Gujarat High Court
M/S Onshore Construction Company ... vs State Of Gujarat on 27 February, 2020
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Bhargav D. Karia
C/SCA/12847/2019 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12847 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 16510 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
==========================================================
M/S ONSHORE CONSTRUCTION COMPANY PRIVATE LIMITED
Versus
STATE OF GUJARAT
==========================================================
Appearance:
for the Petitioner(s) No. 3
DELETED(20) for the Petitioner(s) No. 2
MR CHINMAY M GANDHI(3979) for the Petitioner(s) No. 1,2,3
MR MB GANDHI(326) for the Petitioner(s) No. 1
MR CHINTAN DAVE,AGP GOVERNMENT PLEADER(1) for the
Respondent(s) No. 1,2
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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C/SCA/12847/2019 JUDGMENT
Date : 27/02/2020
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Since the issues raised in both the captioned writapplications are the same, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Special Civil Application No.12847 of 2019 is treated as the lead matter.
3. By this writapplication under Article 226 of the Constitution of India, the writapplicant through its power of attorney has prayed for the following reliefs: 13[A] Be pleased to issue writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus holding and declaring that the Compounding Fees (CF) is also liable to be refunded with 9% interest.
[B] By an appropriate writ, order or direction, be pleased to hold and declare that the order dated 16.01.2019 is illegal and void and be further pleased to quash and set aside the same.
[C] Pending admission, hearing and/or final disposal of this petition, be pleased to stay the execution, operation and implementation of orders dated 16.01.2019 and be further pleased to direct the respondents more particularly respondent No.2 herein to work out on all the pending applications of the petitioners for refund of CF with 9% interest.
[D] Such other and further orders as this Hon'ble Court may deem just, fit and expedient be passed in favour of the petitioners.
[E] Costs of this petition be provided for to the petitioners.
4. The case of the writapplicant in its own words as pleaded in the Page 2 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT memo of the writapplication is as under: 4.1 The cause for filing the present petition has arisen because, there are different judgments, but, it is unfortunate that RTO is not implementing the same and once it is declared that the Crawler Cranes are not motor vehicles and therefore, any tax and penalty recovered is illegal and cannot be levied, the department is charging not only the tax but penalty and compounding fees are also charged. That several cases in which tax and the penalty have been refunded, but this petition is filed because the Compounding Fees with interest is not refunded. That illegal tax is collected, which is in violation of the provisions of the Constitution of India and hence, this petition.
4.2 So far as the Motor Vehicles Act is concerned, the term "Motor Vehicle" is defined in Section 2(28) of the Motor Vehicles Act. Therefore, such vehicles are required to be compulsorily registered and liable to pay road tax applicable from time to time. That so far as Crawler Crane is concerned, it is predominantly used in the factory premises or as at the mining sites or for laying down the drainages and such Crawler Cranes and such crawler cranes cannot cross any road. Such Crawler Cranes also cannot run on the road but they are carried in big tractors and trailers or big vehicles for transporting from one place to another. Under the circumstance, there were number of petitions filed before this Hon'ble Court and a judgment was delivered in the group of matters by this Hon'ble High Court (Coram: Akil Kureshi and Sonia G. Gokani,JJ) on 15.07.2011. In this judgment, various Crawler Cranes for which different conclusions have been arrived at. But, so far as the present petition is concerned, it is only confined to the Crawler Cranes which are not falling within the definition of Motor Vehicles and so far as this category is concerned, the order was Page 3 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT passed that collection of tax is illegal. Therefore, in the conclusion, the Hon'ble Court had passed an order that the tax and penalty be refunded together with interest @ 9%. The said judgment will be referred to in case of need.
4.3 It is further submitted that thereafter, one another litigation had also taken place whereby the appeal was filed before the authority for seeking direction for payment of interest @ 9% on the refund amount pursuant to the orders of the Transport Commissioner of Gujarat dated 26.12.2013, wherein it was held that the vehicle of the said petitioner was not a motor vehicle and hence, not liable to tax under the Motor Vehicles Act and therefore, an order was passed for refund of the amount of duty and penalty. However, interest was not demanded and therefore, it was not paid and therefore, that order was challenged and relying upon the judgment of the Division Bench of this Hon'ble Court referred to herein above, namely, SCA No.4441/2004, though he was not a party to the previous petition, this Hon'ble Court considered all the aspects and recording reasons, passed an order for payment of interest quashing the order of the Transport Commissioner.
4.4 So far as the present petition is concerned, it is confined to payment of Compounding Fees (CF) with interest. It is submitted that when previous petitions were filed, at that time the RTO authorities were not merely charging tax of the Crawler Cranes coming within the area of State of Gujarat, but, from the date of its manufacture the penalty was imposed. That particular fact is also considered in the judgment rendered in SCA No.4441/2004 and the Hon'ble Court held that only from the date of entry the vehicle tax can be collected and not from the date of its manufacture. This was applicable to other kinds of Crawler Cranes, which are moving on Page 4 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT the road with chain or wheels etc. So far as the present petitioners are concerned, it is with regard to the Crawler Crane, which is not falling within the definition of Motor Vehicles.
4.5 As a result of the various judgments, a representation was made by the present petitioners through their representative and it was stated that the department is bound to pay 9% interest and so far as CF is concerned, for which refund was also sought for with interest @ 9%. It is submitted that by letter dated 22.04.2015 after the judgment in SCA No.10077/2014 was delivered in which the Port and Motor Vehicle Department had written to the Commissioner with regard to refund of interest, penalty and CF with 9% interest.
4.6 It is further submitted that after all the orders were passed, the department had prepared a memo for refund in favour of S.V. Crane Services against the recovery and in that tax, penalty and interest from 1995 was ordered to be refunded, which order includes refund of Rs.2,000/ by way of CF. However, this amount of CF is not refunded with interest because tax and penalty over which interest is calculated and at the bottom amount of Rs.2,000/ is given by way of refund of CF. The case of the present petitioners is confined to payment of CF with 9% interest.
4.7 It is submitted that once the imposition of tax, penalty and interest is proved to be illegal, then, in that case, the amount of CF which is ofcourse refunded, but, that CF is charged upon the tax imposed. That tax is found and proved to be illegal. In that case, all monies calculated are also required to be refunded with 9% interest. In the aforesaid illustration, the department had returned all amount except CF, which is also an illegal recovery over the tax and therefore, it should also bear 9% interest from Page 5 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT the date on which it is illegally collected. In this connection, a representation was made on 24.12.2018 to which a reply was given on 16.01.2019 to the effect that CF is not refundable and reason given is that CF is not tax and therefore, the interest is also denied. It is this letter which is under challenge by way of the present petition.
4.8 The order in question is bad for the reason that when the tax is cancelled or declared illegal, then, all consequential amounts which are collected on the said tax are also required to be refunded. CF is charged as Compounding Fees but that arises only when tax is legally liable. But here in all the cases in which tax is not recoverable nor the vehicle is a motor vehicle not the Crawler Crane is motor vehicle and therefore, imposition of tax, penalty and interest being found and proved illegal and therefore, no question arises for charging compounding fees. Therefore, that amount which is illegally recovered in connection with the illegal recovery of tax and therefore, CF is also illegal.
4.9 However, this letter is bad for the reason that in the illustration which is given hereinabove and documents which are produced, their CF is refunded, but the interest is not paid. Now, the stand of RTO is that CF is also not payable nor interest is payable, which is illegal and the department once returned, is estopped from denying the payment of CF amount and the interest is also to be paid. Because, when the whole recovery is bad and interest is liable to be paid and when interest is actually paid, then, CF is also one of the illegal recovery and hence, the said amount is required to be refunded with interest @ 9%. However, the Bhavnagar, RTO is refusing to refund CF and the interest. It is unfortunate that highest corruption is in this department and it is difficult to get the refund unless and until some petitions are filed as all illegalities are Page 6 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT perpetuated. Under these circumstances, since the officers are not prepared to work and do needful in the matter, hence, this petition is filed.
