Kerala High Court
Mansoor vs State Of Kerala on 20 September, 2016
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
MONDAY, THE 20TH DAY OF NOVEMBER 2017/29TH KARTHIKA, 1939
WP(C).No. 36656 of 2016 (F)
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PETITIONERS:
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1. MANSOOR,
SAJITHA MANZIL, PULIKKAL,
MALAPPURAM - 673637.
2. SUBRAMANIAN,
BANKALATH HOUSE, MORAYUR POST,
KONDOTTY, MALAPPURAM-673638.
3. SHAUKATH ALI, KADASSERI HOUSE,
KONDOTTY, MALAPPURAM, PIN-673638.
4. AJITHA,
ERANHITODI HOUSE, MUTHUVALLUR POST,
KONDOTTY, MALAPPURAM - 673638.
5. HAMSA HAJI, 6/395, MANNATHODI HOUSE,
ATHANIKKAL, VALLUVAMRAM POST,
MALAPPURAM - 673651.
6. ABDULLAHKUTTY,
PUTHUSSERI MADATHIL HOUSE,
NARUKARA P O, MANJERI,
MALAPPURAM- 676121.
7. ABDUL RAHIM, KEYATH HOUSE,
POOKKOTTUR P O, MALAPPURAM - 676517.
BY ADVS.SRI.R.JAIKRISHNA
SRI.K.MOHAMMED RAFEEQ
RESPONDENTS:
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1. STATE OF KERALA,
REPRESENTED BY ITS CHIEF SECRETARY,
THIRUVANANTHAPURAM-695001.
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WP(C).No. 36656 of 2016 (F)
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2. TRANSPORT COMMISSIONER,
MOTOR VEHICLES DEPARTMENT,
TRANS TOWERS, VAZHUTHACAUD,
THIRUVANANTHAPURAM-695014.
3. REGIONAL TRANSPORT OFFICER,
LOTTERY ROAD, MIDDLE HILL, UP HILL,
MALAPPURAM - 676505.
4. SUB REGIONAL TRANSPORT OFFICER,
MINI CIVIL STATION, BLOCK ROAD,
CHEMMAD, TIRURANGADI P O,
MALAPPURAM-676306.
BY SPECIAL GOVERNMENT PLEADER SRI.P.RAVINDRANATH
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 20-11-2017 ALONG WITH WPC.11274/2017 & WPC.21772/2017,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
mbr/
WP(C).No. 36656 of 2016 (F)
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APPENDIX
PETITIONERS' EXHIBITS:
EXHIBIT P1: TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE IST PETITIONER DTD 25/7/2016.
EXHIBIT P1(A): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 2ND PETITIONER DTD 8/8/2016.
EXHIBIT P1(B): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 3RD PETITIONER DTD 30/8/2016.
EXHIBIT P1(C): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 4TH PETITIONER DTD 3.9.2016.
EXHIBIT P1(D): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 5TH PETITIONER DTD 25/7/2016.
EXHIBIT P1(E): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 7TH PETITIONER DTD 24/9/2016.
EXHIBIT P1(F): TRUE COPY OF THE REGISTRATION CERTIFICATE OF THE
VEHICLE OF THE 5TH PETITIONER DTD 8/8/2016.
EXHIBIT P2: TRUE COPY OF THE PERMIT ISSUED TO THE
IST PETITIONER DTD 11/8/2016.
EXHIBIT P2(A): TRUE COPY OF THE PERMIT ISSUED TO THE
2ND PETITIONER DTD 7/9/2016.
EXHIBIT P2(B): TRUE COPY OF THE PERMIT ISSUED TO THE
3RD PETITIONER DTD 7/9/2016.
EXHIBIT P2(C): TRUE COPY OF THE PERMIT ISSUED TO THE
4TH PETITIONER DTD 3/10/2016.
EXHIBIT P2(D): TRUE COPY OF THE PERMIT ISSUED TO THE
5TH PETITIONER DTD 6/8/2016.
EXHIBIT P2(E): TRUE COPY OF THE PERMIT ISSUED TO THE
6TH PETITIONER DTD 12/8/2016.
EXHIBIT P2(F): TRUE COPY OF THE PERMIT ISSUED TO THE
7TH PETITIONER DTD 4/10/2016.
