Madras High Court
R.Mahalakshmi vs Government Of Tamilnadu on 30 October, 2012
Author: C.Nagappan
Bench: C. Nagappan, M. Sathyanarayanan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 30/10/2012 C O R A M THE HONOURABLE Mr. JUSTICE C. NAGAPPAN and THE HONOURABLE Mr. JUSTICE M. SATHYANARAYANAN Writ Petition Nos.15267, 16933 to 16941, 17002 to 17006, 17044 to 17047 and 25743 of 2012 and M.P.No.1 of 2012 in all W.Ps. [19 nos.] and M.P.No.2 of 2012 in WP No.15267/2012 R.Mahalakshmi ...Petitioner in WP No. 15267/2012 P.Rajamanikam ...Petitioner in WP No. 16933/2012 M.K.Rajkmumar ...Petitioner in WP No. 16934/2012 S.Rubert ...Petitioner in WP No. 16935/2012 G.Palani ...Petitioner in WP No. 16936/2012 S.Manikandan ...Petitioner in WP No. 16937/2012 K.Sridhar ...Petitioner in WP No. 16938/2012 K.Nagamalar ...Petitioner in WP No. 16939/2012 T.Gandhi ...Petitioner in WP No. 16940/2012 R.Madeswaran ...Petitioner in WP No. 16941/2012 K.Nandagopal ...Petitioner in WP No. 17002/2012 S.Rubert ...Petitioner in WP No. 17003/2012 P.Sundaravaradhan ...Petitioner in WP No. 17004/2012 R.Narayanan ...Petitioner in WP No. 17005/2012 Gandhi ...Petitioner in WP No. 17006/2012 K.Nandagopal ...Petitioner in WP No. 17044/2012 H.Vijayakumar ...Petitioner in WP No. 17045/2012 V.Srinivasan ...Petitioner in WP No. 17046/2012 S. Krishna Kumar ...Petitioner in WP No. 17047/2012 M/s. Wheels Tourist Transport Operators rep by its Partner I.R.Coomaraswami Unit A-1, 1st Floor, "Heavitree" 47, Spur Tank Road, Chetpet, Chennai 31. ...Petitioner in WP No. 25743/2012 vs.... 1. Government of Tamilnadu rep by Secretary Transport Department Fort St. George, Chennai 9. 2. The Transport Commissioner O/o. the Transport Commissioner Govt. of Tamilnadu Chepauk, Chennai 5. ... R1 & R2 in all WPs. 3. The Regional Transport Authority, Meenambakkam, New Bazar Street, Alandur, Chennai 16. ... R3 in WP Nos.15267, 16933, 16937, 16940, 16941, 17046/2012 4. Government of Tamilnadu rep by Secretary, Home Department Fort St. George, Chennai 9. 5. Government of Tamilnadu rep by Secretary, Law Department Fort St. George, Chennai 9. ... R4 & R5 in all WPs except WP No.25743/12 6. The Regional Transport Authority Chennai (West) No.1, Bharathidasan Colony, ... R3 in WPs 16934 to Mambalam Taluk Office Complex, 16936, 16938, 17003 to K.K.Nagar, Chennai 78. 17006/2012 7. The Regional Transport Authority Chennai (West) Thiruvalluvar Nagar East Coast Road, Thiruvanmiyur, Chennai 41. ... R3 in WP 16939, 17002, 17044/2012, 8. The Regional Transport Authority Redhills (Unit Office at Ambattur) 4/87, Sri Samundeeswari Complex Bye-Pass Road, Redhills, Chennai 52. ... R3 in WP No.17045/2012 9. The Regional Transport Authority Chennai (South West) Nos.47 & 49, Kaliamman Koil Street, Sai Nagar, Virugambakkam, Chennai 92. ... R3 in WP No.17047/2012 10. The Regional Transport Authority Chennai (Central), Chennai 23. ... R3 in WP No.25743/2012 [R4 & R5 Impleaded in WP No.15267/12 vide Order dt.17.10.2012] Writ petitions filed under Article 226 of the Constitution of India praying for issuance of a Writ of Declaration as stated therein. Mr. K.J.Parthasarathy for Petitioner in WP No.15267/2012 and Mr. G.Vijayakumar, counsel for petitioners in WP Nos.16933 to 16941 of 2012, W.P.Nos.17002 to 17006 of 2012 and W.P.Nos.17044 to 17047 of 2012 Ms. Hema Murali Krishnan for M/s. OJAS LAW FIRM for petitioners in W.P.No. 25743 of 2012. Mr. A.Navaneetha Krishnan, Advocate General, for Respondents in all the writ petitions, assisted by M/s. V.R.Kamalanathan & D.Raja, Addl.G.Ps. C O M M O N O R D E R
(The Order of the Court was delivered by C.NAGAPPAN, J.) The prayer in all the writ petitions is one and the same and the petitioners have sought for issuance of a writ of Declaration declaring Sections 4 and 7 of the Tamil Nadu Motor Vehicles Taxation (Amendment) Act, 2012 (Act 13 of 2012) insofar as it relates to insistence of Lifetime Tax for Transport vehicles covered under Part I and Part II of 7th Schedule and Part I of 8th Schedule as arbitrary, illegal and unconstitutional and hence they are disposed of by this common Order.
