TMI Blog2004 (4) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, the Bombay Motor Vehicles Tax Act was amended by Gujarat Act No.9 of 2002 in order to validate the imposition and collection of tax on designated omnibuses, which was published in the Gazette on 31.3.2002. Writ Petition Nos.249 and 252 of 2002 have been filed in this Court challenging the amendments made by the aforesaid amending Act. 2. It will be convenient to reproduce relevant provisions of the statute which was subject matter of challenge before the Gujarat High Court. The Bombay Motor Vehicles Tax Act, 1958 (hereinafter referred to as the Act ) was made applicable to the State of Gujarat by the Gujarat Adoption of Laws (State and Concurrent Subjects) Order, 1960. The Act was amended several times and lastly on 6.2.2001 by Gujarat Act No.2 of 2001. Section 2 of this Act gives the definitions and Sub-section (1) defines certificate of taxation and it means a certificate, issued under Section 5, indicating therein the rate at which the tax is leviable, and the periods for which the tax has been paid, Sub-section (5) defines registered owner and it means the person in whose name a motor vehicle is registered under the Motor Vehicles Act, 1939 (or, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be carried. 2.(a) Luxury or tourist designated omnibuses permitted to be carried not more than twenty passengers. (Rs.4,050) per passenger permitted to be carried. (b) Luxury or tourist designated omnibuses permitted to be carried more than twenty passengers. (Rs.6,000) per passenger permitted to be carried. Provided that in the case of the designated omnibuses used solely for the purpose of transporting students of educational institutions in the State in connection with any of the activities of such educational institutions a tax shall be levied and collected under sub-section (1) of section 3, and not under this sub-section. (2) (a) The tax leviable under sub-section (1) shall be paid in advance by every registered owner or any person having possession or control of the designated omnibuses either annually at the annual rate specified in the Table appearing in sub-section (1) or in monthly instalments of one-twelfth of the annual rate. (b) The annual payment of tax or the payment of monthly instalment of tax shall be made within such period and in such manner as may be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of such omnibus for each complete month of the period of which the tax has been paid : Provided that for the purpose of determining the amount of refund under this clause only such of the period in which a designated omnibus has not been used or kept for use shall be taken into account as comprises of complete months. (6) [Omitted as not relevant] Section 4(1) provides that the tax leviable under Section 3 in respect of a motor vehicle specified in the First Schedule shall be paid in advance by every registered owner, or any person having possession or control, of such motor vehicles to which sub-section (IAA) does not apply. 3. The Bombay Motor Vehicle Rules, 1959 (hereinafter referred to as 'the Rules') were amended by Bombay Motor Vehicles Tax (Gujarat Amendment) Rules, 2001 vide notification dated 6.2.2001 and after amendment Rule 5 reads as under : (1) A registered owner or any person who has possession or control of a motor vehicle in respect of which tax is paid in advance, not intending to use or keep for use such vehicle in the State and desiring to claim refund of tax on that account shall before the commencement of the period for which the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special provision with regard to the designated omnibuses and prescribes the annual rate of tax for ordinary, luxury or tourist designated omnibuses having regard to their passenger carrying capacity which are used or kept for use in the State. The challenge here is to Section 3A and, therefore, we will confine to the said provision. Sub-section (2)(a) of Section 3A enjoins that the tax shall be paid in advance by every registered owner or any person having possession or control of the designated omnibuses either annually or in monthly instalments. Sub-section (5)(a) of Section 3A provides for refund of the tax already paid in advance where the registered owner or any person having possession or control of a designated omnibus satisfies the Taxation Authority that the vehicle had not been used or kept for use for a continuous period of not less than one month. Sub- section (5)(b) contains a similar provision of refund where the vehicle has not been used or kept for use for continuous period of not less than one month but exceeding three months in a year. But here the power of refund has been conferred upon the State Government or such officer not below the rank of the Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard were pending for a long period. The High Court has held that the impugned tax was a composite tax and not on passengers alone; the demand of advance tax on passengers for one month was beyond the legislative competence as Entries 56 and 57 of List II of Seventh Schedule of the Constitution do not authorise levy of advance tax; similarly the demand of advance tax on vehicles which are not put on road or which are kept away from use was also beyond the legislative competence and the provision for payment of advance tax and Rule 5 were without any authority of law. The High Court further held that the mere fact that