Madras High Court
Parveen Travels vs The Regional Transport Officer on 12 February, 2008
Equivalent citations: AIR 2008 (NOC) 1592 (MAD.), 2008 (5) AKAR (NOC) 831 (MAD.)
Author: S. Manikumar
Bench: S.Manikumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.02.2008
CORAM
THE HONOURABLE MR.JUSTICE S.MANIKUMAR
W.P.Nos.7505 and 7506 of 2005
WPM.P.Nos.8204 and 8205 of 2005
1. Parveen Travels,
rep. by its Director,
A.Afsal ... Petitioner in W.P.No.7505 of 2005
2. Sadiq ... Petitioner in W.P.No.7506 of 2005
vs.
The Regional Transport Officer,
Salem-7 ... Respondents in both the W.Ps.
Prayer in W.P.No.7505 of 2005: Writ petition is filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari to cal for the records of the respondent herein relating to the Demand Notice made in R.No.B1/94324/2004, dated 16.02.2005, demanding a sum of Rs.1,08,000/- being tax in respect of the petitioners vehicle No.TN-07-R-1999 for the Quarter ending 30.09.2004 and quash the same.
Prayer in W.P.No.7505 of 2005: Writ petition is filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari to cal for the records of the respondent herein relating to the Demand Notice made in R.No.B1/93933/2004, dated 16.02.2005, demanding a sum of Rs.1,08,000/- being tax in respect of the petitioners vehicle No.TN-01-T-1999 for the Quarter ending 30.09.2004 and quash the same.
For Petitioner : Mrs.Radha Gopalan
For Respondents : Mr.A.Arumugam
Addl. Govt. Pleader
COMMON ORDER
As common questions of facts and law are involved in both the Writ Petitions, they are taken up together and disposed of by a common order.
2. Brief facts leading to W.P.No.7505 of 2005 are as follows:
The petitioner is a contract carriage omni bus operator, operating his vehicle bearing Registration No.TN-07-R-1999 with valid permit issued by the State Transport Authority, Pondicherry. The petitioner undertook a tour from Pondicherry to visit places in Chennai, Salem, Yercaud, Dharmapurai, Guruvayur etc., and obtained permit in this regard from the State Transport Authority, Pondicherry for a period of one week from 14.09.2004 to 20.09.2004. On 13.09.2004, when the above said vehicle was proceeding to Yercaud Hills, the vehicle was checked by the Motor Vehicles Inspector, Gr.II, attached to the Office of the respondent and found following irregularities:
"1. The vehicle found to be Pondicherry based vehicle issued by T.P. Under Section 88(8) vide No.16/PY/92, dated 16.02.04, valid from 14.09.2004 to 20.09.2004. On enquiry from the passengers one Mr.O.Rajendran, statement enclosed, found to be Malaisian delegates group of 31 persons boarded in the vehicle in Vandhavasi, T.V. District on 13.09.2004.
2. Picking up the passengers within the State of Tamilnadu is violating the permit condition. Hence tax to be collected for the QE, 30.09.2004. Since the vehicle is only material evidence due to refusal of the Police Officials the vehicle could not be detained. Inspite, the original RC book, seized and enclosed, for necessary action. The passengers found to be foreign delegates. The vehicle is allowed to proceed."
For the irregularities stated above, the checking officer impounded the documents, against which, the petitioner filed W.P.No.28516 of 2004 seeking to release the seized documents of the vehicle and this Court passed orders directing the respondent to release the documents and take action under the Motor Vehicles Act, 1988, after giving necessary opportunity to the petitioner. The petitioner has further submitted that pursuant to the order of this Court, instead of taking action against the permit, the respondent has issued the impugned show case notice, dated 16.02.2005 to the petitioner as to why tax should not be collected for the entire quarter ending with 30.09.2004. Aggrieved by the order of the respondent demanding tax, the petitioner has preferred the present Writ Petition.
3. Facts involved in W.P.No.7506 of 2005 are almost similar to that of W.P.No.7505 of 2005, except, the variation in the Registration Number of the vehicle bearing No.TN-01-T-1999, period of permit from 09.09.2004 to 15.09.2004. The irregularities noticed by the Checking Inspector are as follows:
"At the time of check this vehicle is having valid permit u/s.88(8) issued by the Government of Pondicherry. As per the permit condition, it should not pick up party in out State. But on enquiry, it reveals that the travelled passengers in the vehicle is picked up at Vandavasi on 13.09.2004, 65 passengers in two vehicles is TN-07-R-1999 and this vehicle to go round the Tamilnadu."
