Full Judgment Text
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PETITIONER:
M. NARASIMHAIAH
Vs.
RESPONDENT:
DEPUTY COMMISSIONER FOR TRANSPORT, BANGALORE DIVlSION,INFANT
DATE OF JUDGMENT24/11/1987
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
SINGH, K.N. (J)
CITATION:
1988 AIR 240 1988 SCR (2) 10
1987 SCC Supl. 452 JT 1987 (4) 466
1987 SCALE (2)1171
ACT:
Karnataka Motor Vehicles Taxation Act, 1957-Levy of
additional tax under section 8 thereof on stage carriage.
HEADNOTE:
%
The appellant was a registered owner of a motor vehicle
run by him as a stage carriage under a permit issued under
the Motor Vehicles Act, 1939. He was liable to pay tax in
respect of the vehicle under section 3 of the Karnataka
Motor Vehicles Taxation Act, 1957, which provides that a tax
at the rates specified in Part A of the Schedule to the Act
shall be levied on all motor vehicles suitable for use on
roads, and item 4 in Part A of the Schedule to the Act, as
it stood in 1985, relates to the levy of tax on the motor
vehicles used as stage carriages.
On some occasions, it was found that the appellants
stage carriage was carrying passengers in excess of the
number of passengers allowed to be carried under the permit
issued to him under the Motor Vehicles Act, 1939. The
taxation authority under the Karnataka Act above-said issued
to him a demand for the payment of additional tax under
section 8 of the said Act. The appellant filed a writ
petition, challenging the demand for the additional tax. The
High Court dismissed the petition, following its earlier
decision in Noorullha Khan v. State of Karnataka (Writ
Petition No. 8302 of 1980, etc. decided on 26.6.85.) The
appellant appealed to this Court by special leave against
the order of the High Court.
Allowing the appeal, the Court,
^
HELD: The taxation authority levied the additional tax
under section 8 of the Karnataka Motor Vehicles Taxation
Act, 1957, on the ground that the appellant had proposed to
use the vehicle in such a manner as to cause the vehicle to
become a vehicle in respect of which a higher rate of tax
was payable, in accordance with the decision of the High
Court in the Noorullha Khan’s case. The payment of the
additional tax arises as per section 8 on two occasions-(i)
when the Motor
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Vehicle is altered in such a manner as to cause the vehicle
to become a vehicle in respect of which a higher rate of tax
is payable, or (ii) when any motor vehicle is proposed to be
used in such a manner as to cause the vehicle to become a
vehicle in respect of which a higher rate of tax is payable.
The vehicle in question has not been altered, and it has
been used only as a stage carriage, even when two or five
extra persons have been carried. There is no other provision
in Part A of the Schedule to the Act which requires a higher
rate of tax to be paid in respect of a vehicle which is
being used as a stage carriage on the basis of a larger
number of passengers that are carried in it. It would have
been possible to levy a higher tax on the appellant only if
the words ’which the vehicle is permitted to carry’ in item
4(2) of Part A to the Schedule to the Act had been omitted.
These words cannot be ignored in the construction of the
said item since it relates to the levy of tax. Also, the
provision in section 8 is specific. [17G-H; 18A-C, F-G]
The High Court in Noorullha Khan’s case overlooked the
presence of the words ’which the vehicle is permitted to
carry’, found also in clause (b) of item 7 of the Karnataka
Act. A law which imposes a tax should be construed strictly.
A registered owner of a motor vehicle, which is permitted to
be used as a stage carriage cannot be asked to pay
additional tax under section 8 of the Act merely because he
has carried on some occasions more passengers than the
maximum number of passengers that he is permitted to carry
under the permit. The tax which he is liable to pay is
limited by the maximum number of passengers he is entitled
to carry under the permit. The Court does not agree with the
decisions of the High Court in the Noorullha Khan’s case,
which is overruled. The judgment of the High Court impugned
set aside and the respondents directed not to levy the
additional tax on the appellant under section 8 of the
Karnataka Taxation Act for carrying more passengers than
what he was permitted to carry on some occassions during the
period in question. Need impressed upon the authorities to
enforce the provision in section 60 of the Motor Vehicles
Act, 1939, strictly.[20A, D-F]
Payne v. Allock, [1932] 2 KB 413, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3031 of
1987.
From the Judgment and order dated 9.7.1985 of the
Karnataka High Court in Writ Petition No. 31533 of 1982
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S.S. Javali, Ravi P. Wadhwani, M.Rangaswamy, N.D.B.
