Punjab-Haryana High Court
Bhagat Ravi Dass Transport Company Regd vs The State Of Punjab And Another on 1 February, 2013
Equivalent citations: AIR 2013 PUNJAB AND HARYANA 50, (2013) 2 PUN LR 398
Author: Ritu Bahri
Bench: Hemant Gupta, Ritu Bahri
C.W.P. No. 17240 of 2011 [ 1 ]
IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH
C.W.P. No. 17240 of 2011
Date of Decision: February 1,2013
Bhagat Ravi Dass Transport Company Regd.
Ludhiana and another ....................................Petitioners
Versus
The State of Punjab and another ................. Respondents
Coram: Hon'ble Mr. Justice Hemant Gupta
Hon'ble Ms. Justice Ritu Bahri
1.To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
Present: Mr. Baldev Kapoor, Advocate
for the petitioners.
Ms. Radhika Suri, Addl. A.G. Punjab.
...
RITU BAHRI, J.
This petition under Article 226 of the Constitution of India is for issuance of a writ of Certiorari declaring sub- section (1) and (8) of Section 3 of the Punjab Motor Vehicles Taxation Act, 1924 as substituted by Punjab Motor Vehicles Taxation (Amendment) Act, 2007 (Punjab Act No. 7 of 2008) and sub-section (8) of Section 3 of the Act as substituted by Punjab Motor Vehicles Taxation (Amendment) Act, 2011 C.W.P. No. 17240 of 2011 [ 2 ] (Act. No. 22 of 2011) (Annexure P/5) and Section 17 of the said Act as inserted vide Punjab Act No. 2 of 2008 (Annexure P/4) as ultra vires and unconstitutional being violative of Article 14 and 19 (1) (g) of the Constitution of India.
Before referring to the controversy raised in the present petition it is necessary to notice the background of the Motor Vehicles Act, 1988 with effect from 1.7.1989. After this Act came into force the procedure for grant of Stage Carriage has been liberalized. The permit is granted as per Section 80 of the Motor Vehicles Act, 1988.
A scheme was formulated under Chapter 6 of the Motor Vehicles Act 1988 and published in the Gazette notification dated 9.8.1990 (Annexure P1). This scheme was further modified while exercising powers under Section 102 of the Act vide Government Gazette notification dated 21.10.1997 (P2). The owner of the bus after grant of the permit is required to use the vehicle in accordance with the condition of permit granted and counter-signed by the competent authority as per Section 66 of the Motor Vehicles Act, 1988. This Rule is applicable to State Transport Undertakings and private operators with equal force. The State Transport Undertakings and the private operators can get a motor vehicle registered under the provisions of the Act and Rules, but when the motor vehicle is to be used as a transport vehicle such carriage permit is to be granted by C.W.P. No. 17240 of 2011 [ 3 ] the State Transport Commissioner, Punjab.
The petitioners are engaged in the business of passenger road transport service. They are holding a legal stage carriage permit for running their vehicle on Ludhiana- Abohar, Ludhiana-Ferozepur, Ludhiana-Ropar and Ludhiana- Khamano routes. The permit holders can get the conditions of stage carriage permits varied for the purpose of extension or increase of trips under Sub Section 3 of Section 80 of the Act.
The Punjab Motor Vehicles Taxation Act, 1924 was enacted for the purpose of levying tax on motor vehicles as defined under Motor Vehicles Act, 1939, now the Motor Vehicle Act, 1988. The Punjab Motor Vehicles Taxation (Amendment) Act 1993 came into force with effect from 28.5.1993. By Section 3(f) special road tax was levied on the motor vehicles which were being used as transport vehicles. This tax was in addition to what was being levied under Section 3 of the Act. The tax under Section 3 as well as under Section 3(f) of the 1924 Act was levied on State Transport Undertakings as well as private operators at the same rates.
The Punjab Motor Vehicles Taxation (Amendment) Act 2007 was further amended whereby Section 3A and Section 3(f) of Punjab Act No. 4 of 1924 were omitted and Section 3 was substituted. The State of Punjab specified the C.W.P. No. 17240 of 2011 [ 4 ] rates of motor vehicles tax to be levied with effect from 22.11.2007 (Annexure P3) as under:-
"12.Stage Carriage Buses Rate of Motor registered in State of Punjab Vehicles Tax per Km per vehicle per day in Rs.
