REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO. 1830 0F 2008

M/S DEWAN CHAND BUILDERS &  CONTRACTORS

—    APPELLANT  

VERSUS

UNION OF INDIA & ORS. — RESPONDENTS

WITH

CIVIL APPEAL  NO. 1831 0F 2008  

                               AND

CIVIL APPEAL  NO. 1832 0F 2008

J U D G M E N T

D.K. JAIN, J.:

1. These appeals, by special leave, arise out of judgment and final  

order dated 28th February, 2007 in W.P.(C) No.3620/2003 [connected  

with W.P.(C) Nos.216-17 of 2006];  W.P.(C) Nos.7480-81/2006 & CM  

No. 5879/2006, and W.P.(C)  Nos.7485-87/2006 & CM No.5886/2006]  

rendered by the High Court of Delhi, whereby, the said petitions  

were dismissed with costs of  `25000/-. The High Court has held  

that The Building and Other Construction Workers (Regulation of  

Employment and Conditions of Service) Act, 1996 (for short “the  

BOCW  Act”);  The  Building  and  Other  Construction  Workers

(Regulation  of  Employment  and  Conditions  of  Service)  Central  

Rules, 1998, (for short the “1998 Central Rules”); The Building  

and Other Construction Workers Welfare Cess Act, 1996 (for short  

“the Cess Act”) and  The Building and Other Construction Workers  

Welfare  Cess  Rules,  1998  (  for  short  “the  Cess  Rules”)  are  

constitutionally valid and within the competence of the Parliament  

as the  levy under the impugned enactments is a “fee”, referable  

to Entry 97 of List-I of the Seventh Schedule of the Constitution  

of India.  

2. Since all the appeals involve a common pure question of law, these  

are being disposed of by this common judgment.  For deciding the  

subject issue before us viz. constitutional validity of the Cess  

Act,  even  a  reference  to  the  factual  aspects  is  unnecessary,  

except  to  note  that  the  appellant  in  these  appeals  is  a  

contractor, engaged in building and other construction works in  

the National Capital Territory of Delhi.  

3. However, before addressing the contentions advanced on behalf of  

the parties, it will be useful to survey the relevant provisions  

of both the Acts and the Rules.

4. The background in which the BOCW Act was enacted, is set out in  

the  Statement  of  Objects  and  Reasons,  appended  to  the  Bill  

preceding its enactment.  To better appreciate the legislative  

intent, it would be instructive to refer to the following extract  

from the Statement of Objects and Reasons :

“It  is  estimated  that  about  8.5.  Million  workers  in  the  country  are  engaged  in  building  and  other  construction  works. Building and other construction workers are one of  the most numerous and vulnerable segments of the unorganized  labour in India.  The building and other construction works  are characterized by their inherent risk to the life and  limb of the workers.  The work is also characterized by its  casual nature, temporary relationship between employer and  employee, uncertain working hours, lack of basic amenities  and inadequacy of welfare facilities.  In the absence of  adequate  statutory  provisions,  the  requisite  information  regarding the number and nature of accidents is also not  forthcoming.   In  the  absence  of  such  information,  it  is  difficult to fix responsibility or to take any corrective  action.

Although  the  provisions  of  certain  Central  Acts  are  applicable to the building and other construction workers  yet  a  need  has  been  felt  for  a  comprehensive  Central  Legislation for regulating their safety, health, welfare and  other conditions of service.”

5. A fairly long preamble to the BOCW Act is again indicative of its  

purpose.  It reads thus:

“An  Act  to  regulate  the  employment  and  conditions  of  service of building and other construction  workers and  to provide for their safety, health and welfare measures  and for other matters connected therewith or incidental  thereto.”

Further, Section 1(4) of the BOCW Act makes it clear that it:

“……applies to every establishment which employs, or had  employed on any day of the preceding twelve months, ten  or  more  building  workers  in  any  building  or  other  construction work.”

