Allahabad High Court
Avinash Kumar Jain And Others vs State Of U.P. And Others on 23 December, 2010
Author: Yatindra Singh
Bench: Yatindra Singh, Prakash Krishna
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved 1. Writ Tax 2267 of 2009 Avinash Kumar Jain and others Vs State of UP and others 2. Writ Tax No. 16 of 2010 Ajay Kumar Jaiswal and others Vs State of UP and others 3. Writ Tax No. 17 of 2010 Sangam Travels and others Vs State of UP and others 4. Writ Tax 134 of 2010 Girja Shankar Mishra and others Vs The State of UP and others 5. Writ Tax No. 2347 of 2009 Trilok Singh and others Vs The State of UP and others Hon'ble Yatindra Singh, J.
Hon'ble Prakash Krishna, J.
(Delivered by Hon'ble Yatindra Singh, J)
1. The main question involved in these writ petitions relates to the validity of serial number 3 (Sl-3) of the table as well as the first proviso to the notification no. 1998/30-4-09-8 (19)/09 dated 28.10.2009 (the Notification) issued under section 4(2-A) of the UP Motor Vehicle Taxation Act, 1997 (the MT Act). It provides rates as well as concessions in tax under the MT Act on the public service vehicles. The relevant part of the Notification is Appendix-1.
THE FACTS
2. The petitioners' vehicles are registered as stage carriages {section 2(40) of the MV Act} in the State of MP. They have permits for the inter-state routes between the State of UP and MP (the two States) in pursuance of an agreement between them.
The Agreement
3. A mechanically propelled vehicle adapted for use on the roads is known as 'motor vehicle' under the Motor Vehicle Act, 1988 (the MV Act)--the statute that governs the law (except tax) relating to the motor vehicles in the country. The word 'motor vehicle' {Section 2(28) of the MV Act} is the widest terms used for these kinds of vehicles under the MV Act.
4. Section 39 of the MV Act is titled as 'Necessity for registration'. It provides that a motor vehicle cannot be driven in public or any other place unless it is registered.
5. A transport vehicle {section 2(47) of the MV Act} includes a public service vehicle {Section 2(34) of the MV Act}. Chapter V of the MV Act is titled as 'Control of Transport Vehicles'.
6. Section 66 is in chapter V and is titled as 'Necessity of permits'. It provides that a transport vehicle cannot be driven in any public place unless there is a permit {section 2(31) of the MV Act} for the same and there are different kinds of permits.
7. There are different types of routes {section 2 (38) of the MV Act} as well. One of them is inter-state route. A public service vehicle requires an inter-state permit to operate on an inter-state route.
8. Section 88 of the MV Act titled as 'Validity of permits for use outside region in which granted'. It provides conditions for the different routes. Under the MV Act, an inter-state route as well as number of inter-state permits are agreed between the States. An inter-state permit granted in a State is also required to be counter signed by the Transport Authorities of the other States executing the agreement.
9. There was an agreement between the two States. It was published by the notification dated 27.5.1994. However, it was quashed in WP 24324 of 1994, Abdul Khaliq Vs State of UP and a direction was issued to begin the process for a new agreement (see below)1.
10. In pursuance of the aforesaid direction, a fresh agreement was entered into between the two States on 9.11.2006 (the Agreement). It was published in the official gazette of the two States on 21.11.2006.
The Notification
11. Prior to Amendment by UP Motor Vehicle Taxation (Amendment) Act, 2009 (UP Act no. 18 of 2009) (the Amending Act), the MT Act provided imposition of tax and additional tax under section 4 and 6. The Amending Act was enacted with the view of making the tax structure simpler and more useful to the general public. After the amendment, the MT Act provides only for imposition of tax under section 4: the additional tax has now been included in the tax.
12. The Notification provides rates of tax on the public service vehicles that includes a stage carriage. There are different rates for the stage carriages registered in and out side the State of UP. The stage carriages registered in the State of UP are covered by serial 1 of the table in the Notification (Sl-1); whereas, those registered in the other States are covered by Sl-3.
