Karnataka High Court
State Of Karnataka vs K T Rajashekar on 18 March, 2020
Equivalent citations: AIRONLINE 2020 KAR 989
Bench: Alok Aradhe, M.Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU R
DATED THIS THE 18th DAY OF MARCH 2020
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
W.A. NO.4152/2009 IN W.P.NO.10489/2007
C/W
W.A. NO.4150/2009 IN W.P. NO.4658/2008,
W.A.NO.4151/2009 IN W.P.NO.4166/2008,
W.A.NO.3234/2010 IN W.P.NO.10489/2007,
W.A.NO.3575/2010 IN W.P.NO.4658/2008,
W.A.NOS.4805/2011 & 17395-17446/2011
IN W.P.NOS.34236-34288/2010 (T-MVT)
W.A. NO.4152/2009
IN W.P.NO.10489/2007
BETWEEN:
1. STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHAN SOUDHA
DR AMBEDKAR VEEDHI
BANGALORE-560001.
2. DEPUTY COMMISSIONER FOR TRANSPORT
PODIUM BLOCK
VISHWESHWARAIAH TOWERS
DR. B.R.AMBEDKAR VEEDHI
BANGALORE-560001.
2
3. THE REGIONAL TRANSPORT OFFICER
AND TAXATION AUTHORITY
OFFICE OF THE REGIONAL
TRANSPORT OFFICER, BDA COMPLEX
KORAMANGALA, BANGALORE 34
4. STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF PARLIAMENTARY AFFAIRS & LEGISLATION,
VIDHAN SOUDHA, BANGALORE-560001.
... APPELLANTS
(BY SRI. B.V. KRISHNA, AGA)
AND:
K T RAJASHEKAR
AGED ABOUT 64 YEARS
S/O K GOWDA
PROPRIETOR SRS TRAVELS
NO.321 TSP ROAD
KALASIPALYAM, BANGALORE 2.
... RESPONDENT
(BY SRI. PUTTIGE R. RAMESH, ADV., FOR C/R)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.10489/07 DATED
21/8/2009.
W.A. NO.4150/2009
IN W.P.NO.4658/2008
BETWEEN:
1. STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHAN SOUDHA
DR AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE REGIONAL TRANSPORT OFFICER
CUM TAXATION AUTHORITY
OFFICE OF THE REGIONAL
3
TRANSPORT OFFICER, BANGALORE (CENTRAL)
BDA COMPLEX, KORAMANGALA
BANGALORE-560034.
3. THE REGIONAL TRANSPORT OFFICER
CUM TAXATION AUTHORITY
CORAMANDAL POST
KOLAR GOLD FIELDS-563118.
... APPELLANTS
(BY SRI. B.V. KRISHNA, AGA)
AND:
BEML LIMITED
BEML SOUDHA
23/1, S.R. NAGAR
BANGALORE-560027
REP. BY ITS COMPANY SECRETARY
MR. K.R. MEDAPA.
... RESPONDENT
(BY SRI. K.P. KUMAR, SENIOR COUNSEL FOR
M/S. KING & PARTRIDGE, ADV., FOR C/R1)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.4658/08 DATED
21/8/2009.
W.A. NO.4151/2009
IN W.P.NO.4166/2008
BETWEEN:
1. STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHAN SOUDHA
DR AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE REGIONAL TRANSPORT OFFICER
CUM TAXATION AUTHORITY
OFFICE OF THE REGIONAL
TRANSPORT OFFICER, BANGALORE (NORTH)
4
YESHWANTHPUR, BANGALORE-560022.
... APPELLANTS
(BY SRI. B.V. KRISHNA, AGA)
AND:
HMT LTD
HAVING ITS REGD. OFFICE AT
NO.59, BELLARY ROAD
BANGALORE-560032
BY ITS MANAGER (TRANSPORT)
MR. B.A. UMESH.
... RESPONDENT
(BY SRI. K.P. KUMAR, SENIOR COUNSEL FOR
M/S. KING & PARTRIDGE, ADV., FOR C/R1)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.4166/08 DATED
21/8/2009.