5. Thus, it is the case of the writapplicant that a Coordinate Bench of this Court in the case of Reliance Industries Limited Vs. State of Gujarat; Special Civil Application No.11848 of 2005 and allied petitions; decided on 15th July 2011 has taken the view that the Crawler Cranes marked in "C" category cannot be treated as motor vehicles and such cranes need not be registered with the RTO.
6. The writapplicant seeks to rely on the following observations made by the Coordinate Bench.
"38. Crawler cranes marked in "C' category.
Looking to the dimensions of these vehicles, their maximum height, weight, the fact that they cannot be moved easily and freely on the road, we are of the opinion that further inquiry and investigation is necessary before deciding whether they can be treated as motor vehicles.
39. We may recall that in the order passed by the Revisional Authority, which is impugned in Special Civil Application No.11848 of 2005, heavy reliance was placed placed on the report of the LD Engineering College. The report and the approach, both require much to be desired. The report suggest that some vehicle was inspected while lying on the road side. On the basis of such inspection, if it can be so called, report was submitted which was made to include all vehicles. In a matter of this nature where great details and technical requirements would have to be gone into, all vehicles cannot be treated identically. We are of the opinion that each vehicle or at least category of each vehicle shall have to be inspected individually by the RTO Authorities before coming to the conclusion that the vehicle in question can be said to be adapted for use on road bearing in mind the observations made hereinabove. We may also note that in the report, the main thrust was that the vehicles were construction equipment vehicles. Only on that ground, they were treated as motor vehicles. In our view, real inquiry would be whether a vehicle is adapted for use on road and even if so, whether it is a special type of vehicle adapted only for use in factory or in any other enclosed premises. On the basis of findings on these issues, answer whether the vehicle is a motor vehicle or not can Page 7 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT be had. We may notice that in the report, finding that the vehicle was chain mounted, it was observed:
"When it has to travel on public roads, it must be equipped with rubber pads on the crawlers, so that the road may not be damaged by the crawlers. The rubber pads should be provided by the manufacturers; same may please be ensured from manufactures."
To our mind the whole approach is erroneous. Without verifying if rubber pads can be provided, above suggestion was made. The manufacturers almost ridiculed the suggestions saying that they have never received such a request. In any case, idea is to ascertain if the vehicle in its present condition can be said to be a motor vehicle and not if it can be turned into one by making modifications and then taxing it.
40. So far as the above mentioned vehicles are concerned, it would be open for the RTO Authorities to inspect the vehicles and thereafter take a view whether such vehicles can be stated to be motor vehicle or not. To avoid multiplicity of proceedings, we place this issue before the Revisional Authority who shall have the vehicles inspected through technical experts comprising of Engineers of the Department and after supplying the report of such experts to the concerned petitioners and eliciting their response, final view shall be taken. Such order shall be passed not later than six months from the date of receipt of copy of this order. It is provided that the tax liability of the petitioners involved in these category of cases, including past liability shall depend on final outcome of such exercise. Until such time a fresh decision is rendered by the Deputy Secretary, there shall be status quo with respect to tax collection. In other words, tax if already collected shall not be refunded but from today onwards, there shall not be any further collection of tax till the fresh decision is taken. Once such decision is rendered, either for collection of unpaid tax or refund of tax already collected, the amount shall carry 9% interest as provided in other cases. If for some reasons, under the interim directions of this Court, the concerned vehicle has left the State and the vehicle of similar model is not made available by the petitioner for inspection to the Authorities, it would be open for the Authorities to call for full details of the vehicles, such as, make, use, and other specifications including, dimensions, weight, height, width, capacity, etc. and such other information as may be required. On the basis of such information, the Authorities will take appropriate decision bearing in mind the observations made in this order."
7. It appears that at the relevant point of time, action was taken Page 8 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT against the writapplicant for plying the Crawler Cranes of a specified category without getting them registered with the RTO authorities. The action was taken on the premise that using a motor vehicle without registration is an offence punishable under Section192 of the Motor Vehicles Act, 1988. It appears that such offence was compounded on payment of the Compounding Fees by the writapplicant as provided under Section200 of the Act, 1988.
8. After the decision of this Court, in the case of Reliance Industries [Supra] referred to above, the tax which was recovered from the writ applicant came to be refunded with 9% interest. This fact is not in dispute. The only dispute now remains is with regard to the refund of the compounding fees recovered by the officers under the provisions of Section200 of the Act, 1988.
9. Mr. Gandhi, the learned senior counsel appearing for the writ applicant would submit that as the tax which was illegally recovered has been refunded with 9% interest. The compounding fees recovered from his clients at the relevant point of time should also be refunded with 9% interest as it cannot be said that at the time of compounding the writ applicants had committed any offence punishable under Section192 of the Act, 1988.
10. In such circumstances referred to above, Mr. Gandhi, the learned senior counsel prays that there being merit in his writapplications, those be allowed and an appropriate writ be issued to the authority concerned for refund of the compounding fees with 9% interest.
11. On the otherhand, both the writapplications have been vehemently opposed by Mr. Chintan Dave, the learned AGP appearing Page 9 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT for the State respondents. Mr. Dave would submit that the compounding fees were recovered at the relevant point of time when the decision of this Court was not in force. In other words, according to the learned AGP, at the relevant point of time, it was believed by the State respondents in good faith that Crawler Cranes would fall within the ambit of motor vehicles and plying such crawler cranes without getting them registered with the RTO would constitute an offence under Section192 of the Act, 1988. According to the learned AGP, at the relevant point of time, the authorities had reason to believe that the writapplicants were guilty of the offence punishable under Section192 of the Act, 1988 and therefore, as a special priviledge an option was given to the writapplicants to compound the offence on payment of the requisite compounding fees. The learned AGP would argue that having availed the benefit of the provisions of Section200 of the Act, the writ applicants cannot now turnaround contend that the fees were wrongly or illegally recovered.
12. The learned AGP has also raised an issue with regard to the maintainability of these writapplications. It is argued that this Court in exercise of its extra ordinary jurisdiction under Article226 of the Constitution of India cannot issue a writ of mandamus to the State to refund the compounding fees. In other words, the submission of the learned AGP is that the proper remedy available with the writapplicants is to file a suit in a Competent Court for refund of the compounding fees alleged to have been illegally collected.
13. The learned AGP seeks to rely on the following averments made in the affidavitinreply filed on behalf of the respondent no.2.
"6. I say and submit that by way of this petition, the petitioner Page 10 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT herein has sought a writ of mandamus or a writ of certiorari and or any other appropriate writ, order or direction in the nature of mandamus holding and declaring that the compounding fees are liable to be refunded with 9% interest. The petitioner has further prayed for an appropriate writ, order or direction to hold and declare the order dated 16.01.2019 as illegal, void and hence, prayed for quashing and setting aside the order dated 16.01.2019.