there was a provision for refund of the advance tax paid, could not save the enactment as the levy of advance tax itself was without any authority of law. On these findings, the writ petitions were allowed and Section 3A (1) and (2) of the Act and Rule 5 of the Rules as inserted vide notification dated 6.2.2001 and also a subsequent circular dated 8.2.2001 were struck down. 6. Learned counsel for the writ petitioners (here as well as before the High Court operators of vehicles) have submitted that the tax is essentially a tax on passengers since rate of tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in question is levied under Entry 56 or 57. Learned counsel has further submitted that if income tax can be levied on income and there are provisions in the Income Tax Act for levy of advance tax even when the income in question has not been earned, with a machinery for refund, there is no reason why even under Entry 56 or 57, the tax cannot be levied when the presumption of the vehicle being made for use of passengers arises and taxable event has taken place. Learned Solicitor General has also submitted that the contention that the contract carriages have been levied a higher tax ignores the accepted position that contract carriages are a class by themselves and a higher tax on such category of vehicles has been specifically held to be permissible. The mere fact that the tax falls heavily on one category is wholly irrelevant and the possibility of better classification for imposition of tax in question is no ground for striking down the levy. 8. The relevant entries with reference to which the impugned enactment has been made are Entries 56 and 57 of List II of Seventh Schedule of the Constitution which read as under : Entry 56 - Taxes on goods and passengers carried b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual there is no element of 'quid pro quo' between the tax payer and the public authority. Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the tax-payer depends generally upon his capacity to pay. 12. A fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency. But the traditional view that there must be actual quid pro quo has undergone a sea change with the passage of time. Corelationship between the levy and the services rendered/expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a reasonable relationship between the levy of the fee and the services rendered. It is increasingly realized that the element of quid pro quo in the strict sense is not a sine qua non for a fee. (See Sreenivas General Traders v. State of A.P. AIR 1983 SC 1246, Municipal Corporation of Delhi v. Moh. Yasin AIR 1983 SC 617 and B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State, as contemplated by Section 3 of Kerala Motor Vehicles Taxation Act. It was further alleged by the company that for the purpose of plantation it was maintaining the roads, fit for vehicular traffic, in the eight estates covering a length of 131 miles. Paragraphs 4, 5 and 6 of the Reports which are relevant are being reproduced below : 4. The question that falls for decision is whether on the assumption that the motor vehicles are used or kept for use within the estate, and not intended to be used on public roads of the State; the tax is leviable? In order to appreciate the question raised, it is necessary to refer to the relevant entry in the Constitution, the provisions of the Act and the Motor Vehicles Act and the decision relating to the question rendered by this Court. Entry 57 in List II of the Constitution relates to 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. This entry enables the State Government to levy a tax on all vehicles whether mechanically propelled or not, suitable for use on roads. There is no dispute that the vehicles are mechanically propel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be made of such portion of the tax and subject to such conditions as may be prescribed. In paras 6 and 7 of the Reports, it was held as under : 6On a reading of Sections 3 and 4 it may be seen that they make the registered owner or person having possession or control of a motor vehicle kept in the State absolutely liable to pay tax in advance at the rates specified in part A of the Schedule thereto for a quarter, half-year or year at his choice. The Motor Vehicle Taxation Acts in all the States of the Indian Union follow a uniform pattern. Entry 57 of List II of Schedule VII of the Constitution is the Legislative Entry conferring power on the States to levy the tax. It has been observed by this Court in Automobile Transport Ltd. v. State of Rajasthan (1963) 1 SCR 491: (AIR 1962 SC 1406) that the tax on motor vehicles is a compensatory tax levied for the use of the roads and it is not a tax on ownership or possession of motor vehicles. The object of the Act is achieved by charging to tax all motor vehicles suitable for use on roads kept in the State, the registered owner or person having possession or control being held liable to pay the tax in advance and then providing for gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicle as long as the Certificate of Registration is current irrespective of the condition of the vehicle for use on the roads and irrespective of whether the vehicle had a Certificate of Fitness with current validity or not. The Act, however, takes care to see that the owner of a motor vehicle or a person having possession or control of it is not penalised by payment of tax in advance for