2. For the sake of convenience, we mention the facts of the case in W.P.No.15267 of 2012. The petitioner Mahalakshmi is the present owner of Toyota Innova vehicle and the said vehicle was originally purchased by M/s.Sona Mobility Services Limited from Lanson Toyota by invoice dated 31.5.2007 for a sum of Rs.7,90,684/- and at the time of sale, a sum of Rs.98,835.50 was also levied as Value Added Tax and a total sum of Rs.8,89,519.50 was collected from the purchaser and the original owner obtained an All India Tourist Permit for the said vehicle for a period of five years from 11.7.2007 to 10.7.2012 and initially tax was paid for one year and thereafter, quarterly tax was paid for the said vehicle and the ownership of the vehicle as well as the All India Tourist Permit was transferred to the petitioner on 22.8.2011 and thereafter, she paid the quarterly tax and the permit was valid upto 10.7.2012 and at the time of renewal, the petitioner came to know about the Amending Act 13/2012 in which, provision has been made for compulsory payment of Lifetime Tax in respect of the vehicle of the petitioner, namely, Tourist Motor Cab, which falls under Part 2 of 7th Schedule and she has challenged the validity of Sections 4 and 7 of the Tamil Nadu Motor Vehicles Taxation (Amendment) Act, 2012 in the writ petition.
According to the petitioner, insofar as the new vehicles under Part I of 7th Schedule are concerned, tax at the rate of 10%, if the cost of the vehicle is less than Rs.10 lakhs, and at the rate of 15% if the cost of the vehicle is above Rs.10 lakhs, has been prescribed and in respect of the old vehicles, irrespective of the year of registration and irrespective of the quantum of tax that has already been paid by the registered owner, Lifetime Tax at the rate of 8.5% and 14.5% is insisted for vehicles costing less than Rs.10 lakhs and more than Rs.10 lakhs respectively and in respect of new motor vehicles (own vehicles) falling under part 1 of 3rd schedule, the tax at the rate of 10% is levied at the time of registration and insofar as the old motor vehicles (own vehicles) are concerned, the rate of tax is prescribed on the basis of the age of the vehicle, which starts from 8.75% of the cost of the vehicle and tapers down to 6% of the cost of the vehicle, if the vehicle is more than 11 years old and that being so, to treat the old tourist cab vehicles falling under Part 2 of the 7th Schedule differently and levying a flat rate of 8.5% of 14.5% of the cost of the vehicle as Lifetime Tax, is arbitrary, illegal, discriminatory and unjust in law; that there is no rational or nexus to treat existing registered tourist vehicles differently for the purpose of levy of Lifetime Tax without reference to the age of the vehicle or the tax that has already been suffered by such vehicles; levy of tax on the cost of the vehicle by including the tax already suffered by the vehicle (Value Added Tax) at the time of purchase is arbitrary; that Tourist Motor Cab and Tourist Maxi Cab, which require a separate permit, whose life varies depending upon the permit, cannot be equated to an own vehicle and payment of Lifetime tax cannot be insisted and it amounts to treating different classes of vehicles as one class and hence, there is violation of Article 14 of the Constitution of India; that levy of Lifetime Tax compulsorily in respect of old Tourist Motor Cab under Part 2 of 7th Schedule and compelling payment of quarterly tax in respect of old maxi cab under Part 2 of 8th Schedule is arbitrary and discriminatory; and that insistence upon the payment of Lifetime Tax irrespective of the age of the vehicle deserves to be declared as illegal and arbitrary. Similar averments have been made in other writ petitions challenging the said provisions of the Amendment Act.