13. The proviso to the Notification offers some concession to those operating in Jhansi and Chitrakoot region. However, it is applicable to the public service vehicles covered by Sl-1: in other words, to the vehicle registered in the State of UP only.
14. The petitioner's stage carriages are registered in the State of MP and are covered by Sl-3 of the Notification. They have filed the present writ petitions challenging the validity Sl-3 as well as of the first proviso to the Notification essentially on the ground that the Notification imposes higher rate of tax on the stage carriages registered in the States other than the UP without any reasonable basis.
POINTS FOR DETERMINATION
15. We have heard Sri GK Malviya and Sri HP Dube, counsel for the petitioners; Sri Satish Chaturvedi, Additional Advocate General and Sri AC Tripathi standing counsel for the State of UP, its officials and its authorities (the Respondent).2 The following points arise for determination in the case:
(i)Whether the State of UP is bound by the terms and conditions of the Agreement;
(ii)Whether the State of UP can charge only additional tax and not the tax from the stage carriages registered in the State of MP;
(iii)Whether Sl-3 of the Notification is illegal;
(iv)Whether the first proviso to the Notification is illegal;
(v)Whether the stage carriages registered in MP are not liable to pay tax if they enter the free zones in the State of UP.
1st POINT: BOUND BY THE AGREEMENT
16. The MV Act conceives of the following three categories of permits:
(i) Intra-region;
(ii)Inter-region;
(iii)Inter-State.
17. Section 88 of the MV Act provides the criteria and procedure for granting the different categories of permits.
18. An inter-state permit cannot be granted unless there is an inter-state route. An inter-state route is reciprocal: it has to be agreed by the States; and it cannot be approved unilaterally by anyone State or its transport authorities.
19. In case of the inter-state routes, the concerned States have to agree on the routes as well as numbers of permits to be granted on that route (for citation see below)3. An inter-state permit granted by one State has to be counter signed by the State transport authorities of the other States, party to the agreement.
20. It has been held that a permit for inter-state route cannot be granted unless there is an agreement between the States. If an inter-state permit is granted by any State or its transport authorities without there being any agreement between the States, then it is illegal. It is so mandated by section 88 of the MV Act (for citations see below)4.
21. The counsel for the Respondent submitted that:
(i)Under section 88(6) of the Act, it is not necessary to give effect to all the conditions. Only the conditions relating to the counter-signatures are to be given effect to;
(ii)The word 'State' is not mentioned in section 88(6) of the Act; and
(iii)The States signing the agreement are not bound to comply with the agreement.
22. In our opinion, the submission of the counsel for the Respondent is fallacious.
(i): Submission
23. A plain reading of section 88(6) (see below)5 of the MV Act shows that it mandates that:
The agreement, so far as it relates to grant of counter signatures of the permits, should be published in the official gazette of the concerned States as well as in the news papers in the regional language circulating in the area; and The State Transport and Regional Transport Authorities of the concerned States have to give effect to it.
24. The States execute the agreement; they lay down the terms and conditions and agree on the same. It is on the terms and conditions of the agreement that the counter signatures are agreed to be affixed. All the terms and conditions in the agreement relate to counter signatures and have to be followed.
(ii) & (III): Submissions
25. It is correct that section 88(6) of the MV Act, mentions the State Transport and Regional Transport Authorities and not the State but this does not mean that the States party to the agreement are not bound by the terms of the agreement.
26. The agreement is between the States. It is an agreement that they have to enter in view of section 88(5) of the MV Act (see below)6. It is a statutory contract and the States party to the agreement are bound by it: otherwise, what is the point in executing the agreement.
27. The State Transport and Regional Transport Authorities are subordinate to the States. If the States are bound, then so are the Transport Authorities: neither the State signing the same nor any authority under it can violate it.
28. In our opinion, the State of UP as well as its Transport Authorities ( whether State or Regional) are bound by the terms and conditions of the Agreement.