4. Mrs.Radha Gopalan, learned counsel for the petitioners submitted that when the show cause notices, dated 25.09.1999 were given in respect of the above vehicles, by letters dated 07.10.2004 and 14.10.2004, the petitioners have denied the charges. But, subsequent to the order in W.P.No.28516 and 28517 of 2004 referred to in the impugned order, the petitioners were not given any opportunity to explain in person. She further submitted that in so far as pecuniary liability is concerned, personal hearing is a mandatory requirement and in the absence of the same, the impugned order of demand is in violation of Article 14 of the Constitution of India.
5. Learned counsel for the petitioners further submitted that the charge issued was only for misusing the permit conditions and therefore, action can be taken only against the permits under Section 86 of the Motor Vehicles Act, 1988 for cancelling or suspending the permits of the above said vehicles and tax cannot be demanded under the Motor Vehicles Taxation Act, as there is no provision for collection of tax. She further submitted that G.O.894, Home, dated 29.03.1992, Pondicherry vehicles are exempted from payment of tax in Tamil Nadu and similarly, Tamil Nadu vehicles are exempted from payment of tax, while plying in Pondicherry, provided they are covered by valid permits.
6. Learned counsel for the petitioners further submitted that the petitioners in their explanation have denied the allegation that they have picked up passengers at Vandavasi and the statements relied on in the check reports were not furnished to the petitioners to put forth their case effectively. She further submitted that as the passengers were foreign delegates from Malayasia, there is no question of plying the vehicle as stage carriage. She also submitted that when the vehicles are covered with valid special permit issued under Section 88(8) of the Motor vehicles Act, 1988 for the periods viz., between 09.09.2004 and 15.09.2004 and between 14.09.2004 and 20,09.2004 respectively, the vehicles can be operated within the State of Tamil Nadu and therefore, it is not open to the respondent to contend that the vehicles had been misused as stage carriages on 15.09.2004, when the vehicles were checked by the Motor Vehicles Inspector Grade I.
7. Finally, learned counsel for the petitioners submitted that even assuming that there is violation of permit condition, the petitioner is liable to pay 1/10th of the quarterly tax and not for the entire quarter, ending with 30.09.2004 and therefore, the impugned demand of tax for the entire quarter is illegal. In support of the above contentions, learned counsel for the petitioner placed reliance on the decisions in M.Narasimhaiah v. Dy. Commr., for Transport, Banglore reported in AIR 1988 SC 240 and Shekar, K.V., v. The State of Tamil Nadu, etc., reported in 1995 Writ. L.R. 233.
8. Mr.A.Arumugam, learned Additional Government Pleader, placing reliance on Sections 3 and 11 of the Tamil Nadu Motor Vehicles Taxation Act, submitted that the tax shall be levied on every motor vehicle used or kept for use in the State of Tamil Nadu at the rate specified for such vehicle in the Schedule, as the case may be and any vehicle in respect of which, tax has been paid, altered or proposed to be used in such a manner as to the cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable and since the contract carriages had been owned by the petitioners have been used as stage carriages for picking up the passengers in Vandavasi, the petitioners are liable to pay the differential rate of tax for the use of such vehicle in the State of Tamil Nadu. He further submitted that sufficient opportunity has been given to the petitioners to submit their explanation and in so far as levy of tax is concerned, the Tamil Nadu Motor Vehicles Taxation Act does not contemplate any personnel hearing to the permit holder.
Heard the counsel appearing for the parties and perused the materials available on record.
9. The vehicles bearing Registration No.TN-07-R-1999 and No.TN-01-T-1999 were intercepted on 13.09.2004 and checked by the Motor Vehicle Inspector Grade II, Salem and necessary check Reports dated 15.09.2004 were issued to the petitioners, pointing out the irregularities mentioned above. Subsequently, show cause notices dated 25.09.2004 were issued to the petitioners, calling upon them to show cause as to why a sum of Rs.1,08,000/- and should not be collected for each vehicle, for the irregularity committed by the petitioners. In response to the said show cause notices, the petitioners have submitted explanations dated 07.10.2004 and 14.10.2004 respectively for the above said vehicles, stating that at the time of check, a group of passengers travelled in their vehicles from Pondicherry to Yercaud and not from Vandavasi in Tiruvannamalai District and therefore, there is no misuse of the vehicles as stage carriages. The petitioners have further explained that even assuming that there was any violation of permit conditions, they are liable to pay tax only upto 1/10th of the Quarterly tax applicable to contract carriage and requested the respondent to drop further action in the matter.