7. I say and submit that, these petitions have been preferred through power of attorney holder namely Metaliya Balvanbhai Haribhai and not through the owners of the Crawler Cranes. The petitioner herein is merely a power of attorney and he has sought such power of attorney from the owners of the Crawler Cranes to prefer this petition. It is pertinent to note that there is no proof of payment of compounding fees by M/s. ONSHIRE Construction Company Private Limited who gave the power of attorney to Mr. Metaliya. Petitioner has annexed documents at Page No.22 to 23D of the petition, which are related to Shree S.V. Crane Service and not to related to petitioner. It is stated that that contentions raised in para7 to the petition are also pertains to S.V. Crane Service which is not the party to this petition. It is further required to be noted that the said petitions have been filed seeking refund of compounding fees which were paid at the relevant point of time due to the fact that the vehicle in question were not registered under Section 39 of the Motor Vehicles Act, 1988. Hence, the petitioner committed an offence under Section 29 read with section 192 of the Motor Vehicles Act, 1988 at that point of time.
8. I say and submit that, the petitioner herein sought to get the said offence compounded way back in 2005, and not compounded by him. The respective vehicle owner had resorted to the provision of section 200 of the Motor Vehicles Act, 1988 voluntary and paid the compounding fees. The provision of section 192 of the Motor Vehicles Act, 1988 prevailing at that point of time specifically mentions herein below: "Whoever drives the Motor Vehicle or causes or allows motor vehicle to be used in contravention of provision of section 39 shall be punishable for the first offence with a fine which may extent to 5000 Rs. But not be less than 2000 Rs. for a second offence or a subsequent offence......."
9. I say and submit that, if the Hon'ble Court may kindly consider section 192 of the Motor Vehicle Act, 1988, the said section has its applicability not only in cases where, motor vehicles are driven but also in cases where, they are used to in contravention of the provision of section 39.
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10. It is submitted that, the very provision namely section 192 of the Motor Vehicles Act, 1988 also mentions that a motor vehicle which is used in contravention of the provision of section 39, shall be punished for the first offence with fine which may extend to Rs.5000/ but shall not be less than Rs.2000/. In the present case, as per the say of petitioner, the said vehicle need not necessarily be required to ply on the road. If the said provision is considered even then non registering of such vehicle would amount to breach of provision of section 39 read with section 192 of the Motor Vehicles Act, 1988. The respective vehicle owner voluntarily, in the year 2005 decided to compound the said offence under section 200 of the Act of 1988 and has paid the compounding fees. Section would give guidance to the State Government as a delegate under the state to specify the amount for compounding the offences enumerated under subsec.(1) of Section
200. It is not mandatory that the authorized officer would always compound that offence. It is conditional upon the willingness of the accused to have the offences compounded. It is conditional upon the willingness of the accused to have the offences compounded. It may also be done before the institution of the prosecution case. In the event of the petitioner's willing to have the offence compounded, the authorized officer gets jurisdiction and authority to compound the offence and call upon the accused to pay the same. On compliance thereof, the proceedings, if already instituted, would be closed or no further proceedings shall be initiated. It is matter of volition or willingness on the part of the accused either to accept compounding of the offence or to face the prosecution in the appropriated court. (1996
(o)AIJELSC 20443).
11. I say and submit that, by way of this petition, the petitioner is seeking a writ of mandamus whereby, the respondent authorities be directed to refund the amount of compounding fees. But under the Bombay Motor Vehicle Tax Act, 1958 Section9 pertains to refund of tax. This is the only provision empowering the authority to grant refund and it is respectfully stated that there is no provision authorized the respondent authorities to grant refund of compounding fees for the simple reason that compounding fees is to be charged with respect to commission of offence in lieu of any prosecution. Now, at this stage, a question could be posed that if vehicle owner choosed to proceed against prosecution at relevant point of time, then in that case, whether he is entitled to argue to waive the prosecution?
12. I say and submit that, the said petitions have been preferred after a long span of approximately 14 years after the respective vehicle owner accepted the offence to be compounded in the year 2005. Even after this Hon'ble Court passed the judgment in the case of Crawler Cranes directing, whereby Court has directed the respondents to refund the amount of tax not considering some Crawler Cranes as Page 12 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT Motor Vehicle even then the petitioner herein has approached this Hon'ble Court after a period of approximately 4.5 years. It is respectfully stated that the petitioner is power of attorney holder of many owners of Crawler Crane and on behalf of that owners, he works in offices of Regional Transport Offices. Hence, in fact, the petitioner does not possess any locus to file his application seeking refund of compounding fees."
14. In such circumstances referred to above, the learned AGP prays that there is no merit in the writapplications, those be rejected.
ANALYSIS:
15. Having heard the learned counsel appearing for the parties and having gone through the materials on record, two questions fall for our consideration.
[1] Whether this Court in exercise of its powers under Article 226 of the Constitution of India can issue a writ of mandamus to the State to refund the compounding fees alleged to have been illegally recovered at the relevant point of time under Section200 of the Act, 1988?
[2] Whether the writapplicants have made out any case to seek refund of the compounding fees recovered at the relevant point of time under Section200 of the Act, 1988?
16. We shall answer the first question with regard to the maintainability of the two writapplications.
17. The writapplications have been preferred with the prayer for issue of a writ of mandamus to the respondent authority to refund the money realized from the writapplicants in the form of compounding fees and therefore, the reliefs sought in the writapplications is in the Page 13 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT nature of a claim for money.
18. The aforesaid question was considered by the Supreme Court in the case of HMM Limited Vs. Administrator Bangalore City Corporation, (1989) 4 SCC 640 : (AIR 1990 SC 47), where the Apex Court ruled that realization of the tax or money without the authority of law is bad under Article265; the respondentcorporation, which is a statutory authority, has no right to retain the amounts; these are refundable. In that case, the question was whether the octroi could be levied or collected in respect of goods which are not used, consumed or sold within the municipal limits? The Court held that mere physical entry into the city limits would not attract the levy of octroi and putting the Horlicks power from drums to bottles for the purpose of exporting or taking these out of the city is neither use nor consumption of the Horlicks power attracting the levy of octroi. So these amounts become collection without the authority of law. In paragraph 13 of the judgment, the Supreme Court ordered (at page 53 of AIR):
"We, therefore, hold that amounts should be refunded subject to the verification directed by the learned single Judge of the High Court of the amount of refund. The appeal is, thus, allowed. The judgment and the order of the Division Bench of the High Court are, therefore, set aside. In the facts and the circumstances, there will be no order as to costs."
19. A similar view was taken by the Supreme Court in the case of Salonah Tea Company Ltd. etc. Vs. The Superintendent of Taxes, Nowgong, (AIR 1990 SC 772). Therein the Supreme Court ruled that normally in a case where tax or money has been realized without the authority of law, the same should be refunded and in an application under Art. 226 of the Constitution the Court has power to direct the refund unless there has been avoidable laches on the part of the Page 14 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT petitioner which indicate either the abandonment of his claims or which is of such nature for which there is no probable explanation or which will cause any injury either to respondent or any third party; it is true that in some cases the period of three years is normally taken as a period beyond which the Court should not grant relief but that is not an inflexible rule. It depends upon the facts of each case. In that case a Division Bench of the High Court of Gauhati in Assam passed a judgment setting aside the order and notices of demand but refused relief of refund claimed by the appellants. Aggrieved thereby, the appellants preferred the appeals before the Supreme Court with the prayer that directions be given to the respondents to refund the tax collected in pursuance of the illegal assessment orders. The Supreme Court, on consideration of the matter, allowed the appeals, set aside the judgment and order of the High Court to the extent that it refused refund of the tax illegally realized by the respondents.