Some  of  the  definitions  under  Section  2  of  the  BOCW  Act,  

relevant for these appeals are:

(b)  “beneficiary” means a building worker registered  under Section 12;

(c) “Board”  means  a  Building  and  Other  Construction  Workers’  Welfare  Board  constituted  under  sub- section (1) of Section 18;

(d) … … …

(e) “building worker” means a person who is employed  to  do  any  skilled,  semi-skilled  or  unskilled,  manual,  supervisory,  technical  or  clerical  work  for  hire  or  reward,  whether  the  terms  of  employment be expressed or implied, in connection  with any building or other construction work but  does not include any such person-

(i) who is employed mainly in a managerial or  administrative capacity; or  

(ii) who,  being  employed  in  a  supervisory  capacity,  draws  wages  exceeding  one  thousand six hundred rupees per mensem or  exercises,  either  by  the  nature  of  the  duties  attached  to  the  office  or  by  reason  of  the  powers  vested  in  him,  functions mainly of a managerial nature;

(f)  … … …

(g) “contractor”  means  a  person  who  undertakes  to  produce  a  given  result  for  any  establishment,  other than a mere supply of goods or articles of  manufacture, by the employment of building workers  or who supplies building workers for any work of  the establishment; and includes a sub-contractor;

(h) … … …

(i) “employer”, in relation to an establishment, means  the owner thereof, and includes,-

(i) in  relation  to  a  building  or  other  construction work carried on by or under the  authority  of  any  department  of  the  Government, directly without any contractor,  the authority specified in this behalf, or  where no authority is specified, the head of  the department;

(ii) in  relation  to  a  building  or  other  construction work carried on by or on behalf  of a local authority or other establishment,

directly without any contractor, the chief  executive  officer  of  that  authority  or  establishment;

(iii) in  relation  to  a  building  or  other  construction work carried on by or through a  contractor, or by the employment of building  workers  supplied  by  a  contractor,  the  contractor;

(j)    … … …

(k)  “Fund” means the Building and Other Construction  Workers’ Welfare fund of a Board constituted under  sub-section (1) of Section 24.”

The scheme of the BOCW Act is that it empowers the Central  

Government and the State Governments to constitute Welfare Boards to  

provide and monitor social security schemes and welfare measures for  

the benefit of the building and other construction workers.  Section  

7 requires every employer in relation to an establishment to which  

the BOCW Act applies to get such establishment registered.  Section  

10  makes  this  requirement  mandatory  and  therefore,  without  such  

registration, the employer of an establishment, to which the BOCW  

Act applies, cannot employ building workers.

Chapter IV of the BOCW Act contains provisions stipulating the  

registration  of  building  workers  as  beneficiaries  and  requires  

certain contributions to be made by such beneficiary at such rate  

per month as may be specified by the State Government.  Where the  

worker  is  unable  to  pay  his  contribution  due  to  any  financial  

hardship, the Board can waive the payment of such contribution for a  

period not exceeding three months at a time.

Chapter  V  of  the  BOCW  Act  sets  out  the  constitution  and  

functions of the Building and Other Construction Workers’ Welfare  

Boards.  Section 24 sets out the provision for the constitution of  

the Welfare Fund and its application.

Part III of Chapter VI of the BOCW Act contains provisions  

concerning  the  safety,  health  and  welfare  of  the  construction  

workers  generally  and  with  reference  to  specific  kinds  of  

activities.

It is thus, clear from the scheme of the BOCW Act that its sole  

aim is the welfare of building and construction workers, directly  

relatable to their constitutionally recognised right to live with  

basic human dignity, enshrined in Article 21 of the Constitution of  

India.  It envisages a network of authorities at the Central and  

State levels to ensure that the benefit of the legislation is made  

available to every building and construction worker, by constituting  

Welfare Boards and clothing them with sufficient powers to ensure  

enforcement of the primary purpose of the BOCW Act.  

6. The means of generating revenues for making effective the welfare  

provisions of the BOCW Act is through the Cess Act, which is  

questioned in these appeals as unconstitutional.