10. The Regional Transport Officer, respondent herein, on consideration of the records as well as the explanations submitted by the petitioners and the letters, dated 15.09.2004 of the drivers of the above vehicles, stating that a group of passengers, consisting of 65 members from Malayasia were picked up at Vandavasi in Tamil Nadu State to visit Yercaud, came to the conclusion that the above said vehicles were misused by picking-up passengers in Tamil Nadu state, violating the permit conditions and consequently, demanded Rs.1,08,000/- for each vehicle towards tax.
11. In order to consider the rival contentions, it is relevant to extract some of the provisions of the Motor Vehicles Act and the Tamil Nadu Motor Vehicles Taxation Act.
12. "Stage carriage" is defined in Section 2(40) of the Motor Vehicles Act, 1988, ""stage carriage" means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey."
13. Section 2(7) of the Motor Vehicles Act, defines contract carriage" and it means, ""contract carriage" means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum-
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set down passengers nor included in the contract anywhere during the journey, and includes-
(i) a maxi-cab; and
(ii) a motor cab notwithstanding that separate fares are charged for its passengers."
14. Permit has been defined in Section 2(31) of the Motor Vehicles Act to mean a permit issued by a State or Regional Transport Authority or an authority prescribed in this behalf under this Act authorising the use of a motor vehicle as a transport vehicle.
15. Section 86 of the Motor Vehicles Act, 1988, deals with the power of the Transport Authority, which granted permit, to cancel or suspend permit for such period, as he thinks fit, on the breach of any one of the conditions mentioned in Section 84 of the Act or of any conditions contained in the permit or if the holder of the permit, uses or causes or allows a vehicle to be used in any manner not authorised by the permit. The permit can be suspended or cancelled, after providing the holder of the permit an opportunity to furnish his explanation. If the transport authority is of the opinion that having regard to the circumstances of the case, it would not be necessary or expedient to cancel or suspend the permit, as the case may be, recover the compounding fee from the permit holder.
16. Section 88 of the Motor vehicles Act, 1988 deals with the validation of permit for use of the vehicle outside the region, for which it is granted and it reads as follows:
"Except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been countersigned by the Regional Transport Authority of than other region, and a permit granted in any one State shall not be valid in any other State unless countersigned by the State Transport Authority of that other State or by the Regional Transport Authority concerned."
17. Sub-Section 8 of Section 88 of the Motor Vehicles Act deals with Special Permits granted by the Transport Authorities and it is extracted:
"Notwithstanding anything contained in sub-section (1), but subject to any rules that may be made under this Act by the Central Government, the Regional Transport Authority of any one region or, as the case may be, the State Transport Authority, may, for the convenience of the public, grant a special permit to any public service vehicle including any vehicle covered by a permit issued under section 72 (including a reserve stage carriage) or under section 74 or under sub-section (9) of this section for carrying a passenger or passengers for hire or reward under a contract, express or implied, for the use of the vehicle as a whole without stopping to pick up or set down along the line of route passengers not included in the contract, and in every case where such special permit is granted, the Regional Transport Authority shall assign to the vehicle, for display thereon, a special distinguishing mark in the form and manner specified by the Central Government and such special permit shall be valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or of the State Transport Authority of the other State, as the case may be."
18. Levy of tax is provided in Section 3 of the Tamil Nadu Motor Vehicles Taxation Act and it reads as follows:
"(1) Subject to the provisions of sub-section (2) tax shall be levied on every motor vehicle used or kept for use in the State of Tamil Nadu at the rate specified for such vehicle in the first Schedule or in the Second Schedule or in the Third Schedule, as the case maybe.
(2) The Government may, by notificati0n, under this sub-section shall not, in the aggregate, exceed fifty per cent of the rate specified in the First Schedule or in the Second Schedule or in the Third Schedule, as the case may be.
