Karnataka High Court
Sri S P Swaminathan vs The Joint Commissioner For on 17 June, 2013
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 17TH DAY OF JUNE, 2013
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
WRIT PETITION NO. 21792/2013 (T-MVT)
BETWEEN:
Sri.S.P.Swaminathan,
S/o Sri. S.K.Ponnuswamy,
Aged about 45 years,
M/s S.P.S. Travels,
Jail Road, Kohima,
Nagaland-797 001. ... Petitioner
(By Sri.B.R.Sundararaja Gupta, Advocate)
AND:
The Joint Commissioner for
Transports and Secretary,
Karnataka State Transport Authority
Office of the Commissioner for
Transports, 5th Floor,
Multistoried Buildings,
Dr. Ambedkar Veedhi,
Bangalore-560 001. .....Respondent
(By Sri.Shivayogiswamy, Government Advocate)
Writ petition is filed under Article 226 and 227 of the
Constitution of India, praying to quash the
order/endorsement dated 7.5.2013 vide Annexure-B, in so
far as it relates to the direction to pay the tax for the entire
period of Authorisation by issue of Writ of Certiorari.
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This petition coming on for dictating judgment this
day, the Court made the following:
ORDER
Heard Sri BRS Gupta, learned Advocate appearing for petitioner and Sri Shivayogiswamy, learned AGA appearing for respondents.
2. Petitioner is seeking for quashing of the order passed by the JCT & Secretary, Karnataka State Transport Authority dated 07.05.2013 - Annexure-B insofar as it relates to the direction issued by respondent to pay tax for the entire period of authorization and for a mandamus to the respondent to accept the tax on quarterly basis in accordance with Section 4 of the Karnataka Motor Vehicles Taxation Act, 1957 (hereinafter referred to as 'KMVT Act' for brevity).
3. Petitioner is a holder of All India Tourist Permit issued under Section 88(9) of the Karnataka Motor Vehicles Act, 1988 (hereinafter referred to as 'MV Act, 3 1988) read with Rule 83 of Central Motor Vehicle Rules, 1989 (hereinafter referred to as 'MV Rules, 1989) issued by the State Transport Authority, Nagaland, Kohima. It is stated that permits are valid up to 26.02.2018 and authorization issued in accordance with MV Rules, 1989 is valid up to 26.02.2014. Petitioner submitted a representation dated 27.04.2013 before respondent for acceptance of the authorisation fee under the KMVT Act on quarterly basis vide Annexure-A. Said representation came to be considered and endorsement came to be issued on 07.05.2013 vide Annexure-B informing the petitioner that vehicles in question are covered by All India Tourist Permits issued by State Transport Authority, Nagaland to operate in the State of Karnataka and therefore, registered owner of All India Tourist Vehicles covered by permit issued under Section 88(9) of MV Act, 1988 are required to pay tax for entire period of authorization. Said authorization relating to petitioner's vehicles has been issued by the State Transport Authority, Nagaland in exercise of the powers 4 under Rule 83(2) and 87(2) of MV Rules, 1959 in Form No.47. A perusal of said Form No.47 would indicate that at column No.13, authorization to ply the vehicles in question is for the following States namely, "Assam, West Bengal, Orissa, Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and Pondicherry".
It is also specifically stated that authorization to ply in the said States is subject to payment of tax by permit holders to the respective States.
4. The contention of Sri BRS Gupta, learned Advocate appearing for petitioner is that under the KMVT Act, charging section is Section 3 and tax is collected under Section 4 of the said Act and petitioner has a choice for payment of tax for quarterly, half yearly or yearly and said choice can be exercised by the owner or person having possession or control of the Motor 5 vehicle and as such, respondent-authorities cannot insist that petitioner has to pay tax for the entire year. He also contends that respondent-authorities ought to have directed the petitioner to pay quarterly tax as prayed for and not on yearly basis. He contends that direction issued by the respondent to pay the tax on yearly basis is contrary to Section 4 of KMVT Act.
