Kerala High Court
The Chairman, Calicut-Wyanad Motor ... vs State Of Kerala on 23 September, 1986
Equivalent citations: AIR1987KER21
ORDER Sukumaran, J.
1. Calicut-Wyanad Motor Service (Private) Limited, the petitioner, has contributed much to the motor vehicle "jurisprudence." (See Calicut Wyanad Motor Service (P) Ltd., v. Government of Kerala, 1959 Ker LJ 410 : (AIR 1959 Ker 347). Calicut Wyanad Motor Service (P) Ltd., v. R. T. A., 1957 Ker LT 58 : (AIR 1957 Ker 13), Calicut Wyanad Motor Service (P) Ltd. v. S. T. A. T. 1957 Ker LJ 565 : (AIR 1958 Ker 19) and Calicut Wyanad Motor Service (P) Ltd. v. S. T. A. T., AIR 1974 Ker 129.) It has now come to the court to protect a cause common to many in the industry facing the same difficulty.
2. The petitioner applied for registration of a motor vehicle. (No date is seen in the application; Ext. P1 nor is it indicated in the index to the Original Petition. Such inadequacies in the preparation of the original petition are of such a distressing proportion that the office is unable to detect them while hurriedly processing many petitions a day, and quite a few even for the 'afternoon motion'.) The registration fee is evidently remitted on 21-7-1986. (The chalan has necessarily to contain the date. The Treasury officials insist on the same.) The application was, however, returned by the registering authority with a note, Ext. P 3, reading :
"Returned to the applicant. He is directed to re-submit the documents for registration with Excise duty payment certificate from Central Excise Department as per the order No. C6-15619/Tc (86) dt. 30-5-86 of the Transport Commissioner, Trivandrum."
3. The petitioner challenges the legality of the action of the registering authority. Reliance is placed on Section 27 of the Motor Vehicles Act, 1939, which deals with the grounds on which the registration or the renewal thereof could be refused. That section reads :
"27. Refusal of registration or renewal of the certificate of registration :
The registering authority may, by order, refuse to register any motor vehicle, or renew the certificate of registration in respect of a motor vehicle (other than a transport vehicle), if in either case the vehicle is mechanically defective or fails to comply with the requirements of Chapter V or of the rules made thereunder, or if the applicant fails to furnish particulars of any previous registration of the vehicle or furnishes inaccurate particulars in the application for registration of the vehicle or, as the case may be, for renewal of the certificate of registration thereof and the registering authority shall furnish the applicant whose vehicle is refused registration, or whose application for renewal of the certificate of registration is refused, a copy of such order, together with the reasons for such refusal."
4. The writ petition was admitted on 31-7-1986. The learned Government Pleader who appeared on behalf of the Government and argued the matter, attempted to defend the action of the respondents on the basis of a circular issued by the Transport Commissioner, Trivandrum, along with a demi-official letter addressed by the Collector, Customs and Central Excise Wing, Cochin. It is useful to extract that letter and endorsement made by the Transport Commissioner :
"Dear Sri. Vidhuadharan, Sub :-- Request for insistence on duty payment documents before registration of vehicle.
Under the Finance Act 1986, Central Excise duty has been imposed on bodies built for Motor Vehicles. The units engaged in the body building for Motor Vehicles are being brought under Central Excise Control.
2. As you may be aware, the body building activity is undertaken by small independent body builders spread all over the State, further the body building takes sufficient time. It will be difficult to keep watch over the clearance of body building by all builders.
3. In collection of excise duty, your organisation can be of great help as all vehicles have to get registration. I therefore request you to issue suitable instructions to all the Regional Transport Officers, in the State of Kerala to insist for the production of Central Excise duty paid documents while the vehicle is presented for registration in the Transport Offices. As the point of collection of duty is after the body has been fitted on the chassis, the duty is being charged on the entire motor vehicle. By issue of notification No. 81/86 dated 29-4-1986, rate of excise duty of Rs. 8000/- per motor vehicle has been fixed for all public transport type passenger motor vehicles. Similarly a specific duty of Rs. 4000/-per vehicle has been fixed for motor vehicle for the transport of goods. These rates of duty are applicable only in the case of independent body builders and are not applicable to a manufacturer of chassis.
4. The documents like G. P. I. (Gate pass) issued under Central Excise Rules, 1944 or TR. 6 challans for duty remittance in the Bank or a specific authorisation from the concerned central Excise Officer may serve the purpose in this regard.
5. As the Co-operation extended by you and the Transport authorities, in this connection will go a long way in preventing any attempt to evade Central Excise duty and also in proper accounting by these units, I shall be grateful if suitable instructions are issued to the Regional Officers at the earliest.
Best regard.
Yours sincerely, Sd/-
C.K. Agrawal.
Endt. C6/19619/TC/86 Copy communicated to all Registering Authorities and Additional and Assistant Registering Authorities of Kerala for information and strict compliance.
Sd/-
for Transport Commissioner, Trivandrum."
