Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6
PETITIONER:
MAHARAJA TOURIST SERVICE ETC. ETC
Vs.
RESPONDENT:
STATE OF GUJARAT
DATE OF JUDGMENT26/04/1991
BENCH:
MISRA, RANGNATH (CJ)
BENCH:
MISRA, RANGNATH (CJ)
KULDIP SINGH (J)
CITATION:
1991 AIR 1650 1991 SCR (2) 524
1992 SCC Supl. (1) 489 JT 1991 (2) 423
1991 SCALE (1)799
ACT:
Constitution of India, 1950; Articles 19(1) (g), 301-Levy
of additional tax under Motor Vehicle Tax Acts of different
States- Validity of.
Motor Vehicles Act,1939/1988/ Motor Vehicle Tax Acts- Section
63(7)/88(9)- Motor Vehicle Tax Acts Punjab, Gujarat,
Rajastahan and Madhaya Pradesh- Additional Tax -
Constitutional validity of.
Punjab Motor Vehicles Taxation Rules 1925 Rule 8 (v)-
Exemption to vehicles registered outside the State and kept
in the State upto 30 days -Expression ’kept for use’ - Scope
of - kept for more than 30 days for regular use - Not by way
of transit - Exigibility of tax- To be determined in
individual cases as and when raised.
Words and phrases : ’kept for use’- Meaning of.
HEADNOTE:
Under the taxing power contained in the several Motor
Vehicles Tax Acts in vogue in the Respondent- States,
provision has been made for taxation as also for levy of
additional tax. The petitioners who hold All India
Tourist Permits challenged the constitution validity of the
additional tax, on the ground that it was neither
compensatory nor regulatory, and therefore was violative
of Articles 19(1) (g) and 301 of the Constitution. In
respect of the State of Punjab and Haryana which have
a common Act, an additional contention was raised to the
effect that Rule 8(v) of the Punjab Motor Vehicles Taxation
Rules 1925, provides total exemption from liability of tax
if the vehicle was brought into the State and kept for
use within the State for a period not exceeding 30 days in
a year, and since the vehicles registered outside Punjab
and Haryana States are not kept within the State for more
than 30 days in a year, the demand of tax in the face of
Rule 8(v) is contrary to law.
Disposing of the Writ Petitions, this Court,
HELD : 1. Law is settled that to uphold levy of tax as
in the present case, what is necessary is existence of a
nexus between the subject and
525
the object of the levy and it is not necessary to show that
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6
the whole or a substantial part of the tax collected is
utilised. Hence the demand of tax is not open to challenge
and the plea raised against the levy, whether of tax or
additional tax, is not justified. Under the taxing
provision a statutory outer limit has been provided and
the actual amount is left to be determined by the State
Government by notification. Obviously, discretion is left
with the State Government to demand at rate which in a
given situation would be justified . Once it is held that
the tax is either conmpensatory or regulatory that forms
the guideline for the State Government to keep in view to
determine the rate at which within the upper limit fixed by
law the demand has to be made. {525E-H}
Automobile Transport (Rajasthan) Ltd. v. The State of
Rajasthan and Ors , {1963} 1 SCR 491; M/s. International
Tourist Corporation and Ors. v. State of Haryana and
Ors.,[1981] 2 SCC 318 and B.A. Jayaram and Ors. v. Union
of India and Ors., [1984] SCC 168., relied on.
2. The word ’kept’ has not been defined in the
Punjab Motor Vehicles Taxation Act, 1924. It must ,
therefore, be interpreted in its ordinary popular sense
consistent with the context. The ordinary dictionary
meaning of the word ’keep’ is ’to retain’, ’ to
maintain’ or ’cause to stay or remain in a place ’ or
’to detain’ or ’to stay or continue in a specified
condition , position etc., It is something different from
a mere state of transit or a course of journey through the
State . it is something more than a mere stoppage or halt
for rest, food or refreshment, etc. in the course of
transit through the territory of the State. That being the
position, rule 8 (v) which uses the term ’kept for use’ may
not cover a case of bare transit and in terms of the rule
exemption is available for vehicles kept upto 30 days in a
year. In that view of the matter tourist vehicles
registered outside the State of Punjab and Haryana when
brought into these two States for regular use and not
by way of transit and when used for more than 30 days in a
year would attract taxability; otherwise the exemption
provision in rule 8(v) would be available [530C-F]
M/s. International Tourist Corporation and Ors. v.
State of Haryana and Ors., [ 1981] 2SCC 318 and State of
Mysore and Ors. v. M/s. T.V. Sundaram Iyengar & Sons (P)
Ltd., [1980] 1 SCC 66, referred to.
3. The question of exigibility of tax in the State of
Punjab and Haryana with reference to rule 8(v) of the
Punjab Motor Vehicles Taxation Rules, 1925 is left to be
determined in individual cases as and when raised. [530G].
526
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition No. 505 of 1990
etc.etc.
