CARDAMOM MARKETING COPRN. & ANR. Vs. STATE OF KERALA & ORS.
Supreme Court of India (Full Bench (FB)- Three Judge)
Appeal (Civil), 4453 of 2008, Judgment Date: Sep 01, 2016
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4453 OF 2008
CARDAMOM MARKETING
CORPORATION & ANR. .....APPELLANT(S)
VERSUS
STATE OF KERALA & ORS. .....RESPONDENT(S)
W I T H
WRIT PETITION (CIVIL) NO. 514 OF 2009
A N D
WRIT PETITION (CIVIL) NO. 490 OF 2011
J U D G M E N T
A.K. SIKRI, J.
The two appellants before us in Civil Appeal No. 4453 of
2008, who are the registered dealers under the Kerala General Sales Tax
Act, 1963 and/or the Kerala Value Added Tax Act, 2003 in the State of
Kerala. They challenged the vires of S.R.O. No. 226 of 2002 dated April
05, 2002 issued by the Government of Kerala in exercise of powers under
Section 76(1) of the Kerala Court Fees and Suits Valuation Act, 1959
(hereinafter referred to as the 'CF Act') whereby the Government authorised
the tribunals and appellate authorities constituted by or under special or
local law, other than civil and criminal courts, to levy additional court
fee in respect of each appeal or revision at the rate of 0.5% of the amount
involved in the dispute in cases where it is capable of valuation, and at
the rate of ?50 in other cases. This notification further provides that
the amount so collected shall be credited to the Kerala Legal Benefit Fund
constituted under sub-section (2) of Section 76 of the CF Act. The main
contention of the appellants was that the aforesaid levy is in the nature
of compulsory exaction/tax and the element of service/quid pro quo was
absent and, therefore, such a fee cannot be charged. The High Court has
repelled the challenge thereby upholding the validity of the said
notification following its earlier judgment in Chackolas Spinning & Weaving
Mills Ltd. v. State of Kerala, 2006 (1) KLT 989, vide its judgment dated
July 13, 2007. This judgment of the High Court is challenged in this
appeal on the same grounds. Subject matter of the two writ petitions is
also identical.
Before coming to the detailed submissions in this behalf, it would be
apposite to take note of the relevant provisions of the CF Act as well as
terms of the notification dated April 05, 2002.
The CF Act relates to court fees and valuation of suits in the State of
Kerala. The court fee calculated as per the provision of the said Act has
to be paid in respect of various kinds of proceedings initiated in a court
of law in the State. Clause (ii) of Section 3 defines 'court' and reads as
under:
“”Court” means any Civil, Revenue, or Criminal Court and includes a
Tribunal or other authority having jurisdiction under any special or local
law to decide questions affecting the rights of parties;”
It is clear from the aforesaid definition that within the ambit
of the CF Act, it is not only civil or criminal courts but also revenue
authorities, including the tribunal or other authority having jurisdiction
under any special or local laws, to decide questions affecting the rights
of the parties. Thus, revenue courts as well as tribunals, when such
bodies are deciding questions affecting the rights of the parties, are
treated as 'court' for the purpose of CF Act. Fee prescribed under the
said Act becomes payable in respect of proceedings before these authorities
as well.
Section 76 of the CF Act, under which the impugned notification is issued,
deals with 'Legal Benefit Fund' and makes the following reading:
“76. Legal Benefit Fund. –
(1) Notwithstanding anything contained in this Act or any other law for
the time being in force, it shall be competent for Government to levy an
additional court fee, by notification in the Gazette, in respect of appeals
or revisions to tribunals or appellate authorities, other than Civil and
Criminal Courts, at a rate not exceeding one per cent of the amount
involved in the dispute in cases where it is capable of valuation and in
other cases at a rate not exceeding one hundred rupees for each appeal or
revision.
(2) There shall be constituted a legal benefit fund to which shall be
credited –
(i) the proceeds of the additional court-fee levied and collected under
sub-section (1);
(ii) fifty per cent of the court fees levied and collected on mukhtarnama
or vakalathnama under Article 16 of Schedule II of this Act.
(3) The fund constituted under sub-section (2) shall be applied and
utilised for the purpose of providing an efficient legal service for the
people of the State and to provide social security measures for the legal
profession.
(4) The mode and manner in which legal service to the people may be made
more efficient and social security measures for legal profession may be
provided, shall be as prescribed by rules made by Government.”