Provided that such increase, by notification, under this sub-section shall not, in the aggregate, exceed fifty per cent of the rate specified in the First Schedule or in the Second Schedule or in the Third Schedule, as the case may be.
(3) All references made in this Act to the Schedules shall be considered as relating to the Schedules as for the time being amended in exercise of the powers conferred by this Section."
19. Section 11 of the Tamil Motor Vehicles Taxation Act, deals with the payment of additional tax, when the vehicle is altered or proposed to be used in such manner where higher rate of tax is levid.
20. Schedules 1 to 4 of the Tamil Nadu Motor Vehicles Taxation Act, 1974, deal with the rate of tax applicable to different class of vehicle. The First Schedule deals with the rate of tax applicable to different classes of vehicles, such as, Goods Carriages and Trailers depending upon the laden weight, private service vehicles, vehicles permitted to ply solely as contract carriages, vehicles permitted to ply as stage carriages, etc., As per clause 2(II) of the First Schedule, the rate of tax applicable to contract carriage permitted to carry more than five persons is Rs.2,000/- per quarter. Sub-Clause (iii) of Clause 2 of the First Schedule is extracted hereunder:
"III. Vehicles permitted to ply as stage carriages and to carry more than six persons (other than the driver and the conductor)-
Class of vehicles Quarterly tax
(a) Plying exclusively within the Madras Metropolitan Area For every passenger (other than the driver and conductor) which the vehicle is permitted to carry.
Rs.60/-
(b) Plying exclusively within the limits of the City of Madurai or the City of Coimbatore, or within the limits of one or more contiguous municipalities or on other town service routes For every passenger (other than the driver and the Conductor) which the vehicle is permitted to carry.
Rs.275/-
(c) Plying in routes or areas other than those falling under items (a) and (b) -
(i) For every passenger (other than the driver and the conductor) which the vehicle is permitted to carry if the service is classed as "Express Service"
(ii) For every passenger (other than the driver and the conductor) which the vehicle is permitted to carry in the case of services other than the "Express Service".
Rs.360/-
(1) During the period commencing on the 1st day of April 1974 and ending with the 31st day of March 1990, the tax payable in respect of a reserve stage carriage or a spare bus shall be three-fourths of the maximum rate payable per passenger for any regular stage carriage of the permit holder.
(2) During the period commencing on the 1st day of April 1990 and ending with the 9th day of January 1992, the tax payable in respect of a reserve stage carriage or a spare bus shall be maximum rate payable per passenger for any regular stage carriage of the permit holder.
(3) During the period commencing on the 10th day of January 1992, and ending with the 31st day of March 1994, the tax payable in respect of a reserve stage carriage or a spare bus shall be three-fourths of the maximum rate payable per passengers for any regular stage carriage of the permit holder.
(4) With effect on and from the 1st day of April 1994, the tax payable in respect of a reserve stage carriage or a spare bus shall be the maximum rate payable per passengers for any regular stage carriage of the permit holder."
Thus it is evident that the Motor Vehicles Taxation Act prescribe different rate of tax depending upon the class of the vehicle.
21. G.O.Ms.No.894, Home Transport-A Department, dated 29.05.1991, exempts payment of tax in respect of public service vehicles registered in other States and having Special permits granted under Section 88(8) of the Act and the same is extracted hereunder:
"In exercise of the powers conferred by clause (1) of Section 20 of the Tamil Nadu Motor Vehicles Taxation Act, 1974 (Tamil Nadu Act 13 of 1974) and in supersession of the Home Department Notification No.II (2) HO/1434/81, published at page 236 of Part-II Section 2 of the Tamil Nadu Government Gazette, dated 8th April 1991, the Governor of Tamil Nadu hereby exempts the public service vehicles registered in other states having special permits granted under sub-section (8) of Section 88 of the Motor Vehicles Act, 1988 (Central Act 59 of the 1988) from payment of tax payable under the said Tamil Nadu Motor Vehicles Taxation Act, 1974 (Tamil Nadu Act 13 of 1974), subject to the condition that such other States continue to give reciprocal exemption from payment of tax in respect of the public service vehicle registered in the State of Tamil Nadu having special permits granted under the said sub-section (8) of section 88 of the said Motor Vehicles Act, 1988 (Central Act 59 of 1988) to operate in such other States:
Provided that such exemption shall not be made in respect of:-
(a) The public service vehicles covered by special permits granted under sub-section (8) of section 88 of Motor Vehicles Act, 1988 (Central Act 59 of 1988) by the transport authority of a State other than the State of Tamil Nadu to pickup and set down passengers in the State of Tamil Nadu; and
(b) those vehicles not covered by a permit issued under section 72 (including a reserve stage carriage or a spare bus) or under section 74 or under sub-section (9) of Section 88 but issued with special permission under sub-section (8) of Section 88 of the Motor Vehicles Act, 1988 (Central Act 59 of 1988) by transport authority of a State other than the State of Tamil Nadu."