(Under Article 32 of the Constitution of India)
R.N. Sachtey, S.K. Bhattacharya, S.C. Patel, Anip
Sachthey, Mahabir Singh, R.K.. Agnihotri, R.K. Kapur, Ms.
Anil Katyar, N.D, Garg, C.M. Nayar (NP), H.S. Munjral, V. B.
Joshi, V.K. Verma, S.K. Agnihotri, Sakesh Kumar, N.
Ganapathy, M. Veerappa, ,Mrs. Rani Chhabra, M.N. Shroff,
Indra Makwana, Sushil Kumar Jain, S.N. Aggarwal, Ms. Vijay
Lakshmi Menon, C.V.S Rao, Aruneshwar Gupta and Sushil Kumar
for the appearing parties.
The Judgement of the Court was delivered by
RANGANATH MISHRA, CJ. These are applications under
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6
Article 32 of the Constitution on behalf of petitioners who
hold All India Tourist Permits granted under section 63(7)
of the Motor Vehicles Act, 1939. corresponding to section
88(9) of the Motor Vehicles Act, 1988. The respondent-
States in these writ petitions are Haryana, Punjab, Gujarat,
Rajasthan and Madhaya Pradesh . There is a common Act- the
Punjab Motor Vehicles Taxation Act, 1924- which is
applicable to the States Punjab and Haryana. In each of the
other States there is a similar separate legislation. Under
the taxing power in the several Act provision has been made
for taxation as also for levy of additional tax. It is the
contention of the petitioners that the demand of additional
tax is neither compensatory nor regulatory and , therefore,
the levy is violative of Article 10(1)(g) read with Article
301 of the Constitution. In regard to the State of Punjab
and Haryana a special contention has been raised to effect
that rule 8(v) of the Punjab Motor Vehicles Taxation Rules,
1925 provide total exemption from liability of tax if the
vehicle is brought into Punjab and kept for use within the
State for a period not exceeding 30 days in a year and it
is the contention of the petitioners that since the
vehicles registered outside the State of Punjab and Haryana
are not kept within State for more than 30 days a year, the
demand of tax in the face of rule 8(v) is contrary to law.
In the State of Gujarat, the Bombay Motor Vehicles Tax
Act, 1958 has been amended, Section 3A of the Amending Act
provides that:
"3A (1) On and from the first day of April
1982 there shall
527
be levied and collected. on all ominibuses which are
exclusively used or kept for use in the State as contract
carriages (hereinafter in this section referred to as the
omnibus) a tax (hereinafter referred to as " the additional
tax") in addition to the tax levied under section 3, at the
rates fixed by the State Government by notification in the
official Gazettte but not exceeding the maximum rates
specified in the table below:
Description of Maximum rate of
an omnibus additional tax.
------------------------------------------------------------
A. ordinary (i) Monthly rate of Rs.
Omnibuses 240 per passenger
permitted to be carried.
(ii) Weekly rate of Rs. 80
per passenger permitted
to be carried.
(iii)Daily rate of Rs. 16 per
passenger permitteed to
be carried.
B. Luxury or tourist(i) Monthly rate of Rs. 360
Omnibuses per passenger permitted
to be carried.
(ii)Weekly rate of Rs. 120
per passanger permitted
to be carried.
(iii)Daily rate of Rs.
24 per passenger
permitted to be carried.
The validity of levy of this type came up for
consideration before this Court in the case of the
Automobile Transport (Rajasthan) Ltd.v. The State of
Rajasthan and Ors., [1963] 1 S.C.R.491. Four learned
Judges who constitued the ,majority held that the provisions
of Rajasthan Motor Vehicles Taxation Act, 1951 did not
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6
violate the provisions of Article 301 of the Constitution
and the taxes imposed under the Act were compensatory or
regulatory in nature which did not hinder the freedom of
trade, commerce and intercourse assured by that Article, At
page 586 of the Report the following test was indicated:
528
"It seems to us that working test for
deciding whether a tax is compensatory or
not is to inquire whether the trades people
are having the use of certain facilities for
the better conduct of their business and
paying not patently much more than what is
required for providing the facilities . It
would be impossible to judge the compensatory
nature of a tax by meticulous test, and in the
nature of things that cannot be done.