I. Big buses 2.25
(a) Ordinary Buses
(b) Ordinary H.V AC Buses 1.00
(3x2 seats)
(c) Integral Coach (2x2 0.50
seats) Buses
Punjab Motor Vehicles Taxation (Amendment) Act, 2007 was published on 18.1.2008 (Annexure P4). The amended Section 3 is as under:-
"3. (1) Imposition of Tax: The tax shall be levied on every motor-vehicle on year to year basis, which shall be payable from such date, in such manner and at such rate, as may be determined by the Government from time to time:
Provided that the rate of tax shall not exceed the maximum limit as has been specified in the Schedule.
(6) In the case of a big bus, tax shall be leviable on per kilometer per day basis at such rate, as may be determined by the Government from time to time, but not C.W.P. No. 17240 of 2011 [ 5 ] exceeding the rate as has been specified in the Schedule.
(8) At the time of issue of new state carriage permit, one time tax at the rate of Rs.500/-
(Rupees five hundred only) per kilometer shall be leviable on big buses and at the rate of Rs.250/- (Rupees two hundred and fifty only) per kilometer shall be leviable in case of mini buses. As and when a big bus holder is allowed to ply on extended route with the increased mileage, a one time tax at the rate of Rs.500/- (Rupees five hundred only) per kilometer shall be leviable."
The schedule attached to the Punjab Motor Vehicles Taxation Act, 2007 prescribed the maximum rate of tax per kilometer as under:-
"State Carriage Maximum rate of tax
per km per vehicle
per day in rupees
1. Big buses:-
(a) Ordinary Buses Rs.20/-
(b) Ordinary H.V AC Buses Rs.15/-
(3x2 seats)
(c) Integral Coach (2x2 Rs. 10/-
seats) Buses
2. Mini Buses Rs.1,50,000/- per
annum"
Vide Punjab Motor Vehicles Taxation (Amendment) C.W.P. No. 17240 of 2011 [ 6 ] Act, 2011 (Punjab Act No. 22 of 2011) was published in the Punjab Government Gazette notification on 9.6.2011 (Annexure P5) whereby sub-section 8 of Section 3 the Act has been substituted as under:-
"8. At the time of issue of new stage carriage permit, one time tax at the rate of Rs.1500/- (Rupees one thousand and five hundred only) per kilometer shall be leviable on big buses and at the rate of Rs.250/- (Rupees two hundred and fifty only) per kilometer shall be leviable in the case of mini buses. As and when a big bus holder is allowed to ply on extended route with the increased mileage, one time tax at the rate of Rs.1500/- (Rupees one thousand and five hundred only) per kilometer shall be leviable:-
Provided that in the case of new stage carriage permit issued in respect of State Transport Undertakings, carried on by the Government and the Pepsu Road Transport Corporation, one time tax at the rate of Rs.500/- (Rupees five hundred only) per kilometer shall be leviable. As and when a State Transport Undertaking is allowed to ply on extended route with the increased mileage, on time tax at the rate of Rs.500/- (Rupees five hundred only) per C.W.P. No. 17240 of 2011 [ 7 ] kilometer shall be leviable."
The petitioners have sought quashing of the amendments on the ground that it is beyond the competence of the State legislature under Entry 57 of the List II Schedule 7 of the Constitution and it is violative of Articles 14 and 19 (1) (g) of the Constitution of India.
Mr. Baldev Kapoor, counsel for the petitioners, has argued that the motor vehicles operators were paying the specified taxes as per notification dated 22.11.2011 (Annexure P3). The petitioners are also paying taxes as envisaged under sub-section (6) of Section 3 of the Act regularly. As per sub-section (6) in case of a big bus a tax is to be levied on the basis of per kilometer per day basis as determined by the Government, but not exceeding the rate as has been specified in the Schedule. The imposition of tax as per sub-section (8) of Section 3 at the time of issue of stage carriage permit at the rate of `500/- per kilometer on big buses and at the rate of `250/- per kilometer in the case of mini buses is not a tax on motor vehicles. It is a tax on the issue of new stage carriage permit. Sub-section (8) was amended by Act of 2011 where the one time tax on new stage carriage permits has been enhanced to `1500/- per kilometer in the case of private operators alone. There is an increase from `500/- to `1500/- on one time payment of tax in the case of big buses. The tax on mini buses has been C.W.P. No. 17240 of 2011 [ 8 ] retained at `250/- per kilometer and on State Transport Undertakings at `500/- per kilometer.