W.A. NO.3234/2010
IN W.P.NO.10489/2007
BETWEEN:
K T RAJASHEKAR
AGED ABOUT 66 YEARS
S/O K GOWDA
PROPRIETOR SRS TRAVELS
NO.321 TSP ROAD
KALASIPALYAM, BANGALORE560002.
... APPELLANT
(BY SRI. PUTTIGE R. RAMESH, ADV.,)
AND:
1. STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHAN SOUDHA
DR AMBEDKAR VEEDHI
BANGALORE-560001.
5
2. DY. COMMISSIONER FOR TRANSPORT
PODIUM BLOCK
VISHWESHWARAIAH TOWER
DR. B.R. AMBEDKAR VEEDHI
BANGALORE-560001.
3. THE REGIONAL TRANSPORT OFFICER
AND TAXATION AUTHORITY
OFFICE OF THE RTO, BDA COMPLEX
KORAMANGALA, BANGALORE 34
4. STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF PARLIAMENTARY
AFFAIRS & LEGISLATION, VIDHAN SOUDHA
BANGALORE-560001.
... RESPONDENTS
(BY SRI. B.V. KRISHNA, AGA)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.10489/07 DATED
21/8/2009.
W.A. NO.3575/2010
IN W.P.NO.4658/2008
BETWEEN:
BEML LIMITED
(FORMERLY KNOWN AS BHARAT
EARTH MOVERS LTD.,)
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956 AND
HAVING ITS REGISTERED OFFICE
AT 'BEML SOUDHA'
23/1, 4TH MAIN, S.R. NAGAR
BANGALORE-560027
REP. BY ITS SENIOR MANAGER (LEGAL)
MR. M.K. VIDHYADHARAN.
... APPELLANT
(BY SRI. K.P. KUMAR, SENIOR COUNSEL FOR
6
M/S. KING & PARTRIDGE, ADV.,)
AND:
1. THE STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT
VIDHAN SOUDHA
DR AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE REGIONAL TRANSPORT OFFICER CUM
TAXATION AUTHORITY
OFFICE OF THE REGIONAL TRANSPORT OFFICER
BANGALORE (CENTRAL), BDA COMPLEX
KORAMANGALA, BANGALORE 34.
3. THE REGIONAL TRANSPORT OFFICER CUM
TAXATION AUTHORITY
CORAMANDAL POST
KOLAR GOLD FIELDS-563118.
... RESPONDENTS
(BY SRI. B.V. KRISHNA, AGA)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.4658/08 DATED
21/8/2009.
W.A. NOS.4805/2011 & 17395-17446/2011
IN W.P.NOS.34236-34288/2010
BETWEEN:
1. THE STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY
FINANCE DEPARTMENT, M.S. BUILDING
DR AMBEDKAR ROAD
BANGALORE-560001.
2. DEPUTY COMMISSIONER FOR TRANSPORT
BANGALORE DIVISION
VISHWESHWARAIAH TOWERS
BANGALORE-560001.
7
3. THE REGIONAL TRANSPORT OFFICER
AND TAXATION AUTHORITY
JAYANAGAR SHOPPING COMPLEX
JAYANAGAR, BANGALORE-560011.
4. THE REGIONAL TRANSPORT OFFICE
AND TAXATION AUTHORITY
B.D.A. COMPLEX, KORAMANGALA
BANGALORE-560034.
... APPELLANTS
(BY SRI. B.V. KRISHNA, AGA)
AND:
M/S. N.T. RAHAMATHULLA KHAN
AND ASSOCIATES
BY ITS PARTNER B.R. ZAKIR AHMED KHAN
NO.186, PAMPAMAHAKAVI ROAD
SHANKARAPURAM, BANGALORE-560004.
... RESPONDENT
(BY SRI. PUTTIGE R. RAMESH, ADV.,)
---
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT, PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NOS.34236-288/10
DATED 22/2/2011.