2nd POINT: NOT DECIDED
29. The counsel for the petitioners brought to our notice clause 4(viii) of the Agreement as well as its explanation (see below)7 and submitted that:
The petitioners are only liable to pay additional tax of State of UP and not any other tax;
The additional tax has been abolished; and Tax cannot be charged from them.
30. Clause 4(viii) and the explanation suggest that the stage carriages registered in MP and operating on inter-state routes are liable to pay tax in MP and additional tax but not the tax in the State of UP. However, it is not necessary to decide this point for the reason mentioned in the succeeding paragraph.
31. Our reasons for not deciding this point are as follows:
The MT Act was amended in the year 2009. It is subsequent to the Agreement. The preamble of the Amending Act suggests that additional tax was not abolished but was merged with the tax; perhaps, it is not correct to say that the additional tax has been abolished;
The Amending Act is subsequent to the Agreement. If there is any difference then the new word might be deemed to be substituted;
This point has not been pleaded in any of the writ petitions. No basis has been laid down for it. It was raised at the time of the arguments;
The writ petitions have been filed on the assumption that the petitioners are liable to pay tax. The only question raised was that the notification is discriminatory as it charges more tax on the state carriages registered in the State of MP.
32. In view of above, we refrain from deciding this point.
3rd POINT: TAX ON MP STAGE CARRIAGES--DISCRIMINATORY
33. Article 301 of the Constitution provides that trade, commerce, and inter-course throughout our country shall be free. However, the courts have held that:
The regulatory measures that promote trading facilities are valid (for citations see below);8 The compensatory tax for the use of the trading facilities do not infringe the freedom under Article 301 of the Constitution (for citations see below);9 A tax, confiscatory in nature might be invalid but a tax that goes to construct and maintain--roads, bridges, and other means of transportation--is not confiscatory (for citations see below).10
34. It is not necessary for us to investigate further in this area as the constitutional validity of the MT Act has been upheld.11 And so far as these WPs are concerned, the only question is regarding the validity of discriminatory rate of tax and concession to the stage carriages registered in the two States.
35. Sl-3 of the Notification applies to the stage carriages registered in a State other than the State of UP. It applies to the stage carriages of the petitioner as they are registered in the State of MP.
36. Column 3, 4, and 5 of table provide monthly, quarterly, and yearly tax for different categories of the public service vehicles. For the petitioners (see Sl-3 of Appendix-1), it is `170/-, `500/- and `1800/-. It is flat rate for this category irrespective of the age of the stage carriages.
Omnibus Includes Stage Carriage
37. Sl-1 of the Notification applies to the omni buses. Section 2(29) of the MV Act defines the word 'omni bus'. It means any motor vehicle constructed or adopted to carry more than six persons excluding the driver.
38. The word 'stage carriage' is also defined under the MV Act. It means a motor vehicle constructed or adopted to carry more than six passengers excluding the driver for which the passengers pay separate fares for part or whole of the journey.
39. An omni bus under the MV Act is a wider category and includes a stage carriage as well. Every stage carriage is an omni bus; whereas, every omni bus is not a stage carriage. The stage carriages registered in State of UP are governed under Sl-1 of the Notification.
40. The tax under Sl-1 of the Notification (see Appendix-1) for an omnibus depends upon age of the motor vehicle. There are the following three sub-categories:
(i)Not more than five years old: monthly, quarterly and yearly rates are `110/-, `330/- and `1200/-;
(ii)More than five years old but not more than ten years: monthly, quarterly and yearly rates are `115/-, `345/- and `1250/-;
(iii)More than ten years: monthly, quarterly and yearly rates are `120/-, `360/-, `1300/-.
41. Under Sl-1, the tax on the omni bus not more than five years old is minimum and it is maximum for one, which is more than 10 years old. This is reasonable as an older motor vehicle might be causing more damage to the road. It is not illegal to levy more tax on an older motor vehicle.