4. An elaborate counter affidavit has been filed by the State stating that Lifetime Tax has been in vogue in Tamil Nadu for many years from 1998 and for own vehicles conversion to Lifetime Tax was made compulsory and by the Amendment Act 13/2012, levy is made compulsory to tourist Motor Cab also and a distinction has been maintained between the new vehicles and the old vehicles by giving the old vehicles (i.e. existing permit holders), a reduced Lifetime Tax of 8.5% as compared to 10% for new vehicles and the cost of the vehicle will be inclusive of the Value Added Tax or any other taxes or duties paid by the registered owner and this is in accordance with Rule 2(aa) of the Tamil Nadu Motor Vehicles Taxation Rules, 1974 and the petitioners have not questioned the validity of levy of Lifetime Tax for old tourist motor cab vehicles, but only plead that instead of flat rate of 8.5% of the cost of the vehicle, diminishing rates with reference to the age of the vehicle should have been fixed as in the case of motor cars for personal use covered by Part 2 of 3rd Schedule. It is further stated in the counter that tourist vehicles cannot be equated on par with motor cars and motor cycles which are meant for personal use and the levy of Lifetime Tax for own vehicles introduced by Tamil Nadu Act 27/98 was held to be not arbitrary and discriminatory and was upheld by the Supreme Court by its judgment dated 18.3.2005 in THE STATE OF TAMIL NADU v.. M. KRISHNAPPAN & ANOTHER ETC. [2005 (2) CTC 290] and in the case of Tourist vehicles falling under Part 2 of the 7th Schedule, the compulsion of switching over to Lifetime Tax arises only at the time of renewal of the permit and at other times, it is only option to pay Lifetime Tax during currency of permit and hence, it is not necessary to have a graded rate of tax for old tourist vehicles as is done for motor cars and the levy of said tax is of compensatory nature and a different classes of vehicles have been levied tax at different rates taking into consideration their usage and therefore, there is no violation of Article 14 of the Constitution. According to the respondents, the impugned levy of Lifetime Tax is based on rational and reasonable classification founded on an intelligible differentia having a rational relationship to the object of the impugned levy.
5. Mr. K.J.Parthasarathy, learned counsel appearing for the petitioners, submitted that the Amending Act treats old Tourist Cab vehicles falling under Part 2 of 7th Schedule differently and levy a flat rate of 8.5% or 14.5% of the cost of the vehicle as Lifetime Tax is arbitrary; there is no rational or nexus to treat existing registered tourist vehicles without reference to the age of the vehicle or the tax that has already been suffered by such vehicles; Levy of Tax on the cost of the vehicles at the time of purchase is arbitrary; a Tourist Motor Cab, whose life varies depending upon the permit, cannot be equated to an own vehicle and payment of Lifetime Tax cannot be insisted and it amounts to treating different class of vehicles as one class and hence, it is violative of Article 14 of the Constitution. Reliance was placed by him on the decision of the Supreme Court in SHRI RAM KRISHNA DALMIA & OTHERS v.. SHRI JUSTICE S.R.TENDOLKAR AND OTHERS [AIR 1958 SC 538 (1)].
