Document Fragment View

Matching Fragments

1. These petitions are directed against the levy and collection of 5% cess-tax levied under Section 3 of the Karnataka Motor Vehicles Taxation Act, 1957 and 3A of the Karnataka Act VII of 1995 as illegal, unconstitutional and void. The petitioner wants a refund of tax made over by the petitioner for the schedule vehicles in terms of the schedule from 1.4.1995 till First Quarter and under Act 4/ 02 effective from 15.4.2002.

2. The pleadings of the parties are as under:

The first respondent introduced an amendment to the Karnataka Motor Vehicles Taxation Act, 1957. By an amendment a new power to imposition of cess was statutorily introduced. The amendment by Act No. VII of 1995 inserted Sec.3A. Annexure 'A' is the notification. Section 3A purported to levy and collect by way of cess - tax at the rate of 5% on the Motor Vehicle Tax levied under Section 3 of the Act. The purpose of the cess was for the Bangalore Mass Rapid Transit System. The said amendment was challenged in this Court in several petitions. Petitions were dismissed by this Court. Annexure 'D' is the order of the Division Bench Thereafter, the first respondent introduced an amendment by Act IV/1998 by which the purpose of levy for Bangalore Mass Rapid Transit System was sought to be changed to 'for a period of two years with effect from 1.4.1998 for equity investment in the Karnataka Infrastructure Development Finance Corporation. Annexure 'C' is the Notification. The petitioner states that there has been no such utilisation for the said purpose. Apart from the fact the Karnataka Infrastructure Development and Finance Corporation has nothing to do with either the maintenance, improvement or the creation of roads in terms of the Karnataka Motor Vehicles Taxation Act, 1957. Tax is illegal and without authority of law. By Act No.VI of 2000, the State Government introduced another amendment to Section 3-A. By this there was a substitution of four years for two years. Annexure 'D' is the Notification. In view of the combined operation of Act IV of 1998 and Act VI of 2000, the authority to levy cess-tax of 5% on the Motor Vehicles Tax was to be upto 31.3.2002. By Act IV of 2002 there has been an amendment to Section 3-A by which it has been extended up to six years. Annexure 'E' is the notification. The petitioner says that there has been a Repeal Act of IV of 1998 and VII of 1995. The petitioner has filed the Repealing and Amending Act, 2000 in terms of Annexure 'F". According to the petitioner, the levy is illegal and the petitioner is entitled for refund. The petitioner says that the levy of cess can be justified only when it is compensatory. The levy and collection of tax for the purpose of Bangalore Mass Rapid Transit System has turned out to be only a mirage. No such Bangalore Mass Rapid Transit System was brought out as a physical fact in Bangalore. The petitioner also asserts that the change of purpose with effect from 1.4.1998 for the collection of cess-tax for "equity investment in the Karnataka Infrastructure Development and Finance Corporation" is unconstitutional. There is no nexus. The petitioner further states that there has been a total failure on the part of the first respondent to fulfill the Constitutional obligation of imposition of tax with the authority of law and its utilisation for the proclaimed purpose. The collection of tax under Section 3A is thus unconstitutional.
In order to create a corpus of funds to meet its financial commitments to the Project, the State Government started levying a "BMRTS Cess" with effect from 1.4.1995 within the Bangalore Urban Agglomeration area on a variety of commercial transaction, which continued until 31.3.1998. From 1.4.1998, the BMRT Cess was merged into a new "Infrastructure Cess" which 'was and is continuing to be, levied across the whole State of Karnataka for the purpose of infrastructure development, including the Bangalore ELRTS Project. One-thirds of the cess collection is earmarked for the Bangalore ELRTS Project while the remaining two-thirds is for other infrastructure development projects. The cess collections meant for the ELRTS Project are being accumulated in a separate, "BMRTS Fund" and will be used only for the ELRTS or similar Mass Rapid Transit System Project."
Rival submissions:

7. Sri C.B.Srinivasan, learned Senior Counsel appears for the petitioners. He took me through the history of the case to contend that initially, the Act was challenged in this Court and the Division Bench of this Court in terms of Annexure 'B' has chosen to uphold the Act with certain observations. Thereafter, according to the learned Counsel, the Act was amended in terms of Annexure 'C' thereby introducing a period of 2 years in addition to equity investment in Karnataka Infrastructure Development and Finance Corporation. Learned Counsel further says that in terms of the Karnataka Act VI of 2000, sub-section 1 of Section 3A was amended providing for four years as against three years. It was again amended in terms of Act IV of 2002 for 6 years instead of 4 years. Learned Counsel while elaborating his contentions says that the entire levy does not have the Constitutional approval in terms of the law governing the subject. He says that in the light of the Division Bench Judgment and the laws governing the subject, the respondent has to justify its imposition in such cases. Learned Counsel further says that the cess so collected cannot be diverted to the State Revenue. He reads to me the various averments in the objection statement to contend that the entire action requires to be noticed by the Court for the purpose of holding the cess as illegal. Learned Counsel says that the object of equity investment and the object of maintaining roads etc., would not support the cess, according to him. He also refers to the effect of repealing Act in terms of 2002 Act.

15. In terms of 2000 amendment, "two years" was substituted by "four years". In terms of the 2002 amendment, "four years" is amended as "six years".
16. This very levy was challenged in a batch of petitions in this Court in W.P.Nos.25498-25501/1995 dated 20.9.1995. This Court, after noticing the contentions and after noticing the Judgment of the Supreme Court in has ruled that no substance is found in the arguments. However, this Court noticed that cess is with reference to Mass Rapid Transit System for the purpose of elevated light rail transit system. This Court noticed that there is broad correlation between expenditure involved and the taxes that are collected under this head either arising under Section 3 or under Section 3-A of the Act. This Court noticed the figures available in the case to demonstrate a correlation in those petitions. This Court also ruled that the tax collected is compensatory and regulatory in character. This Court also noticed 'whether any subsequent tax could be examined only when they are levied. One cannot predicate as to what cannot be taken thereon either by the petitioner or by this Court.' This Court was concerned only with regard to the initial levy in terms of Section 3-A of the Taxation Act as amended in terms of the amendment Act 1995. After 1995, the Government has removed the words "Bangalore Mass Rapid Transit System and instead added the words "Karnataka Infrastructure Development Finance Corporation". Virtually, the Government wants the parties to pay a capital fund to the Infrastructure Development Finance Corporation. It was also for a period of two years. It became 4 years. Now it became 6 years. The petitioner asserts in the petition that money is not meant for general Revenue and even otherwise, the money collected is not spent for the purpose for which it is collected. The same is referred to in the objection statement. Several objections have been filed on several sittings, after some arguments.