7. The Statement of Objects and Reasons to  the BOCW Act explained  

that it had been considered “necessary to levy a Cess on the  

cost of construction incurred by the employers on the building  

and other construction works for ensuring sufficient funds for

the Welfare Boards to undertake the social security Schemes and  

welfare  measures.”  Simultaneously  with  the  enactment  of  the  

BOCW Act, the Parliament enacted the Cess Act.  The Statement  

of Objects and Reasons to the Cess Act noted that the intention  

was to “provide for the levy and collection of a Cess on the  

cost of construction incurred by the employers for augmenting  

the resources of the Building and Other Construction Workers’  

Welfare Boards constituted by the State Governments under the  

Building  and  Other  Construction  Workers  (Regulation  of  

Employment and Conditions of Service) Ordinance, 1995.”

Section 2(a) of the Cess Act defines the term “Board” to mean  

the Board constituted by the State Government under sub-section (1)  

of Section 18 of the BOCW Act.  Section 2(d) of the Cess Act adopts  

all of the definitions contained in the BOCW Act and reads as under:

“2(d) words and expressions used herein but not defined and  defined  in  the  Building  and  Other  Construction  Workers  (Regulation of Employment and Conditions of Service) Act,  1996 shall have the meanings respectively assigned to them  in that Act.”

Section  3  of  the  Cess  Act,  the  charging  Section,  reads  as  

under:

“3. Levy and collection of Cess: (1) There shall be levied  and collected a Cess for the purpose of the Building and  Other  Construction  Workers  (Regulation  of  Employment  and  Conditions of Service) Act, 1996, at such rate not exceeding  two per cent, but not less than one per cent of the cost of  construction  incurred  by  an  employer,  as  the  Central  Government  may,  by  notification  in  the  Official  Gazette,  from time to time specify.

(2) The  Cess  levied  under  Sub-section  (1)  shall  be  collected  from  every  employer  in  such  manner  and  at

such time, including deduction at source in relation to  a building or other construction work of a Government  or of a public sector undertaking or advance collection  through  a  local  authority  where  an  approval  of  such  building  or  other  construction  work  by  such  local  authority is required, as may be prescribed.

(3) The proceeds of the Cess collected under Sub-section  (2) shall be paid by the local authority or the State  Government  collecting  the  Cess  to  the  Board  after  deducting  the  cost  of  collection  of  such  Cess  not  exceeding one per cent of the amount collected.  

(4) Notwithstanding  anything  contained  in  Sub-section  (1)  or Sub-section (2), the Cess leviable under this Act  including payment of such Cess in advance may, subject  to  final  assessment  to  be  made,  be  collected  at  a  uniform rate or rates as may be prescribed on the basis  of the quantum of the building or other construction  work involved.”

Section 4 of the Cess Act requires “every employer” to file a  

return in the manner prescribed.  Section 5 spells out the process  

for the assessment of the Cess payable, while, Section 8 provides  

for interest payable in the event of a delayed payment of Cess.  

Section 9 stipulates penalty for non-payment of the Cess within the  

specified time.  There is an internal mechanism of appeal under  

Section 11 for an employer who is aggrieved by the assessment order  

made under Section 5.

In exercise of the power conferred under Section 14 of the Cess  

Act, the Central Government framed the Cess Rules.    Rule 3 thereof  

defines the cost of construction for the purpose of levy of Cess as  

under:

“3. Levy of Cess- For the purpose of levy of Cess under Sub- section (1) of Section 3 of the Act, cost of construction  shall  include  all  expenditure  incurred  by  an  employer  in

connection with the building or other construction work but  shall not include-

-cost of land; -any compensation paid or payable to a worker  

or his kin under the Workmen’s Compensation Act, 1923.”

Rule 4 of the Cess Rules makes it mandatory for deduction of  

Cess payable at the notified rates from the bills paid for the  

building and other construction work of a Government or a Public  

Sector  Undertaking.  Rule  5  prescribes  the  manner  in  which  the  

proceeds of Cess collected under Rule 4 shall be transferred by such  

Government office, Public Sector Undertakings, local authority, or  

Cess collector, to the Board.  The powers of the Assessing Officer  

and the Board of Assessment are enumerated in Rules 7 to 14 of the  

Cess Rules.  