6. Mr. A.Navaneethakrishnan, Learned Advocate General, appearing for State/respondents submits that the levy of Lifetime Tax for the old Tourist motor Cab vehicles at the flat rate of 8.5% of the cost of the vehicle irrespective of the age, cannot be said to be irrational and the impugned amended Act has the twin objectives of streamlining and simplifying the taxation structure and it cannot be said to be illegal and inspite of collecting the tax once in a quarter, the tax is proposed to be collected in one lump sum in advance and the levy of Lifetime Tax is more convenient for administrative reasons and in the interest of vehicle owners also and different classes of vehicles have been levied tax at different rates taking into consideration their usage and they cannot be said to be violative of Art.14 of the Constitution and Tourist vehicles are run for commercial purpose and they use the roads extensively and introduction of levy of Lifetime Tax is compensatory in nature for the road usage and the revenue so derived is mainly used for development of roads and the impugned levy of Lifetime Tax is based on rational and reasonable classification founded on an intelligible differntia having a rational relation to the object of the impugned levy. It is the further contention of the learned Advocate General that the decision of the Supreme Court in THE STATE OF TAMILNADU v.. M. KRISHNAPPAN & ANOTHER ETC. [(2005) 4 SCC 53] covers all the contentions raised in the present writ petitions including the validity of Lifetime Tax based on the value of the vehicles and he also relied on the decision of the Division bench of this Court in K.M.VIJAYAN v.. STATE OF TAMIL NADU [2005 (4) CTC 337].
7. The validity of Sections 4 and 7 of of the Tamil Nadu Motor Vehicles Taxation (Amendment) Act, 2012 (Act 13 of 2012) are challenged in the writ petitions. Section 4 of the Amending Act substitutes Clause (a) of Sub-Section (1-A) of Section 4 of the Principal Act. Similarly Section 7 of the Amending Act adds new schedules 7 to 9 to the Principal Act.
Section 4(1-A)(a) of the Tamil Nadu Motor Vehicles Taxation Act, 1974 as amended by Act 13/2012 reads as under:
"(a) in respect of the motor vehicles specified in Part-I of the Second Schedule, in Part-I of the Third Schedule, in Part-I of the Seventh Schedule and in Part-I of the Eighth Schedule, at the time of its registration, a life time tax shall be paid at the rates specified in Part-1 of the Second Schedule or in Part-I of the third Schedule or in Part-I of the Seventh Schedule or in Part-I of the Eighth Schedule, as the case may be, on a licence to be taken out for the life time of such vehicles;
(aa) In respect of the motor vehicles specified in Part-II of the Seventh Schedule, the registered owners of such vehicles shall pay life time tax at the rates specified therein either at the time of renewal of permit or during the currency of the existing permit. In cases where the registered owners of the motor vehicles opt to pay the life time tax during the currency of permit, they shall exercise their option before 31st day of March 2013 and shall pay the tax in either of the following manner:-
(i) in one lump sum after deducting the proportionate amount of tax already paid for the unutilized period of licence; or
(ii) in four equal annual instalments after deducting one-fourth of the proportionate amount of tax already paid for the unutilized period of licence in each such instalment;
(aaa) in respect of the motor vehicles specified in Part-II of the Eighth Schedule, the tax shall be paid at the rates specified therein, on a licence to be taken out for such vehicles,";
Similarly, by the Amending Act 13 of 2012 new Schedules 7 to 9 were added and Schedules 7 & 8 are read as under:
"SEVENTH SCHEDULE [See sections 3, 4(1-A)(a) and (aa)] Part-I New tourist motor cab which vehicle is permitted to carry more than four persons but not more than seven persons including the driver At the time of registration Rate of Tax
(i) If the cost of the vehicle does 10 per cent of not exceed rupees 10 lakh of the cost of vehicle
(ii) If the cost of the vehicle exceeds 15 per cent of rupees 10 lakh of the cost of vehicle Part-II Old tourist motor cab which is already registered and is permitted to carry more than four persons but not more than seven persons including the driver Rate of Tax
(i) If the cost of the vehicle does 8.5 per cent of not exceed rupees 10 lakh the cost of vehicle
(ii) If the cost of the vehicle 14.5 per cent exceeds rupees 10 lakh of the cost of vehicle Explanation. - For the purpose of this Schedule, "cost of vehicle" means the cost of vehicle at the time of purchase, in such manner as may be prescribed.
EIGHTH SCHEDULE [See sections 3, 4(1-A(a) and (aaa)] Part - I New tourist maxi-cab, with a floor area of more than 6 square metre, which vehicle is permitted to carry more than seven persons but not more than thirteen persons including the driver.