As is clear from the plain language of the aforesaid Section, this
provision empowers the State Government to levy an additional court fee in
respect of appeals or revisions to tribunals or appellate authorities,
other than civil and criminal courts. This can be done by notification in
the Gazette. The upper limit of such an additional court fee is one per
cent of the amount involved in the dispute in cases where it is capable of
valuation, and in other cases the additional court fee which can be levied
is not to exceed rupees hundred for each appeal or revision. This levy of
additional court fee is meant for Legal Benefit Fund. This Fund is to be
applied and utilised for the purpose of providing an efficient legal
service for the people of the State and to provide social security measures
for the legal profession. The mode and manner in which legal services are
to be made more efficient and social security measures for legal profession
need to be provided can be prescribed by rules made by the Government. For
this purpose, the State Government has framed the Kerala Legal Benefit Fund
Rules, 1991, These Rules prescribed the manner in which the Fund is to be
operated. Rule 3 thereof enumerates the sources of monies to the said Fund
and reads as under:
“3. Depositing of certain monies to the Fund. –
(1) The amount to be credited to the Legal Benefit Fund shall be drawn
from the head of account 2014-800-06 Legal Benefit Fund – Contributions by
the Secretary, Board of Revenue (L/R) and may be made available to the
Secretary to Government, Law Department for depositing it in the Fund.
Government may make available in the first instance for deposit in the Fund
such amount as it may deem necessary for the initial working of the Fund.
This amount shall be adjusted against the actual amount payable to the Fund
on consolidation of Statements regarding court fees actually levied from
the year from which this (sic – these) rules shall be brought into force.
(2) The amount of additional court fees levied and collected under sub-
section (1) of S.76 of the Act shall be added to the Fund as and when such
additional court fees are levied and collections are made. This amount
will also be made available to the Law Secretary during the beginning of
every financial year based on consolidated accounts of collection made in
the previous year.
(3) The fund shall be deposited in the Public Deposit account as 'Fund' in
the District Treasury, Thiruvananthapuram in the name of the Legal Benefit
Fund Trustee Committee constituted under rule 4.”
Under Rule 4, a Fund Trustee Committee is constituted and
detailed provisions are made thereof for operating the Fund by the said
Trustee Committee as well as the functions which the said Trustee Committee
is supposed to discharge.
We may point out at this stage that the Legislature of the Kerala State has
also enacted a law known as the Kerala Advocates' Welfare Fund Act, 1980.
Rules are also framed under the said Act which are called as the Kerala
Advocates' Welfare Fund Rules, 1981. The Welfare Fund Act is aimed at
providing of a Welfare Fund for the payment of retirement benefits to
advocates in the State of Kerala and for the matters connected therewith or
incidental thereto. Section 3 thereof deals with constitution of the
Advocates' Welfare Fund and reads as under:
“3. Advocates' Welfare Fund. – (1) The Government shall constitute a fund
called the Advocates' Welfare Fund.
(2) There shall be credited to the Fund –
(a) all amounts paid by the Bar Council under section 12;
(b) any other contribution made by the Bar Council;
(c) any voluntary donation or contribution made to the Fund by the Bar
Council of India, any Bar Association, any other association or
institution, any advocate or any other person;
(d) any grant made by the State Government to the Fund;
(e) the amount set apart from the Legal Benefit Fund constituted under sub-
section (2) of Section 76 of the Kerala Court Fees and Suits Valuation Act,
1959 (10 of 1960), for providing social security measures for the legal
profession;
(f) any sum borrowed under section 10;
(g) all sums received from the Life Insurance Corporation of India on the
death of an advocate under the Group Insurance Policy;
(h) any profit or dividend received from the Life Insurance Corporation of
India in respect of policies of Group Insurance of the members of the Fund;
(i) any interest or dividend or other return on any investment made of any
part of the Fund;
(j) all sums collected by way of sale of stamps under section 22;
(k) all sums collected under section 15 by way of application fees and
annual subscriptions and interest thereon.
(3) The sums specified in sub section (2) shall be paid or collected by
such agencies at such intervals and in such manner, and the accounts of the
Fund shall be maintained in such manner as may be prescribed.”
It becomes clear from clause (e) of sub-section (2) of Section 3 that the
amount set apart from the Legal Benefit Fund constituted under Section 76
of the CF Act is to be credited to the Advocates' Welfare Fund, for
providing efficient legal services for the people of the State and social
security measures for the legal profession.
In nutshell, the additional court fee at the rate of 0.5% of
the amount involved or ?50 in each case by the tribunals and appellate
authorities constituted by or under any special or local laws, other than
civil and criminal courts, is meant for the aforesaid Welfare Fund which is
to be utilised in accordance with the provisions of the Welfare Fund Act.