EXHIBIT P3: TRUE COPY OF THE RELEVANT EXTRACT OF THE KERALA
FINANCE BILL 2016 DTD NIL.
EXHIBIT P4: TRUE COPY OF THE RELEVANT EXTRACT OF THE BUDGET
SPEECH OF HON'BLE FINANCE MINISTER
MR.THOMS ISAAC DTD 8/7/2016.
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WP(C).No. 36656 of 2016 (F)
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EXHIBIT P5: TRUE COPY OF THE CIRCULAR ISSUED BY THE
2ND RESPONDENT DTD 18/7/2016.
EXHIBIT P6: TRUE COPY OF THE RELEVANT EXTRACT OF THE FINANCE
ACT, 2016.
RESPONDENTS' EXHIBITS:
EXHIBIT R2A: TRUE COPY OF THE "CODE OF PRACTICE FOR BUS BODY
DESIGN AND APPROVAL" INTRODUCED BY GOVERNMENT OF
INDIA.
EXHIBIT R2B: TRUE COPY OF THE NOTIFICATION DATED 20.9.2016 OF
THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS.
//TRUE COPY//
P.S. TO JUDGE
mbr/
'C.R.'
A.K.JAYASANKARAN NAMBIAR, J.
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W.P.(C).No.36656 of 2016
&
W.P.(C) Nos.11274 & 21772 of 2017
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Dated this the 20th day of November, 2017
J U D G M E N T
As the issue involved in all these writ petitions is the same, they are taken up together for consideration and disposed by this common judgment.
2. In all these writ petitions, the petitioners seek to challenge the amendments introduced in the Kerala Motor Vehicles Taxation Act, 1976, by the Kerala Finance Act, 2016. It is pointed out that, through the said amendment, the petitioners and other like stage carriage operators, who had their stage carriages registered with the Motor Vehicles Department after 18.07.2016, have been made liable to motor vehicle tax, on the basis of the floor area of the vehicle, as against the earlier scheme of taxation, which was based on seating/standing capacity of the vehicle concerned. It is pointed out that the amendment introduces a cutoff date of 18.07.2016, and makes only those stage carriages which were registered after the said date, subject to the new system of levy of tax, on the basis of floor area, whereas, existing stage carriage operators, whose vehicles were registered prior to 18.07.2016, -2- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 continue to pay tax as per the erstwhile system, based on the seating/standing capacity of the vehicle in question. To appreciate the contention of the learned counsel for the petitioners in these writ petitions, it would be necessary, at the outset, to notice the statutory provisions under the Kerala Motor Vehicles Taxation Act, as obtained prior to, and after the amendment, that was introduced through the Finance Act, 2016.
3. In the Schedule to the Kerala Motor Vehicles Taxation Act, serial No.7(iii), prior to the amendment dated 18.07.2016, read as follows:-
7. Motor vehicles plying for hire and used for transport of passengers and in respect of which permits have been issued under the Motor vehicles Act, 1988.
(iii) Vehicles permitted to ply solely as stage carriages
(a) Ordinary services-for every seated passenger (other than driver and conductor) which the vehicle is permitted to carry 600.00
(b) Fast Passenger and Express Services- for every seated passenger other than driver and conductor which the vehicle is permitted to carry 690.00
(c) For every standing passenger the vehicle (whether Ordinary, Fast Passenger or Express service) is permitted to carry 210.00
(d) For every standing passenger if the vehicle with only city/town permit (whether ordinary, Fast Passenger or Express service) is permitted to carry 150.00 -3- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017
4. By the amendment that was brought about in the Schedule with effect from 18.11.2016, the aforesaid entry was modified to as read as follows:-
7. Motor vehicles plying for hire and used for transport of passengers and in respect of which permits have been issued under the Motor vehicles Act, 1988.
(iii) Vehicles permitted to ply solely as stage carriages
(a) Ordinary services-for every seated passenger (other than driver and conductor) which the vehicle is permitted to carry 600.00
(b) Fast Passenger and Express Services- for every seated passenger other than driver and conductor which the vehicle is permitted to carry 690.00
(c) For every standing passenger the vehicle (whether Ordinary, Fast Passenger or Express service) is permitted to carry 210.00
(d) For every standing passenger if the vehicle with only city/town permit (whether ordinary, Fast Passenger or Express service) is permitted to carry 150.00 "iv) Vehicles to ply solely as stage carriage - based on floor area."