At the time of registration Rate of Tax (i) If the cost of the vehicle does 10 per cent of not exceed rupees 10 lakh the cost of vehicle (ii) If the cost of the vehicle-exceeds 15 per cent of rupees 10 lakh the cost of vehicle
Explanation. - For the purpose of this Schedule, "cost of vehicle" means the cost of vehicle at the time of purchase, in such manner as may be prescribed.
Part - II Old tourist maxi cab which vehicle is already registered and is permitted to carry more than seven persons but not more than thirteen persons including the driver
(i) If the floor area of the vehicle Quarterly tax - Rs.
is more than 6 square metre 420.00 per but not more than 8 square metre. square metre (ii) If the floor area of the vehicle 450.00 per is more than 8 square metre. square metre
8. The petitioners in all the writ petitions are old tourist motor cab operators. As per the amended Tamil Nadu Motor Vehicles Taxation Act, levy of life time tax for the new tourist motor cab vehicle is provided under Part I of 7th Schedule. Similarly, levy of life time tax for the new tourist maxi cab vehicle is provided under Part I of 8th Schedule. Insofar as the old tourist motor cab vehicle is concerned, levy of life time tax is provided under Part II of 7th Schedule. Levy of life time tax for the above vehicles as stipulated under Sections 4 and 7 of the Amended Act, are challenged as ultravires in these writ petitions. All the writ petitioners are old tourist motor cab operators and levy of life time tax for their vehicles falls under Part II of 7th Schedule alone. They are not concerned with the levy of life time tax to new tourist motor cab/new tourist maxi cab vehicle; but, still they have chosen to challenge those provisions.
9. According to the writ petitioners, in respect of new motor vehicles, falling under Part I of 3rd Schedule (own vehicles), tax at the rate of 10% is levied at the time of registration and so far as old motor vehicles/own vehicles are concerned, rate of tax is prescribed on the basis of the age of the vehicle, which starts from 8.75% of the cost of the vehicle and tapers down to 6% of the cost of the vehicle, if the vehicle is more than 11 years old, and while so, treating the old tourist motor cab vehicle falling under Part II of 7th Schedule, differently and levying tax at the flat rate of 8.5% or 14.5% of the cost of the vehicle are arbitrary, illegal and discriminatory. A distinction is made in the Motor Vehicles Act, 1988, between the own vehicles and tourist vehicles, by insisting a permit to be granted for tourist vehicles under Section 74 read with Section 81 of the Act for a period of five years and renewal thereof, stipulating certain permit conditions. Hence own vehicles and tourist vehicles are different and cannot be treated similarly. Further, in respect of own vehicles, conversion to lifetime tax was made compulsory for all vehicles registered after 1.7.1998, and graded system of taxation for the old vehicles depending on its age, was introduced. Only now, by virtue of Amending Act 13/2012, levy of life time tax is introduced to new as well as old tourist motor cab vehicles. Still, it is not compulsory to old tourist motor cab vehicles to shift to life time tax when the permit is in currency. Only when the permit expires, levy of life time tax comes to play. Even at this juncture, a distinction has been maintained between new tourist motor cab vehicles and old vehicles by giving old vehicles reduced life time tax of 8.5% as compared to 10% for new vehicles. Insofar as old tourist motor cab vehicles are concerned, an option to pay life time tax during the currency of the permit, in four equal annual instalments, is also provided. In fact, after the payment of the life time tax for the old tourist motor cab vehicles, there is no need to further pay tax in the event of its conversion to own vehicle or its sale.