The amendment is being sought to be quashed on the ground of discrimination being violative of Articles 14 and 19 (1) (g) of the Constitution. Right from the date when the Punjab Motor Vehicles Taxation Act 1924 came into force the State Transport Undertakings and private operators were being taxed uniformly. When Section 3(f) was inserted in the Motor Vehicles Act, 1924 imposing special road tax parity of taxation was maintained between the State Transport Undertaking and private operators.
The classification made by Punjab Motor Vehicles (Amendment) Act, 2011 whereby under sub-section (8) of Section 3 the tax in respect of private operators has been increased to `1500/- per kilometer whereas with regard to State Transport Undertakings it has been retained at `500/- per kilometer. The amendment suffers from hostile discrimination between private operators and the State Transport Undertakings.
Mr. Baldev Kapoor has argued that the powers levying tax on a motor vehicle under Entry 57 of List II of the VIIth Schedule of Constitution can be exercised subject to Entry 35 of List III of the VIIth Schedule. There is no bar under the Motor Vehicles Act, 1988 for every citizen for grant of stage carriage permit. There is no provision for levy C.W.P. No. 17240 of 2011 [ 9 ] of tax for grant or issue of the stage carriage permit. The requisite application fee and permit fee has been prescribed by the competent authority which are being paid by the petitioners and all the operators. The fee is being paid as per Rules 67 and 68 of the Punjab Motor Vehicles Rules 1989. The impugned levy of tax as per the amendments is beyond the legislative competence of State legislature in exercise of its powers under Entry 57 of List II of VIIth Schedule of the Constitution. Section 17 as added by Punjab Act No.7 of 2009 further provides that any transport vehicle or non transport vehicle owned by State Government or Central Government and not have any commercial purpose shall be exempted from tax. This benefit of tax exemption is not available to private operators. There is no provision for a private transport operator that if the vehicle is not being used he will not be liable to pay the taxes prescribed by the respondent State.
Ms. Radhika Suri, Additional A.G. Punjab, has referred to a judgment passed by this Court in Sidhu Roadlines Regd. Patiala and others v. The State of Punjab (2003-2) PLR 280. In a petition challenging the amendment in Punjab Motor Vehicles Taxation Act, 1924 Section 3(f), 4
(a), 5(a) this Court had examined the power of the State Government in imposing the tax under Entry 57 List II Schedule VII of the Constitution of India. The levy of tax as C.W.P. No. 17240 of 2011 [ 10 ] per Section 3(f) was upheld by this Court on the ground that the Constitution had given wide latitude to the State legislature for classification and imposing taxes on motor vehicle. The challenge to the imposition of special road tax on the ground of discrimination and violation of Article 14 of the Constitution of India was rejected placing reliance on a judgment of the Supreme Court in The Malwa Bus Service (Pvt.) Ltd. etc. v. State of Punjab and others AIR 1983 Supreme Court 634. She has referred to a judgment passed by the Supreme Court in State of Gujarat and others v. Akhil Gujarat Pravasi V.S.Mahamandal and others (2004) 5 Supreme Court Cases 155. In this case the Supreme Court had upheld the validity of Section 3-A of Bombay Motor Vehicles Act 1958 and Rule 5 of Bombay Vehicles Rules, 1959. As per Section 3-A only contract carriages which were designated as omnibuses, as luxury or tourist designated mini buses were subjected to heavy taxes. The quantum of tax qua other vehicles was much lower. The notifications were upheld rejecting the argument that the imposition of tax on omnibuses and luxury buses was discriminatory and arbitrary. Reasonable classification can be made by the legislature by taxing some and leaving out others. The legislature can adopt reasonable classification of persons and things in imposing tax liabilities. Unless the fiscal law is manifestly discriminatory the Court should refrain from striking it down on the ground C.W.P. No. 17240 of 2011 [ 11 ] of discrimination.
Heard counsel for the parties.