20. The Supreme Court in the case of Suganmal v. State of Madhya Pradesh, AIR 1965 SC 1740 in which a Constitution Bench considered the question of refund of tax and held that though the High Courts have power to pass any appropriate order in the exercise of the powers conferred on them under Art. 226 of the Constitution, a petition solely praying for the issue of a writ of mandamus directing the State to refund the money alleged to have been illegally collected by the State as tax is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as a tax and in such a suit it is open to the State to raise all possible defences to the claim, defences which cannot, in most cases, be appropriately raised and considered in the exercise of writ jurisdiction. While discussing the question, the Court made the following observation (at page 1742) :
Page 15 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020C/SCA/12847/2019 JUDGMENT "We have been referred to cases in which orders had been issued directing the State to refund taxes illegally collected, but all such cases had been those in which the petitions challenged the validity of the assessment and for consequential relief for the return of the tax illegally collected. We have not been referred to any case in which the Court were moved by petition under Art. 226 simply for the purpose of obtaining refund of money due from the State on account of its having made illegal exactions. We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realised, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought."
21. In the case of M/s Shree Baidyanath Ayurved Bhawan Pvt. Ltd. Vs. State of Bihar, 1996 (8) JT (SC) 177 : (AIR 1996 SC 2829), a Division Bench of the Supreme Court considered the previous decision in Salonah Tea Company Ltd. v. Superintendent of Taxes Nowgaon (supra) and Suganma v. State of Madhya Pradesh (supra) and held that the writ petition was not a run of the mill case; it was a case where the respondentState had not acted as this Court has expected a high constitutional authority to act, in furtherance of the order of this Court; that is something that this Court cannot accept; the respondentState was obliged by this Court's order to refund to the writ petitioners, including the appellants, the amounts collected from them in the form of the levy that was held to be illegal; if there was a good reason in law for rejecting the refund claim, it should have been stated; not to have responded to the appellants refund claim for 11 years and then to have turned it down without reason is to have acted disrespectfully to this Court. The Court further observed that even assuming, therefore, that this was a writ petition only for money, the writ petitioners fell outside the ordinary stream of writ petitioners, and, acting upon it, the High Court should have ordered the refund. The Supreme Court allowed the appeal, set aside the judgment of the Patna High Court, also allowed the writ petitions filed by the appellants, quashed the order of the State Page 16 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT Government refusing refund and ordered the respondent State to pay the appellants a sum of Rs.90,723/ with interest thereon at the rate of 12% per annum.
22. A Full Bench of the Bombay High Court speaking Chittosh Mookerjee, C.J. in the case of New Industries Ltd. and Another Vs. Union of India and Another reported in AIR 1990 Bombay 239 observed thus: "15. It is equally settled law that an application under Art. 226 of the Constitution would lie for enforcing the obligation of the State to refund and/or return the moneycollected towards an illegal tax or duty. Ever since the decision in the case of Sales Tax Officer v. Kanhaiya Lal, AIR 1959 SC 135, it has been consistently held that payment towards tax or duty which is without authority of law is a payment made under mistake within the meaning of S.72 of the Indian Contract Act. Section 72 is based on equitable principles. Therefore, by claiming to retain the tax which has been collected without the authority of law, the Government cannot enrich itself and it is liable to make restitution to the person who had made payment under mistake or under coercion vide (1) Patel India (Pvt.) Ltd. v. Union of India, AIR 1973 SC 1300 (at p.1304), paras 15 to 18; (2) D. Cawasji and Co. v. State of Mysore, AIR 1975 SC 813 (supra): (3) Shri Vallabh Glass Works Ltd. v. Union of India, AIR 1984 SC 971; (4) Commissioner v. Auriaya Chamber, 1986 (25) ELT 867 (at p.872) : (AIR 1986 SC 1556 at p.1559) (arising out of departmental proceedings for refund of sales tax), paras 11 to 17, 28 and 31; (5) Salonath Tea Co. v. Supdt. of Taxes, 1988 (33) ELT 249: (AIR 1990 SC 772) (Paras 46 to 51 and 55); (6) Ayurveda Pharmacy v. State of Tamil Nadu, AIR 1989 SC 1230 (para 48), etc..
16. Another basic proposition which is beyond controversy is that the Court's jurisdiction under Art. 226 of the Constitution is discretionary. The powers under Art. 226 cannot be taken away or curtailed by legislation short of amendment of the Constitution (vide In re The Kerala Education Bill, 1957, AIR 1958 SC 956. But the Writ Court does not act arbitrarily and guides itself according to certain well settled principles for doing justice. Therefore, the Court's powers under Art. 226 are subject to certain selfimposed limitations. This aspect of the summary nature of the Court's writ jurisdiction to order refund of tax has been indicated in many of the reported decisions upon which Mr. Hidayatullah, the learned Counsel for the petitioners, relied in Page 17 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT support of his submission that the Government has a binding obligation to refund tax or duty collected without the authority of law [vide Sales Tax Officer v. Kanhaiya Lal (supra); State of Madhya Pradesh v. Khoda Bhai,AIR 1964 SC 1006; Tilokchand Motichand v. H. B. Munshi, AIT 1970 SC 898 and D. Cawasji and Co. v. State of Mysore, (AIR 1975 SC 813 (at p.814) (supra)]. Even if the Court finds that the assessment was void, it is still not bound to exercise its discretion directing repayment. The exercise of discretion would depend on its own facts and circumstances and it is not easy nor is it desirable to lay down a general rule [vide observations of Das Gupta, J. in State of Madhya Pradesh v. Khola Bhai (supra) which was referred to by Mathew, J. in D. Cawasji and Co.'s case (supra)]. Thus, the conduct of the petitioner who seeks refund in a writ application is certainly relevant. In some of the reported cases, on ground of unreasonable delay, acquiescence and gross laches on the part of the petitioner, the Writ Court had refused to grant refunds of tax collected without lawful authority. Again, the petitioner who seeks personal redress under Art. 226 of the Constitution must, inter alia, prove that he had suffered injury or wrong."
23. The language of Article 226 of the Constitution is advisedly wide and confers ample power on the High Court to afford complete relief to a party which has made out a case for exercise of the writ jurisdiction. Apart from issuing writs in the nature of habeas corpus, prohibition, quo warranto and certiorari, it also confers a power of issuing suitable directions or order to any person or authority. When it comes to issuing a direction, the remedy is not confined to be exercised against an authority. It can with equal force be issued against a person. The law is now settled by the pronouncements of the Supreme Court that the jurisdiction of the High Court under Article 226 of the Constitution is not to be narrowly construed by equating it with the jurisdiction of the English courts to issue prerogative writs. The power of the High Court under Article 226 to issue directions or orders was explained by the Supreme Court in Dwarka Nath v. I. T. Officer, AIR 1966 SC 81. It was observed (at pp 84, 85 of AIR).
"This article is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it Page 18 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT is found. The Constitution designedly used a wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be exercised. It can issue writs in the nature of prerogative writs as understood in England, but the scope of those writs also is widened by the use of the expression "nature", for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them. That apart, High Courts can also issue directions, orders or writs other than the prerogative writs. It enables the High Courts to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of "Government to a vast country like India functioning under a federal structure. Such a construction defeats the purpose of the article itself."
24. Sometimes in order to give adequate relief to an aggrieved petitioner it becomes imperative that some kind of consequential relief be also granted. This is precisely the reason why in the language of the Supreme Court the High Courts are entitled to mould the relief to meet the peculiar and complicated requirements" of a case. The question has, for instance, arisen in those matters where orders relating to the assessment of salestax have been challenged. In State of Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006 the facts were that the assessment of tax under the impugned notification had been held invalid by the High Court. A portion of the tax, however, assessed had already been deposited by the petitioners.
25. Apart from Quashing the order by a writ of certiorari, a writ of mandamus was also issued by the High Court commanding the State of Madhya Pradesh to refund the amount illegally collected. The order directing the refund of tax was upheld by the Supreme Court and Das Gupta, J. observed : (at p. 1011 of AIR).
