Full Judgment Text
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PETITIONER:
TATA ENGINEERING & LOCOMOTIVE CO. LTD.
Vs.
RESPONDENT:
THE SALES TAX OFFICER & REGIONAL TRANSPORTOFFICER, POONA AND
DATE OF JUDGMENT22/11/1978
BENCH:
FAZALALI, SYED MURTAZA
BENCH:
FAZALALI, SYED MURTAZA
BHAGWATI, P.N.
SARKARIA, RANJIT SINGH
CITATION:
1979 AIR 343 1979 SCR (2) 357
1979 SCC (1) 208
ACT:
Bombay Motor Vehicles. (Taxation on Passengers) Act,
1958, Section 2(1), (7) and 3 read with Preamble-Whether
transport service registered as a ’private service vehicle
providing exclusively transport service to employees of the
company a public service vehicle, so as to be exigible to
passenger tax under the Bombay Act, 1958.
HEADNOTE:
The appellants are a Company registered under the
Companies Act, 1913 and provide transport facilities to
their employees at a nominal rate from certain pick-up
places to their factories at Pimpri and Chinchvad in
district Pune (Maharashtra) in their transport vehicle
registered as "private service vehicle" within the meaning
of the Bombay Motor Vehicles Rules 1959. The Bombay High
Court held that the transport vehicle provided to the
employees by the company would be a public service vehicle
and therefore, the respondents sought to levy a tax on
passengers under the charging section 3 of the Bombay Motor
Vehicles Taxation on Passengers) Act, 1958. A challenge to
the said levy having been rejected by the Commissioner of
Pune the appellant obtained special leave of this Court.
Allowing the appeals, the Court
^
HELD: 1. The preamble to the Bombay Motor Vehicles
(Taxation on Passengers) Act, 1958 clearly reveals that the
dominant object of the Act was to impose tax on certain
classes of public service vehicles. In other words, the
Preamble indicates that vehicles which could not be termed
as public service vehicles fell beyond the ambit of the
taxing provisions of the Act. [359 G-H]
2. Though the Act and Rules made thereunder do not
define the term "public service vehicle", it is clear that,
from the Preamble of the Act that the tax can be levied only
on passengers who are carried by a stage carriage which is
of‘ the nature of Public Service Vehicle. [361A-B]
3. Section 3 of the Act which authorises the levy of
tax on all passengers carried by road in state carriages
contains two essential ingredients (1) that the transport
concerned must carry passengers by road, and (2) that each
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passengers must be carried in stage carriages, that is to
say, as defined in Section 2(7) of the Act, passengers must
be carried for hire or reward at separate fares paid by or
for individual passengers, either for the whole journey or
for stages of the journey. [360F-G]
4. A combined reading of section 7 (1) which defines
’passenger’ and section 2(7) which defines ’stage carriage.
Of the Act clearly indicates that the tax would be leviable
only if the passengers are carried on a public service
vehicle. [361A]
358
5. The word ’Public’ has got a well known connotation
and means a carriage to which any member of the public can
have free access of payment of the usual charges. It cannot
by any process of reasoning or stretch of imagination be
deemed to include employees of a private company who are
given facilities not as members of the public but as holding
a status namely, the employees of that company. Thus, qua
public the employees from a separate class and cannot be
said to be public as contemplated by rule 2(i). [361-C]
6. In the present case:
(a) The transport service which was registered as a
private service vehicle falls squarely within the ambit of
the definition of ’private vehicle service in the Bombay
Motor Vehicles Rules, 1959. [361E]
(b) The transport provided to the employees of the
company was reserved for them only and no other member of
the public even if he wanted to pay full charges could be
carried on the said vehicle. In these circumstances,
therefore, it cannot be said that the transport vehicle
provided to the employees by the appellants could be a
public service vehicle in any sense of the term. Such a
transport vehicle, being not a public service vehicle within
the meaning of the provisions of the Bombay Motor Vehicles
Act, the view taken by the Bombay High Court is clearly
erroneous. [361F-G, 362B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 204-226
of 1978.