10. Learned Advocate General produced a chart containing permit particulars of the vehicles, owned by all the writ petitioners. It reveals that the permits of only two of the writ petitioners in W.P.No.15267/2012 and W.P.No.25743/2012, have expired on 10.7.2012 and 22.8.2012 respectively. Insofar as the tourist permits of the vehicles belonging to the other 18 writ petitioners, are concerned, 3 permits would expire in the year 2013; 1 permit in the year 2014; 6 permits in the year 2015; 5 permits in the year 2016 and 3 permits in the year 2017. Hence, as of now, there is no compulsion for conversion to life time tax in respect of those motor vehicles, whose permits are in currency. However, it is only an option to pay life time tax at will, as of now. It is also relevant to point out that the writ petitioners have not questioned the levy of life time tax for old tourist motor cab vehicles, but only plead that instead of flat rate of 8.5 % of the cost of the vehicle, diminishing rates with reference to the age of the vehicle, should have been fixed as in the case of own vehicles. The own vehicle is meant for personal use; but, the tourist vehicle is used for commercial purpose and hence, it is not correct to compare them and seek for similar terms in the levy of life time tax.
11. It is the further contention of the writ petitioners that there is no rational or nexus to treat existing registered tourist vehicles differently for the purpose of levy of life time tax without reference to the age of the vehicle or the tax that has already been suffered by such vehicles. Taxes are levied for the usage of public roads by the vehicles and levy of such tax is compensatory in nature. Till now, the existing tourist vehicles have been taxed on a quarterly basis for the use of commercial purpose and according to the State, the Amending Act has the twin objectives of streamlining and simplifying the taxation structure. The age of the vehicle and its depreciation is a function of time and maintenance, whereas the levy of life time tax is based on time, use and maintenance of roads. In fact, Their Lordships of the Supreme Court, while considering the question as to the introduction of the concept of "value" as the basis of life tax in the decision in STATE OF TAMIL NADU V. M.KRISHNAPPAN AND ANOTHER (2005 (2) CTC 290), have observed thus:
"15.It is well to remember that the State maintains old roads and makes new ones. These roads are at the disposal of those who use motor vehicles either for private purpose or for trade or commerce. India is a cost-push economy. It has high rate of inflation. The costs of maintenance as well as the costs of material used in the maintenance of the roads increases by the day. This naturally costs the State, which has to find funds for making new roads and for maintenance of those that are in existence. The impugned tax is regulatory and compensatory in nature in the sense that it is imposed to meet the increasing costs of maintenance and upkeep and to that extent it is not plenary. However, as stated above, the limited question is : whether the tax ceases to be compensatory and regulatory with the introduction of "weight-cum-value" index and whether the said index is contrary to the scheme of the said 1974 Act.
16.At the outset, it may be noted that depreciation is a function of time and maintenance. In the present case, we are concerned with the "life time tax" which is one time payment spread over the economic life of the vehicle. The said tax is based on time, use and maintenance of the roads. As stated in the judgment of this Court in Bombay Tyre (supra), any standard, which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy....... When the Constitution provides a field of legislation, it has to be read in the broadest possible terms. When the State is empowered to levy taxes on goods, it is empowered to levy such taxes on every aspect of such goods. Similarly, when the State is empowered to levy tax on the vehicle, it is empowered to levy tax on every aspect of the vehicle......
.....
19.In the present case, we are satisfied that the levy in question being one time tax continues to be a part of regulatory measure. For administrative reasons, in the matter of collection of tax, one time payment of tax is administratively convenient and at the same time, it is also beneficial to the users of the vehicles who do not have to go to the office of the RTO every year to pay the annual taxes. It is also beneficial to the users of the motor vehicles, as they do not have to pay taxes at the increased rates from time to time over the economic life of vehicle as contemplated by Section 3(2) of the Act......
20.In the circumstances, we reiterate that introduction of "weight-cum-value" index will not make the levy non-regulatory/non-compensatory. Further, under the unamended 1974 Act, weight was the basis of the impugned levy as an annual tax. But with the introduction of a "life time tax", the entire future projection spread over the economic life of the vehicle had to be taken into account along with other factors like fall in the value of the rupee, inflation, rising costs of the material, cross subsidy, etc., and consequently, it was necessary to introduce the new index of "weight-cum-value" and factors like paying capacity of the owner. In our view, these factors have nexus with the use of the roads over a period of time and hence, the impugned levy fell within Entry 57 List-II of the Seventh Schedule to the Constitution."