Entry 35 of List III of the Constitution reads as under:-
"35. Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied."
Entry 57 of List II of the VIIth Schedule reads as under:-
"57. Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III."
These two entries came up for consideration before the Supreme Court in State of Assam and others v. Labanva Probha Devi A.I.R. 1967 SC 1575.
The question for consideration before the Supreme Court was whether the Assam Motor Vehicle Taxation (Amendment) Acts (1963 and 1966) were repugnant to the Assam Motor Vehicles Taxation Act 1936 (Assam Act 9 to 1936). The principle Act had come into force on 1.3.1937. The Assam High Court had held that the Amendment Acts were inconsistent with the existing law, the principle Act, and they had not received the accent of the President and were void under Article 254 of the Constitution. On appeal C.W.P. No. 17240 of 2011 [ 12 ] by the State of Assam the Supreme Court held that Entry 35 of the concurrent list and Entry 57 of List II deal with two different matters though allied ones; one deals with taxes on vehicles and the other with the principles of which the taxes are to be levied. Both the Entries deal with separate subjects and an attempt should be made to harmonize them rather than to bring them into conflict. While allowing the appeal filed by the State of Assam, the Supreme Court in paragraph 11 has observed as under:-
"11. The short question, therefore, is whether any of the provision of the Amending Acts is repugnant to any of the provisions of the existing law with respect to any of the matters enumerated in the Concurrent List. Under the existing law, i.e. Act 9 of 1936, on motor vehicles could be used in the Assam Province unless the owner thereof had paid in respect of it a tax at the appropriate rate specified in the Schedule to the Act and, save as therein specified, such tax should thereafter be payable annually notwithstanding that the motor vehicle might from time to time cease to be used (see S.4). As aforesaid, the Schedule annexed to the Principal Act was amended from time to time by different amending Acts and the rate was increased. Under the 1963 amending Act, apart C.W.P. No. 17240 of 2011 [ 13 ] from other provisions which do not relate to any principles of taxation a new Schedule has been substituted. Neither the amending Act nor the Schedule laid down any principles of taxation in respect of motor vehicles. So too, the amending Act of 1966 substituted the Schedule of the Act by another Schedule. A perusal of the aforesaid Schedule only discloses that different rates were fixed; that is to say, the amended Schedule does not lay down any principles on which taxes on motor vehicles are to be levied within the meaning of Entry 35 of the Concurrent List; it is solely concerned with taxes on vehicles within the meaning of Entry 57 of List II. The two entries deal with two different matters though allied ones - one deals with taxes on vehicles and the other with the principles on which such taxes are to be levied. When two entries in the Constitution, whether in the same List or different Lists, deal with two subjects, if possible an attempt shall be made to harmonize them rather than to bring them into conflict. Taxes on vehicles in their ordinary meaning connote the liability to pay taxes at the rates at which the taxes are to be levied. On the other hand , the expression C.W.P. No. 17240 of 2011 [ 14 ] "principles of taxation" denotes rules of guidance in the matter of taxation. We, therefore, hold that the amending Acts do not come into conflict with the existing law in respect of any principles of taxation, but only deal with a subject-matter which is exclusively within the legislative competence of the State Legislature. In this view, there is no scope for the application of Art. 254 of the Constitution."