Appeals by Special Leave from the order dated 29-11-
1977 of the Commissioner, Pune Division, Pune in Passenger
Tax Appeals Nos. POI-1/56 AR-12, 24, 27, 32, 42, SO and 17
other appeals.
F. S. Nariman Ravinder Narain and K. J. John for the
Appellant.
V. S. Desai M. C. Bhandare (In CA 209/78) and M. N.
Shroff for the Respondents.
Ravinder Narain and K. J. John for the Interveners-
Sandvik Asia Ltd. S. K. F. Cooper Engineering Ltd. Bharat
Forge Ltd. and Bajaj Auto Ltd.
The Judgment of the Court was delivered by
FAZAL ALI, J. These appeals by special leave arc
directed against an order of the Commissioner of Pune dated
29-11-1977 dismissing the appeals and holding that the
challenge to the tax sought to be realised by the Revenue
was not tenable and the appellants were liable to pay the
tax as also the penalty.
The appellants are a company registered under the
Companies Act, 1913 and have their factories at Pimpri and
Chinchvad in the District of Pune (Maharashtra). The
appellants employ as many as 7.000 workmen in those
factories. In order to provide transport
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359
facilities to their employees to come to the factories from
their respective villages the appellants provided transport
which would pick up passengers from Pune or Khed or Vadgaon
or Alandi or places enroute to TELCO Factory at Pimpri or
Chinchvad and back. For this journey a nominal charge of Rs.
10 per month was realised by the appellants from the
employees. Similarly, for the transport facilities provided
to the employees from Pimpri Railway Crossing and onwards to
TELCO factory, they were charged at the rate of Rs. 5 per
month. A charge of Rs. 2 per month was levied for the
transport of employees from Chinchvad Village to TELCo
factory at Pimpri and back. the appellants further averred
that these amounts were realised by the appellants only from
a particular category of employees and no charges were
levied in respect of those employees who were in the
supervisory grades. In the course of the arguments, it was
pointed out that when the company was prepared to grant free
transport facilities to the supervisory staff there was no
reason why the same amenities should not be extended to the
other employees and Mr. Nariman, learned counsel for the
appellants frankly conceded that in future no charges would
be realised from the employees and they would he provided
free transport as in the case of supervisory staff. It is
manifest that if the appellants had not levied any charge at
all for the transport facilities granted to the employees
they would not be exigible to passenger tax. Mr. Nariman,
however, argued that even if a nominal charge is realised
from the employees that would not make the transport a
public service vehicle carrying passenger;, so as to attract
the provisions of section 3 which is the charging section of
the Act. In our opinion, the contention of the learned
counsel is well founded and must prevail.
The Bombay Motor Vehicles (Taxation on Passengers) Act,
1958 hereinafter called the Act is a statute which
authorises the levy of passenger tax. This Act has been
amended several times right from the year 1960 to 1975.
Before analysing the relevant provisions of the Act, it may
be necessary to extract the Preamble to the Act which runs
thus:-
..Whereas it is expedient lo provide for the levy
of a tax on passengers, carried in certain classes of
public service. vehicles in the State of Bombay. It is
hereby enacted in the Ninth Year of the Republic of
India as follows."
A perusal of the Preamble clearly reveals that the
dominant object of the Act was to impose tax on certain
classes of public service vehicles. In other words, the
Preamble indicates that vehicles which could not be termed
as public service vehicles fell beyond the ambit of the
taxing provisions of the Act.
360
Section 2(7) of the Act defines ’stage carriage’ thus:-
"’stage carriage’ means 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, and includes such a carriage or other omnibus
when used as a contract carriage within the meaning of
the Motor Vehicles Act, 1939".