THESE WRIT APPEALS HAVING BEEN HEARD AND
RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT OF
ORDERS, THIS DAY, ALOK ARADHE J., DELIVERED THE
FOLLOWING:
COMMON JUDGMENT
In this batch of appeals, since, common questions of law and fact arise for consideration, they were heard analogously and are being decided by this common judgment. The issue in W.A.No.3234/2010, 8 W.A.No.4805/2010 and W.A.No.3575/2010, is whether a statute which was earlier declared unconstitutional can be given retroactive operation through fresh validating legislation enacted by the legislature. In W.A.No.4152/2009, W.A.No.4150/2009 and W.A.No.4151/2009, the issue which arises for consideration is whether a writ of mandamus can be issued to the State Government to refund the amount despite upholding the validity of Karnataka Motor Vehicles Taxation (Second Amendment) Act, 2007 (hereinafter referred to as 'the Act, 2007' for short). For the facility of reference, facts from W.P.No.10489/2007 are being referred to.
FACTUAL BACKGROUND:
2. The petitioner in W.P.No.10489/2007 (hereinafter referred to as 'the petitioner' for short) is a transport operator and is operating various vehicles by obtaining permits under the provisions of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act' 9 for short). The petitioner entered into lease agreement with Tata Infotech Ltd., on 01.04.1999 for a period of three years. Under the aforesaid agreement, the consideration in respect of each vehicle per calendar month was Rs.30,000/-, which was payable by the company to the petitioner. The petitioner under the agreement was under an obligation to transfer the ownership of the vehicle in favour of Tata Infotech Ltd.
The vehicles were to be used for the purpose of providing transportation facilities to the employees of the company to travel from the residence to the place of work and back to their residence without collecting any amount from them. The Regional Transport Officer issued a show cause notice dated 23.09.1988 to the petitioner who was informed that as per pre-audit enquiry report, the tax paid on the vehicles treating the vehicles as private service vehicles is not proper and it should be treated as contract carriages and the petitioner was called upon to show cause as to why the 10 difference of tax should not be collected. The petitioner responded to the aforesaid notice by submitting a reply, in which inter alia it was pointed out that the vehicle has been properly assessed as private vehicle and the question of treating the same as contract carriage does not arise. It was also stated that there was no prohibition on the issue of contract carriage permits in the State of Karnataka.
3. The Regional Transport Officer, however, in respect of 48 vehicles and 10 vehicles passed an order on 28.10.1998 and 04.11.1998 respectively, by which the petitioner was directed to pay Rs.94,36,540/- and Rs.21,51,400/- being the amount of difference of tax and penalty. The petitioner preferred an appeal under Section 15 of the Karnataka Motor Vehicles Taxation Act, 1957 (hereinafter referred to as 'the Act, 1957' for short). The appellate authority by an order dated 02.03.1999 dismissed the appeal preferred by the petitioner. Being aggrieved, the petitioner filed a writ 11 petition viz., W.P.No.7364/1999, which was dismissed by learned Single Judge of this court by order dated 17.03.1999. Being aggrieved, the petitioner preferred a writ appeal viz., W.A.No.2327/1999, which was admitted on 01.06.2009 and the prayer for interim relief was made and an interlocutory order was passed on 24.08.1999, which reads as under:
"No ground for grant of interim stay of recovery of tax is made out.
IA 1 is dismissed. However, keeping in view, the amount of tax involved and the fact that this has to be paid every quarter thereby creating a continuing liability, we order that the appeals be listed in the hearing list for the week commencing 27.09.1999. In case the appellants succeed in the appeal, the respondent shall be liable to refund the amount of tax collected with 12% interest."
4. The writ appeal preferred by the petitioner along with other connected writ appeals were decided by 12 a division bench of this court vide order dated 25.05.2005, and it was inter alia held that the vehicles plied by the contractors on the basis of an agreement for carrying the employees of the company without hire or reward cannot be treated as contract carriages. It was further held that essential ingredient of a contract carriage as defined under the Act, 1957 is that it must carry passengers for hire or reward. It was also held that since the employees were not being carried for hire and reward, therefore, in the absence of aforesaid ingredient, the vehicles in question have to be taxed as private service vehicles and not as contract carriages.