8. It is manifest from the overarching schemes of the BOCW Act,  

the Cess Act and the Rules made thereunder that their sole  

object is to regulate the employment and conditions of service  

of  building  and  other  construction  workers,  traditionally  

exploited  sections  in  the  society  and  to  provide  for  their  

safety, health and other welfare measures.  The BOCW Act and  

the Cess Act break new ground in that, the liability to pay  

Cess  falls  not  only  on  the  owner  of  a  building  or  

establishment, but under Section 2(i)(iii) of the BOCW Act “in  

relation to a building or other construction work carried on by  

or  through  a  contractor,  or  by  the  employment  of  building  

workers  supplied  by  a  contractor,  the  contractor.”  The  

extension of the liability on to the contractor is with a view

to  ensure  that,  if  for  any  reason  it  is  not  possible   to  

collect  Cess  from  the  owner  of  the  building  at  a  stage  

subsequent to the completion of the construction, it can be  

recovered from  the contractor.  The Cess Act and the Cess  

Rules ensure that the Cess is collected at source from the  

bills  of  the  contractors  to  whom  payments  are  made  by  the  

owner.  In short, the burden of Cess is passed on from the  

owner to the contractor.

9.  Although both the statutes were enacted in 1996, the Central  

Government in exercise of its powers under Section 62 of the  

BOCW Act notified the Delhi Building and Other Construction  

Workers (RE&CS), Rules, 2002 (for short “the Delhi Rules”) vide  

Notification  No.  DLC/CLA/BCW/01/19  dated  10th January,  2002.  

Accordingly, Government of NCT of Delhi constituted the Delhi  

Building  and  Other  Construction  Workers  Welfare  Board  vide  

Notification No. DLC/CLA/BCW/02/596 dated 2nd September, 2002.  

Thus, the Cess Act and the Cess Rules are operative in the  

whole of NCT of Delhi w.e.f. January, 2002.  

10. As  noted  above,  the  principal  ground  for  challenge  to  the  

validity of the Cess Act is the lack of legislative competence  

of the Parliament. Mr. Uday Joshi, learned counsel appearing on  

behalf  of  the  appellant,  strenuously  urged  that  the  impost  

levied  by  the  Cess  Act  is  a  compulsory  and  involuntary  

exaction, made for a public purpose without reference to any  

special benefit for the payer of the Cess. It was argued that

there exists no co-relationship between the payee of the Cess  

and the services rendered and therefore, the levy is in effect  

a tax. It was submitted that the maintenance of a separate  

corpus, i.e., Building and Other Construction Workers Welfare  

Fund, which also vests in the State, is a cloak to cover the  

true character of the levy, which is to be utilized for the  

benefit of the building worker, is in fact a ‘tax.’  

11. Asserting that the Cess Act in fact provides for the levy of  

tax although it is termed as Cess, it was contended that no tax  

can  be levied  or collected  in terms  of Article  265 of  the  

Constitution of India, except by authority of law. In other  

words, the power to make a legislation imposing a tax has to be  

traced with reference to a specific Entry in the Lists in the  

Seventh Schedule to the Constitution. According to the learned  

counsel, the subject matter of the present statute i.e. the  

Cess Act being fully covered by Entry 49 in List II (State  

List) pertaining to taxes on “lands and buildings”, the power  

to levy Cess would not be available to the Parliament, based on  

the assumption of residuary power.  