(a) Ordinary service other than Rs.1,300 per square meter or
city / town services part thereof
(b) Ordinary city / town services Rs.1,100 per square meter or
part thereof
(c) Fast passenger and other higher Rs.1,400 per square metre or class services part thereof.
5. The corresponding amendment in Section 3 of the Kerala Motor Vehicles Taxation Act, 1976, was through the insertion of the following proviso, after the 3rd proviso to Section -4- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 3 (1) of the Act.
"Provided also that in respect of new stage carriages registered or assigned a new registration mark, or altered from any category other than stage carriage, there shall be levied a tax based on the floor area of the vehicle at the rate specified in item (iv) of Sl. No.7 of the Schedule."
Note: This shall be deemed to have come into force on and from 18th day of July, 2016.
The effect of the amendment introduced to the Kerala Motor Vehicles Taxation Act, 1976, by the Kerala Finance Act, 2016, was to provide for a new basis for levy of tax - based on the floor area of the vehicle - in respect of stage carriages registered or assigned a new registration mark or altered from any category other than stage carriages, with effect from 18.07.2016. Inasmuch as the new basis of tax was made applicable only to newly registered stage carriages and such stage carriages as were assigned a new registration mark or altered from any category other than stage carriages, it is the case of the petitioners that they have been discriminated against, in that, while they have to pay tax in respect of their vehicles, in accordance with the new system of tax, based on the floor area -5- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 of the vehicle, other stage carriage operators, who had registered their vehicles prior to 18.07.2016, get to pay tax as per the earlier system, based on the seating/standing capacity of the vehicles.
6. The counter affidavit filed by the respondents indicates that the decision to switch over to the floor area based levy of motor vehicle tax, was necessitated in the wake of the new "Code of Practice for Bus Body Design and Approval"
introduced by the Government of India. It is the case of the respondents that the said Code stipulates new parameters to govern bus building processes and reckons various safety features as also comfort of passengers. It is stated that new guidelines with regard to layout of seats, their dimensions, facial arrangements etc. constitute a major part of the new Code that is contemplated by the Central Government. The reason for switching over to the new basis of taxation is stated to be the apprehension of the State Government that, with the switching over to the new standards as contemplated under the Motor Vehicles Act and Rules, there would invariably result, a reduction of the seating capacity in stage carriages that ply within the State, and therefore, a consequent reduction of the -6- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 tax that could be collected from the stage carriages plying in the State. It was therefore decided to introduce a new basis for the levy of motor vehicle tax on stage carriages by subjecting the said vehicles to a taxation based on the floor area. It is further stated that, inasmuch as the change over to the new specifications is contemplated only now, it was thought expedient to confine the new basis of taxation only to those vehicles which were registered after 18.07.2016, and to leave the vehicles registered prior to the date, untouched by the new basis of taxation.
7. I have heard Sri. R.Jayakrishna, the learned counsel for the petitioner in W.P.(C).No.36656/2016 and Sri. G. Harikumar Nair, the learned counsel for the petitioners in W.P.(C). Nos.11274/2017 and 21772/2017 as also Sri. P.Ravindranath, the learned Special Government Pleader for the respondents in all these writ petitions.