5. Being aggrieved by the aforesaid judgment, respondent Nos.2 and 3 filed SLP No.24109/2005, which was dismissed in limine vide order dated 18.11.2005. The petitioner thereafter sent a notice dated 25.03.2007 seeking refund of the amount collected from the petitioner. However, the Regional Transport Officer vide reply dated 17.04.2007 informed the petitioner that the 13 plea made in the notice cannot be granted in the light of Amendment to Act, 1957 viz., Karnataka Motor Vehicles Taxation (second Amendment) Act, 2007, as the proceeding held for levy and collection of tax, penalty had been validated by the State Legislature. The petitioner thereupon filed the writ petition, in which challenge was made to the validity of the Karnataka Motor Vehicles Taxation (Second Amendment) Act, 2007. A writ of mandamus was also sought seeking a direction to the respondents to refund the amount of tax and penalty collected from the petitioner.
6. The respondents filed objection statement in which inter alia it was pleaded that certain companies and industrial undertakings had procured motor vehicles either on lease or on ostensible ownership and allowed private operators who were the actual owners to operate the said vehicles as if they had been operated on behalf of the company. It was further pleaded that this arrangement was a colorable device adopted by the 14 owners of the vehicles in order to pay taxes at a lower rate. It was further pleaded that by virtue of the amendment, the vehicles are brought under the entry relating to contract carriages for the purposes of taxation during the period 01.01.1991 to 31.03.2000 and an entry in item No.8A was inserted in Part A to the schedule of the Act with effect from 01.04.2000 to take care of such vehicles.
7. The learned Single Judge vide impugned order dated 21.08.2009 inter alia held that lacuna, which was pointed out by a division bench of this court to the effect that private service vehicles cannot be equated with contract carriages has been remedied by introduction of Clause 8A, which encompasses omni bus and private service vehicles, which are held in the lease agreement with an industrial undertaking for carrying the employees from the residence to the factories and vice versa and such industrial undertaking or company being holder of such vehicle thereby equating private 15 service with that of contract carriages. Thus, it was held that the defect found by the division bench of this Court has been cured by Act, 2007 and it is within the competence of the Legislature to do so. However, in view of impugned order dated 24.08.1999 passed by the division bench of this court, it was held that effect of a judicial decision, which may have attained finality and is binding on the parties cannot be taken away by amending the Act. The learned Single Judge though upheld the validity of the amending Act, yet directed the State Government to refund the amount, which was collected prior to introduction of item 8A. In the aforesaid factual background, these intra court appeals have been filed.
ARGUMENTS ON BEHALF OF THE APPELLANTS:
8. Learned Senior counsel for the appellants submitted that the learned Single Judge ought to have appreciated that the amending Act was a colorable exercise of power and the levy in question could not 16 have been validated without removing the defects and the lacuna pointed out by a division bench of this court. It is further submitted that the learned Single Judge ought to have appreciated that the defects and lacuna pointed out by division bench of this court was not removed by the State Legislature while enacting the amending Act and a writ of mandamus issued by this court could not be set at naught by enacting the amendment Act. It is further submitted that action of the respondents in giving retrospective effect to the amendment Act, with effect from 01.03.1991 is unreasonable, arbitrary and is unconstitutional. In support of aforesaid submissions, reliance has been placed on decisions of Supreme Court in 'MADAN MOHAN PATHAK AND ANOTHER VS. UNION OF INDIA AND OTHERS, AIR 1978 SC 803(1), 'D.CAWASJI AND CO., MYSORE VS. STATE OF MYSORE AND ANOTHER', 1984 (SUPP) SCC 490, 'B.KRISHNA BHT VS. STATE OF KARNATAKA AND 17 ANOTHER', AIR 2001 SC 1885, 'NATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDERATION OF INDIA LTD. AND ANOTHER VS. UNION OF INDIA AND OTHERS', (2003) 5 SCC 23, 'SOBHA PROJECTS AND TRADE (PRIVATE) LIMITED, BANGALORE VS. GOVERNMENT OF KARNATAKA', (2009) SCC ONLINE KAR 306 AND 'S.T.SADIQ VS. STATE OF KERALA AND OTHERS', (2015) 4 SCC 400.