12. Per contra, Mr. R.P. Bhatt, learned senior counsel appearing on  

behalf  of  the  respondents,  defending  the  constitutional  

validity of the subject legislation, stressed that the Cess Act  

is  within  the  legislative  competence  of  Parliament  with  

reference to Entry 97 of List I in the Seventh Schedule.  In  

the written submissions filed on behalf of the respondents, it

is pleaded that the charging Section in the Cess Act makes it  

clear that the levy is attracted when there is an activity of  

building and construction. The collection of cess on the cost  

of construction is for enhancing the resources of the Building  

& other Construction Workers’ Welfare Boards constituted under  

the BOCW Act. The Cess so collected is directed to a specific  

end spelt out in the BOCW Act itself; it is set apart for the  

benefit of the building and construction workers; appropriated  

specifically for the performance of such welfare work and is  

not  merged  in  the  public  revenues  for  the  benefit  of  the  

general public.

13. It is evident from the contentions raised on behalf of the  

appellant that there is a two pronged attack on the legislative  

competence of the Parliament to enact the Cess Act: (i) it is a  

‘tax’ and not a ‘cess’ because no element of quid  pro quo  

exists between the payer of the cess and the beneficiary and  

(ii) if it is a ‘tax’ then it is a tax on “lands and buildings”  

falling within the ambit of Entry 49 List II (the State List)  

of the Seventh Schedule, ousting the legislative competence of  

the Parliament.

14. Thus, the core issue arising for consideration is whether the  

cess levied under the scheme of the impugned Cess Act is a  

‘fee’ or a ‘tax’. Before embarking on an evaluation based on  

the said submissions, it would be apposite to briefly examine  

the concept of ‘tax’ and ‘fee’.

15.  The question whether a particular statutory impost is a ‘tax’  

or ‘fee’ has arisen as a challenge in several cases before this  

Court, which in turn necessitated the demarcation between the  

concepts of ‘Cess’, ‘tax’ and ‘fee’. The characteristics of a  

fee, as distinct from tax, were explained as early as in  The  

Commissioner,  Hindu  Religious  Endowments,  Madras Vs.  Sri  

Lakshmindra  Thirtha  Swamiar  of  Sri  Shirur  Mutt1 (generally  

referred to as the ‘Shirur Mutt’s Case’).  The ratio of this  

decision has been consistently followed as a locus classicus in  

subsequent  decisions  dealing  with  the  concept  of  ‘fee’  and  

‘tax’.  The Constitution Bench of this Court in Hingir Rampur  

Coal Co. Ltd. Vs. State of Orissa2  was faced with the challenge  

to  the  constitutional  validity  of  the  Orissa  Mining  Areas  

Development Fund Act, 1952, levying Cess on the petitioner’s  

colliery. The Bench explained different features of a ‘tax’, a  

‘fee’ and ‘cess’ in the following passage:

“The  neat  and  terse  definition  of  Tax  which  has  been given by Latham, C.J., in Matthews v. Chicory  Marketing Board (1938) 60 C.L.R. 263 is often cited  as a classic on this subject. “A Tax", said Latham,  C.J., "is a compulsory exaction of money by public  authority for public purposes enforceable by law,  and  is  not  payment  for  services  rendered".  In  bringing out the essential features of a tax this  definition  also  assists  in  distinguishing  a  tax  from a Fee. It is true that between a tax and a fee  there is no generic difference. Both are compulsory  exactions  of  money  by  public  authorities;  but  whereas a tax is imposed for public purposes and is  not,  and  need  not,  be  supported  by  any  consideration of service rendered in return, a fee  

1 AIR 1954 SC 282 2 1961 (2) SCR 537

is levied essentially for services rendered and as  such there is an element of quid pro quo between  the  person  who  pays  the  fee  and  the  public  authority  which  imposes  it.  If  specific  services  are rendered to a specific area or to a specific  class of persons or trade or business in any local  area,  and  as  a  condition  precedent  for  the  said  services  or  in  return  for  them  cess  is  levied  against the said area or the said class of persons  or trade or business the cess is distinguishable  from a tax and is described as a fee. Tax recovered  by  public  authority  invariably  goes  into  the  consolidated fund which ultimately is utilised for  all public purposes, whereas a cess levied by way  of Fee is not intended to be, and does not become,  a part of the consolidated fund. It is earmarked  and set apart for the purpose of services for which  it is levied.”   