In M/s Bolani Ores Ltd. v. State of Orissa and another A.I.R. 1975 S.C. 17 while examining the powers to be exercised by the State legislature under Entry 57 the Supreme Court held that Entry 57 regulated the power to impose taxes on motor vehicles whether mechanically propelled or not. On the other hand Entry 35 of the concurrent list III deal with the principles of which taxes on such vehicles were to be levied. Entry 35 denotes Rules of guidance in the matter of taxation. In B.A.Jayaram and others v. Union of India and others (1984) 1 Supreme Court Cases 168 the Supreme Court was examining a case where the State Government of Karnataka had withdrawn exemption of tax which was given to All India Tourist Vehicles registered in other states. While upholding the State action the Supreme Court held that the withdrawal of the exemption notification did not violate Article 301 of the C.W.P. No. 17240 of 2011 [ 15 ] Constitution. This power had been exercised by the State Government and the Karnataka Government had withdrawn the exemption pursuant to Section 63(3) of the Motor Vehicles Act vide notification dated 31.5.1981. The notification withdrawing the exemption was upheld on the ground that the State had the power to tax and to exempt under Entry 57 of List II. In paragraph 9 it has been observed as under:-
"9. By virtue of the power given to them by Entries 56 and 57 of List II every one of the States has the right to make its own legislation to compensate it for the services, benefit and facilities provided by it for motor vehicles operating within the territory of the State. Taxes resulting from such legislative activity are by their very nativity and nature, case (sic caste) and character, regulatory and compensatory and, are therefore, not within the vista of Article 301, unless, as we said, the tax is a mere pretext designed to injure the freedom of inter-State trade, commerce and intercourse. The nexus between the levy and the service is so patent in the case of such taxes that we need say no more about it. The Karnataka Motor Vehicles Taxation Act and the Motor Vehicles Taxation Acts of other States are without doubt regulatory and C.W.P. No. 17240 of 2011 [ 16 ] compensatory legislations outside the range of Article 301 of the Constitution."
In Sharma Transport Company v. Government of Andhra Pradesh (2002) 2 Supreme Court Cases 188 the Supreme Court was examining a case of withdrawal of concession in tax under the Andhra Pradesh Motor Vehicles Taxation Act, 1963 but vide notification dated 5.6.2000 the State Government had cancelled the earlier notification dated 1.7.1995 dealing with concessional rates of tax pursuant to Central letter dated 30.8.1993. The Supreme Court held that the letter of Joint Secretary to the Government of India dated 30.8.1993 cannot be regarded as a law laying down the principles of tax on vehicles. The letter dated 3.8.1993 of the Government of India would not be a bar to the power of State legislature as provided under Entry 57 of List II of the Constitution to levy or exempt taxes from time to time. As per Entry 35 List III the parliament may lay down the guidelines for levy of such taxes on vehicles, but the right to levy such taxes vests solely on the State legislature. Withdrawal of such concession by the State Government did not violate Article 301 of the Constitution, tax on freedom of trade, commerce and intercourse. For the withdrawal of the concession the notification was issued well within the powers given to the State legislature under Entry 57 of List II.
C.W.P. No. 17240 of 2011 [ 17 ] The Supreme Court in State of Gujarat and others v. Akhil Gujarat Pravasi V.S.Mahamandal and others (2004) 5 Supreme Court Cases 155 had examined Section 3A of the Bombay Motor Vehicles Act 1958 which required payment of tax in advance even when the vehicle was not being used. The Supreme Court held that the provision was valid. Section 3A of the Bombay Motor Vehicles Act laid down that there shall be levied and collected on all omnibuses which are used or kept in for use in the State exclusively as contract carriages, a tax at the rates specified in the table. The incidence of tax was on omnibuses. Imposition of this tax was well as per Entry 57 List II. In paragraph 18 the Supreme Court observed as under:-
"18. The language used in Section 3-A - all omnibuses which are used or kept for use in the State exclusively as contract carriages - is in conformity with Entry 57 of List II. The consistent view taken by this Court is that if a vehicle is "used" or is "kept for use" in the State, it becomes liable for payment of tax and the actual use or quantum of use is not material. The fact that the statute provides for refund of the tax, if the authority is satisfied that the vehicle has not been used, does not mean that the legislature can only make a provision for levy of tax which is limited C.W.P. No. 17240 of 2011 [ 18 ] for the period of actual use or that no tax can be levied during the period the vehicle is not put to use in the State. The provision for the refund has been made only for the advantage of the operator so that he may be relieved of the burden of tax when he is not getting any income from the vehicle on account of its non-use but it has no relevance to the competence or authority of the State to enact a law providing for imposition of a tax on vehicles which are used or are kept for use in the State."
In State of T.N. v. M.Krishnappan and another (2005) 4 Supreme Court Cases 53 while examining Entry 57 List II of Schedule VII of the Constitution the Supreme Court held that it provides a field to the State legislature to impose tax in respect of every aspect of a vehicle. This provision of the Constitution has to be read in the broadest possible terms.