ARGUMENTS ON BEHALF OF THE RESPONDENTS:
9. On the other hand, learned Additional Advocate General for the respondents submitted that once the learned Single Judge had upheld the amendment, which was with retrospective effect, the question of refund of tax collected would not arise and the petitioners were liable to pay tax. It is further submitted that the direction of the learned Single Judge to the extent of allowing the writ petition for refund of tax is erroneous. It is also argued that in view of 18 amendment, which was made with retrospective effect, the petitioners are liable to pay tax on the private service vehicle on par with the tax payable on contract carriages and therefore, the question of refund merely because the lis between the parties has reached finality is untenable in law. It is further submitted that amending Act having cured the defects and being made effective retrospectively, the petitioners cannot be absolved of their liability to pay the tax. STATUTORY PROVISIONS:
10. The Karnataka Motor Vehicles Taxation Act, 1957 is an Act to consolidate and amend the law relating to levy of tax on the motor vehicles in the State of Karnataka. Section 2(ee) and Section 2(f) of the Karnataka Motor Vehicles Taxation Act, 1957 defines the expression 'private service vehicle' and 'registered owner'. Section 2(j) of the Karnataka Motor Vehicles Taxation Act, 1957 provides that the words and expressions used but not defined in this Act shall have 19 meanings assigned to them in Motor Vehicles Act, 1939. Section 2(7) of the Act deals with 'contract carriage'. The aforesaid provisions are reproduced below for the facility of reference:
2(ee) "private service vehicle"
means an omnibus constructed or
adapted to carry more than nine
persons (excluding the driver) and
used by or on behalf of the owner of
such vehicle for the purpose of carrying persons for or in connection with his trade or business or otherwise than for hire or reward;
2(f) "registered owner" means the person in whose name a motor vehicle is registered under the Motor Vehicles Act, 1939.
2(j) Words and expressions used but not defined in this Act, shall have the meanings assigned to them in the Motor Vehicles Act, 1939.
20 2(7) "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 not included in the contract anywhere during the journey, and includes-
(i) a maxicab; and 21
(ii) a motor-cab notwithstanding that separate fares are charged for its passengers;
Section 3(1) of the Act provides that a tax at the rates specified in Part A of the Schedule shall be levied on motor vehicles suitable for use on roads.
11. Thereafter, the provisions of the Act were amended by the Motor Vehicles Taxation (Amendment) Act, 2000, by which in schedule to the Act, following Entry viz., 8A was inserted, which reads as under:
Omini Buses and Private Service Vehicles held under lease agreement with industrial undertakings or companies for the purposes of providing transport conveyance to their employees from residence to factories/ companies vice-versa and such industrial undertakings or companies being holder of permit of such vehicles.22
(a) Having floor area 1000.00 exceeding 5 square metres, but not exceeding 6 square metres, for every square metre
(b) Having floor area 1050.00 exceeding 6 square metres but not exceeding 9 square metres, for every square metre
(c) Having floor area 1150.00 exceeding 9 square metres but not exceeding 12 square metres, for every square metre
(d) Having floor area 1300.00 exceeding 12 square metres, for every square metre
12. Thereafter, in the light of judgment of the division bench of this court, the State Legislature enacted the Karnataka Motor Vehicles Taxation (Second Amendment) Act, 2007 by which fourth proviso to Section 3 was inserted with effect from 01.03.1999 and in Sub-Section (7) of the Act after Sub Section (5) and before the explanation the following clause was inserted 23 with effect from 01.03.1991. The amendments to Section 3 and Section 7 reads as under:
2. Amendment of Section 3 -
After the fourth proviso to Section3 of the Karnataka Motor Vehicles Taxation Act, 1957 (Karnataka Act 35 of 1957) (hereinafter referred to as the 'principal Act', the following proviso shall be deemed to have been inserted with effect from the 1st day of March, 1991 and shall be deemed to have been omitted, with effect from 1st day of April, 2000, namely -
Provided also that in respect of Motor Vehicles owned by companies or industrial undertakings either on lease or agreement or arrangement of any kind whatsoever and operated under a Private Service Vehicle permit by any other person on behalf of such companies or industrial undertakings, tax shall be levied at the rates specified 24 for contract carriages in Part A in the schedule.
