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Shaik Madar Saheb Versus State of Andhra Pradesh

1971 (12) TMI 110 - SUPREME COURT

Civil Appeals Nos. 932 to 934 of 1968 - Dated:- 14-12-1971 - MITTER, G.K., SIKRI, S.M. (CJ), SHELAT, J.M., DUA, I.D. AND KHANNA, HANS RAJ. S.V. Gupte, K. Srinivasamurthy, Naunit Lal and Swaranjit Sodhi, for the Appellants G. Narayana Rao, A. V. V. Nair, P. Ram Reddy and K. Javaram, for the Respondents JUDGMENT: The Judgment of the Court was delivered by Mitter, J. All these appeals and Writ Petitions are directed against the Andhra Pradesh Motor Vehicles Taxation Act (V of 1963) and notification .....

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horities under the Motor 'Vehicles Act IV of 1939. Their complaint against the ever increasing burden of taxation they are called upon to bear which is said to have passed the breaking point. A short history of the taxes levied in the area which came to Andhra Pradesh from the State of Madras and the increase thereof from stage to stage by the new State based on the seating capacity of buses with stage carriage permits referred to in the pleadings is recited in the judgment of this Court in .....

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e. It is an Act to consolidate and amend the law relating to levy a tax on motor vehicles in the State of Andhra Pradesh. Under s. 3(1) of the Act the State Government is empowered by notification from time to time, to direct that a tax shall be levied on every motor vehicle used or kept for use in a public place in the State. Under sub-s. (2) of s. 3 the notification is to specify the class of motor vehicles on which, the rates for the periods of which and the date from which, the tax is to be .....

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leage. A crop t of writ petitions was filed before the High Court in the year 1963 praying for the issue, of a writ restraining the State, from enforcing the provisions of the Act of 1963 and of the notification dated March 27, 1963. By a common judgment and order dated September 6, 1963 the High Court dismissed all the writ petitions. The first group of appeals arises out of this judgment. It was contended on behalf of the petitioners before the High Court in that case, the appellants in the fi .....

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han as a benefit for the facilities afforded to the operators of transport vehicles, since the taxes were far in excess of the requirements for the construction of new roads and bridges and the maintenance of existing ones. The High Court found itself unable to accept the above submission and on a scrutiny of the budget estimates for the year 1963-64, the receipts under the Taxation Act, the amount collected by way of taxes on the sale of motor spirits allocable to this head, came to the conclus .....

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the description of compensatory tax and did not interfere with the freedom of trade and commerce. As such the taxes were held not to offend Art. 301 of the Constitution. The High Court further took the view that it had not been shown that "the power ceded to the State Government by this legislative measure was in any way detrimental to the public good or that it was opposed to the well recognised principles underlying taxation." The High Court turned down the contention that the taxes .....

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enhancement of the tax there had been considerable competition for securing permits whenever any proposal was mooted by the transport authorities which according to the court went to show that the operators themselves considered that it would be a profitable business. In the opinion of the High Court, the increase in the taxes was more than offset by the sanctioned increase in the fares and the grievance of the operators that the taxes were an unreasonable restriction was negatived. Finally the .....

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ct by notification No. 434 by increasing the maximum quarterly tax in respect of sub items (iii) and (iv) of item 4 to ₹ 121 in respect of buses Plying exclusively within municipal limits and to ₹ 135 in the case of other buses. On the same day the State Government issued notification No. 435 in exercise of the powers conferred by sub-s. (1) of s. 9 of the Act directing the substitution of higher taxes in respect of buses covered by the aforementioned sub items of item 4 of the First .....

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instead of a flat rate of levy on the basis of the number of seats it was now made to relate to the actual mileage per day covered by the vehicles. A challenge was made to the additional impost on spare buses which bus operators running more than a certain number of buses per day were obliged to reserve for use in the event of any break-down. It was asserted that even for these buses, no matter whether they were actually used or not, tax was levied at the rate of ₹ 30 per seat per quarter .....

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isions of Part III and Part XIII of the Constitution it was illegal and unconstitutional. and (c) the levy of tax on spare buses was illegal. By a common judgment and order dated April 26, 1968 the High Court rejected the contentions raised and dismissed this group of writ petitions. This had led to the filing of the second group of appeals before us. The two writ petitions filed in this Court under Art. 32 raise identical questions. In Nazeeria Motor Service case [1970] 2 S.C.R. 52 the central .....

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uisite sanction, it was open to the Court to go into the question of reasonableness both with regard to the said provision as also Art. 19(1)(g) read with cl. (6) of that article. The Court was entitled to determine whether the imposition was in public interest. 3.The Act violated Art. 14 of the Constitution inasmuch as it was not made applicable to all the areas under the State and vehicles on inter-State routes on permits granted by other States had not been subjected to tax in the same way. I .....