A Division Bench of the Himachal Pradesh High Court recently in Kanshi Ram v. Union of India and others 2009 AIR (H.P.) 91 has upheld the levy of tax on vehicles for using National Highways under Section 3A of the Himachal Pradesh Motor Vehicles Taxation Act 1973. While dismissing the petition the Himachal Pradesh High Court held that the State Government by virtue of Entry 57 List II of Schedule VII C.W.P. No. 17240 of 2011 [ 19 ] of the Constitution of India had the power to legislate for levy of taxes on motor vehicles using national highways. In paragraph 8 it has been observed as under:-
"The present is a case where tax is levied not on passengers or goods carried by road, but on the vehicles using or kept for using the roads in the State of Himachal Pradesh. The Act has been passed under Entry 57 of List -II of Schedule-VII. The Act provides for levy of tax for use of all roads whether National Highways or State roads. On the analogy of the law laid down by the Hon'ble Supreme Court in the aforesaid case of M/s International Tourist Corporation etc. (AIR 1981 Supreme Court 774)."
As per the consistent law of the Supreme Court as laid out in the above mentioned judgments, we have no hesitation to come to a conclusion that the respective amendments made in the Punjab Motor Vehicles Act in 2007, 2009 and 2011 were made by the State Legislature exercising powers conferred on it by Entry 57 of List II of the Schedule.
In M/s East India Tobacco Co., etc. v. State of A.P. and another AIR 1962 Supreme Court 1733 the Court has examined the amendment of Section 5 of the Madras General Sales Tax Act, by which a tax was imposed on C.W.P. No. 17240 of 2011 [ 20 ] Virginia tobacco and the country tobacco was exempted from tax. The tax was not held to be violative of Article 14 of the Constitution. The Supreme Court in paragraph 4 observed as under:-
"4. It is not in dispute that taxation laws must also pass the test of Art. 14. That has been laid down recently by this Court in Kunnathat Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons on objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification that it would be violative of Art. 14. The following statement of the law in Willis on 'Constitutional Law' page 587, would correctly represent the position with reference to taxing statutes under our Constitution:-
'A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even C.W.P. No. 17240 of 2011 [ 21 ] rates for taxation if it does so reasonably ............ The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation'."
In G.K.Krishnan etc. v. State of T.N. and another etc. AIR 1975 Supreme Court 583 the Supreme Court had an occasion to consider classification of vehicles as stage carriage and contract carriage for the purpose of imposing higher tax on the latter and had examined whether such classification of vehicles would suffer from the vice of Article 14 of the Constitution. Upholding the classification made by the State Government the Supreme Court held that Government was fully competent to impose separate taxes by classifying the vehicles as it had reasonable relation to achieve the object of the Act.
In The Malwa Bus Service (Pvt.) Ltd. Etc. v. State of Punjab and others AIR 1983 Supreme Court 634 the Supreme Court had upheld the imposition of levy of tax on motor vehicles used as stage carriage at the rate of `35,000/- per annum and the levy of `1500/- per year on a motor vehicle used as goods carrier. The levy was held to be not discriminatory. In paragraph 21 it is observed as under:-
"21. The next submission urged on behalf of the petitioners is based on Article 14 of the Constitution. It is contended by the petitioners C.W.P. No. 17240 of 2011 [ 22 ] that the Act by levying `35,000/- as the annual tax on motor vehicle used as a stage carriage but only `1,500/- per year on a motor vehicle used as a goods carrier suffers from the vice of hostile discrimination and is, therefore, liable to be struck down. There is no dispute that even a fiscal legislation is subject to Art. 14 of the Constitution. But it is well settled that a legislature in order to tax some need not tax all. It can adopt a reasonable classification of persons and things in imposing tax liabilities. A law of taxatioin cannot be termed as being discriminatory because different rates of taxation are prescribed in respect of different items, provided it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere tact that a tax falls more heavily on certain goods or persons may not result in its invalidity."