From the reading of the aforesaid provisions it becomes clear that Section
76 authorises the State Government to issue such a notification and
notification has been issued in exercise of powers contained therein. This
power extends to levy additional court fee by tribunals and other appellate
authorities constituted by or under any special law. The impugned
notification, therefore, is intra vires the provision of Section 76 of the
CF Act. Even the rate which is prescribed in the notification is within
the outer limit prescribed under Section 76(2) of the Act. To this extent,
therefore, there cannot be any quarrel.
However, the main argument of the appellants is that the additional court
fee which is to be paid on the appeals etc. which are to be filed either
under the Kerala General Sales Tax Act or the Kerala Value Added Tax Act by
virtue of the aforesaid notification, have no nexus with the object and,
therefore, it does not have any character of 'fee' as no services are
provided to the litigants in return. To put it otherwise, it is submitted
that since such additional court fee collected from the assessees like the
appellants is used for the benefit of the advocates and no benefit thereof
accrues to the litigants, charging of such additional court fee is clearly
impermissible as it amounts to compulsory exaction of the money from the
appellants in the name of court fee, without giving any corresponding
benefit to the appellants. It is more so when such an additional fee has
to be paid at each and every subsequent level of statutory appeal and
revision as well.
The aforesaid arguments of the appellants is devoid of any merit. Insofar
as the argument predicated on fee vis-a-vis tax is concerned, i.e. the
submission that the imposition in question is in the nature of tax inasmuch
as this imposition has no nexus to any object sought to be achieved in
relation to the service available to the appellants and there is no quid
pro quo, the same is dealt with by the High Court elaborately. The High
Court has referred to Entry 3 in List II (State List) of the Seventh
Schedule of the Constitution as it stood in the year 1960 when the CF Act
was enacted on receiving the assent of the President of India. This Entry
reads as under:
“3. Administration of justice, constitution and organization of all courts
except the Supreme Court and the High Court; officers and servants of the
High Court; procedure in Rent and Revenue Courts; fees taken in all courts
except to the Supreme Court.”
By the Forty-Second Amendment to the Constitution in the year
1976, administration of justice became a Concurrent Subject, having been
included as Entry 11A in List III which resulted in requisite modification
to Entry 3 in List II as well. At the same time, by the very same
amendment, Article 39-A was also inserted in Part IV of the Constitution
which relates to the Directive Principles of State Policy. This Article
exhorts the State to provide equal justice and free legal aid and reads as
under:
“39A. Equal justice and free legal aid. The State shall secure that the
operation of the legal system promotes justice, on a basis of equal
opportunity, and shall, in particular, provide free legal aid, by suitable
legislation or schemes or in any other way, to ensure that opportunities
for securing justice are not denied to any citizen by reason of economic or
other disabilities.”
As per the High Court, the administration of justice, thus,
becomes a distinct topic and Article 39A calls upon the State to ensure
establishment of such legal system which promotes justice and provides free
legal aid.
We agree with the aforesaid approach of the High Court. First of all, the
argument of the appellants ignores that as per Section 76(3) of the CF Act,
one of the purposes for which the Fund is to be utilised is for providing
efficient legal services for the people of the State. It clearly amounts
to quid pro quo. Other purpose is also for the benefit of the public at
large. When we talk of sound and stable system of administration of
justice, all the stakeholders in the said legal system need to be taken
care of. Legal community and advocates are inseparable and important part
of robust legal system and they not only aid in seeking access to justice
but also promote justice. Judges cannot perform their task of dispensing
justice effectively without the able support of advocates. In that sense,
advocates play an important role in the administration of justice. It is
wisely said that for any society governed by Rule of Law, effective
judicial system is a necessary concomitant. The Rule of Law reflects man's
sense of order and justice. There can be no Government without order;
there can be no order without law; and there can be no administration of
law without lawyers. It is no small service to be called upon to prosecute
and enforce the rights of a litigant through the court of law and in that
sense the legal profession is treated as service to the justice seekers.
It is, therefore, by contributing an essential aid to the process of the
administration of justice that the advocate discharges a public duty of the
highest utility.
When the subject matter of the instant cases is examined in the aforesaid
hue, it becomes apparent that providing social security to the legal
profession becomes an essential part of any legal system which has to be
effective, efficient and robust to enable it to provide necessary service
to the consumers of justice. Section 76 of the CF Act and the impugned
notification vide which additional court fee is imposed have a direct nexus
to the objective sought to be achieved in relation to the service available
to the appellants or others who approached the courts/tribunals for
redressal of their grievances.
We, thus, do not find any merit in the appeal and the writ petitions, which
are accordingly dismissed.
.............................................J.
(A.K. SIKRI)
.............................................J.
(S.A. BOBDE)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
SEPTEMBER 01, 2016.
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