Amendment of Section 7 - In Section 7 of the principal Act, after sub-Section (5) and before the Explanation, the following shall be deemed to have been inserted with effect from 1st day of March, 1991, namely -
" (6) Notwithstanding any order or direction contained in any judgment, decree or order of any Court, Tribunal or other authority, no refund of tax is levied or deemed to have been levied and collected under the fifth proviso to Section3 of the principal Act before the commencement of the Karnataka Motor Vehicles (second amendment) Act, 2007.
13. Section 4, by which the collection of tax, penalty or amount purported to have been collected by 25 way of tax was validated is reproduced below for the facility of reference:
4. Validation (1) Notwithstanding anything contained in any judgment, decree or order of any Court, Tribunal or other Authority, anything done or any action taken or purporting to have been done or taken (including any notices or orders issued and all proceedings held for levy and collection of tax, penalty or amount purported to have been collected by way of tax) in relation to such levy or collection under the provisions of the principal Act before the commencement of this Act shall be and shall be deemed to be valid and effective as if such levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly -
(a) all acts, proceedings or things done by the Government or any authority in connection with the levy or 26 collection of such tax or penalty or other amount for all purposes be deemed to be and to have always been made, done or taken in accordance with this law;
(b) no suit or other proceedings shall be maintained or continued in any Court or Tribunal or before any authority for the refund of any such tax, penalty or other amount.
(c) no court shall enforce any decree or order directing the refund of any such tax, penalty or other amount.
(2) For the removal of doubts it is hereby declared that nothing under sub-Section (1) shall be construed as preventing any person -
(a) from questioning, in accordance with the provisions of the principal Act as amended by this Act, any levy or collection of tax, penalty or other amount referred to in sub-
Section (1) or 27
(b) from claiming refund of any excess amount paid by him by way of tax under the Principal Act as amended by this Act.
LEGAL PRINCIPLES:
14. We may advert to certain well settled legal principles before proceeding further. The imposition of the taxes or validation of the action under void law is not the function of the judiciary and therefore, by taking these steps, the legislature cannot be accused of trespassing on the preserve of the judiciary. The courts have to be vigilant to ensure that non compliance of power so thoughtfully conceived by our constitution is not allowed to be upset but the concern for safeguarding the judicial power does not justify conjuring up trespassers for invalidating laws. If the vice from which an enactment suffered is cured by due compliance with the legal or constitutional requirements, the legislature has the competence to validate the enactment and such 28 validation does not constitute an encroachment on the function of the judiciary. [See: 'MISRI LAL JAIN VS. STATE OF ORISSA', (1977) 3 SCC 212]. The Supreme Court after taking note of several decisions, in 'INDIAN ALUMINIUM CO. AND ORS. VS. STATE OF KERALA AND ORS.', (1996) 7 SCC 637 laid down the principles as follows:
57. From a resume of the above decisions the following principles would emerge;
(1) The adjudication of the rights of the parties is the essential judicial function. Legislature has to lay down the norms of conduct or rules which will govern the parties and the transactions and require the court to give effect to them;
(2) The Constitution delineated delicate balance in the exercise of the sovereign power by the Legislature, Executive and Judiciary;
29(3) In a democracy governed by rule of law, the Legislature exercises the power under Articles 245 and 346 and other companion Articles read with the entries in the respective Lists in the Seventh Schedule to make the law which includes power to amend the law.
(4) Courts in their concern and endeavour to preserve judicial power equally must be guarded to maintain the delicate balance devised by the Constitution between the three sovereign functionaries.
In order that rule of law permeates to fulfil constitutional objectives of establishing an egalitarian social order, the respective sovereign functionaries need free play in their joints so that the march of social progress and order remain unimpeded. The smooth balance built with delicacy must always maintained :
(5) In its anxiety to safeguard judicial power, it is unnecessary to be overzealous and conjure up incursion into the judicial 30 preserve invalidating the valid law competently made :
(6) The Court, therefore, need to carefully scan the law to find out: (a) whether the vice pointed out by the Court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the Legislature has competence to validate the law; (c) whether such validation is consistent with the rights guaranteed in Part III of the Constitution.