Raju, C. K . Sucharita and Mrs. C.K. Sucharita for the
Appellant
K.L. Sharma and M. Veerappa for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. Aggrieved by the levy of additional
tax under section 8 of the Karnataka Motor Vehicles Taxation
Act, 1957 (hereinafter referred to as ’the Act’) in respect
of his motor vehicle, which he has been running as a stage
carriage under a permit issued under the provisions of the
Motor Vehicles Act, 1939, the appellant herein questioned
the levy of the said additional tax before the High Court of
Karnataka in Writ Petition No. 31533 of 1982. That writ
petition was dismissed by the High Court following an
earlier decision of a Division Bench of that Court in
Noorullha Khan v. State of Karnataka (Writ Petition No. 8302
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of 1980 and connected cases decided on 26.6.1985). The
appellant has filed this appeal by special leave against the
decision of the High Court dismissing his writ petition
The facts of the case are briefly these. The appellant
is the registered owner of the motor vehicle which he has
been running as a stage carriage under a permit issued by
the Regional Transport Authority under the provisions of the
Motor Vehicles Act, 1939. He is liable to pay tax in respect
of the said motor vehicle under section 3 of the Act which
provides that a tax at the rates specified in Part A of the
Schedule to the Act shall be levied on all motor vehicles
suitable for use or roads. Item 4 in Part A of the Schedule
to the Act, as it stood in the year 1985, which related to
the levy of tax on motor vehicles which were used as stage
carriages reads thus:-
Class of vehicles Quarterly tax for
vehicle fitted with
pneumatic tyres
____________________________________________________________
(1) (2)
____________________________________________________________
"4. Motor Vehicles other than those
mentioned in items 5, 6 and 7 plying for
hire and used for transport of passengers
and in respect of which permits have been
issued under the Motor Vehicles Act, 1939.
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(i) Vehicles permitted to carry in all: Rs. p.
(a) not more than three persons 40.00
(other than the driver)
(b) Four persons (other than 75.00
the driver)
(c) Five persons (other than 90.00
the driver)
(d) Six persons (other than the driver) 200.00
(ii)(1) Vehicles permitted to carry
more than six persons and plying
exclusively on routes within the limits
of cities and towns notified by the
Government and other vehicles not
falling under (2) below:
(a) For every seated passenger 130.00
(other than the driver and the
conductor) which the vehicle is
permitted to carry.
(b) For every passenger (other than 45.00
the seated passenger, the driver and
the conductor) which the vehicle is
permitted to carry.
(2) Vehicles permitted to carry more
than six persons and the total mileage
of which exceeds 100 kilometers
per day:
(a) For every seated passenger 160.00
(other than the driver and the
conductor) which the vehicle is
permitted to carry.
(b) For every passenger (other than 45.00
the seated passenger, the driver and
the conductor) which the vehicle is
permitted to carry. "
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Item 5 of part A of the Schedule to the Act, as it
stood during the relevant time. referred to the tax payable
by motor vehicles which were used as contract carriages
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under permits issued under the Motor Vehicles Act, 1939.
Item 6 of part A of the Schedule to the Act has been
repealed. Item 7 of Part A of the Schedule to the Act, as it
stood during the relevant period, dealt with the tax payable
in respect of omnibuses It read thus:
____________________________________________________________
Class of Vehicles Quarterly tax for
vehicles fitted with
pneumatic tyres
____________________________________________________________
(1) (2)
____________________________________________________________
"7. Omnibuses,- Rs. p.
(a) permitted to carry not more than 10 50.00
persons (excluding the driver), for every
person which the vehicle is permitted
to carry:
(b) permitted to carry 11 persons or 100.00
more (excluding the driver), for every
person which the vehicle is permitted to
carry.
The appellant was liable to pay at the time when he
filed the writ petition Rs.160.00 per quarter for every
seated passenger (other than the driver and the conductor)
which the vehicle was permitted to carry and Rs.45 per
quarter for every passengers (other than the seated
passengers, the driver and the conductor) which the vehicle
WAS permitted to carry. Section 8 of the Act which provides
for payment of additional tax in respect of motor vehicles
reads thus:-
"8. Payment of additional tax-When any motor
vehicle in respect of which a tax has been paid is
altered or proposed to be used in a such a manner
as to cause vehicle to become a vehicle in respect
of which a higher rate of tax is payable, the
registered owner or person who is in possession or
control of such vehicle shall pay an additional
tax or a sum which is equal to the difference
between the tax already paid and the tax which is
payable in respect of
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such vehicle for the period for which the higher
rate of tax is payable in consequence of its being
altered or so proposed to be used and taxation
authority shall not grant a fresh taxation card in
respect of such vehicle so altered or proposed to
be so used until such amount of tax has been paid.
