THE MUNICIPAL COUNCIL, MADURAI vs R. NARAYANAN ETC.

The Supreme Court held that the fee imposed on hoteliers under Section 321(2) of the Madras District Municipalities Act, 1920, cannot be classified as a tax. The Court reasoned that the section authorizes the collection of a fee, which is distinct from a tax, and that the legislative intent and procedural safeguards for tax imposition under Section 78 were not followed. Consequently, the High Court's ruling in favor of the respondents was upheld, affirming that the fee does not meet the criteria for a tax as defined in constitutional provisions.