22. A conjoint reading of Section 88(8) of the Act and G.O.Ms.No.894, Home Transport-A Department, dated 29.05.1991, makes it clear that whenever special permits under Section 88(8) of the Motor Vehicles Act are granted to a public service vehicle by the Transport Authority of the State other than the State of Tamil Nadu, the holder of such permit is exempted from payment of tax for use of such vehicle in the State of the Tamil Nadu, provided that there is a reciprocal agreement and the holder of the permit shall not stop the vehicle to pick up or set down any passengers in the State of Tamil Nadu.
23. In K.V.Shekar v. The State of Tamil Nadu, etc., reported in 1995 Writ.L.R. 233, the petitioners therein filed two Writ Petitions for a Mandamus forbearing the respondents 1 to 4 therein from seizing the vehicles and demanding motor vehicles tax, pursuant to the exemption granted in G.O.Ms.No.894, dated 29.05.1991 in respect of their tourist vehicle, granted under Section 88(8) of the Motor Vehicles Act, 1988. The contention of the petitioners therein was that by grant of special permits under Section 88(8) of the Act, it is not necessary that basic permit should be issued under Sections 72, 74 and Sub-Section 9 of Section 88 of the Motor Vehicles Act to cover the area or the route, for which, special permits are granted under sub-Section 8 of Section 88 of the Act. Per contra, it was the stand of the Government that as long as, the basic permits do not authorise or enable the holder of the permit to operate the vehicle over an area in respect of which, special permits are granted, the special permits beyond the area covered by the basic permits cannot be held to be valid so as to enable the holder of the permit to avail exemption from payment of tax under G.O.Ms.No.894, dated 29.05.1991, issued by the Tamil Nadu State.
24. After referring to the relevant provisions, a Division Bench of this Court held that the basic contract carriage permit need not cover the area, for which, special permit is issued under Section 88 (8) of the Act and consequently, the vehicles in question, which were covered by the Special permits issued under Section 88(8) of the Act and also possess basic contract carriage permits, are entitled to the benefit of Tamil Nadu Government Order and therefore, they are exempted from the payment of Motor Vehicle Tax, irrespective of the fact, whether the contract carriage permit is issued for the area or not, for which, special permits are issued. With due respect, the reported judgment deals only with the exemption of the vehicle from payment of Motor Vehicle tax, if it is covered by the special permits issued under Section 88(8) of the Act and there was no occasion to deal with the cases of violation of permit conditions and the exceptional Clauses (a) and (b) contained in G.O.Ms.No.894, Home Transport-A Department, dated 29.05.1991.
25. In M.Narasimhaiah v. Dy. Commr., for Transport, Bangalore reported in AIR 1988 SC 240, the Supreme Court considered the competence of the Motor Vehicles Authority to levy additional tax on stage carriage, found carrying passengers in excess, which the owner was allowed to carry under the permit issued to him. In this case, the vehicle was having a stage carriage permit issued under the provisions of the Motor Vehicles Act, 1939. The Taxation Authority demanded an additional tax on the ground that the appellant therein had proposed to use the vehicle in such a manner, as to cause the vehicle to become a vehicle, in respect of which a higher rate of tax was payable. The High Court took the view that the petitioner, having used the vehicle for carrying excess passengers, was liable to pay additional tax. On appeal, the Supreme Court considering the provisions of the Motor Vehicles Act and the Karnakata Motor Vehicles Taxation Act, at Paragraph 13 held as follows:
"13. The argument urged on behalf of the State Government that the liability of the registered owner to pay tax in respect of a stage carriage depends upon the number of passengers carried in a vehicle on a given date does not appeal to us because in that event the words 'which the vehicle is permitted to carry' in item 4(2) become meaningless and ineffective. The High Court in Noorullha Khan's case (reported in ILR (1985) Kant 2711) (supra) overlooked the presence of the words 'which the vehicle is permitted to carry' which are found in Cl.(b) of item 7 of the Act also. It is no doubt true that it is not in the public interest that a registered owner of a motor vehicle should be allowed to carry under his permit and such a tendency on the part of any registered owner should be checked. That fact, however, cannot be relied upon for the purpose of construing the items in Part A of the Sch. To the Act liberally and in favour of the State Government. It is needless to say that a law which imposes a tax should be construed strictly. If the action on the part of the registered owner is contrary to the provisions of the Motor Vehicles Act, 1939 there is sufficient provision in that Act to take appropriate action against him and either to cancel the permit or to suspend it."
