aggriev ed by any order of assessment, the remedy lies by way of appeal under Section 54 of the Act. 18. Another grievance put forward by the petitioners is that even in respect of pr emises or part of premises which are in occupation of the tenants the impugned taxes are being realized from the owners. It has been alleged that names of occu piers are mentioned in the assessment register of the Nagar Mahapalika but inst ead of submitting the bills to the occupiers, the taxes are being realized from the owners on the threat of disconnection. In the counter- affidavit filed on behalf of the Jal Sansthan the stand taken is that primarily the t ax is levied on the premises under Section 56 of the Act and it is recoverable fro m the 'occupier' which term as defined in Section 2(16) includes a owner who is in occupation of the premises. It has been averred that the tax is being realized from the persons whose names are recorded over the property as occupiers whet her they be the owners or not and unless due information is furnished to the Jal Sansthan about transfer of occupation to another person, the bills are issued to t he persons whose names are recorded in the records available with the Jal Sanst han. Except for making a vague and general statement the petitioners have not f urnished particulars of premises which are in occupation of the tenants. In the a bsence of any information that a particular property is occupied by a tenant, the only course for the Jal Sansthan is to submit the bills to the owner of the premis es and realize the amount from him. 19. In our opinion the petitions lack merits and are consequently dismissed with costs. Petitions dismissed. Cases Referred. 1. AIR 1962 All 83 2. AIR 1965 SC 895 3. AIR 1965 And Pra 91 4. AIR 1968 SC 1232 5. AIR 1979 SC 321 6. AIR 1958 SC 909 7. AIR 1965 SC 1107 8. AIR 1972 SC 1168 9. AIR 1962 SC 745 10. AIR 1974 SC 685 11. AIR 1977 Pun and Hary 297 12. (1898-2 QB 91)