5. In response to a suggestions from Court, counsel for the petitioner brought to the notice of the court two decisions, one of the Punjab & Haryana High Court and other of the Karnataka High Court reported respectively in C. I. T. v. Ramesh Chander, (1974) 93 ITR 450 : (1973 Tax LR 1427) (Punj & Har) and Bafna Textile v. I.T.O., (1975) 98 I.T. R. 1 : (1975 Tax LR 385) (Kant), to support the contention on principles laid down by judicial decisions. The decision in (1974) 93 ITR 450 : (1973 Tax LR 1427) (Punj & Har) supra, was followed by that Court in Tarsem Kumar v. C. I. T., (1974) 94 I. T. R. 567 : (1974 Tax LR 741) (Punj & Har). The Supreme Court upheld that decision in C. I. T. v. Tarsem-Kumar, (1986) 3 SCC 489 : (AIR 1986 SC 1477). That two authorities functioning under different enactments, like the Customs and the Income-tax, cannot meddle with the rights and property of citizens unmindful of their statutory limitations, is a discernible principle gatherable from the decisions on the topic.
6. The question undoubtedly is one of principle and of general application. It may be better viewed from a larger perspective of the proper functioning of statutory authorities.
7. Undoubtedly levy of a tax, rate or duty is a permitted function of the modern State. In the assigned field, the Parliament or the State Legislature has undoubted jurisdiction to levy, assess and collect the tax or other dues. Excise duty is a major contributor to the central revenue, its impact may be invisible but heavy; indirect but drastic. That has necessarily to be borne by the citizen, when lawfully levied, properly assessed and correctly collected. Even in the exercise of their exacting duties, the Excise authorities have necessarily to take note of the Constitutional constraints to which they are subjected to. They have to act fairly, rationally and reasonably; they have to abide by the constitutional obligation as contained in Article 265 of the Constitution which reads :
"265. Taxes not to be imposed save by authority of law. -- No tax shall be levied or collected except by authority of law."
It is now settled that violation of Article 265 would result in an infraction of fundamental rights (See State of Kerala v. P. J. Joseph, AIR 1958 SC 296 and other cases). The width and planitude of Article 265 had been indicated in many decisions, K. T. Moopil Nair v. State of Kerala, AIR 1961 SC 552 being one of the early period. Earlier in 1959, a Division Bench of the Madras High Court (consisting of Rajagopalan and Balakrishna Iyer JJ.) gave a neat analysis of that Article and its glorious content. (See Rayalaseema Construction v. D. C. T. O., AIR 1959 Mad 382.) It is significant that even the Advocate General of the State, submitted :
"....when the stage of collection is reached, all that the Article says is that the manner of collection must be authorised by the law. The State is prohibited from adopting illegal or arbitrary methods of collecting the tax already levied and assessed."
(vide para 29 at page 385-6 of the judgment).
The entire process and progress of levy, assessment and collection of the tax must be along the track set and settled by the law and the Constitution.
8. An analysis of the provisions of the Central Excise Act would clearly bring out that the duty is payable by one assessed to it; and it is to be recovered from the person liable to pay. The mode of recovery is indicated in Section11 of the Act. Rules have been framed as regards recovery. No other mode is visualised in the enactment. If Parliament has not provided for any other mode of recovery, it is not open to the authorities to add to its channels or widen it beyond the pre-ordained embankments. The Collector has evinced unjustified though possibly bona fide exuberance of enthusiasm while resorting to a recovery method not sanctioned by law. He cannot, by persuasion or by pressure, make another statutory functionary do an act which that authority does not possess the power to do under the statute under which it functions. As far as the Registering Authority under the Motor Vehicles Act is concerned, he is bound to give registeration to a vehicle when the pre-conditions set in Section 27 are complied with by the person seeking registration. It is beyond the power of the Registering authority to oversee about the due observance of other laws, including other tax laws, by a person seeking registeration, when from the point of view of the Motor Vehicles Act, there is no objection or impediment to the grant of registration. The Registering Authority cannot withhold registration, for the non-payment of excise duty or other tax. That is, however, what has been attempted by the first respondent. The approach is not legal or proper. In a cognate context, Rose J. demonstrated the unwholesomeness in that approach by citing the instances of a municipal authority attempting to levy tax on salt (a central subject) or on births or on marriages (unauthorised fields). If a statutory functionary cannot attempt an unauthorised assessment, a fortiori, it cannot attempt a collection in an unauthorised mode. If today, the Registering authority is permitted to withhold registration of a vehicle for nonpayment of tax, in a similar manner, tomorrow the Taluk Supply Officer may dare to withhold ration to a citizen. That is not permissible under our Constitutional set up.
9. More than two centuries back, Dr. Johnson defined excise in his Dictionary as a "hateful tax levied upon commodities and adjudged not by the common judges of property, but wretches hired by those to whom excise was paid." Mr. Fitt made a contemporaneous remark :
"Excise was odious and grievous to the dealer, but intolerable to the private person, whose house was to be invaded by the gaugers." The situation has, no doubt, changed thereafter. A harsher mode of recovery of excise duty, as attempted in the present case, may make it more hateful and more odious. This Court shall not permit such an attempt. The action of the respondents is therefore clearly illegal. The writ petition is allowed. The respondent shall forthwith grant registration of vehicle as prayed for by the petitioner.