(Emphasis  supplied by us)

It was further held that,  

“It is true that when the Legislature levies a fee  for rendering specific services to a specified area  or  to  a  specified  class  of  persons  or  trade  or  business, in the last analysis such services may  indirectly form part of services to the public in  general.  If  the  special  service  rendered  is  distinctly and primarily meant for the benefit of a  specified class or area the fact that in benefiting  the specified class or area the State as a whole  may  ultimately  and  indirectly  be  benefited  would  not detract from the character of the levy as a  fee.  Where,  however,  the  specific  service  is  indistinguishable  from  public  service,  and  in  essence  is  directly  a  part  of  it,  different  considerations  may  arise.  In  such  a  case  it  is  necessary to enquire, what, is the primary object  of the levy and the essential purpose which it is  intended  to  achieve.  Its  primary  object  and  the  essential  purpose  must  be  distinguished  from  its  ultimate  or  incidental  results  or  consequences.  That is the true test in determining the character  of the levy.”

        (Emphasis supplied by us)

16.   On the basis of the above considerations, this Court  in the  

aforementioned case, examined the scheme of the Act impugned in  

that  case  in  depth  and  opined  that  the  primary  and  the  

principal object of the Act was to develop the mineral areas in  

the  State  and  to  assist  in  providing  more  efficient  and  

extended exploitation of its mineral wealth. The Cess levied  

did not become a part of the consolidated fund and was not  

subject to an appropriation in that behalf. It went into a  

special fund earmarked for carrying out the purpose of the Act  

and thus, its existence established a correlation between the  

Cess and the purpose for which it was levied, satisfying the  

element of quid pro quo in the scheme. These features of the  

Act  impressed  upon  the  levy  the  character  of  a  ‘fee’  as  

distinct from a ‘tax’.  

17. Recently in State of W.B. Vs. Kesoram Industries Ltd. & Ors.3,  

the  Constitution  Bench  of  this  Court,  was  faced  with  a  

challenge to the Constitutional validity of the levy of Cesses  

on coal-bearing lands; tea plantation lands and on removal of  

bricks earth.  Relying on the decision in  Hingir Rampur Coal  

Co. Ltd (supra), speaking for the majority, R.C. Lahoti, J. (as  

His Lordship then was), explained the distinction between the  

terms ‘tax’ and ‘fee’ in the following words: (SCC HN)  

“The term cess is commonly employed to connote a Tax  with a purpose or a tax allocated to a particular  thing. However, it also means an assessment or levy.  

3 (2004) 10 SCC 201

Depending on the context and purpose of levy, cess  may not be a tax; it may be a fee or fee as well. It  is not necessary that the services rendered from out  of  the  Fee  collected  should  be  directly  in  proportion with the amount of Fee collected. It is  equally not necessary that the services rendered by  the  Fee  collected  should  remain  confined  to  the  person  from  whom  the  fee  has  been  collected.  Availability of indirect benefit and a general nexus  between the persons bearing the burden of levy of  fee  and  the  services  rendered  out  of  the  fee  collected is enough to uphold the validity of the  fee charged.”   

18. In the light of the tests laid down in  Hingir Rampur (supra)  

and followed in Kesoram Industries (supra), it is manifest that  

the true test to determine the character of a levy, delineating  

‘tax’ from ‘fee’ is the primary object of the levy and the  

essential purpose intended to be achieved.  

19. There is no doubt in our mind that the Statement of Objects and  

Reasons of the Cess Act, clearly spells out the essential purpose,  

the enactment seeks to achieve i.e. to augment the Welfare Fund  

under the BOCW Act. The levy of Cess on the cost of construction  

incurred by the employers on the building and other construction  

works is for ensuring sufficient funds for the Welfare Boards to  

undertake  social  security  schemes  and  welfare  measures  for  

building and other construction workers. The fund, so collected,  

is directed to specific ends spelt out in the BOCW Act. Therefore,  

applying the principle laid down in the aforesaid decisions of  

this Court, it is clear that the said levy is a ‘fee’ and not  

‘tax’. The said fund is set apart and appropriated specifically

for the performance of specified purpose; it is not merged in the  

public revenues for the benefit of the general public and as such  

the nexus between the Cess and the purpose for which it is levied  

gets established, satisfying the element of quid pro quo in the  

scheme.  With these features of the Cess Act in view, the subject  

levy has to be construed as ‘fee’ and not a ‘tax’. Thus, we uphold  

and affirm the finding of the High Court on the issue.  