In the above reported judgment, the Apex Court held that when the registered owner of a Motor Vehicle carried more passengers than the maximum number of passengers, permitted to carry under the permit, action can be taken against the owner of the vehicle either to cancel or suspend the permit and in the absence of any provision under the Motor Vehicles Taxation Act, directed the respondents not to levy additional tax for carrying more passengers. The Supreme Court observed the need for enforcement of the provision under Section 60 of the Motor Vehicles Act, 1939 (Section 86 of the present Act) strictly.
26. In an unreported judgment in W.P.NO.1426 of 2000 dated 04.02.2000 (S.V.Kumar v. the Regional Transport Officer, Sivagangai), this Court considered the demand for payment of tax for the use of a contract carriage as a stage carriage. The facts of the case are, the contract carriage, during the check by the Motor Vehicles Inspector was found to have collected individual fare of Rs.180/- per passenger and a show cause notice was issued to the permit holder, as to why the action should not be taken to suspend the permit under section 86(1)(c) of the Motor Vehicles Act. Besides that, a memo was also issued demanding tax of Rs.11,400/- in respect of his spare bus. Following the Division Bench judgment in W.A. No.262 of 1977 etc., dated 18.12.1981, this Court held that for violation of permit condition, the authorities concerned can proceed against the permit holder for cancellation or suspension of the permit and the demand for payment of tax cannot be made for violation of any condition.
27. In an unreported judgment in W.P.No.19211 of 2000 (A.Sadiq v. the Transport Commissioner, Chennai-5 and another) the petitioner therein challenged a circular No.190/2000, dated 10.10.2000, issued by the Transport Commissioner, Chennai, in which, Joint Transport Commissioner, all Deputy Transport Commissioners, Regional Transport Officers, Motor Vehicle Inspectors, Unit Office and check posts were instructed to collect full rate of quarterly tax in respect of other State Public Service vehicles covered by the Special permits under Section 88(8) of the Motor Vehicles Act issued by the State Transport Authority, Pondicherry for violating G.O.Ms.No.894, Home, dated 29.05.1991.
28. While dealing with the correctness of the circular, this Court held that the Public Service Vehicles of other States covered under G.O.Ms.No.894, Home, dated 29.05.1991, do not require to obtain any temporary permit and the provisio to Section 6 of the Act will not be applicable. This Court, at Paragraph 12 of the order, held that when the respondents were all along levying tax only at the rate of 1/3rd or 1/10th from the vehicles having the benefit of the reciprocal arrangement as per G.O.Ms.No.894, Home, dated 29.05.1991, it is not open to the Transport Commissioner, Chennai to issue any clarification with regard to the quantum of collection of tax by the Regional Transport Officers in case of violation or irregularity. So saying, this Court set aside the Circular, which compelled the authorities to collect quarterly tax, giving a go-by to the practice all along adopted. The said decision was confirmed by a Division Bench of this Court in W.A.No.1101 of 2002, dated 12.11.2002, holding that, "It is trite law that taxes are not to be imposed by the authority of law. The Statutory provisions which confers authority on the State to impose tax should be specific. G.O.Ms.No.894, Home, dated 29.03.1992 does not require the obtaining of any temporary licence. The result is that the Transport Authorities, depending upon the gravemen of the violation, have been collecting the tax at the rate of one tenth of the total tax payable or one-third of the quarterly tax payable."