Page 19 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020C/SCA/12847/2019 JUDGMENT "We see no reason to think that the High Courts have not got this power. If a right has been infringed whether a fundamental right or a statutory right and the aggrieved party comes to the Court for enforcement of the right it will not be giving complete relief if the Court merely declares the existence of such right or the fact that that existing right has been infringed. Where there has been only a threat to infringe the right, an order commanding the Government or other statutory authority not to take the action contemplated would be sufficient. It has been held by this Court that where there has been a threat only and the right has not been actually infringed an application under Article 226 would lie and the courts would give necessary relief by making an order in the nature of injunction. It will hardly be reasonable to say that while the court will grant relief by such command in the nature of an order of injunction where the invasion of a right has been merely threatened the court must still refuse, where the right has been actually invaded, to give the consequential relief and content itself with merely a declaration that the right exists and has been invaded or with merely quashing the illegal order made."
26. From the conspectus of the views expressed in the aforementioned decided cases, the position that emanates is that this Court has the power to issue a writ/ direction to the State - respondents to refund the amount illegally realized from its citizens in the form of tax or fees.
SECOND QUESTION:
27. We shall now proceed to answer the second question whether any case has been made out by the writapplicants for the refund of the compounding fees with 9% interest thereon.
28. Before adverting to the rival submission canvassed on either side, we must look into few relevant provisions of the Act, 1988.
29. The term "Motor Vehicle" or "Vehicle" has been defined under Section2(28) of the Act as under: "(28) "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of Page 20 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding 1[twentyfive cubic centimetres];"
30. Chapter IV of the Act provides for the Registration of Motor Vehicles. Section39 of the Act falling in ChapterIV is with regard to the necessity for registration. Section39 reads thus: "39. Necessity for registration.--No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with this Chapter and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner:
Provided that nothing in this section shall apply to a motor vehicle in possession of a dealer subject to such conditions as may be prescribed by the Central Government."
31. ChapterXIII of the Act provides for the Offences, Penalties and Procedure. Section192 provides that if the vehicle is used without registration, the same would constitute an offence. Section192 reads thus: "1[192. Using vehicle without registration.--(1) Whoever drives a motor vehicle or causes or allows a motor vehicle to be used in contravention of the provisions of section 39 shall be punishable for the first offence with a fine which may extend to five thousand rupees but shall not be less than two thousand rupees for a second or subsequent offence with imprisonment which may extend to one year or with fine which may extend to ten thousand rupees but shall not be less than five thousand rupees or with both:
Provided that the court may, for reasons to be recorded, impose a lesser punishment.
(2) Nothing in this section shall apply to the use of a motor vehicle in Page 21 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT an emergency for the conveyance of persons suffering from sickness or injuries or for the transport of food or materials to relieve distress or of medical supplies for a like purpose:
Provided that the person using the vehicle reports about the same to the Regional Transport Authority within seven days from the date of such use.
(3) The court to which an appeal lies from any conviction in respect of an offence of the nature specified in subsection (1), may set aside or vary any order made by the court below, notwithstanding that no appeal lies against the conviction in connection with which such order was made.]"
32. Section200 provides for the Composition of certain offences. Section192 of the Act referred to above is one of the offences falling within Section200 of the Act. Section200 of the Act reads thus: "200. Composition of certain offences.--(1) Any offence whether committed before or after the commencement of this Act punishable under section 177, section 178, section 179, section 180, section 181, section 182, subsection (1) or subsection (2) of section 183, section 184, section 186, 1[section 189, subsection (2) of section190]; section 191, section 192, section 194, section 196 or section 198 may either before or after the institution of the prosecution, be compounded by such officers or authorities and for such amount as the State Government may, by notification in the Official Gazette, specify in this behalf.
(2) Where an offence has been compounded under subsection (1), the offender, if in custody, shall be discharged and no further proceedings shall be taken against him in respect of such offence."
33. We shall now look into few provisions of the Bombay Motor Vehicles Tax Act, 1958. Section3 is with regard to the levy of tax. Section3 reads thus: "3. Levy of tax.- (1) Subject to the other provisions of this Act, on and from the 1 day of April 1958, there shall be levied and st collected on all motor vehicles used or kept for use in the State, a tax at the rates fixed by the State Government, by notification in the Official Gazette, but not exceeding the maximum rates specified in the Page 22 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT First, Second and Third Schedules:
7[Provided that in case of any motor vehicles (irrespective of whether they are specified 8[in section 3A or the First Schedule] or the Second Schedule 9[or the Forth Schedule or the Sixth Schedule 10[or Eighth Schedule] kept by a dealer in, or manufacturer of such vehicles, for the purpose of trade, there shall be levied and collected annually such amount of tax not exceeding Rs.250 as the State Government may, by notification in the Official Gazette specify on those motor vehicles only which are permitted to be used on the roads in the manner prescribed by rules made under 11[the Motor Vehicles Act, 1988 (59 of 1988)]:
Provided further that, if the State Government, because of disparity in the rates of tax prevailing in certain areas of the State immediately before the commencement of this Act or for any other reason, is of opinion, that the levy and collection of tax on motor vehicles immediately at a uniform rate throughout the State, is likely to cause undue hardship to owners or persons having possession or control of such vehicles in those areas, or to affect adversely trade and commerce or the development of motor transport and other industries in such areas, the State Government may levy and collect the tax on motor vehicles, or any class thereof at different rates in those areas, so however that by increase or decrease of the rate of tax annually in those areas, within a period of three years, a uniform rate of tax is levied throughout the State.
(2) Except during any period for which the Taxation Authority has, in the prescribed manner, certified that a motor vehicle was not used or kept for use in the State, the registered owner, or any person having possession or control, of a motor vehicle of which the certificate or registration is current, shall, for the purposes of this Act, be deemed to use or keep such vehicle for use in the State.1
[(3) No tax shall be leviable under subsection (1) on motor vehicles on which tax is leviable under subsection (1) of Section 3A]."
34. Section9 provides for the refund of tax. Section9 reads thus: "9. Refund of tax. - (1) 1[Where any person who has paid the tax in advance in respect of a motor vehicle specified in the First Schedule, produces a certificate signed by a Taxation Authority stating that the certificate of taxation issued in respect of such vehicle has been surrendered] on the date specified in such certificate (herein referred to as 'the said date"), such person shall, on an application made in that behalf, and subject to such conditions as the State Government Page 23 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT may notify in this behalf in the Official Gazette, be entitled to a refund,
(a) where the tax has been paid in advance at the annual rate, then,
(i) in respect of a quarter or quarters which have not commenced before the said date, of a sum equal to the difference between the sum paid at the annual rate and the sum which would have been payable at the quarterly rate, for every quarter which has expired before the said date as also for the quarter in which 2 [the certificate of taxation is surrendered], and
(ii) in respect of any unexpired portion of a quarter, in accordance with the provisions of clause (b) of this subsection as if he had paid the tax for that quarter at the quarterly rate;
(b) where the tax has been paid in advance at the quarterly rate, then for each calendar month in the period for which the tax has been paid and which has not commenced on the said date, of a sum equal to onetwelfth of the annual rate of tax leviable in respect of such vehicle.
(2) Where any person has paid the tax in advance 1[in respect of a motor vehicle specified in the First Schedule], he shall be entitled, on the production of a certificate signed by a Taxation Authority that an application for the registration of such vehicle has been refused, to a refund of the tax paid.