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only if it was shown that the restrictions imposed were reasonable and in public interest. It was not contended on behalf of the State in that case that the impugned Validating Act imposed a tax which was by way of regulatory or compensatory measure. The Court therefore addressed itself to the question whether the restrictions imposed were reasonable and in public interest within the meaning of Art. 304(b). Taking into consideration the finding of the High Court that the computation of income by .....

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regard to imposition of tax was not in public interest. The utmost according to this Court "that could be said was that it would result in the diminution of profits." The Court also turned down the contention based on the violation of Art. 14. In the first set of appeals now before us learned counsel for the appellants submitted that in view of the, earlier decision of this Court the only question left for consideration was whether the restriction imposed by the tax was reasonable and .....

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st was purely for the purpose of making revenue and was not a compensatory measure. Reliance was placed on the fact that before the raising of the impost to ₹ 67.50 per _quarter the rate of tax was ₹ 50 per seat per quarter. Our attention was drawn to annexure 'A' attached to the counter affidavit of Writ Petition No. 361 of 1963 out of which appeal No. 932 has arisen, giving a chart of quarterly taxes payable per seat per quarter on the basis of mileage done prior to 1-4-196 .....

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e counter affidavit of the State, there were few, if any, buses covering less than 50 miles per day. In that view of the matter there is no case of distinction so far as the first group of appeals is concerned from the decision of this Court in Nazeeria Motor Company's case. Besides nothing was shown to induce us to disregard the figures in the budget estimates referred to by the High Court in its judgment and order dated September 6, 1963, namely, that whereas the whole revenue from this so .....

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roads etc. in 'the State of Andhra Pradesh during the years 1964-67. The relevant portion of the report is given below : "Statement showing the expenditure on Roads by Andhra Pradesh State during the years 1964-67." "State Revenue from Road Transport and Expenditure on Roads by Andhra Pradesh State during the years 1964-67. Expenditure Figures in lakhs of Rupees Year Revenue Original Mainte- Total Surplus works nance 1964-65 744.35 200.51 439.50 694.01 50.34 page 206 1965-66 1 .....

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of Andhra Pradesh during the years mentioned. Our attention was however drawn to the additional counter affidavit of the State affirmed before the High Court on April 24, 1968 wherein it was said that the report relied on was misleading and the chart which was taken from the annexures to the report of the Road Transport Taxation Enquiry Committee showing surplus was contrary to the prevalent state of affairs. It was categorically stated that. "the figures given in the annexures to the Repo .....

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y the, State Government the estimated figure for the construction of roads was ₹ 2,49,45,200/- and the cost of maintenance was ₹ 6 crores and the total expenditure was thus of the order of Rs' 8,50,00,000/-. It was reiterated that the Taxation Enquiry Committee did not ask for the figures for 1966-67. The High Court went into this question in some detail and found that as per the budget estimates of 1967-68 the yield under the said head 'taxes on motor vehicles under the Moto .....

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into account the figures on the receipt side in the budget estimates, the court was of the view that the total receipts would fall short of the anticipated expenditure by about ₹ 50 lakhs. The High Court also scrutinised the statistical data available in the report of the Road Transport Enquiry Committee and the explanation put forward by the State and observed : "the figures given in the report of the Road Transport Taxation Enquiry Committee do not give a completely accurate picture .....

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d development of the road system as a whole. On these facts the High Court concluded that there was no warrant for the charge that the increased levy ceased to be a compensatory measure. In the second group of petitions, the High Court also negatived the contention raised on behalf of the petitioners that the increase in taxation would virtually throw them out of the transport business. It was argued before the High Court that the increase in the tax being of the order of 50% over the pre-existi .....

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other order bearing the same date as that of the impugned order.' Reliance was also placed on the fact that on previous occasions the operators bad no been slow in utilising similar permission to raise the fare structure. It was further submitted on behalf of the. State before, the High Court that "the Motor Vehicles Taxation had undergone changes to make it confirm to and subserve the development of improved means of communication, by the development of roads and control of transport e .....

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State. It was submitted before us, as was done before the High Court, that taxation by reference to mileage specially in regard to bus operators who had to ply their vehicles in other States where the rate of taxation was much lower was an anachronism and an unreasonable restriction. Our attention was drawn to Annexure 2 to the Writ Petition No. 1792 of 1968 where the total mileage covered by various bills operators including the break-up thereof showing the mileage in Andhra area, in Madras and .....

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uot;there were reciprocal arrangements between the States and consequently the provisions made by the other States in regard to the free movement on their roads, constituted a compensator measure for the tax even though it is wholly levied by the State of Andhra Pradesh". We see no reason to take a view different from the above. The facts and figures disclosed do not justify us in coming to the conclusion that the levy was a general one for augmenting the revenues of the State. On the other .....

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