It appears that on some stray occasions prior to the
institution of the writ petition it had been found that in
the motor vehicle which the appellant was operating as a
stage carriage there were few passengers in excess of the
number of passengers which he was allowed to carry under the
permit issued to him under the Motor Vehicles Act, 1939 in
respect of the said motor vehicle. The taxation authority
under the Act, therefore, issued a demand for payment of
additional tax under the provisions of section 8 of the Act
on the ground that the appellant had proposed to use the
motor vehicle in such a manner as to cause the vehicle to
become a vehicle in respect of which a higher rate of tax
was payable following the decision of the High Court in
Noorullha Khan’s case (supra). Aggrieved by the said demand
he filed the writ petition. As mentioned above, that
petition having been dismissed, this appeal by special leave
has been filed.
Since the judgment of the High Court under appeal is
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based on the decision in Noorullha Khan’s case (supra) it is
necessary to set out briefly the facts in that case.
Noorullha Khan who was the petitioner in that case was the
registered owner of a motor vehicle classified as an
’omnibus’ with a seating capacity of 15+ 1 under the
provisions of the Motor Vehicles Act, 1939 and was subjected
to tax on that basis under item 7(b) of Part A of the
Schedule to the Act. He was liable to pay at the rate of Rs.
100 per seat per quarter under the said provision. He was,
however, called upon by the taxation authority to pay an
additional sum by way of tax on two different occasions
calculating the tax on the basis of the number of passengers
carried in the vehicle on those two occasions. He challenged
the said demands before the Deputy Commissioner for
Transport in appeal. That appeal having been dismissed he
filed Writ Petition No. 8302 of 1980, referred to above, on
the file of the High Court. The High Court took the view
that the petition in that writ petition having used the
vehicle on two occasions for carrying passengers in excess
of the number of passengers which he was allowed to carry
under the permit he had become liable to pay additional tax
for the ’proposed user’ of the motor vehicle in a manner
different from the manner in which he was permitted to run
it. In support of its decision the High Court
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relied strongly on the decision in Payne v. Allcock, 119321
2 K B. 413 in which the conviction of the owner of a motor
vehicle in respect of which he had obtained a licence to use
it as a private motor car for having used it for the
conveyance of goods had been upheld.
The Motor Vehicles Act, 1939 is a central act, which
was enacted pursuant to Entry 20 of List III of the Seventh
Schedule to the Government of India Act, 1935 corresponding
to Entry 35 of List III of the Seventh Schedule to the
Constitution of India. The Act under which a tax is leviable
on motor vehicles has been enacted by the Karnataka State
Legislature in exercise of its powers under Entry 57 of List
II of the Seventh Schedule to the Constitution of India.
Thus the scope of the Act and the scope of the Motor
Vehicles Act, 1939 are entirely different Section 42 of the
Motor Vehicles Act, 1939 provides that no owner of a
transport vehicle shall use or permit the use of the vehicle
in any public place whether or not such vehicle is actually
carrying any passenger or goods save in accordance with the
conditions of a permit granted or countersigned by a
Regional or State Transport Authority or the Commission
authorities the use of the vehicle in that place in the
manner in which the vehicle is being used. The expression
’permit’ is defined under section 2(20) of the Motor
Vehicles Act, 1939 as a document issued by the Commission or
a State or Regional Transport Authority authorizing the use
of a transport vehicle as a contract carriage, or stage
carriage, or authorizing the owner as a private carrier or
public carrier to use such vehicle. Section 2(29) of the
Motor Vehicles Act, 1939 defines the expression ’stage
carriage’ as a motor vehicle carrying or adapted to carry
more than six persons excluding the driver which carries
passengers for hire or reward at separate fares paid by or
for individual passengers, either for the whole journey or
for stages of the journey. Section 2(j) of the Act provides
that the words and expressions used but not defined in the
Act, shall have the meanings assigned to them in the Motor
Vehicles Act, 1939. Section 48(3)(vi) of the Motor Vehicles
Act, 1939 provides that the Regional Transport Authority, if
it decides to grant a stage carriage permit, may grant the
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permit specifying the maximum number of passengers that may
be carried in the motor vehicle in respect of which the
stage carriage permit is issued. Section 60 of the Motor
Vehicles Act, 1939 empowers the Regional Transport Authority
to cancel or suspend a permit for such period as it thinks
fit on the breach of any of the conditions attached to the
permit. Thus a person who has obtained a stage carriage
permit exposes himself to the cancellation of the permit
itself under section 60 of the Act if he carries passengers
in excess of the
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maximum number of passengers that he is permitted to carry
under the permit.