Section 3 which is the charging section runs thus:-
"3. (1) There shall be levied and paid to the
State Government a tax on all passengers carried by
road in stage carriages at such rate to be filed by the
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State Government from time to time by order in the
official Gazette as would yield an amount not exceeding
twenty per cent of the inclusive amount of fares
payable to the operator of a stage carriage.
(2) After calculating the total amount of tax
payable under sub-section (1) out of the total amount
received by an operator during each month on account of
inclusive fares in respect of the stage carriage or
stage carriages held by him the total amount of the
tax shall wherever necessary be rounded off to the
nearest naya paisa, fractions of half a naya paisa and
over being counted as one and less than half being
disregarded".
Thus section 3 authorises the levy of tax on all passengers
carriages by road in stage carriages. This section contains
two essential ingredients: (1) that the transport concerned
must carry passengers by road, and (2) that such passengers
must be carried in stage carriages. that is to say, as
defined in section 2(7) of the Act, passengers must be
carried for hire or reward at separate fares paid by or for
individual passengers, either for the whole journey or for
stages of the journey.
Rule 2(i) of the Bombay Motor Vehicle Rules, 1940
framed under the Bombay Motor Vehicles Act, 1939 defines
’passenger’ thus:-
" ’passenger’ for the purposes of the rules in
Chapter IV means any person travelling in a public
service vehicle other than the driver or the conductor
or an employee of the permit holder while on duty".
361
A combined reading, therefore, of rule 2(i) and section
2(7) of the Act clearly indicates that the tax would be
leviable only if the passengers are carried on a public
service vehicle. It is true that the term ’public service
vehicle’ has not been defined either by the Act or by the
Rules, but that however does not create any difficulty,
because having regard to the Preamble of the Act we are of
the opinion that the tax can be levied only on passengers
who are carried by a stage carriage which is of the nature
of a public service vehicle. The word ’public’ has got a
well known connotation and means a carriage to which any
member of the public can have free access on payment of the
usual charges. It cannot by any process of reasoning or
stretch of imagination be deemed to include employees of a
private company who are given facilities not as members of
the public but as holding a special status, namely, the
employees of that company. Thus, qua public the employees
form a separate class and cannot be said to be public as
contemplated by rule 2(i).
On the other hand, the Bombay Motor Vehicles Rules 1959
define ’private service vehicles’ as follows:
"Private Service Vehicle’ means any omnibus
constructed or adapted to carry more than nine persons
excluding the driver and ordinarily used by or on
behalf of the owner of such vehicle for the purpose of
carrying persons for or in connection with his trade or
business, or otherwise than for hire or reward; but
does not include a motor vehicle used solely for Police
purposes".
The transport service in the present case which was
registered as private service vehicle falls squarely within
the ambit of the aforesaid definition Moreover, in the
instant case, it is not disputed that the transport provided
to the employees of the company was reserved for them only
and no other member of the public even if he wanted to pay
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full charges could be carried on the said vehicle. In these
circumstances, therefore, it cannot be said that the
transport vehicle provided to the employees by the
appellants could be a public service vehicle in any sense of
the term. Mr. Nariman drew our attention to a number of
rules and forms in order to illustrate his point that
private service vehicle was beyond the ambit of the charging
section. In view of what we have already said, it is not
necessary for us to go into such meticulous details, because
the legal position appears to be clear enough. As counsel
for the appellants has already undertaken not to charge any
amount from the employees for providing transport
facilities, the point has now become more or less academic.
The Commissioner appears to have dismissed the appeals of
the appellants 5-978 SCI/78
362
as he felt bound by the judgment of the Bombay High Court
which had held that the transport vehicle provided to the
employees by the company would be a public service vehicle.
In view of our finding that such a transport vehicle is not
a public service vehicle within the meaning of the
provisions of the Bombay Motor Vehicles Act, the view taken
by the Bombay High Court is clearly erroneous and must be
overruled.
For these reasons, therefore, the appeals are allowed
and the order of the Commissioner imposing the tax is set
aside. The appellants would he entitled to one set of costs.
S.R. Appeals allowed.
363