(3) 2[Where a motor vehicle in respect of which the tax fixed under section 3 having regard to the maximum rates specified in the First Schedule has been paid is altered or is used in such manner as to cause it to become a vehicle in respect of which the tax so fixed is leviable at a lower rate], the person who has paid such tax shall be entitled on the production of a certificate signed by a Taxation Authority stating that the vehicle has been so altered or used and on the surrender of 3 [x x x ] the certificate of taxation, to a refund of a sum equal to the difference between the amount which would be refundable to him in accordance with the provisions of subsection (1) and the amount of the tax leviable on such vehicle at the lower rate; 4[and the Taxation Authority shall cause an entry of such refund to be made in the certificate of taxation issued in respect of such motor vehicle.] (4) Notwithstanding anything contained in subsection (1), a person shall be entitled to a refund of the tax as provided in that subsection on the production of a certificate signed by a Taxation Authority stating that such Authority is satisfied that-
(a)(i) such person for reasons beyond his control, is not able to surrender 5[ x x x ] the certificate of taxation, and
(ii) the vehicle in respect of which the refund of the tax is being Page 24 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT claimed will not be used in any public place during the period for which such refund is claimed; or,
(b)(i) the vehicle in respect of which refund of the tax is claimed has not been used in any public place during the period for which such refund is claimed, and
(ii) the application for refund could not be made for reasons beyond his control; provided however that such application is made within such period as may be prescribed.
6[(4A) Where a person is entitled to a refund of tax under subsection (1), (2), (3) or (4) and,
(a) the amount of such refund exceeds the amount of tax, penalty or interest or the aggregate of any of them which is due from such person in respect of any other period at the time of payment of the amount of refund to him, there shall be paid to him by the Taxation Authority either the whole amount of refund or at his option the balance of the amount of refund remaining after deduction therefrom the amount of such tax, penalty or interest or the aggregate of any of them;
(b) the amount of such refund is less than the amount of tax, penalty or interest or the aggregate of any of them which is due from such person in respect of any other period at the time of payment of the amount of refund to him, there shall be paid to him by the Taxation Authority the whole amount of refund or at his option the whole amount of refund shall be appropriated by the Taxation Authority towards payment of the amount of such tax, penalty or interest or the aggregate of any of them and the balance shall be recoverable from him.] 1 [(5) Where a Taxation Authority is satisfied that
(a) for any reasons whatsoever -
(i) a motor vehicle specified in the Second Schedule or, as the case may be, the Third Schedule (hereinafter in this subsection referred to as "such motor vehicle") is removed to any other State; or
(ii) the registration of such motor vehicle is cancelled; or
(b) such motor vehicle is altered or proposed to be used in such manner as to cause such motor vehicle to become the vehicle liable to payment of tax at a rate fixed by the State Government under section 3 having regard to the maximum rates specified in the First Schedule;
the person who has paid the lump sum tax in respect of such motor vehicle shall, on a application made in that behalf, be entitled to a refund of such amount as may be determined by the Taxation Authority having regard to such principles as may be prescribed.] Page 25 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT
35. In Black's Law Dictionary, the expression 'Compounding Crime' has been defined thus:
"Compounding crime consists of the receipt of some property or other consideration in return for an agreement not to prosecute or inform one who has committed a crime. There are three elements to this offence at common law, and under the typical compounding statute:
(1) the agreement not to prosecute; (2) knowledge of the actual commission of a crime; and (3) the receipt of some consideration The offence committed by a person who, having been directly injured by a felony, agrees with the criminal that he will not prosecute him, on condition of the latter's making reparation, or on receipt of a reward or bribe not to prosecute.
The Offence of taking a reward for forbearing to prosecute a felony, as where a party robbed takes his goods again, or other amends, upon an agreement not to prosecute."
36. Mr. Gandhi would argue that there can be a compounding only when there is an offence committed; and, the offence cannot be said to have been committed unless there is a determination of the fact that an offence is committed. Such a determination may be by a long drawn process or by examining the relevant facts, and, it need not be by way of elaborate reasoned order. What is necessary is that a person who is empowered to compound must be competent to determine the same.
37. A Division Bench of the Karnataka High Court in the case of T. Nanjappa And Sons Vs. Assistant Commissioner of Commercial Taxes, Mysore Division, Mysore, And Anr., 22 STC 277 while considering the provisions contained in Section31 of the Mysore Sales Tax Act, 1957 relating to composition of an offence, has held thus:
"6. The essential principles governing the idea of compounding offences as known to the law of criminal procedure are wellknown. Offences are defined and punished by the law. Normally or ordinarily, it is the State that has the right or power to punish offences, although Page 26 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT individuals might be directly and personally aggrieved by the commission of the offences. The criminal law regards the punishment imposed by the law at the instance of the State on the offender as the proper and sufficient satisfaction, not only for the society as a whole, but also for the individual or individuals personally aggrieved by the offence. But, in the case of certain offences, the law permits the aggrieved person himself to agree to receive or receive satisfaction other than actual punishment or satisfaction in substitution of punishment for his grievance caused by the commission of the offence. That satisfaction is permitted to be substituted for the punishment prescribed by the law by an agreement between the offender and the aggrieved person.
7. In actual event, therefore, compounding of an offence or composition of an offence otherwise than by regular punishment is a matter of agreement between the offender and the aggrieved party which the law permits them to arrive at in substitution of actual imposition of the punishment prescribed by law. According to the relevant provisions of the Code of Criminal Procedure, composition of an offence means an acquittal in the eye of the law."
38. Subsection (2) to Section200 of the Act also incorporates the aforesaid proposition. It specifically provides that, where an offence has been compounded under Subsection (1), the offender, if in custody, shall be discharged and no further proceedings shall be taken against him in respect of such offence. The compounding has the effect of acquittal of a person from the charge. In other words, he is permitted to bargain the acquittal on payment of certain amount. But, nevertheless in the eye of law there is a determination of the fact that a crime has been committed and the conviction or the punishment is waived on receiving certain sum and the offender is treated or is deemed as acquitted of the charge.
39. The Black's Law Dictionary states the full meaning of the words 'compounding crime'. In this regard, it is also relevant to notice the statement of law contained in Halsbury's Laws of England, 4th Edition, 40th Volume, as follows:
Page 27 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020C/SCA/12847/2019 JUDGMENT "539. Scope and effect of procedure. The following procedure, known as the "fixed penalty procedure", applies (until replaced by a new fixed penalty procedure by the Transport Act 1982) in any area specified by order made by the Secretary of State and to any person who is found in any occasion by a police constable or an authorised traffic warden having reason to believe he is committing or has committed a statutory summary offence, other than an excluded offence, in respect of a vehicle by (1) the vehicle being on a road during the hours of darkness without the lights or reflectors required by law; or (2) the vehicle obstructing a road, or waiting, or being left or parked, or being loaded or unloaded, in a road; or (3) the nonpayment of the charge made at a street parking place; or (4) the vehicle being used in contravention of certain provisions as to the route to be followed by vehicles of the class to which it belongs or as to roads or parts of carriage ways not to be used by them or as to places where Uturns are prohibited to them or as to the conditions under which Uturns may be made by them; or (5) any use of the vehicle in contravention of construction and use regulations which are specified by order; or (6) its being used or kept on a public road without a vehicle excise licence being exhibited in the prescribed manner, in such cases, the constable or warden may give to the suspected person a prescribed notice in writing offering the opportunity of the discharge of any liability to conviction of the offence by payment of a fixed penalty. The fixed penalty for an offence may be paid to a specified justices' clerk and, if paid, must be treated by him as a fine imposed on summary conviction for that offence. The fixed penalty is £10 or onehalf of the maximum amount of the fine payable on summary conviction by a person who has not previously been convicted of the offence, whichever is the less. Where such a notice has been given in respect of an offence, criminal proceedings may not be taken against any person for that offence by any constable, warden or local authority for twentyone days from the date of the notice or such longer period, if any, as may have been specified in the notice. If the fixed penalty is paid within such period or before proceedings are begun the person concerned may not be convicted of the offence."