20.At this juncture, we may also deal with the argument of learned  

counsel appearing for the appellant that, since there exists no  

‘quid pro quo’ between the payer (contractors) of the fee and the  

ultimate beneficiary (workers) of the services rendered, the said  

levy is in fact a tax. While it is true that ‘quid pro quo’ is one  

of the determining factors that sets apart a ‘tax’ from a ‘fee’  

but the concept of quid pro quo requires to be understood in its  

proper perspective.  

21.A Constitution bench of this Court in Kewal Krishan Puri and  

Anr. Vs.   State of Punjab and Anr.  4  ,      while dealing with  

provisions  of  the  Punjab  Agricultural  Produce  Markets  Act,  

1961, held that the element of quid pro quo must exist between  

the payer of the Fee and the special services rendered. Taking  

note of the well recognized distinct connotations between ‘tax’  

and ‘fee’, the Bench observed that a ‘fee’ is a charge for  

special  service  rendered  to  individuals  by  the  Governmental  

agency and therefore, for levy of fee an element of quid pro  

4 1980 (1) SCC 416

pro quo between the services rendered and payer of the fee was  

concerned:

"The  traditional  view  that  there  must  be  actual quid  pro  quo for a fee has undergone a sea change in the subsequent  decisions.  The  distinction  between  a  tax  and  a  fee  lies  primarily in the fact that a tax is levied as part of a  common  burden,  while  a  fee  is  for  payment  of  a  specific  benefit  or  privilege  although  the  special  advantage  is  secondary  to  the  primary  motive  of  regulation  in  public  interest. If the element of revenue for general purpose of  the State predominates, the levy becomes a tax. In regard to  fees there is, and must always be, correlation between the  fee collected and the service intended to be rendered. In  determining whether a levy is a fee, the true test must be  whether  its  primary  and  essential  purpose  is  to  render  specific services to a specified area of class; it may be of  no consequence that the State may ultimately and indirectly  be benefited by it. The power of any legislature to levy a  fee  is  conditioned  by  the  fact  that  it  must  be  "by  and  large" a     quid pro quo     for the services rendered. However,    correlationship between the levy and the services rendered  (sic or) expected is one of general character     and not of    mathematical exactitude. All that is necessary is that there  should be a "reasonable relationship" between the levy of  the Fee and the services rendered."

(Emphasis supplied)

23.Viewed from this perspective, the inevitable conclusion is that  

in the instant case there does exist a reasonable nexus between  

the payer of the Cess and the services rendered for that industry  

and therefore, the said levy cannot be assailed on the ground that  

being in the nature of a ‘tax’, it was beyond the legislative  

competence of Parliament.

24.Having reached the conclusion that the levy by the impugned Act  

is in effect a ‘fee’ and not a ‘tax’, we deem it unnecessary to  

deal with the second limb of the challenge, viz. the impost is a

tax on “lands and buildings”, covered by Entry 49 in List II of  

the Seventh Schedule.

25.In  view  of  the  aforegoing  discussion,  we  do  not  find  any  

infirmity in the conclusions arrived at by the High Court while  

upholding the validity of the impugned Acts.  All the appeals,  

being bereft of any merit are dismissed with costs, quantified at  

`25,000/- in each set of appeals.   

     .……………………………………

         (D.K. JAIN, J.)  

                         ..….………………………………….        (ASOK KUMAR GANGULY, J.)

NEW DELHI;   NOVEMBER 18, 2011. ARS