8. On a consideration of the facts and circumstances of the case and the submissions made across the Bar, I find that, while it is not in dispute that the State enjoys considerable relaxations in matters of taxation, and the State can even pick and choose -7- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 the subject matter of tax, it is also well settled that the State, if it decides to bring about a classification between the various subjects for the purposes of taxation, must adhere to the mandate of Article 14 of the Constitution. In State of W.B. v. Anwar Ali Sarkar and Another [1952 KHC (304) SC], a larger bench of the Supreme Court, while dealing with the aspect of classification, for the purposes of avoiding a discriminatory levy, observed that all persons are not, by nature, attainment, or circumstances, equal, and the varying needs of classes of persons often require separate treatment, and, therefore, the protecting clause has been construed as a guarantee against discrimination amongst equals only, and not as taking away from the State the power to classify persons for the purpose of legislation. Though the classification may be on different basis, the classification cannot be arbitrary, but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out , but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions are to be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia -8- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 which distinguishes those that are grouped together from others and (2) that the differentia must have rational relation to the object sought to be achieved by the Act. The differential which is the basis of classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class legislation in the sense of making improper discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liability proposed to be imposed, it does not forbid classification for the purposes of legislation, provided, such classification is not arbitrary. To the same effect is the judgment of the Supreme Court in Thathunni Moopil Nair and Others v. State of Kerala [1961 KHC 332], where, in the context of a levy of land tax, it was observed that, in order that the law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing a tax and authorising the collection thereof and, secondly, the tax must be subject to the conditions laid down in Article 13 of the Constitution. One of the conditions envisaged by Article 13(2) is that the Legislature shall not be make any law which takes away -9- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 or abridges the equality clause in Article 14, which enjoins the State not to deny to any person equality before the law or equal protection of the laws in the country. The guarantee of equal protection of laws must extend even to taxing statutes. This does not mean that every person should be taxed equally, but it does mean that if the property of the same character has to be taxed, the taxation must be by the same standard, so that the burden of taxation may fall equally on all persons holding that kind and extent of property (emphasis supplied). If the taxation, generally speaking, imposes a similar burden on everyone with reference to that particular kind and extent of property, on the same basis of taxation, the law shall not be open to attack on the ground of inequality, even though the result of the taxation may be that the total burden on different persons may be unequal. It was pointed out that if the same class of property similarly situated is subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating an inequality amongst holders of the same kind of property. While Courts are not concerned with the policy underlying a taxing statute or whether a particular tax could not have been imposed in a different way or in a way that the Court might think more just and equitable, this Court would definitely interfere, if it is found -10- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 that, in the imposition of tax, there is a discrimination meted out to one set of people to the exclusion of others similarly situated. In Prabodh Verma and Others v. State of U.P and Others [1984 KHC 727], while reiterating the above principle, it was observed by the Supreme Court that the principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the territory of India , irrespective of differences of circumstances, but it only means that all persons similarly circumstanced should be treated alike and there should be no discrimination between one person and another if as regards the subject matter of the legislation, their position is substantially the same.
9. Viewed in the backdrop of the settled position of law as enumerated in the decisions referred above, I find, in the instant cases, that while the decision of the State Legislature to amend the provisions of the Kerala Motor Vehicles Taxation Act, so as to introduce a new basis for the levy of tax on stage carriages, cannot be seen as suffering from the vice of legislative incompetency, and further, cannot be said to be arbitrary and discriminatory in itself, the illegality in the instant case stems only from the differential treatment meted out to those stage -11- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 carriages that are registered with effect from 18.07.2016, to the exclusion of other stage carriage operators, who, while continuing to operate their stage carriages, have been carved out of the ambit of the new basis of taxation solely because their vehicles were registered prior to 18.07.2016. While the learned Government Pleader would take me through various provisions of the Motor Vehicles Act and Rules, to point out that an amendment is proposed in the said Act and Rules, so as to introduce new specifications to govern the manufacture of bus bodies with emphasis on the safety aspects that are inbuilt in such specifications, I am of the view that there is nothing in those provisions which would suggest that, with the introduction of new specifications, the vehicle that emerges would be classified as anything other than a stage carriage. In other words, vehicles manufactured under the new specifications would also satisfy the definition of 'stage carriage', for the purposes of classification under the Motor Vehicles Act and Rules. If that be the case, then one fails to understand why the Legislature deemed it fit to introduce a new basis for levy of motor vehicle tax only in respect of those vehicles registered after 18.07.2016, while excluding similar vehicles that were registered prior to 18.07.2016. It is trite that among subjects -12- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 which come within the same genus for the purposes of classification for taxation, there cannot be a further sub- classification with a view to introduce a differential tax regime for the subjects governed by the same genus. This aspect of the matter was gone into by this Court in Bharati Telemedia Ltd. v. Union of India and others [2016 (1) KLT 312], where this Court found as follows, in paragraph 12 of the judgment, while striking down a levy of luxury tax on DTH operators, to the exclusion of a similar levy on cable operators with effect from 01.04.2011.