The same question came up for consideration before
a Two-Judge Bench in M/s. International Tourist
Corporation and Ors. v. State of Haryana and Ors,.,
[1981] 2 SCC 318. This Court followed the decision
referred to above of the larger group and observed:
"There cannot be the slightest doubt that the
State of Haryana incurs considerable
expenditure for the maintanance of roads and
providing facilities for the transport of
goods and passengers within the State of
Haryana . The maintenance of highways other
than the National Highways is exclusively the
responsibility of the State Government. While
the maintenance of National Highwauyys is the
responsibility of the Union Government, under
section 5 of the National Highways Act, that
very provision empowers the Central Government
to direct that any function in relation to the
developement and maintenance of a National
Highway shall also be exercisable by the
concerened State Government. Section 6 further
empowers the Central Government to give
directions to the State Government as to the
carrying out of the provisions of the Act and
section 8 authorises the Central Government to
enter into an agreement with the State
Government in relation to the developement
and maintenance of the whole or part of a
National Highway situated within the State
including a provision for sharing of
expenditure. Therefore, the State government
is not altogether devoid of responsibility in
the matter of developement maintenance of
National Highway, though the primary
responsibility is that of the Union
Government. It is under a statutory obligation
to obey the directions given by the Central
government with respect to the development
and maintenance of National Highways and may
enter into an agreement to share the
expenditure. That part of the Highway which
is within a municipal area is excluded from
the definition of a National
529
highway and therfore, the responsibility for
the development and maintenace of that part of
the Highway is certainly on the State
Government and the Municipal Committee
concerned. Since the development and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6
maintenance of the part of the Highway which
is within a municipal area is equally
inportant for the smooth flow of passengers
and goods along the National Highway it has to
be said that in developing and maintaining
the Highway which is within a municipal area,
the State Government is surely facilitating
the flow of passengers and goods along the
National Highway. Apart from this , other
facilities provided by State Government along
all Highways including National Highways, such
as lighting, traffic control, amenities for
passengers, halting places for buses and
trucks are available for use by everyone
including those travelling along the National
Highways . It cannot, therfore, be said that
the State Government confers no benefits and
renders no service in connection with traffic
moving along National Highways and is,
therfore, not entitled to levy a compensatory
and regulatory tax on passengers and goods
carried on National Highways.We are satisfied
that there is sufficient nexus between the
tax and passengers and goods carried on
National Highways to justify the imposition."
This view has been appoved in B.A. Jayaram and Ors.v.
Union of India and Ors.,[1984] 1 S.C.C. 168. That case
also relates to permit holders under section 63(7) of the
Motor Vehicles Act, 1939, and challenge of the present type
was negatived in the case. Law is settled that uphold levy
of a tax of this type, what is necessary is existence of a
nexus between the subject and the object of the levy and
it is not necessary to show that the whole or substantial
part of the tax collected is utilised. We are, therefore,
satisfied that the demand of tax is not open to challenge
and the plea raised against the levy, whether of tax or
additional tax, is not justified.under the taxing provision
a statutory outer limit has been provided and the actual
amount is left to be determined by the State Government by
notification. Obviously, discretion is left with the State
Government to demand at a rate which in a given situation
would be justified. Once it is held that the tax is either
compensatory or regulatory that forms the guideline for the
State Government to keep in view to determine the rate at
which within the upper limit fixed by law the demand has to
be made.
The second contention which has been raised is
applicable to the
530
State of punjab and Haryana and that depends upon the scope
of rule 8(v) of the Punjab Motor Vehicles Taxation
Rules,1925. We note that the provision perscribes that a
motor vehicle temporarily brought into Punjab and kept for
use therein for a period not exceeding 30 days is entitled
to total exemption and that is not in dispute before us. Nor
is it in dispute that the rule applies to Haryana . The
words ’Kept for use’ came up for consideration in the case
of International Tourist Corporation (supra) where this
Court held that once a vehicle is used within the State the
Taxable event occured and it must be taken for use. In State
of Mysore and Ors.v. M/s. T.V. Sundaram Iyengar & Sons(P)
Ltd., (1980) 1 S.C.C. 66 the meaning of ’kept’was examined
at length and this Court held that vehicle in transit
through the State of Mysore, or even making a necessary
halt for a short interval, during transit , cannot be said
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6
to be a vehicle ’kept’ for use on roads in the State of
Mysore. The word ’kept’ has not been defined in the Act. It
must , tharefore, be interpreted in its ordinary popular
sense consistent with the context. The ordinary dictionary
meaning of the word ’kept’ is ’to retain’, ’to maintain’ or
’cause to stay or remain in place’ or ’to detrain’ or ’to
stay or continue in specified condition, position etc.’ It
is something different from a mere state of transit or a
course of journey through the State. It is something more
than a mere stoppage or halt for rest, food or refreshment,
etc. in the course of transit through the territory of the
State. That being the position rule 8(v) which uses the
terms ’kept for use’ may not cover a case of bare transit
and in terms of the rule exemption is available for vehicle
kept upto 30 days in a year. In that view of the matter
tourist vehicles registered outside the State of Punjab and
Haryana when brought into these two States for regular use
and not by way of transit and when used for more than 30
days in a year would attract taxability otherwise the
exemption provision in rule 8(v) would be available . We
have settled the legal position and we leave it to the
individual taxing authorities as also the operators of
tourist vehilces to work out their respective rights.
We would , therefore , like to clarify that the first
aspect being a challenge against the taxing provision
whether by way of tax or additional tax is rejected and the
question of exigibility of tax in the States of Punjab and
Haryana with reference to rule 8(v) of the Punjab Motor
Vehicles Taxation rules, 1925 is left to be determined in
individual cases as and when raised. There would be no order
as to costs.
G.N. Petitions deposed of.
531