TMI Blog2000 (2) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 1954, are under challenge. All these notices relate to demand for tax under the Act for the period commencing from 1-4-1997 to 31-3-2000 and have been raised by notices dated 11th Jan. 2000. The petitioners have challenged the said demand notices on the ground that machines/dumpers are not 'motor vehicle' within the meaning of Rajasthan Motor Vehicles Taxation Act, 1951 for the purpose of levying tax thereon though they are registrable under the Motor Vehicles, Act, 1988 and that the demand notices have been issued without first assessing the liability of the petitioners to tax. without affording any opportunity of hearing, demand notices have been issued directly without preceding assessment of tax. 3. The learned single Judge in the first instance upheld the preliminary objection on behalf of the respondents that the present petition is not maintainable because of the principle enshrined in the provisions of Order 2, Rule 2 of the Code of Civil Procedure as well as on the principle of constructive res judicata. The learned Judge also upheld the preliminary objection of the respondents that as appeal was provided against the demand notice, there was an alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the challenge to the demand notices issued subsequent to the decision of the earlier writ petition. It is obvious that the cause of action for present proceedings has not arisen not even during the pendency of earlier writ petition where the petitioners could have incorporated the challenge to subsequent notices by seeking amendment. In such event also the suit or is not under obligation to seek amendment necessarily. He is free to file fresh suit on fresh cause of action. Only inhibition in such event may be about trial of an issue, which has been directly and subsequently in issue in the earlier lis, and which has been FINALLY decided between the parties. That finding becomes binding on the parties to earlier suit. The principle will be illustrated. If we assume that instead of dismissing the earlier petition had this Court allowed the same; and the impugned notices had come in existence thereafter. Notwithstanding decision of earlier petition, the only mode by which the petitioner could have got extricated itself from effect of such notice, was to have recourse to remedial forum. Had the earlier decision by this Court become final, the assessing officer or the other re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties, they cannot operate as res judicata much less as constructive res judicata, where an appeal is filed against an order, or Judgment or decree, the finality of decision of the lower Court is destroyed, and the matter again becomes sub-judice. The Privy Council in Annamalay v. Thornhill, AIR 1931 PC 263 expressed the effect of appeal on operation of principle of res judicata in following words. Where an appeal lies, the finality of decree on such appeal being taken, is qualified by the appeal and the decree Us not final in the sense that it will form res judicata as between the same parties. 6. In the present case, on the facts noticed in the order under appeal, the order passed in CW No. 3599/999 on 9-12-1999 has been made subject matter of Special Appeal No. 1540/99, which was pending. Thus, the matter which was in Issue in the Writ Petition No. 3579/99 again became sub-judice and there was no final decision which could operate as res judicata in subsequent proceedings that too relating to new cause of action that has arise subsequently. 7. There is yet another reason for us not to sustain this reason given by the learned single Judge for dismissing the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reached his own conclusion. Obviously decision was In respect of a different article, and in the context of a notification issued specifically to cover such article. Such are not the facts of the present case. In the aforesaid circumstances, when the petition has been dismissed with reference to an earlier decision, which itself has been dismissed with reference to another decision, the findings given in the case are not clear on the merits of the controversy. 10. There is yet another reason that makes us think that rule of constructive res judicata in the facts and circumstances of the present case cannot be invoked. The well settled principle in connection with taxing statute is that tax liability is determined for a period which constitute independent proceedings. The findings reached in respect of one period does not generally operate as res judicata, so as to debar either party from raising same or additional ground in respect of respective stands taken by the revenue or the tax payer as the case may be, in respect of determination of liability for subsequent period. Nor it is appropriate to apply rule of constructive res judicata so as to debar a party of rasing same o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants in the present proceedings are in respect of the tax levied for a period different from the period covered by the notices issued on August, 23, 1958 which