12. The fourth respondent State in its counter, has stated that levy of motor vehicle tax is compensatory in nature for the road usage and the rate of tax has been reasonably fixed at 8.5% of the cost of the vehicle taking into account all factors like rise in fuel cost, cost of maintenance of vehicle, road usage, hire charges collected by the tourist operators, and their average earning and therefore, it cannot be said to be high.
13. In our view also, the factors referred above, have nexus with the use of the roads over a period of time and the levy of lifetime tax at the flat rate of 8.5% of the cost of the vehicle irrespective of its age, cannot be said to be irrational.
14. Yet another contention was raised by the writ petitioners that levy of tax on the cost of the vehicle by including tax already suffered by the vehicle at the time of purchase, is arbitrary. This contention is also devoid of merit. Levy of life time tax has been in vogue in Tamil Nadu from the year 1998 onwards, and the explanation to 3rd Schedule of the Act provides that cost of the vehicle means the cost of the vehicle at the time of purchase determined in the manner as prescribed. As per Clause (aa) of Rule 2 of the Tamil Nadu Motor Vehicles Taxation Rules, 1974, the cost of the vehicle means the total price paid at the time of purchase, as ascertained from the authorised dealer or manufacturer as the case may be. The explanation as to the cost of the vehicle provided under the 7th Schedule, is the same as that of the explanation to the 3rd Schedule stated supra. In other words, it has been clarified that cost of the vehicle includes all taxes and duties paid at the time of taking delivery of the vehicle. Therefore, the cost of the vehicle will be inclusive of the value added tax or any other taxes or duties paid by the registered owner. Thus, the said levy of tax on the cost of the vehicle was in vogue from the year 1998 onwards and the same has been upheld by the Supreme Court in its decision referred to above.
15. In the course of his submissions, learned Counsel for the writ petitioners contended that as per the new amendment, there is an increase of more than 2.24 times of the previous tax payable by vehicles permitted to carry more than 4 persons and not more than 6 persons and the said increase in the rate of tax is in violation of Section 3(2) of the Tamil Nadu Motor Vehicles Taxation Act, 1974. This contention is also liable for rejection for the reason that under Section 3(2) of the Act, the Government is empowered by a notification, to increase the rate of tax specified in the Schedules, from time to time, provided such increase, at a given time, shall not in the aggregate, exceed 50% of the rate specified in the respective Schedule, as the case may be. The said provision is applicable only to the notification issued by the Government to increase the rate of tax specified in the Schedule. In the present case, the Government has passed the Amending Act 13/2012 adding three new Schedules to the Act, which provide for levy of life time tax to certain categories of vehicles and hence Sub-section (2) to Section 3 of the Act is not applicable.
16. The last contention of the writ petitioners is that tourist motor cab vehicles and tourist maxi cab vehicles, which require separate permit, cannot be equated to own vehicle and payment of life time tax cannot be insisted and it amounts to treating different class of vehicles as one class and hence it is violative of Article 14 of the Constitution of India and further, the levy of life time tax compulsorily in respect of a tourist motor cab vehicle under Part II of 7th Schedule and compelling payment of quarterly tax in respect of old maxi cab vehicles under Part II of 8th Schedule, is arbitrary and discriminatory. The vehicles of the writ petitioners are old tourist motor cab vehicles, which are covered by Part II of 7th Schedule. Tourist maxi cab vehicles are covered under 8th Schedule. Even as per the pre-revised Taxation Schedule, there was difference in tax pattern between the tourist motor cab vehicles and tourist maxi cab vehicles based on the categorisation of the vehicles. Therefore, there shall be a difference in tax pattern between these two categories, existing always. As stated earlier, there can be no comparison of a tourist vehicle with the own vehicle. Life time tax is not levied for old tourist maxi cab vehicles; but, quarterly tax alone is levied as per Part II of 8th Schedule.
17. A contention was raised before the Supreme Court while challenging the Amendment Act 27/98 introducing life time tax on motor vehicles, in the case referred to supra, that there is violation of Article 14 of the Constitution by imposing higher tax on vehicles owned by "others" vis-a-vis the vehicles owned by "individuals" in Part I of the Third Schedule and the said contention was repelled by Their Lordships in the following terms.