(7) The Court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the Legislature. Therefore, they are not the encroachment on Judicial power.
(8) In exercising Legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, 31 revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The Legislature can change the character of the tax or duty from impermissible to permissible tax but the tax or levy should answer such character and the Legislature is competent to recover the invalid tax validating such a tax on removing the invalid base for recovery from the subject or render the recovery from the State ineffectual. It is competent for the legislature to enact the law with retrospective effect and authorise its agencies to levy and collect the tax on that basis, make the imposition of levy collected 32 and recovery of the tax made valid, notwithstanding the declaration by the Court or the direction given for recovery thereof.
(9) The consistent thread that runs through all the decisions of this Court is that the legislature cannot directly overrule the decision or make a direction as not binding on it but has power to make the decision ineffective by removing the base on which the decision was rendered, consistent with the law of the Constitution and the legislature must have competence to do the same.
15. The validity of the validating Act has to be adjudged on the parameters (i) Whether the legislature enacting the Validating Act has competence over the subject matter. (ii) Whether while enacting the Validating Act, the legislature has removed the defect, which the court had found in the previous law. (iii) Whether the validating Law is consistent with the provisions of Chapter III of the Constitution and if these 33 tests are satisfied, the Act can confer the jurisdiction upon the court with retrospective effect and validate past transactions, which were declared to be unconstitutional. The aforesaid legal propositions were reiterated by the Supreme Court in 'STATE OF KARNATAKA AND ORS Vs. PRO LABS AND ORS.', (2015) 8 SCC 557, 'SUPREME COURT ADVOCATES- ON-RECORD ASSOCIATION AND ORS V. UNION OF INDIA', (2016) 5 SCC 1, 'EUROTEX INDUSTRIES AND EXPORTS LTD. AND ORS V. STATE OF MAHARASHTRA', 2017 (14) SCC 390, 'KALPANA MEHTA V. UNION OF INDIA', AIR 2018 SC 2493, AND 'BK PAVITRA AND ORS V. THE UNION OF INDIA', AIR 2019 SC 2723.
16. It is equally well settled legal proposition that no doubt, it is open to the legislature to change the law in general by changing the basis but it is not open to set aside an individual decision inter se between the parties and thus, affect the rights and liabilities of the parties to 34 the lis. It is equally well settled legal proposition that once a decision has attained finality and is binding on the parties, it cannot be overruled by legislative measure and such an Act is an open invitation to lawlessness and anarchy and is against Rule of law. [See: 'MEDICAL COUNCIL OF INDIA VS. STATE OF KERALA', (2019) 13 SCC 185].
ANALYSIS:
17. We have considered the submissions made on both the sides and have perused the record. In the backdrop of aforesaid well settled legal principles, the facts of the case in hand may be seen. From the perusal of agreements entered into between the companies, industrial undertakings as well as the private operators, it is axiomatic that companies and industrial undertakings had procured motor vehicles either on ostensible ownership and allowed private operators who were the actual owners to operate the vehicles as if the vehicles were being operated on behalf of the companies 35 / undertakings. From the agreements, it is evident that in fact under the agreements, the vehicles of the transport operators were hired by the companies and they had taken shelter under the definition of expression private service vehicle. Thus, the aforesaid arrangement was a colorable device adopted by the vehicle owners in order to pay taxes at a lower rate. Thus, the aforesaid arrangements were made with the sole intention to deprive the government of the revenue, which was legitimately due and therefore, the amendments were made to ensure that aforesaid vehicles are treated on par with contract carriages. A private service vehicle under Section 2 (ee) of the Act has been defined to be a vehicle, which is being plied on behalf of the owner and the passengers are not being carried for hire or reward. Section 2(7) of the Act, which deals with contract carriages provides that a vehicle can be said to be a contract carriage only if it carries the passengers for hire and reward. A division bench of this court vide 36 judgment dated 25.05.2005 in W.A.No.4339/1999 and other connected matters between the parties to the present lis had passed an interim order dated 24.08.1999 and had allowed the writ appeal on the ground that if a vehicle is being plied on behalf of the owner and the passengers are not being carried for hire or reward, then the vehicle cannot be treated as private service vehicle and no tax can be levied on such a vehicle treating the same to be a contract carriage. Accordingly, the order passed by the Regional Transport Officer and the Deputy Commissioner were quashed. The aforesaid order was admittedly upheld by the Supreme Court as Special Leave Petition against the order of the division bench was dismissed by an order dated 18.11.2005.