were the subject matter of the earlier writ proceedings (The Amalgamated Coalfileds Ltd. (2)). Where the liability of a tax for a particular year is considered and decide, does the decision for that particular year operate as a res judicata in respect of the liability for a subsequent year? In a sense, the liability to pay tax from year to year is a separate and distinct liability, it is based on a different cause of action from year to year, and if any points of fact or law are considered in determining the liability for a given year, they can generally, be deemed to have been considered and decided in a collateral and incidental way. The trend of the recent English decisions on the whole appears to be, in the words of Lord Radcliffe, that it is more in the public Interest that tax and rate assessments should not be artificially encumbered with estoppels (I am not speaking, of course, of the effect of legal decisions establishing the law, which is quite a different matter), even though in the result, some expec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain came to be considered by Supreme Court in Devilal's case (AIR 1965 SC 1150) (supra) in respect of another tax matter. The assessee had challenged validity of Sales Tax Imposed upon him for a particular period under Article 226. The petitions were rejected on merits by the High Court of Madhya Pradesh. Appeals against the same too were dismissed by the Supreme Court. The assessee sought to raise additional points before Supreme Court which were refused to be raised because the same were not earlier raised before High Court. Subsequently the assessee again challenged the very same assessment order before High Court by filing another petition under Article 226, raising the additional grounds. The petition was dismissed by the High Court. The Supreme Court upheld the applicability of principles of res Judicata Including that of constructive res judicata, where the subject matter was the orders relating to same period as were subject matter In previous proceedings. However, the Court clearly emphasised the distinction between the cases where the same order is being challenged again in successive proceedings by raising one or two new grounds on the one hand and the cases relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f recovery of tax. In the present case there is no order relating to determination of recovery. It has been urged that considering the demand notice an order relating to the determination of recovery of tax, the same could be appealed against under the Act. 20. We are not impressed by the contention of learned counsel for the respondents that no separate assessment order is envisaged and the assessing officer is not required to hear the owner of the vehicle before determining the tax to be recovered from him by treating the vehicle to be Motor Vehicle for the purposes of the Taxation Act. The fact that the Act does not make any elaborate provision for making an assessment before raising a demand as has been provided in many other taxing statutes like Income-tax or the Sales Tax, or the Central Excise Duty Act, it cannot be gain said that before recovery is to be made, an order relating to determining the tax to be recovered has to be made. Firstly we may examine the scheme of the Act as to right to appeal. Section 14 of the Act of 1951 provides for appeal which reads as under :-- 14. Appeal. -- (1) Any person aggrieved by an order relating to the determination of recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gazette which shall not exceed 5% of the cost of the chassis/vehicle per annum : Provided that where the rates are not specified on quarterly or monthly basis, by the State Government, by notification in the official gazette and if the tax is permissible to be paid quarterly or monthly the amount payable shall be equivalent to the one forth or one twelfth respectively of the annual rate of tax. (b) A one time tax in the case of non-transport vehicles at such rates as may be notified by the State Government by notification in the official gazette which shall not exceed 10% of the cost of the vehicle: Provided that in addition to one time tax there shall be paid by the owner or person having possession or control of a motor vehicle on which one time tax is payable, any tax or penalty as was payable under this Act for any period prior to the coming into force of the provisions of the Chapter V of the Rajasthan Finance Act, 1997 (Rajasthan Act No. 9 of 1997) at such rates as were applicable to such vehicles from time to time. (c) A tax in respect of vehicles registered outside the State using roads in Rajasthan or under temporary permits, at such rates as may be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle for the purpose of computation of Tax shall include purchase price and such other elements as may be prescribed by the State Government. (2) For determining the vehicle kept in possession of a dealer or manufacturer, the number of vehicles declared by them likely to be in their possession or the vehicles sold by them during the preceding year, whichever is higher, shall be taken into consideration. There is no impost of tax unless facts necessary for such levy are established before raising demand. 