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Mathura Vrindavan Development Authority & Another vs. Rajesh Sharma and Others

Civil Appeal · 2023 INSC 448Decided 28 Apr 2023
Civil Appeal No. 5645 of 2015
M.R. Shah · C.T. Ravikumar · J.B. Pardiwala alongside Justice M.R. Shah

Background

Various Development Authorities in Uttar Pradesh, acting on State Government orders issued under Section 41 of the U.P. Urban Planning and Development Act, 1973, levied a range of charges on property owners/builders beyond the standard development fee, including internal/external development charges, inspection and supervision fees, sub-division charges, stacking charges, and impact fees. The Allahabad High Court struck down most of these additional levies (while upholding the basic development fee), and in one case (Rekha Rani) even struck down the development fee itself, leading to cross-appeals by both the authorities/State and some petitioners to the Supreme Court.

Decision Breakdown

The Supreme Court held that Section 41 only gives the State Government supervisory/policy-direction power over the authorities, not the power to independently create new categories of chargeable fees beyond what Section 15(2-A) of the Act specifically permits. Since the Act only defines and permits the development fee/charges under Section 15(2-A), any other levies (inspection fee, sub-division charges, stacking charges, impact fee, etc.) imposed merely through State-directed orders were invalid and violated Article 265 of the Constitution, which bars taxation without proper legal authority. The Court confirmed the High Court's striking down of the extra charges, reversed the High Court's decision in Rekha Rani insofar as it had also struck down the basic development fee (which was upheld), and ordered refund with 6% interest of any amounts collected beyond what the Act actually authorised.

Lesson Learnt

A government authority cannot levy a fee or charge on citizens merely through an administrative order or supervisory direction, under Article 265 of the Constitution, any charge amounting to a tax or fee must be backed by clear authority in the parent statute itself.

Official source (sci.gov.in)View Judgment (PDF)

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