29. The above Division Bench judgment has confirmed the power of the Transport Authorities to levy 1/4th or 1/3th of the quarterly tax in respect of violation of permit conditions. In the case on hand, the vehicles were granted special permits under Section 88(8) of the Act for the periods stated supra. At the time of check, the Motor Vehicles Inspector Grade II, Salem has found that the vehicles were carrying passengers from Vandavasi in Tiruvannamalai District in the State of Tamil Nadu and they picked up the passengers to visit Yercaud. A statement was also obtained from one of the passengers and the drivers of both the vehicles and in their letter dated 15.09.2004, they have stated that a group of passengers, consisting of 65 members from Malayasia were picked up at Vandavasi to visit Yercaud.
30. As per Section 3 of the Motor Vehicles Taxation Act, tax shall be levied on every vehicle used or kept for use in the State of Tamil Nadu at the route specified for such vehicle in the First Schedule or second Schedule or Third Schedule, as the case may be. As per G.O.Ms.No.894, Home, dated 29.05.1991, the payment of tax in respect of public service vehicle registered in other States having special permits granted under sub-section 8 of Section 88 of the Motor Vehicles Act, 1988, are exempted from payment of tax subject to the condition, that such other State continues to give reciprocal exemption from payment of tax to the public service vehicles registered in the State of Tamil Nadu.
31. There are certain exceptions in G.O.Ms.No.894, Home, dated 29.05.1991 and it is extracted hereunder:
"(a) The public service vehicles covered by special permits granted under sub-section (8) of Section 88 of the Motor Vehicles Act, 1988 (Central Act 59) of 1988) by the transport authority of a state other than the State of Tamil Nadu to pick up and set down passengers in the State of Tamil Nadu; and
(b) Those vehicles not covered by a permit issued under Section 72 (including a reserve stage carriage or a spare bus) or under section 74 or under sub-section (9) of Section 88 but issued with special permission under sub-section (8) of Section 88 of the Motor Vehicles Act, 1988, Central Act 59 of 1988) by the transport authority of a State other than the State of Tamil Nadu."
32. The Government Order indicates that payment of tax in respect of public service vehicles registered in other States having reciprocal agreements are exempted from payment of tax and that the proviso in the above referred clauses deals with the cases where exemption is not applicable.
33. In State of A.P. v. B.Noorulla Khan reported in 2004 (6) SCC 194, the Supreme Court, at Parapragh 16 of the judgment, explained the distinction between "Contract Carriage and Stage Carriage" held as follows:
"16. The distinction between a stage carriage permit or a contract carriage permit as envisaged by the legislature has to be maintained as the two types of permits are intended to meet different requirements. The contract carriages are for those who want to hire the vehicle collectively or individually for a group or a party for their transport to a destination/destinations. The vehicle has to be hired as a whole for the carriage of passengers mentioned in the contract. There has to be only one contract for carrying the passengers mentioned in the contract from one destination to another. An agent or a group of persons/individuals cannot hire a public service vehicle for going from one place to another with passengers having different purposes. If such a construction is put then there would be no distinction between stage carriage or contract carriage permits. If contract carriage permit-holder is permitted to pick up an indivudual or a few of them from the starting point of the journey and drop them at the last terminus of the route it would virtually be a stage carriage with corridor restriction. Stage carriage is intended to meet the requirements of the general public travelling from one destination to another having different purposes whereas a contract carriage is meant for those who want to hire a public service vehicle as a whole collectively for their transport from one destination to another having the same purpose."
34. In Hardev Motor Transport v. State of M.P., reported in 2006 8 SCC 613, the constitutionality of entry IV (G) and Explanation 7 (as amended in 2004) of Schedule I of M.P.Motoryan Karadhan Adhiniyam, 1991 was tested. The facts of this case are that the holders of Contract Carriage Permit were alleged to have used their vehicles as Stage Carriages and their vehicles were detained. The petitioners therein were asked to pay duty, as if the vehicles were being plied without any permit. The amendments and the levy was challenged before the High Court and the operators were unsuccessful. On appeal, the Supreme Court having regard to the nature of tax and the type of permits granted under the Motor Vehicles Act at Paragraphs 29, 30, and 32 held as follows:
"29. Section 3 of 1991 Act is the charging Section. It provides that the tax shall be levied on every motor vehicle used or kept for use in the State at the rates specified in the First Schedule. The levy of tax, therefore, is on the motor vehicles. Its rate may vary keeping in view its use or the nature thereof. However, the use of a motor vehicle so far as public service vehicles are concerned would depend upon the nature of permit held by it. It is not in dispute that the appellants herein have been granted permit for plying their buses as contract carriage. Allegation against this is that they have been violating the terms and conditions of the permit by plying their vehicles as stage carriage. It is however, not in dispute that the rate of tax of a contract carriage permit is more than the stage carriage permit. Clause (g) of Entry IV specifies the rate of tax of motor vehicle plying without permit at the rate of Rs.1500 per seat per month.