21. The charging Section informs us that the facts which are necessary for levying and collecting tax under the Act are that there must be a motor vehicle in existence and secondly such motor vehicle should be used or kept for use in the State and that such user must relate to use of public roads, within the State Inasmuch as the tax is compensatory tax for use of public roads within State in accordance with authorisation under Entry 57 of the II List. Subsection (2) of Section 4 makes it amply clear that for the period during which the owner surrenders the certificate of the registration in the prescribed manner for satisfying the taxation officer that the vehicle has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the determination of a liability arising on account of levy of tax is a proceeding which is quasi judicial in nature. A fair and adequate opportunity of hearing to the affected party is necessary concomitant of every State action affecting any person, unless expressly or by implicit implication it is excluded by the statute. One need not elaborate on it. It is so well ingrained in the scheme of our constitutional administration. If the contention of the learned counsel for the respondents is to be accepted, it would mean that the assessing officer is never called upon to decide the foundational facts necessary for levy of tax and he can without determining the levy embark upon proceedings of collection of tax may be within his competence or without his competence and the tax payer exercise his right of hearing only before appellate authority without having any chance to urge before the original authority and convince him not to make the impugned order at all, because no tax is leviable. There is no explicit exclusion of natural justice. We do not find any such exclusion by necessary implication either from the provisions of the Motor Vehicles Taxation Act, 1951. Making an order det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and could, therefore, be treated as void or non est, in all other cases Courts should not entertain petition under Article 226 of the Constitution and prayer for granting relief cannot be accepted. Thus, the two well known exceptions to the entertainability of the petition under Article 226 of the Constitution of India in the face of alternative remedy are; (i) where there is lack of complete jurisdiction on the part of authority making the order, and (2) the order being prejudicial to the writ petitioner is made in violation of the principles of natural justice. The principle has since not been departed from. 25. In the present case, it is not in dispute that before raising demand vide Annex. 4/1 to 4/27, no notice was issued to the assessee for considering any objection as to the liability to be assessed to tax, nor an opportunity has been offered to the petitioners to show to the assessing authority even after proposing to raise a demand to raise objection to it, if he has any. 26. We are, therefore, of the opinion that the petition filed by the petitioners could not have been rejected on either of the preliminary objections raised by the learned counsel for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remanded to the original assessing authority Instead of directing the appellate authority to continue with the proceedings of the appeal. Learned counsel further states that the orders being made in this behalf by this Court he shall withdraw the appeal filed by him before the appellate authority which has only been filed because of the observations made by the learned single Judge. 29. In the facts and circumstances, we are of the opinion that the contention of learned counsel for the appellant has merit. We have already come to the conclusion above that it is for the assessing officer in the first Instance to determine the questions relating to recovery of demand and make a demand by passing an order before he can actually resort to recovery. For filing an appeal before the appellate authority such an order is sine qua non and an appellate authority cannot be directed in the first instance to decide the questions of fact and allowed to act as first authority without the assessing authority ever been called upon to decide those questions. In the present case. It is also apparent that while the directions of this Court are to the original authority to decide the disputed questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l clause, before it came into existence in the present form, read : Words and expressions used but not defined in this Act and defined in the Motor Vehicles Act. 1939 (Central Act CIV of 1939); have the meanings assigned to them in that Act. Thereafter it was substituted by Section 2 of Rajasthan Act No. 20 of 1982 published in the Rajasthan Gazette Part 1VA of extraordinary Gazette of 30th Sept., 1982 with the following: (e) Words and expressions used but not defined in this Act and defined in the Motor Vehicles Act. 1939 (Central Act IV of 1939) shall have the meaning assigned to them