5. Per contra, learned AGA would support the endorsement issued by the authorities and contends that vehicle in question would be plying in the State of Karnataka by virtue of an All India Permit issued and said vehicle having not paid the tax in the State of Nagaland where authorization has been issued petitioner has to necessarily pay taxes in the States in which vehicle is being plied and such authorisation issued by State of Nagaland should be construed as empowering the respondent-authority to collect the tax for the period for which authorization is valid namely, for a period of one year and charging provision is to be 6 read as co-terminus with authorization. He would also elaborate his submission by contending that movement of the vehicle in question cannot be monitored throughout the year and as such, tax demand made by the respondent-authorities for the entire year is valid and justifiable. He would also contend that in the event petitioner establishes that vehicle in question was not used in the State for a period of one year by producing cogent material evidence, then, respondent-authorities would examine such claim under Section 7 of the KMVT Act and refund the tax paid. Hence, he prays for rejection of the writ petition.
6. In support of his submission, he has relied upon judgment of Hon'ble Apex Court in the case of STATE OF GUJARAT AND OTHERS vs AKHIL GUJARAT PRAVASI V.S. MAHAMANDAL & OTHERS reported in (2004)5 SCC 155 and in the case of MAHAKOSHAL TOURIST, NAPIER TOWN & OTHERS vs STATE OF M.P. & OTHERS reported in (2002) 7 SCC 245.
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7. The provisions of KMVT Act come into operation the moment a motor vehicle is issued with certificate of registration as required under the provisions of MV Act which are suitable for using on roads. Taxes in respect of such vehicles is levied at the rates specified in Part-A and Part-B of Schedule to the KMVT Act for different classes of motor vehicles. Section 3 of KMVT Act is the charging section. Section 4 of KMVT Act provides for mode of payment of tax and it also provides for levy of tax on all motor vehicles suitable for use on road at the rates specified in Part-A of the Schedule. Explanation to Section 3 of KMVT Act would indicate that motor vehicle of which certificate of Registration is current, shall for the purposes of the Act, be deemed to be a vehicle suitable for use on roads. Sub-section (2) of Section 3 provides for rate of tax as specified in Part-B of the Schedule to be levied on motor vehicles for periods shorter than a quarter, but not exceeding 30 days. Section 4 of KMVT Act enables the 8 owner of a motor vehicle to pay tax in respect of vehicle referred to in Part-A of Schedule quarterly, half yearly or yearly at his choice.
8. At this juncture, it would be appropriate to deal with the contentions of Sri BRS Gupta which is to the effect that since Section 4 of KMVT Act has given choice to the owner of vehicle or person having possession or control of the motor vehicle to pay tax either quarterly, half yearly or yearly, within 15 days from the commencement of such quarter, as the case may be, requires to be examined in the factual background.
9. It is not in dispute that in the instant case, petitioner has obtained a national permit under Section 88(9) of MV Act, 1988 to ply the vehicle in the States specified under the permit. By virtue of such permit having been granted, authorization has been issued by the jurisdictional State Transport Authority namely, 9 Nagaland which is for the period 20.03.2013 to 19.03.2014. Said authorization is issued by the State Transport Authority, Nagaland in exercise of its powers under Rule 83(2) read with Rule 87(2) of MV Rules. Same reads as under:
"83. Authorization fee.-- (2) Every authorization shall be granted in Form 23-A, in case the certificate of registration is issued on Smart Card or shall be granted in Form 47, in case the authorization is in paper document mode subject to the payment of taxes or fees, if any, levied by the concerned State. The authority which grants the authorization shall issue to the permit holder separate receipts for such taxes or fees in respect of each bank draft and such receipts shall be security printed watermark paper carrying such hologram as may be specified by the concerned State/Union Territory:
Provided that the bank drafts received in respect of taxes or fees shall invariably be forwarded by the authority which grants the authorisation to the respective States: Provided also that the use of such security printed watermark paper carrying such hologram shall come into force on or before six months from the date of commencement of the Central 10 Motor Vehicles (Third Amendment) Rules, 2002."