30. Explanation (7) of the First Schedule of the 1991 Act does not create any legal fiction. It provides for an inclusive definition stating that the words "plying without permit" in clause (g) shall include plying of a public service vehicle on an unauthorised route or making a trip not authorised by a permit granted under the 1988 Act.
32. We have noticed that the Constitution Bench categorically states that compensatory tax cannot be progressive. We have furthermore noticed that, according to the Constitution Bench, imposition of tax cannot be a term or condition of a licence. If a permit has been granted, the holder of a permit is liable to comply with the conditions of permit. If he violates the terms and conditions of permit, law will take its own course. A permit is granted under the 1988 Act. If there is violation of the terms of permit, the consequences therefor, shall ensue as contained in Section 192-A of the 1988 Act. A distinction must be borne in mind that a tax cannot be imposed by way of penalty although penalty can be imposed for non-payment of tax or evasion of tax. The State may make suitable legislations in this behalf. But the same would not mean that while specifying a rate of tax, the executive Government of the State can indirectly levy a penalty which it cannot do directly."
35. Reading of the Motor Vehicles Act in entirety along with the Government Order does not indicate that a vehicle of that a vehicle of a particular class. class or category if used as a vehicle of other category or class can be subjected to a higher or a differential tax, when such use of the vehicle is found by the Transport Authorities as contravention of the conditions of permit.
36. Motor Vehicles Act, 1988 provides for issuance of permit under Section 72 in respect of contract carriage and they are subjected to certain conditions. If the Transport Authority finds that there is a violation of permit condition, the scheme of the Act contemplates action either for suspension or cancellation of permit and in certain cases, the permit holders are permitted to compound in lieu of suspension. In so far as change of class of vehicle is concerned, the Motor Vehicles Act, prescribes certain procedure to be followed. Merely because, the vehicle is used on a particular occasion for a different use (in the instant case, contract carriage used as a stage carriage), that by itself does not mean that the class of vehicle itself has been changed. Sections 3 and 4 of the Tamil Nadu Motor Vehicles Taxation Act, enable the Government to levy tax depending upon the class of vehicle and there is a variation in taxing structure, whenever the class of vehicle is changed. The moment the change in class of vehicle is permitted by the Transport Authorities, the rate of tax applicable to the class of vehicle is automatically attracted and as per Section 4 of the Taxation Act, the authorities can levy the differential rate of tax. Therefore, it is clear that the provisions of the Taxation Act is based on the class of vehicle and its regular use and not for an occasional use, which is said to be a contravention of the permit conditions. Therefore, following the judgment of the Supreme Court in Hardev Motor Transport's case, I am of the considered view that the respondents are not empowered to demand tax for entire quarter ending with 30.09.2004, as the petitioner had a valid permits issued under Section 88(8) of the Motor Vehicles Act. However, taking into consideration of the violations of the permit conditions noticed by the Checking Officers, and following the judgment of the Supreme Court in M.Narasimhaiah v. Dy. Commr., for Transport, Banglore reported in AIR 1988 SC 240, the authorities shall consider the need to enforce the provision of Section 86 of the Motor Vehicles Act, 1988, if so advised. The judgment of the Supreme Court deals only with the case of excess passengers.
37. In view of the above, the impugned demand notices, directing the petitioners to pay quarterly tax is liable to be set aside and accordingly set aside. In the result, the Writ Petitions are allowed. No costs. Consequently, connected Miscellaneous Petition are also closed.
12.02.2008 skm To The Regional Transport Officer Salem-7.
S. MANIKUMAR, J.
SKM W.P.Nos.7505 and 7506 of 2005 12.02.2008