in that Act as amended from time to time. Thereafter when 1939 Act was repealed with the commencement of the Motor Vehicles Act, 1988 the definition was further substituted vide Rajasthan Act No. 14 of 1990 and the clause (e) reads now as under:-- (e) Words and expressions used but not defined in this Act and defined in Motor Vehicles Act, 1988 (Central Act 59 of 1988) and Central Motor Vehicles Rules, 1989, shall have the meaning assigned to them in that Act and Rules as amended from time to time. 31. Learned counsel, therefore, submits that the vehicles having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or use within the State by the owner thereof. The taxation of motor vehicles falls within the exclusive competence of the State legislation under Entry 57 of the II List of the Seventh Schedule of the Constitution of India. Article 265 of the Constitution of India ordains that no tax shall be levied and collected except by authority of law. Schedule Seventh of the Constitution defines the legislative fields within which the different legislatures of the country can operate. List I enumerates the subjects on which the Parliament has the exclusive powers to legislate. List II enumerates the subjects on which the State legislature have exclusive powers to legislate and the List III enumerates the fields on which Parliament as well as the State Govt. has concurrent authority to legislate. Taxation on vehicles falls within Entry 57 of List II which reads as under :-- 57. Taxes on vehicles, whether mechanically propelled or not suitable for use on roads including tramcars subject to the provisions of Entry 35 of List III. 34. There is no dispute about the fact that the Act of 1951 with which we are concerned, has been enacted by State legislature in exercise of this power. Ambit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be exercised to impose taxes on motor vehicles which use the roads in the State or are kept for use thereon either throughout the whole area or parts thereof and are sufficient to make and maintain such roads. The Taxation Act is a regulatory measure imposing compensatory taxes for the purpose of raising revenue to meet the expenditure for making roads, maintaining them and for facilitating the movement and regulation of traffic. The validity of the taxing power under Entry 57, List II of the Seventh Schedule read with Article 301 of the Constitution depends upon the regulatory and compensatory nature of the taxes. It is not the purpose of the Taxation Act to levy taxes on vehicles which do not use the roads or in any way form part of the flow of traffic on the roads which is required to be regulated. The regulations under the Motor Vehicles Act for registration and prohibition of certain categories of vehicle being driven by persons who have no driving licence, even though those vehicles are not plying on the roads, are designed to ensure the safety of passengers and goods etc. etc. and for that purpose it is enacted to keep control and check on the vehicles. Legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitutional limit of the legislative competence as laid down by the Supreme Court in the aforesaid decision to construe the words 'used or kept for use in the State' in the Taxation Act as 'used or kept for use on the public roads In the State.' 38. It may be equally important to notice that under Sub-section (2) of Section 3 of the Kerala Motor Vehicles Taxation Act, 1963 a deeming provision was made that registered owner or any person having possession or control of a motor vehicle of which certificate of registration is current, shall be deemed to use or deemed to keep such vehicle for use in the State except for any period for which Regional Transport Authority has certified in the prescribed manner that the motor vehicle has not been used or has not been kept for use. We do not find any such legal fiction laying down the rule of evidence raising presumption about the use of vehicle which is registered under the Motor Vehicles Act and the registration of which is current in use within the State during the period for which notices have been served. Therefore it has to be established as a fact, when this part of the condition of levy is disputed by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant entry in the tariff under the Excise Act levying duty on tyres was 16 which is in respect of the tyres in three categories viz. (1) tyres for motor vehicles, (2) for cycles other than motor cycles and (3) all other vehicles. Thus tyres for Motor Vehicles were treated differently. Question that arose was. whether tyres on which dumpers were loaded, were used in motor vehicles. Entry 34 of the tariff prescribed duty on motor vehicles. That entry reads as under :-- Item No. 34 - Motor Vehicles Item No. Tariff Description Rate of duty 34. Motor vehicles (Motor Vehicles' means all mechanically propelled vehicles adapted for use upon roads, and Includes a chassis and a trailer, but does not Include a vehicle, running upon fixed rails- (1) Auto-cycles, motor-cycles, scooters, auto-rickshaws and any other three wheeled motor vehicles 10% ad valorem (2) Motor vehicles of not more than 16HP by Royal Automobile Club (RAC) rating 25% ad valorem (3) Motor cars of more than 16HP by Royal Automobile Club (RAC) rating constructed or adapted to carry not more than 9 persons 40% ad valorem (3A) Tractors, including agricultural tractors 15% ad valorem (4) Motor vehicles, not ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, AIR 1975 SC 17 the Taxation Act of Orissa State was considered as it was existing prior to 1975- The provisions in Orissa Act at that time had not adopted the definition of 'motor vehicle' of the Motor Vehicles Act, 1939 as amended from time to time but had only adopted the definition in the Motor Vehicles Act, 1939 simplicitor at the time of its enactment. The Court answered the question by invoking the doctrine of legislation by incorporation. 'Motor Vehicle' at the time of the enactment of the Orissa Act defined 'motor vehicle' as under (Para 8) :-- motor vehicle means any mechanically propelled vehicle adapted for use upon roads whether the power of 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 used solely upon the premises of the owner. 45. For considering that the enquiry for determining whether the propelled vehicle is a motor vehicle adapted for use Upon roads, it has also to take into consideration that the definition has excluded all vehicles running upon fixed rails or used sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Motor Vehicles Act by the amendment of 1956 referred to above. Considering that the plain and clear object of the amendment was to legislate retrospectively on the subject directly Instead of by incorporation, as done earlier, so as to bring uniformity in the post amendment effect of Section 2(18) of the Act and therefore, the effect of Bolani Ores case to the extent the vehicles of any kind used solely on the premises of the owner were not treated motor vehicles, was nullified by amending the provisions of the Act Itself. The Court in Central Coal Fields case was dealing with the amended provisions of the Orissa Act where the actual user did not exclude the dumpers in question before the Court from the definition of motor vehicle' if other wise it can be held that they are adapted for use on public roads. It is relevant to notice that the decision in Central Coal Fields Limited was rendered only on facts of the case but did not lay down that in all cases and in all circumstances the dumpers or rockers are vehicles. The Court said (Para 8 of AIR 1992 SC 1371) :-- On the facts situation, we have no hesitation in holding that the High Court was right in concluding that Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it prohibits the tax-payer from raising plea that it is a vehicle of special type adapted for use only in a factory or In any other enclosed premises. In this connection, it becomes further relevant to consider the ambit and scope of the meaning 'adapted for use upon roads' for the purposes of taxation, as that expression in identical language has been interpreted by the Supreme Court by a larger Bench in Goodyear's case (AIR 1997 SC 2038) without deviating from the view expressed in the Central Coal Fields case and Chowguley and Company's case to mean 'the dominant use of the vehicle' is the determining factor. The Court said that merely because, the areas on which such heavy movers traverse might sometimes include roads also is not enough to hold that they were 'adapted for use upon roads'. Such use of the heavy mover on the road may only be ancillary or incidental to the main use of It. Emphasis In the definition must be on the words use upon road as those words would denote the principal or dominant use and not where it may move incidentally. This enunciation makes it imperative in the context of the controversy which is to be decided when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by Exs. 4/1 to 4/27 Is set aside and the notices are treated as notices to show cause against the demand proposed to be raised vide those notices and the assessee is given an opportunity of hearing, if he has any objection to such demands by raising necessary objections and is given opportunity to lead evidence, if any, in support of his plea. This course has also been adopted by this Court while allowing the earlier appeals filed by the present appellant in D.B. Civil Special Appeal No. 1540/99 wherein the Court has directed in respect of demands raised in earlier orders to appear before the assessing officer and raise all the objections within stipulated time. 55. We have deemed it necessary to discuss in detail the scheme of the Act about the ambit and scope of enquiry to be held by the assessing officer for the purposes of determining the questions on which liability to tax under charging provisions depends. 56. Accordingly, we allow this appeal as well as the petition filed by the petitioners, set aside the demand raised vide Annexures 4/1 to 4/27 by treating the same to be the show cause notices against proposed levy of tax under the Act of 1951. The appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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