Dilip Dhariwal vs The State Of Madhya Pradesh on 22 September, 2015

[Cites 17, Cited by 303]

Madhya Pradesh High Court

Dilip Dhariwal vs The State Of Madhya Pradesh on 22 September, 2015

This judgment will govern the disposal of all the aforesaid writ petitions. The hearing of the bunch of these writ petitions was done as common questions of law have been raised in all petitions, calling in question the Constitutional validity of the amendment made in Section 13 of the M.P. Motoryan Karadhan Adhiniyam, 1991 (hereinafter referred to as the 'Taxation Act' for brevity). However, for the convenience, the facts are taken from Writ Petition No.1430/2014 (Nihal Ahmed Vs. The State of Madhya Pradesh and others).

2: The petitioner, transporter, has called in question initially the M.P. Ordinance dated 5.10.2009, by which amendment in the Taxation Act was made. Since the Ordinance was made an Act thereafter on 22.12.2009, by way of amending the reliefs, the said Amending Act is called in question now. The Constitutional validity of the provisions of amended Act have been called in question, on the ground that the same runs contrary to the provisions of Section 192-A of the Motor Vehicles Act, 1988 (hereinafter referred to as the 'MV Act' for brevity). To bring home the challenge, it is contended that the Apex Court in the case of M.P. AIT Permit Owners Assn. and 4 another Vs. State of M.P.1 , has already laid down the law, wherein similar amendment in Section 16 of the Taxation Act, were said to be invalid as the same were made in contravention to the provisions of the MV Act. It is further submitted that in view of the law laid down by the Apex Court in the case of Hardev Motor Transport Vs. State of M.P. and others2, such an Act of the respondents-State was violative of the provisions of Article 256 of the Constitution of India, and thus, the Act was liable to be struck down.

3: Per contra, it is contended by the respondents-State that law is differently made. The MV Act does not contain any provision with respect to the action to be taken in case of tax evasion by the owners of the motor vehicles. Precisely, for the said purposes exercising the power in terms of Entry 56 & 57 of List II in VII Schedule of Constitution of India, the Taxation Act has been made by the State. Section 13(1) of the Taxation Act, prescribes for penalty for non- payment of tax or in breach of the license condition. However, no procedure is prescribed for taking action against the transporters who are evading the tax liability and for that reason, the amendment has been made in the Taxation Act in exercise of legislative power by the State legislature, which is not in contravention of any provisions of Section 192-A of the MV Act and, as such, challenge to the said amendment made in the Act is not sustainable. The law laid down by the Apex Court as relied on by the petitioners would not be attracted, on the other hand, in terms of the law laid down by the Apex Court in the case of State of U.P. Vs. Sukhpal Singh Bal 3, it is to be held that the amendment in the Taxation Act is properly made by the State Government. It is, thus, contended that the petitions are liable to be dismissed.

1 (2004) 1 SCC 320 2 (2006) 8 SCC 613 3 (2005 AIR SCW 4325) 5 4: We have heard learned counsel for the parties at length, perused the record and examined the law.

5: To understand, what is the object of making of the Taxation Act, we have to refer to the object and reasons of making of such law. The statement of object and reasons of Act No.25/1991, basically prescribes that there were two sets of law for motor vehicle tax made in the Madhya Pradesh, known as Madhya Pradesh Motor Vehicle Taxation Act, 1947 (hereinafter referred to as 1947 Act for short). There was yet another law made for the said purposes, known as M.P. Motor Vehicle (Taxation of Goods) Act, 1962. The 1947 Act was dealing with the taxation on the motor vehicles, whereas the 1962 Act was dealing with the Goods Tax to be levied on the goods to be transported by motor vehicles. To amalgamate both the laws and to achieve the object of prescribing a uniform taxation law after coming into force of the MV Act, the Taxation Act, 1991, was enacted. This being the subject matter of legislative power of the State legislature as the said subject is included in List II of Entry No.56 and 57 in VII Schedule of the Constitution.

6: The object of the Taxation Act itself is clear from the provisions made therein. Section 3 of the Taxation Act specifically prescribes levy of tax on Motor Vehicles, Section 4 prescribes tax payable by dealer or manufacturer and Section 5 deals with the time within which or interval in which the tax is to be paid. There is a bar created under Section 6 of the Taxation Act for imposition of tax by any local authority. Section 10 of the Taxation Act deals with the manner of payment of tax and Section 11 of the Taxation Act deals with general exemption from levy of tax. Section 13 of the Taxation Act deals with failure to pay tax and Section 14 of the Act deals with the refund of tax. Section 15 of the Taxation Act deals with recovery of tax, penalty with interest and Section 16 of the Taxation Act deals with the 6 power of entry, seizure and detention of Motor Vehicles in case of non-payment of tax.