a vehicle which had not been actually used during the whole of a period or part of a period for which tax had been paid by him. After considering the provision for refund of the tax as contained in Section 7 of the Act, it was held as under in para 8 of the Report : 8. The principle underlying the Taxation Act is that every motor vehicle issued Certificate of Registration is to be deemed a potential user of the roads all through the time the Certificate of Registration is current and therefore liable to pay tax under Section 3(1) read with Section 4. If, however, the vehicle had not made use of the roads because it could not be put on the roads due to repairs, even though the Certificate of Registration was current, the owner or person concerned has to seek for and obtain refund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntercourse within the State by providing roads and maintaining roads in a good state of repairs. As has been held by this Court in Automobile Transport Ltd. v. State of Rajasthan Ors. (1963) 1 SCR 491, it would not be right to say that the tax is not compensatory because the precise or specific amount collected is not actually used in providing any facilities. If a statute fixes a charge for a convenience or service provided by the State or an agency of the State, and imposes it upon those who choose to avail themselves of the service or convenience, or who can use the services provided for, the imposition assumes the character of remuneration or consideration charged in respect of an advantage sought or received or advantage which can be received. The mere fact that any particular individual though can take advantage of the convenience of the services provided by the State but for some reason or the other chooses not to enjoy the services provided cannot escape the taxing liability on that score nor can the provision imposing the tax become invalid on that score... 17. This view has been reiterated in several decisions of this Court. In State of Kerala v. Arvind Ramakant Mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that he may be relieved of the burden of tax when he is not getting any income from the vehicle on account of its non-use but it has no relevance to the competence or authority of the State to enact a law providing for imposition of a tax on vehicles which are used or are kept for use in the State. 19. Learned counsel for the writ petitioners has laid great emphasis upon Bolani Ores Ltd. v. State of Orissa AIR 1975 SC 17 where having regard to Bihar and Orissa Motor Vehicles Taxation Act an observation was made that 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 . Another observation in the same judgment but Entry 57 of List II is subject to the limitation that the power of taxation thereunder cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads, viz. public roads. If the vehicles do not use the roads, notwithstanding that they are registered under the Motor Vehicles Act, they cannot be taxed has also been heavily relied upon for contending that tax can be levied only for the period whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 2175, wherein the words for reasons beyond the control of such owner or person previously occurring in Section 3A(5)(b) were held to be beyond the legislative competence of the State. In this case the High Court had held that once the statute provided for refund of tax on account of non-use of the vehicle, the legislature could not have imposed a further condition to the effect for reasons beyond the control of such owner or person and the said expression was held to be beyond the legislative competence. The appeal preferred by the State of Gujarat was dismissed by this Court and the view taken by the High Court was affirmed. We would like to point out that the judgment does not show that the attention of the Bench was invited to any of the decisions which we have referred to above, wherein it has been held that actual user of the road is not material and mere keeping of the vehicle which is capable of being used is enough to attract liability of tax. 21. Learned counsel for the writ petitioners has submitted that the purpose for which the Act was enacted was to augment the financial resources of the State to meet the huge expenditure on account of natural calamities etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of taxation are prescribed in respect of different items, provided it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere fact that a tax falls more heavily on certain goods or persons may not result in its invalidity It was further held that the Courts lean more readily in favour of upholding the constitutionality of taxing law in view of the complexities involved in the social and economic life of the community. Unless the fiscal law in question is manifestly discriminatory, the Court should refrain from striking it down on the ground of discrimination. This being the position of law, it is not possible to accept the contention of the writ petitioners that the tax imposed upon the designated omnibuses is discriminatory. 23. Nothing new has been pointed out to challenge Gujarat Act No.9 of 2002 by which the Bombay Motor Vehicles Taxation Act, as adopted in the State of Gujarat with up to date amendments, was further amended after the decision of the High Court which was rendered on 17th August ..... X X X X Extracts X X X X X X X X Extracts X X X X
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