"24.There is no merit in the contention advanced on behalf of the respondent herein that there is violation of Article 14 of the Constitution by imposing higher burden of tax on vehicles owned by "others" vis-a-vis the vehicles owned by the "individuals" in Part-I of the Third Schedule. We do not find merit in this argument. Firstly, as held by this Court in the case of Bombay Tyre (supra), levy is a constitutional concept, whereas collection of a tax as well as incidence of tax comes within the statutory measure. The mode of collection or the incidence of tax cannot be the conclusive test to decide the nature of the levy. The nature of the levy is a concept different from the mode of collection of tax. Levy is a constitutional concept whereas mode of collection of tax is a statutory concept. They stand on different footings. Secondly, it is important to remember the words of Lord Wilberforce, quoted with approval by House of Lords in the case of Barclays Mercantile Business Finance Ltd. v. Mawson (Inspector of Taxes), 2005 (1) All ER 97 stating that "a tax is generally imposed by reference to economic activities or transactions which exist in the real world". When an economic activity is to be valued, it is open to the law maker to take into account various factors including the paying capacity of the user, the value of the vehicle, the economic life of the vehicle, etc. Lastly, in the present case, for the vehicles registered before 1.7.1998 the option between annual and one time tax is retained.
25.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, 1999 (3) KLT 147 [to which one of us, Dr. AR. Lakshmanan, J., was a party], which state as under:
"A taxing statute can be held to contravene Art. 14 of the Constitution only if it purports to impose on the same class of property similarly situated an incidence 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 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."
26.For the aforestated reasons, there is no violation of Article 14 of the Constitution. As stated above, the impugned levy of life time tax is based on rational and reasonable classification founded on an intelligible differentia having a rational relation to the object of the impugned levy."
18. Article 14 forbids class legislation and not reasonable classification and in order to pass the test of reasonable classification, the classification must be founded on an intelligible difference, which distinguishes persons or class of persons that are grouped together from the others left out of that group and that such differentia must have a rational relation to the object sought to be achieved by the statute in question. In the light of the above discussion, we do not find the impugned levy to be discriminatory, arbitrary or unreasonable so as to violate Article 14 of the Constitution.
19.In the result, we uphold the validity of Sections 4 and 7 of the Tamil Nadu Motor Vehicles Taxation (Amendment) Act, 2012, (Act 13 of 2012), insofar as it relates to insistence of life time tax for transport vehicles covered under Part I and Part II of 7th Schedule and Part I of 8th Schedule, and consequently, all the writ petitions are dismissed. No costs. The connected MPs are also dismissed.
Index: Yes / No Internet: Yes / No (C.N., J.) (M.S.N., J.) 30.10.2012 pb/nsv To 1. Government of Tamilnadu rep by Secretary Transport Department Fort St. George, Chennai 9. 2. The Transport Commissioner O/o. the Transport Commissioner Govt. of Tamilnadu Chepauk, Chennai 5. 3. The Regional Transport Authority, Meenambakkam, New Bazar Street, Alandur, Chennai 16. 4. Government of Tamilnadu rep by Secretary, Home Department Fort St. George, Chennai 9. 5. Government of Tamilnadu rep by Secretary, Law Department Fort St. George, Chennai 9. 6. The Regional Transport Authority Chennai (West) No.1, Bharathidasan Colony, Mambalam Taluk Office Complex, K.K.Nagar, Chennai 78. 7. The Regional Transport Authority Chennai (West) Thiruvalluvar Nagar East Coast Road, Thiruvanmiyur, Chennai 41. 8. The Regional Transport Authority Redhills (Unit Office at Ambattur) 4/87, Sri Samundeeswari Complex Bye-Pass Road, Redhills, Chennai 52. 9. The Regional Transport Authority Chennai (South West) Nos.47 & 49, Kaliamman Koil Street, Sai Nagar, Virugambakkam, Chennai 92. 10. The Regional Transport Authority Chennai (Central), Chennai 23. C.NAGAPPAN, J. and M.SATHYANARAYANAN,J. pb/nsv Pre-Delivery Order in W.P.Nos.15267, 16933 to 16941, 17002 to 17006, 17044 to 17047 and 25743 of 2012 30.10.2012