7: From this Scheme of the Taxation Act, it is clear that independent to the provisions of MV Act, where no such provision for taxation has been made, the Act has been made by the State legislature within its competence and, as such, making of Taxation Act is not beyond the legislative competence of the State. If that is so, whether any provision if added in the said Taxation Act, would be said to be running contrary to the provisions of the MV Act or encroaching upon the field occupied by the Central legislation. For the aforesaid reason, we are required to see the provisions proposed to be added in the Taxation Act. Section 13 of the Principal Act has been renumbered and Sub-section (2) is added by amendment, which according to us is required to to be considered, therefore, the same is reproduced hereunder :-

"(2) The motor vehicles covered under permit granted by the Transport Authority of Madhya Pradesh or any other State under Section 72, 74, 76, 79, 87 and 88(1), (9) and (11) of the Motor Vehicles Act, 1988 (No.59 of 1988), if found plying other than the purpose specified in the permit, or without permit, the owner of such vehicle shall be liable to pay, in addition to the tax, the penalty per month, which shall be twice the amount of monthly, quarterly or annual tax as specified in the First Schedule to this Act for such vehicle."

(emphasis supplied) 8: Precisely, this is what, said to be invalid as it is the case of the petitioners that the provision in that respect has already been made in Chapter XIII of MV Act, where Section 192-A is prescribed. Chapter XIII of the MV Act deals with penalty and procedure to be followed in imposing that penalty. Section 177 of the MV Act deals with general provision for punishment of offences. Section 178 of the said Act deals with penalty for travelling without pass or ticket and for 7 dereliction of duty on the part of conductor and refusal to ply contract carriage, etc. Section 179 of the Act deals with disobedience of orders, obstruction and refusal of information, Section 180 deals with allowing unauthorised persons to drive vehicles, Section 181 deals with driving vehicles in contravention of section 3 or section 4 of the MV Act. Section 182 deals with offences relating to licences, Section 182-A deals with punishment of offences relating to construction and maintenance of vehicles. Likewise Sections 183 and 184 deal with driving at excessive speed, or driving dangerously. Section 185 of the Act deals with driving by a drunken person or by a person under the influence of drugs. Section 186 of the MV Act deals with driving when mentally or physically unfit to drive. Section 187 deals with punishment for offences relating to accident. Section 188 deals with punishment for abetment of certain offences, Section 189 deals with racing and trials of speed. Section 190 deals with using vehicle in unsafe condition and Section 191 deals with sale of vehicle in or alteration of vehicle to condition contravening this Act.

9: In this Chapter, except for the few conditions, all other penalties or offences are relating to the driving of motor vehicles. Section 192 and 192-A of the MV Act are in relation to the use of vehicle without the registration and use of vehicle without permit. Precisely, what is prescribed in Section 192-A of the MV Act, is that whosoever drives the motor vehicle or causes or allows a motor vehicle to be used in contravention of the provision of Sub-section (1) of Section 66 or in contravention of any permit, is liable to be punished in accordance to the provisions of the MV Act. For the purposes of convenience, the provisions of Section 192-A of the MV Act are reproduced hereunder, which reads thus :-

"192-A. Using vehicle without permit.-(1) Whoever drives a motor vehicle or causes or allows a motor vehicle to be used in contravention of the provisions of sub-section (1) of Section 66 or in contravention of any 8 condition of a permit relating to the route on which or the area in which or the purpose for which the vehicle may be used, shall be punishable for the first offence with a fine which may extend to five thousand rupees, but shall not be less than two thousand rupees and for any subsequent offence with imprisonment which may extend to one year but shall not be less than three months or with fine which may extend to ten thousand rupees but shall not be less than five thousand rupees or with both :

Provided that the court may for reasons to be recorded, impose a lesser punishment.

(2) Nothing in this section shall apply to the use of a motor vehicle in an emergency for the conveyance of persons suffering from sickness or injury or for the transport of materials for repair or for the transport of food or materials to relieve distress or of medical supplies for a like purpose:

Provided that the person using the vehicle reports about the same to the Regional Transport Authority within seven days from the date of such use.

(3) The court to which an appeal lies from any conviction in respect of an offence of the nature specified in sub-section (1), may set aside or vary any order made by the court below, notwithstanding that no appeal lies against the conviction in connection with which such order was made."