"540. Affixing penalty notice to vehicle. If, where the fixed penalty procedure applies, a constable or authorised traffic warden finds a vehicle and has reason to believe that there is then being or has been committed in respect of it an offence to which that procedure applies, he may affix the statutory notice to the vehicle, and the fixed penalty procedure applies as if he had found a person reasonably believed by him to be committing the offence, and the affixed notice is deemed to have been given to the person liable for that offence.
A notice so affixed must not be removed or interfered with except by or Page 28 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT under the authority of the driver or person in charge of the vehicle or the person liable for the offence; and contravention of this provision is an offence punishable on summary conviction by a fine not exceeding level 2 on the standard scale."
40. Thus, it may be noticed from the aforesaid statement of law that a fixed penalty for certain offences may be paid to a specified Justices' clerk or, if paid, must be treated by him as a fine imposed on summary conviction for that offence. It is also not collected on the spot. The notice of the fixed penalty is served upon the offender who has to pay the same within a particular period to the specified Justices' clerk. If it is not paid within that period, criminal proceeding will be continued. On the contrary, if it is paid, criminal proceeding is dropped. The result is that the control of the Court over the matter is maintained even though the determination at the initial stage of the commission of the offence, is made by the Officer empowered to levy fixed penalty. If the person concerned does not agree to pay it, he has to face the prosecution before the Court. Whereas in the case on hand, compounding fee which is equivalent to fixed penalty is collected on the spot and thereafter there is no question of the Court having any control over it. In fact, the Court does not come to know of it at any time.
41. Thus, the compounding of offences by virtue of Section200 of the Act, 1988 involves determination of the three elements viz., (1) that the offence has been committed; (2) that there is an agreement to compound; and (3) receipt of the consideration for compounding the offence.
42. In view of Article 265 of the Constitution of India no tax can be levied or collected except by authority of law. Law in this context means an Act of legislature and not an executive order or a rule without express Page 29 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT statutory authority. An executive order, executive instruction or custom cannot justify an imposition of tax.
43. The Apex Court has classified the fine distinction between the tax and fees in the case of Krishi Upaj Mandi Samiti vs. Orient Paper & Industries Ltd., (1995) 1 Supreme Court Cases 265. The principles discernible may be summarized as under: (1) Though levying of fee is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fee under a separate category for purposes of legislation. At the end of each one of the three Legislative Lists, it has given power to the particular legislature to legislate on the imposition of fee in respect of everyone of the items dealt with in the list itself, except fees taken in Court.
(2) The tax is a compulsory extraction of money by public authority for public purposes enforceable by laws and is not payment for services rendered. There is no quid pro" quo between the tax payer and the public authority. It is a part of the common burden and the quantum of imposition upon the tax payer depends generally upon his capacity to pay.
(3) Fee is a charge for a special service rendered to individuals or a class by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service though in some cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are various kinds of fees and it is not possible to formulate a definition that would be applicable to all Page 30 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT cases.
(4) The element of compulsion or coerciveness is present in all kinds of impositions though in different degrees and it is not totally absent in fees. Hence it cannot be the sole criterion for distinguishing a tax from fee. Compulsion lies in the fact that payment is enforceable bylaw against an individual in spite of his unwillingness or want of consent and this element is present in taxes as well as in fees.
(5) The distinction between a tax and fee lies primarily in the fact that a tax is levied as a part of the common burden while a fee is a payment for a 'special benefit or privilege. Fees confer a special capacity although the special advantage is secondary to the primary motive of regulation in the public interest. Public interest seems to be at the basis of all imposition but in a fee it is some special benefit which is conferred and accruing which is the reason for imposition of the levy. In the case of a tax, the particular advantage it is exists at all is an incidental result of State action. A fee is a sort of return or consideration for services rendered and hence it is primarily necessary that the levy of fee should on the face of the legislative provision be correlated to the expenses incurred by Government in rendering the services. As indicated in Article 110 (2) of the Constitution ordinarily there are two classes of cases where Government imposes fees upon persons. The first is of grant of permission or and the second for services rendered. In the first class of cases, the cost incurred by the Government for granting of permission or privilege may be very small and the amount of imposition levied is based not necessarily upon the costs incurred by the Government but upon Page 31 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT the benefit that the individual receives. In such cases, the tax element is predominant. It the money paid by privilegeholders goes entirely for the expenses of matters of general public utility, the fee cannot but be regarded as a tax. In the other class of cases, the government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered.
(6) There is really no generic difference between tax and fee and the taxing power of the State may manifest itself in three different forms, viz. special assessments, fees and taxes. Whether a case is tax or fee, would depend upon the facts of each cases. If in the guise of fee, the legislature imposes a tax it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. In determining whether the levy is a fee, the true test must be whether it primary and essential purpose is to render specific services to a specific area or classes. It is of no consequence that the State may ultimately and indirectly be benefited by it. The amount of the levy must depend upon the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a tax. Nor can be method prescribed by the legislature for recovering the levy by itself alter its character. The method is a matter of convenience and though relevant, has to be tests in the light of other relevant circumstances.
(7) It is not a postulate of a fee that it must have relation to the actual service rendered. However, the rendering of service has to be established. The service, further; cannot be remote. The test of quid pro quo is not to be satisfied with close or proximate Page 32 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT relationship in all kinds if fees, a good and substantial portion of the fee must, however; be shown to be expended for the purpose for which the fee is levied. It is not necessary to confer the whole of the benefit on the payers of the fee but some special benefit must be conferred on them which has a direct and reasonable correlation to the fee. While conferring some special benefits on the payers of the fees, it is permissible to render service in the general interest of all concerned. The element of quid pro quo is not possible or even necessary to be established with arithmetical exactitude. But it must be established broadly and reasonably that the amount is being spent for rendering services to those on whom the burden of the fee falls. There is no postulate of a fee that it must have a direct relation to the actual services rendered by the authorities to each individual to obtain the benefit of the service. The element of qutd pro quo in the strict sense is not always a sine quo nonfor a fee. The element of quid pro quo is not necessarily absent in every tax. It is enough if there is a broad, reasonable and general co relationship between the levy and the resultant benefit to the class of people on which the fee is levied though no single payer of the fee receives direct or personal benefit from those services. It is immaterial that the general public may also be benefited from some of the services if the primary service intended is for the payers of the fees.
(8) Absence of uniformity is not a criterion on which alone it can be said that the levy is of the nature of a tax. The legislature has power to enact appropriate retrospective legislation declaring levies as fees by denuding them of the characteristics of tax.
(9) It is not necessary that the amount of fees collected by the Page 33 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT Government should be kept separately. In view of the provisions of Article 266, all amounts received by the Governments have to be credited to the Consolidated Funds and to the public accounts of the respective Governments.
44. The whole idea in looking into the difference between a 'tax' and a 'fee' as discussed above is to indicate that there is no generic difference between a tax and a fee, though broadly tax is a compulsory exaction as a part of a common burden, without promise of any privilege to the class of taxpayers, whereas, fee is a payment for the services rendered, benefit provided or privilege conferred. The compulsion is not the hallmark of the distinction between a tax and a fee.