"87. Form, contents and duration of authorisation.--
(2) Every authorization shall be granted in Form 23-A, in case the certificate of registration is issued on Smart Card or shall be granted in Form 47, in case the authorization is in paper document mode, subject to the payment of taxes or fees, if any, levied by the concerned State. The authority which grants the authorization shall issue to the permit holder separate receipts for such taxes or fees in respect of each bank draft and such receipts shall be security printed watermark paper carrying such hologram as may be specified by the concerned State/Union territory:
Provided that the bank drafts received in respect of taxes or fees shall invariably be forwarded by the authority who grants the authorisation to the respective States:
Provided also that the use of such security printed watermark paper carrying such hologram shall come into force on or before six months from the date of the Central Motor Vehicles (Third Amendment) Rules, 2002."11
10. A perusal of the authorization would indicate at column No.13, petitioner has been permitted to ply the vehicle in those states as specified therein subject to payment of tax by the permit holder in respective States.
11. It is in this background, sub-rule (2) of Rule 83 would be of relevance and as such, same has been extracted herein above. A perusal of the said Rule would indicate that authorization so issued would be subject to payment of tax or fees if any levied by the concerned State. Proviso to sub-rule (2-A) of Rule 83 of MV Rules enables the permit holder to pay tax directly to the concerned State Transport Authority at the time of entry into such State, permit holder will have to undertake to pay such tax. Sub-rule (3) of Rule 83 restricts the validity of an authorization not to exceed one year at a time.
12. Section 4 of KMVT Act, as already noticed herein above, gives choice to the registered owner or 12 person having possession or control of the motor vehicle to pay tax quarterly, half yearly or yearly. Entry of the vehicle into the State of Karnataka would not indicate that tax can be levied for full period only when the vehicle is actually using the road and not otherwise since actual use of vehicle has no nexus to levy of tax. Tax is levied under Section 3 of KMVT Act in respect of all motor vehicles suitable for use on roads and it does not mandate the use of vehicle on road as a condition precedent for levy of tax. This is a scuttled distinction that will have to be noticed while examining the right of State to levy tax for one year by invoking charging section namely, Section 3 of KMVT Act. It remains a fact that State has to maintain roads and to keep them in proper condition for all those who own the vehicle irrespective of the fact whether they use it or not or use it occasionally or for a shorter duration only. Levy of tax under Section 3 of KMVT Act being a tax and not fee, as such, will have no correlation to the use of vehicle on road in the State of Karnataka. This aspect came to be 13 considered by the Hon'ble Apex Court in the case of STATE OF KARNATAKA vs K GOPALAKRISHNA SHENOY reported in AIR 1987 SC 1911 and has been held that Section 3(1) provided for levy of tax on all motor vehicles suitable for use on roads kept in the State of Mysore. It has been further held that explanation appended to sub-section (1) of Section 3 laid down that a motor vehicle of which certificate of registration is current, shall for the purposes of the Act, be deemed to be a vehicle suitable for use on roads and as such, tax is to be paid under Section 4 in advance by the person who is registered owner or person having possession and control of motor vehicle and its validity came to be upheld. It was also noticed that by virtue of Section 7 of KMVT Act, a plea put forward by the registered owner of a motor vehicle or a person in possession and control of the vehicles would be entitled to make an application seeking for refund of tax if he is able to demonstrate and prove that said vehicle was not used for continuous period for over a month or whole of 14 a quarter, half year or year as in a given set of situation that may arise. It has been further held in GOPALAKRISHNA SHENOY's case that principle underlying the Taxation Act is that every motor vehicle issued with a certificate of registration is to be deemed a potential user of the roads all through the time and if the certificate of registration is current it is liable to pay tax under Section 3(1) read with Section 4. As such, transport authorities need not justify the demand for tax by proving that the vehicle is in a fit condition and can be put to use on the roads or that it had plied on the roads without payment of tax, inasmuch as, it would be impossible for the State authorities to keep monitoring all the vehicles at all times and prove that each and every registered vehicle is in a fit condition and would be making use of the road and therefore is liable to pay tax. It is in this background, State has made the payment of tax compulsory on every registered vehicle and that too in advance and has at the same time provided for grant of refund of tax whenever a 15 person paying the tax has not made use of the roads by plying the vehicle and substantiates his claim by proper proof.
13. In the instant case, it is noticed that State Transport Authority, Nagaland while issuing authorization under Rule 83(2) of MV Rules has fixed the responsibility on the owner of the vehicle or a person in control or possession of the vehicle to pay tax in the respective State, pursuant to which, petitioner has submitted a representation dated 27.04.2013 to pay tax for quarterly under Section 4 of KMVT Act.