Under clause (2) of item 4 of Part A of the Schedule to
the Act the owner of a vehicle used as a stage carriage the
total mileage of which exceeded 100 kilometers per day had
to pay for every quarter during the relevant time Rs.160 for
every seated passenger (other than the driver and the
conductor) and Rs.45 for every passenger (other than the
seated passenger, the driver and the conductor) which the
vehicle was permitted to carry. According to the above
provision if the owner of a motor vehicle, which is used as
a stage carriage, who is permitted to carry, say, 45 person
including the driver and the conductor of whom 40 are seated
passengers and 3 are standing passengers, he has to pay
Rs.6,535 for every quarter. The question is whether he is
liable to pay and additional tax under section 8 of the Act
if he carries on any occasion any passengers in excess of
the number of passengers he is permitted to carry Let us
assume that the registered owner of the motor vehicle in the
above case has carried on one occasion in a given quarter 47
passengers (inclusive of the driver and the conductor) and
on another occasion in the same quarter 50 passengers
(inclusive of the driver and the conductor). In this
illustration the question which arises for consideration is
whether the registered owner is liable to pay Rs.6,535 for
that quarter or Rs.6,535 plus the additional tax in respect
of two more passengers or Rs.6,535 plus the additional tax
for five more passengers during that quarter. Section 8 of
the Act PROVIDES that when any motor vehicle in respect of
which a tax has been paid is altered or proposed to be used
in such a manner as to cause vehicle to become a vehicle in
respect of which a higher rate of tax is payable, the
registered owner or person who is in possession or control
of such vehicle shall pay an additional tax of a sum which
is equal to the difference between the tax already paid and
the tax which is payable in respect of such vehicle for the
period for which the higher rate of tax is payable in
consequence of its being altered or so proposed to be used
and the taxation authority shall not grant a fresh taxation
card in respect of such vehicle so altered or proposed to be
used until such amount of tax has been paid. The crucial
words in section 8 of the Act are ’when any motor vehicle
........ is altered or proposed to be used in such a manner
as to cause the vehicle to become a vehicle in respect of
which a higher rate of tax is payable’. The payment of
additional tax arises, therefore, only on two occasions; (i)
when the motor vehicle is altered in such a manner as to
cause the vehicle to become a vehicle in respect of which a
higher rate of tax is payable; or (2) when any motor vehi-
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cle is proposed to be used in such a manner as to cause the
vehicle to become a vehicle in respect of which a higher
rate of tax is payable. Admittedly, the vehicle in question
has not been altered The question which remains to be
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considered is whether in the given case the vehicle is
proposed to be used in such a manner as to cause the vehicle
to become a vehicle in respect of which a higher rate of tax
is payable. The vehicle in question has been used only as a
stage carriage even when two or five extra passengers have
been carried. There is no other provision in Part A of the
Schedule to the Act which requires a higher rate of tax to
be paid in respect of a vehicle which is being used as a
stage carriage on the basis of a larger number of passengers
that are carried in it. In order to bring the case within
the scope of section 8 of the Act it must be first shown
that there is a provision in the Act which makes a stage
carriage vehicle which carries a larger number of passengers
than what is permitted under the permit issued in respect of
it is subject to a higher rate of tax. The highest rate of
tax in respect of a stage carriage that can be levied under
the Act is incorporated in clause (2) of item 4. Sub-clause
(a) of clause (2) of item 4 of the Schedule to the Act
provides that for every seated passengers (other than the
driver and the conductor) which the vehicle is permitted to
carry the registered owner is liable to pay Rs.160 and for
every passenger (other than the seated passenger, the driver
and the conductor) which the vehicle is permitted to carry
has to pay Rs.45 per passenger per quarter. In both the sub-
clauses the liability of the registered owner is governed by
the number of passengers that he is permitted to carry under
the permit issued in his favour under the Motor Vehicles
Act, 1939 and thus his liability is limited by the condition
incorporated in the permit.