45. "Fees" are the amounts paid for a privilege, and are not an obligation, but the payment is voluntary. In the case on hand, we are concerned with the fees for the purpose of compounding the offence. At the relevant point of time, having regard to the position of law, the authorities concerned were of the view that a Crawler Crane is a motor vehicle and to ply such a crawler crane without registration would be an offence punishable under Section192 of the Act, 1988. In such circumstances, an option was offered to the writapplicant either to face the prosecution or to pay the compounding fees and put an end to the matter. The writapplicant on his own free will and volition opted to pay the compounding fees as the writapplicant never wanted the prosecution to be instituted against him for the alleged offence. In such circumstances, if later in point of time, by a judgment of the High Court, it is held that the crawler crane is not a motor vehicle and does not require registration, the writapplicant at this point of time cannot turn around and say that the compounding fees were wrongly recovered by the authorities. A special privilege was conferred on the writapplicant so Page 34 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT that the prosecution can be avoided. Having opted to exercise such privilege on its own free will and volition and having saved itself from being prosecuted, later in point of time, the writapplicant cannot claim for refund of the compounding fees on the premise that at no point of time, he had committed any offence and therefore, there was no question of paying the compounding fees. This is one aspect of the matter.
46. In the aforesaid context, we may refer to and rely upon the Supreme Court decision in the case of P. Ratnakar Rao Vs. Govt. Of Andhra Pradesh reported in 1996 LawSuit (SC) 945, wherein the Supreme Court has observed as under: "4. The contention raised before the High Court and repeated before us by Shri Rajeev Dhavan, learned senior counsel for the petitioners is that the discretion given in Section 200 [1] of the Act is unguided, uncanalised and arbitrary. Until an accused is convicted under Section 194, the right to levy penalty thereunder would not arise. When discretion is given to the court for compounding of the offence for the amount mentioned under Section 200, it cannot be stratified by specified amount. It would, therefore, be clear that the exercise of power to prescribe maximum rates for compounding the offence is illegal, arbitrary and violative of Article 14 of the Constitution. We find no force in the contention. For violation of Sections 113 to 115, Section 194 accords penal sanction and on conviction for violation thereof, the Section sanctions punishment with fine as has been enumerated hereinbefore. Section would give guidance to the State Government as a delegate under the statute to specify the amount for compounding the offences enumerated under subsection [1] of Section 200. It is not mandatory that the authorized officer would always compound the offence. It is conditional upon the willingness of the accused to have the offences compounded. It may also be done before the institution of the prosecution case. In the event of the petitioner's willing to have the offence compounded, the authorized officer gets jurisdiction and authority to compound the offence and call upon the accused to pay the same. On compliance thereof, the proceedings, if already instituted, would be closed or no further proceedings shall be initiated. It is a matter of volition or willingness on the part of the accused either to accept Page 35 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT compounding of the offence or to face the prosecution in the appropriate court. As regards canalization and prescription of the amount of fine for the offences committed Section 194, the penal and charging section prescribes the maximum outer limit within which the compounding fee would be prescribed. The discretion exercised by the delegated legislation, i.e., the executive is controlled by the specification in the Act. It is not necessary that Section 200 itself should contain the details in that behalf. So long as the compounding fee does not exceed the fine prescribed by penal section, the same cannot be declared to be either exorbitant or irrational or bereft of guidance."
47. It is sought to be argued that the State thought fit to refund the tax, which was recovered from the writapplicant on the erroneous assumption that a crawler crane is a motor vehicle. It is argued that in the same manner, the fees should also be refunded. The claims for refund of the tax have been classified to fall into three groups or categories. According to the Constitutional Bench decision of the Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India [1997 (5) SCC 536], the three groups are as follows: (I) Unconstitutional Levy...... Where the claim is found on the ground that the tax was levied under unconstitutional provisions.
(II) Illegal levy...... Where the claim for refund is based on the ground that there has been misconstruction/misapplication or erroneous interpretation of the provisions of the Motor Vehicles Act, Rules or Notifications or an erroneous finding of facts or in violation of the fundamental principles of judicial procedure.
(III) Mistake of law...... Where the claim for refund is based on the decision rendered in another case holding that the levy to be not exigible in law (without jurisdiction) or illegal or unconstitutional.
48. According to the aforenoted Constitutional Bench decision, the term "mistake of law" would cover unconstitutional levy as well as illegal levy. However, at the same time, while examining the claim for Page 36 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT refund, the financial chaos, which would result into the administration of the State by allowing such claims would not be an irrelevant consideration. Whether the writapplicant has suffered any loss or injury, having passed on the burden of tax or duty to another person, it would be unjust to allow his claim since it is bound to prejudicially effect the public exchequer. The amount involved in the present case may be very nominal, but the legal implications for the State exchequer because of any judicial verdict would be phenomenal because many persons similarly situated like the writapplicant may claim refund.
49. Thus, it cannot be said that the compounding fees were illegally realized from the writapplicant.
50. We may also look into the matter from a different angle. We proceed on the footing for the time being that the writapplicant was wrongly asked to pay the compounding fees. In other words, let us assume for a moment that the compounding fees was illegally realized.
51. It is a settled principle of law that the remedy under Article 226 of the Constitution of India is discretionary in nature and in a given case, even if some action or order challenged in the petition is found to be illegal and invalid, the High Court while exercising its extraordinary jurisdiction thereunder can refuse to upset it with a view to doing substantial justice between the parties. The interference by the writ Court for infraction of any statutory provision or norms, if such infraction has not resulted in injustice, is not a matter of course.
52. In the case of M/s. Shiv Shanker Dal Mills v. State of Haryana & Ors., AIR 1980 SC 1037, the dealers in that case had paid market fees Page 37 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT at the increased rate of 3%, which was raised from the original 2 per cent under the Haryana Act 22 of 1977. The excess of 1 per cent over the original rate was declared ultra vires by the Hon'ble Supreme Court of India in the case of Kewal Krishna Puri and Anr. v. State of Punjab and Ors. AIR 1980 SC 1008. The excess of 1 per cent over the original fees having been declared ultra vires, became refundable to the respective dealers from whom they were recovered by the Market Committee concerned. The demand for refund of the excess amounts illegally recovered from them not having been complied with, the dealers filed Writ Petitions under Article 32 and Article 226 of the Constitution for a direction to that effect to the Market Committee concerned. The Market Committees contended that although the refund of the excess collections might be legally due to the dealers, many of them had in turn recovered this excess percentage from the next purchasers. While disposing of the petition and laying down guidelines, the Hon'ble Supreme Court of India has held as under:
"Article 226 grants an extraordinary remedy, which is essentially discretionary, although founded on legal injury. It is perfectly open for the court, exercising this flexible power, to pass such order as public interest dictates and equity projects. Courts of equity may, and frequently do, go much further both to give and withhold relief in furtherance of the public interest than they are accustomed to go where only private interests are involved. Accordingly, the granting or withholding of relief may properly be dependent upon considerations as of public interest."
53. It has been rightly observed that the legal formulations cannot be enforced divorced from the realities of the fact situation of the case. While administering law it is to be tempered with equity and if the equitable situation demands after setting right the legal formulations not to take it to the logical end, the High Court would be failing in its duty if it does not notice equitable considerations and mould the final order in exercise of its extraordinary jurisdiction. Any other approach would Page 38 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020 C/SCA/12847/2019 JUDGMENT render the High Court a normal Court of Appeal, which it is not.
54. In the overall view of the matter, we are convinced that no case is made out by the writapplicants to seek refund of the compounding fees.
55. In the result, both the writapplications fail and are hereby rejected.
(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) aruna Page 39 of 39 Downloaded on : Sun Jun 14 16:11:18 IST 2020