14. While interpreting taxing statute, presumption is always in favour of constitutionality of a statute. If two interpretations of a statutory provision are possible, the one which renders it constitutionally valid should be preferred to the one which renders it invalid. For this proposition, the judgment of Hon'ble Apex Court in KEDAR NATH vs STATE OF BIHAR reported in AIR 1962 SC 955 can be looked up. 16 Although tax laws are subject to Article 14 of the Constitution, a larger discretion in classification is given to the legislature in tax matters than in other spheres. This is in view of the inherent complexity of fiscal adjustment of diverse elements. A taxing statute is not open to attack on the ground that it taxes some persons or objects and not others. The State has a wide discretion in selecting the objects or persons that it will tax and in order to tax something it is not bound to tax everything. It is well settled that whenever a statute makes a distinction, it has to satisfy two tests in order to conform to Article 14 of the Constitution namely, (1) it must make a classification and (2) classification should have a rational nexus to the objects sought to be achieved. In this regard, judgment of Hon'ble Apex Court in the case of ITO vs NTR RYMBAI reported in AIR 1976 SC 670 can be looked into along with the judgment of Hon'ble Apex Court in the case of VVR VARMA vs UNION OF INDIA reported in AIR 1969 SC 1094.
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15. This legal analysis referred to above has been discussed by me inasmuch as, Sri BRS Gupta has contended that in respect of vehicles for which Karnataka State permits are being issued, choice is left to the registered owner or to the person who is in possession and control of the vehicle to pay tax either quarterly, half yearly or yearly but in respect of the vehicles for which All India Permit is issued and authorization is issued by another State Transport Authority as in the instant case, State of Nagaland, such vehicles cannot be called upon to pay tax for the whole year when there being no express provision under the Karnataka Motor Vehicles Taxation Act, 1959, and as such, it would be hit by Article 14 of the Constitution of India. As already noticed herein above, latitude with which State can be permitted can be examined if it satisfies twin tests as enumerated herein above namely, it must make a classification and such classification if 18 any should have a rational nexus to the objects sought to be achieved.
16. In the instant case, authorization has been issued by the State of Nagaland for a period of one year i.e., from 20.03.2013 to 19.03.2014. In the representation made by the petitioner dated 27.04.2013 to the respondent, tax is sought to be paid on quarterly basis contending that said vehicle intend to ply continuously for more than 30 days by entering the vehicle through Attibele Check Post , Karnataka which would indicate that said vehicle would be plying for more than 30 days. It is in this background the respondent-authority has called upon the petitioner to pay the tax as per Part-A of Schedule for the entire period of authorization and authorization issued by State of Nagaland being valid for a period of one year, possibility of the vehicle being plied in the State of Karnataka for the entire period cannot be ruled out or for even a little less than a year. Authorities cannot be 19 expected to keep a watch and monitor the vehicle continuously from the time it enters the State of Karnataka till it departs from the State and this exercise cannot be undertaken for the obvious reason that number of such vehicles would be entering the State of Karnataka and it is not practical to keep a tab on all such vehicles to find out as to how many days or months it is plying in the State of Karnataka. As such, authorities have rightly insisted the petitioner to pay tax for the period covered under the authorization which demand is co-terminus with the period of authorization. As such, demand has a rational nexus to the object of Section 4 of KMVT Act. Hence, it cannot be said that demand made by the respondent authorities is contrary to the statutory provisions particularly, section 4 of the Act as sought to be contended by learned advocate appearing for petitioner. The reasonableness of such taxation cannot be tested on the ground that it would adversely affect the business interest of petitioner and for this proposition, judgment in the case of MALWA 20 BUS SERVICE vs STATE OF PUNJAB reported in (1983) 3 SCC 237 can be looked up.
17. In that view of the matter, I am of the considered view that demand raised by respondent- authorities calling upon the petitioner to pay tax on yearly basis as per endorsement dated 07.05.2013 - Annexure-B cannot be held as without authority of law.
18. In the result, following order is passed:
Writ petition is hereby dismissed. No order as to costs.
Sd/-
JUDGE *sp