10 : From perusal of this provision, it is clear that it nowhere deals with an act of evasion of the tax. A case of evasion of tax is not covered under Section 13(1) of the Taxation Act. As a matter of fact, this amended provision is to loop in the operators who were plying the vehicles without permit, within the tax regime. Thus the tax net has been widened even against the illegal operators. Therefore, precisely this was the reason, the amendment in Section 13 of the Taxation Act was made by the State Government. The very purpose of making of sub-section (2) of Section 13 is thus, action to be taken against persons who are found plying the vehicles other than the purpose specified in the permit or without the permit, which inevitably results in tax evasion. The reference to those activities in Section 13(2) is 9 only to relate it with the liability to pay tax for those activities and the penalty for such tax evasion. These aspects have not been covered under Section 192-A of the MV Act as something done in contravention of a permit, is to be punished by fine for first offence and for the subsequent offence imprisonment may also be inflicted. However, this would be the criminal liability or cause for prosecution of the said person. Thus, Section 192-A is not referable to civil liability to pay tax and tax with penalty, if it is found that the act done by the operator was an act of evasion of tax liability. Therefore, for a distinct purpose, the provision has been made by making amendment in the Taxation Act on subject exclusive within the domain of State legislature in List II; Entry No.56 and 57 of the Seventh Schedule of the Constitution. It necessarily follows that it is not covered by the provisions of Section 192-A of the MV Act.

11 : In the context of the aforesaid, if the law laid down by the Apex Court in the case of M.P. AIT Permit Owners Assn. and another (supra) is examined, it would be clear that specific provision for confiscation was made under the MV Act and, therefore, the provision inserted in Section 16 of the Taxation Act was said to be running contrary to the provisions of the MV Act and, as such, the amended provisions of Section 16 of the Taxation Act were said to be ultra vires and invalid. The distinction between the two has already been delineated hitherto. The amendment made by Section 13(2) of the Taxation Act is exclusively in respect of subject of tax and for the tax evasion and, therefore, it is not in contravention of any provision of Section 192-A of the MV Act. Nor can it be said that it transgresses the authority of the Central legislature as the same is within the exclusive competence of the State legislature conferred in terms of the Entry 56 and 57 of II List of VII Schedule of the Constitution of India.

12 : The Apex Court in the case of Hardev Motor Transport (supra) has considered these aspects and has categorically held that imposition 10 of tax cannot be a term or condition of licence. The permits are granted under certain conditions and the holder of the permit is liable to comply with the conditions. If the same are violated, action is to be initiated under the MV Act. However, caution is to be kept in mind that a tax may not be imposed by way of penalty. The observations made by the Apex Court in paragraphs 32, 33 & 34 are reproduced for ready reference :-

"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 192A 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.

33. Our attention has been drawn to a decision of this Court in State of U.P. v. Sukhpal Singh Bal and in particular to the following passage: (SCC p.621, para 12) "12. In State of Madras v. V.G. Row (AIR at p. 200, para 15) this Court observed as follows: (SCR p. 607) 'It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the 11 prevailing conditions at the time, should all enter into the judicial verdict.'"

34. Kapadia, J. in that case was dealing with the constitutionality of a penal provision. It was stated that before a penalty can be imposed, mens rea on the part of the defaulter is required to be established. The said decision is merely an authority for the proposition that a statute may provide for a fixed penalty or minimum penalty. But it was not laid down therein that penalty can be imposed without giving an opportunity of hearing to the defaulter or without satisfying the other conditions laid down therefor. [See also State of T.N. v. M. Krishnappan]."

(emphasis supplied) 13 : In view of the aforesaid law as also the law laid down in the case of State of U.P. Vs. Sukhpal Singh Bail (supra), which has been quoted by the Apex Court in the case of Hardeo Motor Transport (supra), we are of the view that the amendment made in the Taxation Act is within the legislative competence of the State and, does not violate the provisions of Section 192-A of the MV Act. For this reason, we accept the analogy laid down by the Andhra High Court in the case of Addl. Commissioner of Income Tax Vs. Dargapandarinath Tuljayya & Co.4, wherein the tax liability and the penalty of evasion of tax have been considered widely. For the evasion of the tax or in breach of permit condition, though penalty is imposed, but the nature of penalty for tax evasion would be civil in nature, whereas the penalty on account of breach of permit condition would be penal in nature.

14 : In view of the aforesaid, we hold that the provisions of Section 13(2) of the Taxation Act are not ultra vires or repugnant to or transgressing Section 192-A of the MV Act, and are thus, valid. As a consequence, the writ petitions fail and are hereby dismissed. However, there shall be no order as to costs.

          (A.M. Khanwilkar)                                         (K.K. Trivedi)
             Chief Justice                                              Judge
A.Praj.

          4 1976 (1) APLJ 43
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