42. The tax for the stage carriages registered in MP is more than the highest tax meant for the stage carriages registered in the State of UP. The grievance of the petitioners is that there is no basis for the same except that their stage carriages are registered in the State of MP.
No Reason for the Higher Tax
43. The counsel for the respondent submitted that:
Greater latitude should be given to taxing provision while judging their validity;
The difference in taxation is not because of the place of registration but because of the nature of permit;
There can be different tax for different kinds of permits. It is reasonable classification.
44. Article 14 provides equal protection of laws to everyone and taxation law is not an exception (for citations see below).12 However, in the matter of taxation greater latitude is conceded (for citations see below:).13 There is also no violation of Article 14, if there is a reasonable basis for the classification (for citations see below)14. But, the question is, is there any reasonable basis?
Nature of Permit is the Same
45. The only basis pointed out by the counsel for the Respondent is that there is difference in the nature of the permits. No other reason has been pointed out to show why higher tax has been imposed on the state carriages registered in the State of MP.
46. This different pointed out by the counsel for the Respondent is in fact no difference: no discrimination on the rates of tax can be made on its basis.
47. A stage carriage registered in the State of UP is governed by Sl-1 of the Notification; whereas, a stage carriage registered in state of MP is covered under Sl-3. Both are stage carriages. The inter-state route is fixed irrespective of place of registration of the stage carriage. They operate on the same inter-state routes fixed by the Agreement. The starting and ending point may be different but the route is the same.
48. The stage carriages, irrespective of the place of registration, have similar permits though granted by different State Transport Authorities and counter signed by the State Transport Authority of the other State. It is not correct to say the difference in rate is because of the nature of the permit: the permits of the stage carriages registered in either of the State is similar.
Difference--Merely on the Place of Registration
49. The stage carriages registered at either place have similar permits; they travel same distance in UP; they get similar benefits in the State of UP--there is no justification to provide different rates of tax to the stage carriages operating on the same inter-state route merely on the place of registration. This is discriminatory.
50. In our opinion Sl-3 of the Notification is discriminatory. It is violative of Article 14 of the Constitution and is invalid.
51. We have held Sl-3 of the Notification to be illegal, it does not mean that no tax is leviable on the stage carriages registered in the State of MP. Once Sl-3 is held to be invalid: it ceases to exist--in such an event, stage carriages registered in the State of MP would be covered as Omni bus in Sl-1 of the Notification. They have to pay tax mentioned therein and it is same as the tax on the Stage carriages registered in the State of UP.
4th POINT: ENTITLED TO THE BENEFIT OF THE PROVISO
52. The first proviso in the Notification (see Appendix-1) provide some concession to the stage carriages operating in the territorial area of Jhansi and Chitrakoot region. However, it is only applicable to those stage carriages that are covered by Sl-1 of the Notification.
53. The benefit of the first proviso to the Notification was not available to the petitioner as they were covered by Sl-3. We have held that Sl-3 to be illegal and the stage carriages registered in the State of MP are covered by Sl-1. In view of this, the petitioners would also be entitled to the benefit of the first proviso of the Notification provided they operate in Jhansi and Chitrakoot regions.
5th POINT: NOT ENTITLED TO CHARGE
54. The counsel for the petitioners brought to our notice clause (6) as well as sub-clause (ii) of the agreement (see below)15 and submitted that:
The end point of some of the petitioners is in free zone and they enter the same.
They are entitled to facilities of the free zone.
55. The word 'free zone' is explained in the Agreement and they are also specified there. The Agreement provides the following benefits to the stage carriages entering the free zones:
The permits of the vehicles operating there, are not required to be counter signed;
They are not liable to pay tax, additional tax, and tolls of the other State.
56. It is not disputed that some of the petitioners operate on the inter-state route with the end point in the free zone in the State of UP as mentioned in the Agreement: they enter the same. This is admitted in the counter affidavit filed by the State in WP (Tax) 2267 of 2009. In the counter affidavit, it is also indicated that their permits are not being countersigned. However, in the counter affidavit a plea is taken that they are liable to pay tax.