"12. The material relied upon by the petitioners in the writ petition would indicate that there are a lot of similarities between cable TV services and DTH services when it comes to provision of entertainment/luxury to subscribers/customers. Both are involved in distributing TV Channels, both charge subscription charges from the customers, both provide digital quality pictures, both provide as many channels in the packages offered to customers, the digital services in both, including High Definition channels, are provided through a set top box that is installed in the customers premises. The regulatory body in respect of both the services is the same, although they may be classified separately for the purposes of levy of service tax under the Finance Act, 1994, as amended. The argument advanced on behalf of the State Government, by the learned Special Government Pleader, appears to focus on the technological difference in the system of delivery of entertainment in both the services. It is contended that in the case of cable operators, the services are rendered through an analogue system where the connectivity to the subscriber is ensured through co--13-
W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 axial cables or optic fibre cables whereas in the case of DTH operators, the subscribers receive programmes through an antenna that receives signals directly from the satellite. It is pointed out that this confers an additional feature of mobility to the system when it comes to DTH subscribers. Reference is also made to the alleged difference in picture quality in both the systems. In my view, the said differences in the technology involved or number of intermediaries involved in the delivery of entertainment/luxury content to a subscriber cannot be the basis of a classification for the purposes of the levy under the Kerala Tax on Luxuries Act. The object of the levy being to tax a luxury, and it being established that the luxury, of the same content, is provided by both cable operators and DTH operators, there cannot be a further sub-classification among persons who come within the ambit of the levy based solely on technological differences in the system of delivery of entertainment in both the services. While it is trite that the legislature is given greater latitude in tax matters and can even pick and choose the subject matter of a tax, any classification that is effected by the legislature must conform to the mandate of Article 14 of the Constitution. A sub-classification effected between persons who would ordinarily come within the ambit of tax, must be based on an intelligible differentia that bears a rational nexus with the object sought to be achieved by the legislature. It has to be shown that the difference between the two categories of service providers is real and substantial and there must be some just and reasonable relation to the object of the legislation. A classification based on microscopic and insignificant differences is not good, and overdoing classification would tantamount to undoing equality [See: State of U.P. v. Deepak Fertilizers and Petrochemical Corporation Ltd. - [(2007) 10 SCC 342; Roopchand Adlakha and others v. Delhi Development Authority and Others - [(1989) 1 Supp. SCC 116]; Union of India and Others v.
N.S.Rathnam & Sons - [2015 (322) ELT 353 (SC)]. In the instant case, the sub-classification based on technological differences that do not affect the content of the luxury provided to the subscriber, does not withstand the scrutiny under Article 14 of the Constitution. I therefore find that the levy of luxury tax on DTH -14- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 operators, to the exclusion of a similar levy on cable operators, with effect from 01.04.2011, is discriminatory and violative of Article 14 of the Constitution of India."
10. In my view, in the absence of any justification for the classification that is sought to be introduced between existing stage carriage operators and those stage carriage operators registered with effect from 18.07.2016, for the purposes of levy of tax on the new basis of floor area, the levy of tax on the said basis solely on vehicles registered after 18.07.2016, cannot be legally sustained. Although the learned Government Pleader would take me to the decision of the Division Bench of this Court in W.P.(C) No.12487/2017 dated 27.10.2017 to point out that the said decision was passed by relying on the judgment of Supreme court in Jindal Stainless and another v. State of Haryana and Others [AIR 2016 SC 5617], I find that the reference to the said judgment will not come to the aid of the respondents in the instant case, since, the Division Bench in that case, was called upon to decide whether there was any discrimination that was established in levying a differential rate of tax in respect of motor vehicles that were registered outside the State, as against the motor vehicles registered inside the State of Kerala. While there cannot be any dispute to the settled -15- W.P.(C). No. 36656 of 2016 & W.P.(C).Nos.11274& 21772 of 2017 position in law that the State has got the power to choose the subject matter of taxation and also impose different rates of tax on different subjects, the point that arises for consideration in the instant case is not with regard to the power of the State to levy tax at different rates, but whether the State can bring about a sub-classification, within an established classification, of subjects upon whom the levy falls.
In the result, these writ petitions are allowed, by declaring that, while the State Legislature has the legislative competence to levy a tax on the basis of floor area on stage carriages in general, the levy of such tax on stage carriages registered with effect from 18.07.2016, to the exclusion of a similar levy on those stage carriages that were registered prior to 18.07.2016, is discriminatory and violative of Article 14 of the Constitution of India.
Sd/-
A.K.JAYASANKARAN NAMBIAR JUDGE nkr/23.11.2017