The Supreme Court in Mrs. Meenakshi and others v. State of Karnataka and others AIR 1983 Supreme Court 1283 examined a case where the tax on passenger vehicles was disproportionately high as compared to the tax on C.W.P. No. 17240 of 2011 [ 23 ] goods vehicle. The tax was sought to be quashed on the ground that it was discriminatory. The Supreme Court upholding the power of the legislature to impose separate class of vehicles observed as under:-
"12. As stated earlier, in the matter of taxation the rate of tax and the objects to be taxed are to be determined by the Legislature and unless it is found to be so unreasonable, the Court would not interfere with the latitude enjoyed by the Legislature in this behalf. Now when a passenger tax is raised, the individual passenger may have to pay the same as and when there is upward revision of fare structure. But when tax on goods vehicles is raised the incidence of enhanced tax would fall on consumers of commodities transported. The transported goods may comprise essential commodities like food grains, sugar, fuel and the common man would have to pay the higher price. Further even in the matter of taxation, goods vehicles and passenger vehicles, even on account of use of the same road would not form the same class, and no statical information was supplied to the Court as to the degree of wear and tear inflicted, by the goods vehicles passing over roads than by the use of the C.W.P. No. 17240 of 2011 [ 24 ] road by the passenger vehicles."
The imposition of a tax or a levy is not discriminatory, arbitrary or unreasonable if it is founded on a reasonable classification and the classification is based on intelligible differentia which distinguish persons or class of persons that a group together from the others left out that group. Such a differentia must have a rationale relation to the objects sought to be achieved by the statute in question. If the object sought to be achieved is reasonable there is no violation of Article 14 of the Constitution. This view has been taken by the Supreme Court in Municipal Corpn. of the City of Ahmedabad v. Jan Mohammed Usmanbhai (1986) 3 SCC 20, State of Gujarat v. Shri Ambica Mills Ltd. (1974) 4 SCC 656 State of Maharashtra v. Madhukar Balkrishna Badiya (1988) 4 SCC 290 and State of Karnataka and others, etc. etc. v. D.P.Sharma, etc., etc. 1975 AIR (SC) 594.
The Supreme Court recently in State of T.N. v. M.Krishnappan and another (2005) 4 Supreme Court Cases 53 had inserted Section 4(1-A)(a) in the Tamil Nadu Motor Vehicles Taxation Act, 1974 with effect from 1.7.1998 which required a life time tax to be paid on motor vehicles (four wheeler) to be registered on or after that date. In respect of vehicles registered prior to 1.7.1998 (old vehicles) an option was given either to pay one time tax or annual tax. No option was given to new vehicles. Part I of Schedule III of C.W.P. No. 17240 of 2011 [ 25 ] 1974 Act provided for "weight-cum-value" index based for payment of "life time tax". The High Court had held that the impugned Amendment Act 1998 imposing levy of life time tax based on the value of the vehicle registered on or after 1.7.1998 was inconsistent with Section 4(1-A)(a) sub-clause
(b). The tax ceased to be compensatory and fell outside Entry 57 of the VIIth Schedule of the Constitution. The State Appeal was allowed. The Supreme Court held that by imposing levy of tax on the basis of "weight-cum-value" the levy continued to be compensatory in nature and was within the Entry 57 List II of VIIth Schedule of the Constitution. The levy was not violative of Article 14 as has been observed in paragraph 28 of the judgment as under:-
"28. Before concluding, we may quote the observations of the Division Bench of the Kerala High Court in the case of Anas v. State of Kerala (to which one of us, Dr. Ar.Lakshmanan, J. was a party), which state as under:
'A taxing statute can be held to contravene Article 14 of the Constitution only if it purports to impose on the same class of property similarly situated an incident of taxation which leads to obvious inequality. It is for the legislature to decide on what objects to levy what rate of tax and it is not for the courts to consider whether C.W.P. No. 17240 of 2011 [ 26 ] some other objects should have been taxed or whether a different rate should have been prescribed for the tax. It is also to be noted that the legislature is competent to classify persons or properties into different categories and tax them differently, and if the classification thus made is rational, the taxing statute cannot be challenged merely because different rates of taxation are prescribed for different categories of persons or objects'."
In view of the discussion made above, we are of the view that the impugned amendments made by the State Government were in accordance with law and as per Entry 57 of List II of the Constitution. The imposition of higher rate of tax for the omnibuses as compared to mini buses and State Transport Undertakings does not suffer from the vice of discrimination and Article 14 of the Constitution of India.
No other point has been raised.
In view of the above, we find no merit in this petition and the same is accordingly dismissed. No costs.
( HEMANT GUPTA ) ( RITU BAHRI )
JUDGE JUDGE
1.2.2013
rupi