57. Clause (6)(ii) of the Agreement mandates that the stage carriage, contract carriages, and the goods carriages that are registered under the State of MP shall be exempted from paying tax, additional tax or tolls of the State of UP in the free zone in the of State of UP. Similar benefit is required to be given to the vehicles registered in the State of UP entering the free zones falling in the State of MP.
58. In deciding the first point, we have already held that the terms of the Agreement are binding on the States. In view of this, the State of UP is not entitled to charge any tax, additional tax, or toll in Uttar Pradesh from the stage carriages entering the free zones.
59. Sl-3 of the Notification was also clear on this point. It required the payment of the tax from the stage carriage registered in the other States only if they were authorised to ply under counter signatures. The stage carriages registered in the State of MP and entering the free zones are not required to get their permits counter signed; they are authorised to ply without getting their permits counter signed: they were not liable to be pay any tax under Sl-3. But as we have held Sl-3 to be illegal and the petitioner are covered by Sl-1 of the Notification--a clarification in this regard is required from the State of UP.
60. In our opinion, the permits of the stage carriages registered in MP and entering free zonse in UP are neither required to be countersigned nor are they liable to pay any tax, additional tax, and tolls in UP.
AN OBSERVATION AND A SUGGESTION
61. The Agreement provides taxes to be paid by the transport vehicles operating on the inter-state routes. It provides that the transport vehicles registered in the State of MP are required to pay additional tax in the State of UP but some doubts have been cast, whether tax is payable or not.
62. The second point involved the question, whether in view of the Agreement any tax in the state of UP is payable by the stage carriages registered in the state of MP. We have refrained from answering it for the reasons indicated there, but it would be in the interest of State of UP to consider it and do the needful in the matter.
CONCLUSIONS
63. Our conclusions are as follows:
(i)The State of UP, its State Transport and Regional Transport Authorities are bound by the terms and conditions contained in the Agreement;
(ii) It is not necessary to decide the question whether the State of UP is entitled to charge any tax from the stage carriages registered in MP or not;
(iii) Serial number 3 of the table of the notification 1998/30-4-09-8(19)/09 dated 29th October, 2009 is discriminatory. It violates Article 14 of the Constitution and is quashed;
(iv)The stage carriages registered in the State of MP are liable to pay tax under serial number 1 of the table of the aforesaid notification;
(v)The benefit of concessional rate of tax for the stage carriages operating in the region of Jhansi and Chitrakoot under the first proviso is also available to the stage carriages registered in the State of MP;
(vi)The permits of the stage carriages registered in the state of MP and entering the free zones of the State of UP are neither required to be counter signed by UP State Transport Authority nor are they required to pay any tax, additional tax, and toll in the state of UP.
In view of our conclusions, the writ petitions are allowed and a direction is issued to the State government to ensure that the conclusions are complied with.
Date: 23.12.2010 BBL APPENDIX-1 The relevant part of the Notification is as follows:
TABLE Rate of tax on public service vehicles under sub-section (2-A) of Section 4.
Sl. No. Description of Vehicles Rate of tax per seat ( in rupees Monthly Quarterly Yearly 1 2 3 4 5 1 Omni bus other than maxi cab
(a) age not more than five years old
(b) age more than five years but not more than ten years old.
(c) age more than ten years old 110 115 120 330 345 360 1200 1250 1300 2 . . .
. . .
. . .
. . .
3Stage carriages registered under the Motor Vehicles Act, 1988 in any other State of India or under a law in force for the time being in any other country, with which reciprocal arrangements in the matter of road transport has been made and which are authorised to ply in Uttar Pradesh under counter signature of their permits for every seat.
170 500 1800. .
. . . . . .
. . .
. . .
. .
Provided that:-
The rate of tax per seat in respect of stage carriages operating in the territorial area Jhansi region and Chitrakoot region shall be seventy five percent of the rate as specified in column (3), column (4) and column (5) for motor vehicles as specified in column (2) against serial no. 1 of the table.