It would have been possible to levy higher tax on the
appellant p only if the words ’which the vehicle is
permitted to carry’ in item 4(2) of Part A to the Schedule
to the Act had been omitted The Court cannot ignore those
words while construing the said item since it relates to the
levy of a tax. Moreover the provision in section 8 is
specific. It says that the additional tax shall be equal to
the difference between the tax already paid and the tax
which is payable in respect of such vehicle for the period
for which the higher rate of tax is payable is consequence
of its being altered or so proposed to be used in such a
manner as to cause the vehicle to become a vehicle in
respect of which a higher rate of tax is payable.
There is another difficulty in applying section 8 to
stray cases of overloading. Additional tax is payable for
the period during which the
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vehicle is proposed to be used for a purpose which will
attract a higher rate of tax. The rate of tax is fixed
taking one quarter i.e. 3 months as a unit of time for
taxation. Is it reasonably possible to determine the higher
rate of tax payable, if say, on two days in a quarter there
has been overloading of the vehicle for a few hours or
minutes? The problem of computation of additional tax
becomes difficult in such cases
There is another important circumstance which persuades
us to disagree with the construction placed by the High
Court on the relevant provision of taxation in the Act. The
rate of taxation in this case is not based on the number of
passengers actually carried during any period in a motor
vehicle used as a stage carriage but it is related to the
number of passengers which the motor vehicle is permitted to
carry under the permit. If the number of the passengers
carried during any period is less than what is permitted,
the registered owner of the motor vehicle does not get any
rebate He has to pay the tax at the rate determined by the
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number of maximum passengers mentioned in the permit even
when the stage carriage is run without any passengers. When
that is the position there appears to be no justification to
hold that the registered owner or whoever is liable to pay
the tax should be made to pay the additional tax merely
because on some stray occasions the motor vehicle is found
to have carried a few more passengers than the number
permitted under the permit since the tax is not levied on
the basis of the number of passengers actually carried.
The decision in Payne v. Allock, (supra) is clearly
distinguishable from the present case. In that case the
appellant had paid the duty under para 6 of the Schedule II
to the Finance Act, 1922 which was a residuary clause under
which he had to pay 16 for taking out the licence for
using his motor vehicle as a private motor car. But he was
found to be using the vehicle for the purpose of carrying
goods for a fairly long period which brought the vehicle
under the 5th para of that schedule which levied a higher
rate of tax. In the case before us, as we have already
pointed out the vehicle could not be subjected to a higher
rate of tax under any other item in Part A to the Schedule
to the Act
The argument urged on behalf of the State Government
that the liability of the registered owner to pay tax in
respect of a stage carriage depends upon the number of
passengers carried in a vehicle on a given date does not
appeal to us because in that event the words
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which the vehicle is permitted to carry in item 4(2) become
meaningless and ineffective. The High Court in Noorullha
Khan’s case (supra) overlooked the presence of the words
’which the vehicle is permitted to carry’ which are found in
clause (b) of item 7 of the Act also. It is no doubt true
that it is not in the public interest that a registered
owner of a motor vehicle should be allowed to carry more
passengers than the maximum number of passengers that he is
allowed to carry under his permit and such a tendency on the
part of any registered owner should be checked That fact,
however, cannot be relied upon for the purpose of construing
the items in Part A of the Schedule to the Act liberally and
in favour of the State Government. It is needless to say
that a law which imposes a tax should be construed strictly.
If the action on the part of the registered owner is
contrary to the provisions of the Motor Vehicles Act, 1939
there is sufficient provision in that Act to take
appropriate action against him and either to cancel the
permit or to suspend it.
In the instant case we feel that when a registered
owner of a motor vehicle which is permitted to be used as a
stage carriage cannot be asked to pay additional tax under
section 8 of the Act merely because he has carried on some
occasions more passengers than the maximum number of
passengers that he is permitted to carry under the permit.
The tax which he is liable to pay is limited by the maximum
number of passengers he is entitled to carry under the
permit. We, therefore, do not agree with the decision of the
High Court in Noorullha Khan’s case (supra). We overrule it
The judgment of the High Court against which this appeal is
filed is liable to be set aside. It is accordingly set
aside. The respondents are directed not to levy additional
tax on the appellant under section 8 of the Act for carrying
more passengers than what he was permitted to carry on some
occasions during the period in question. But we however
impress upon the authorities the need to enforce the
provision in section 60 of the Motor Vehicles Act, 1939
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strictly.
The appeal is accordingly allowed. No costs
S.L. Appeal allowed.
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