18. It is pertinent to mention here that by Karnataka Motor Vehicle Taxation (Amendment) Act, 2000, Entry 8A was inserted with effect from 31.03.2000, which provided that omni buses and private 37 service vehicles held under the lease agreement with industrial undertakings or companies for the purpose of providing transport / conveyance to their employees from residence to factories, companies and vice versa and such industrial undertaking or companies being holder of such permits shall pay tax on the basis of floor area. Thereafter, by the Act, 2007, 4th proviso to Section 3 of the Act was inserted with effect from 01.03.1991 and it was provided that in respect of motor vehicles owned by companies or industrial undertakings either on lease or agreement or arrangement of any kind whatsoever and operated under private service vehicle permit by any other person on behalf of such companies or industrial undertakings, tax shall be levied at the rates specified for contract carriages in part A of the Schedule. Similarly, in Section 7 of the Act after sub- Section (5), Sub-Section (6) was inserted with effect from 01.03.1991 and it was provided that notwithstanding any order or direction contained in the 38 judgment, decree or order of any court, no refund of tax shall be allowed in respect of motor vehicles, on which tax has been levied or deemed to have been levied and collected under the fifth proviso to Section 3 of the Act before the commencement of Karnataka Motor Vehicles Taxation (second Amendment) Act, 2007. A validating Act may even make ineffective judgments or orders of competent courts provided that it, by retrospective legislation remove the cause of invalidity or the basis which had led to those judgments. In the instant case, by enacting the aforesaid provisions, the State Legislature has removed the basis of the judgment rendered by a division bench of this court dated 25.05.2005 and has cured the invalidity on the basis of which the judgment was rendered by division bench. Therefore, the Validating Act being well within the legislative competence of the State Legislature and having removed the basis of the judgment rendered by 39 a division bench of this court dated 25.05.2005, the same cannot be held to be ultra vires.
19. Admittedly, in the instant case, a division bench of this court passed an interim order on 24.08.1999, by which it was provided that in case petitioner succeeds, the respondents shall be liable to refund of the amount of tax collected with 12% interest. Eventually, by judgment dated 25.05.2005, the writ appeals were allowed and the judgment passed by the division bench was upheld by the Supreme Court. Thus, the decision between the parties had attained finality and was binding on the parties and therefore, the judgment passed by division bench of this court could not have been overruled by way of a legislative measure viz., the Validating Act in view of law laid down by the Supreme Court in the case of MEDICAL COUNCIL OF INDIA VS. STATE OF KERALA Supra. Admittedly, the petitioners are making payment of the tax, which is in respect of the vehicles in question at the rate, which is 40 payable by the owners of contract carriages with effect from 01.04.2000. However, rights and liabilities of the parties have already attained finality by judicial adjudication for a period from 01.04.1999 till 31.03.2000. Therefore, the impugned amendment insofar as it pertains to collection and levy of tax at the rate, which is payable in respect of contract carriages, which has been recovered from the petitioners in the light of interim order passed by division bench of this court dated 24.08.1999 as well as judgment of the division bench dated 25.05.2005 and the fact that the aforesaid judgment has attained finality, we hold that the legislature cannot overrule the judicial decision, which has attained finality by a legislative measure.
In view of the preceding analysis, the impugned amendment insofar as it pertains to period from 01.04.1999 to 31.03.2000 is declared ultra vires and the State Government is directed to refund the amount for the aforesaid period to the petitioners. 41
With the aforesaid directions, the appeals are disposed of.
Sd/-
JUDGE Sd/-
JUDGE ss