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1983 (8) TMI 305 - SUPREME COURT

1983 (8) TMI 305 - SUPREME COURT - 1983 AIR 1005, 1983 (3) SCR 624, 1984 (1) SCC 168, 1983 (2) SCALE 118 - Writ Petition No. 1854 of 1981 - Dated:- 12-8-1983 - REDDY, O. CHINNAPPA AND DESAI, D.A. JJ. Shanti Bhushan, Y.S. Chitale, K.K Venugopal KN. Bhat, V.K Verma, S. Ravindra Bhat, N. Ganpathy, C.S. Vaidayanathan, N. Nattar, R.B. Datar, A.V. Rangam, V.G. Gupta, T.V.S.N. Chari A.T.M. Sampath, Vineet Knmar, D.P. Singh, Miss H. Wahi, B.N. Tawakley, S. Srivinasan, P.R. Ramashesh, P.N. Ramlingam, S.R .....

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of the Motor Vehicles Act, provides that, except as may be otherwise prescribed, a permit granted by the regional transport authority of any one region shall not be valid in any other region, unless the permit has been counter signed by the regional transport authority of that other region, and a permit granted in any one state shall not be valid in any other state unless counter-signed by the State Transport Authority of that other state or by the regional transport authority concerned. The pro .....

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the whole or any part of India, in respect of such number of tourist vehicles as the Central Government may, in respect of that state specify in that behalf. Preference is to be given, to applications for permits from the India Tourism Development Corporation, a State Tourism Development Corporation, a State Tourist Department and such operators and tourist cars or such travel agents as may be approved in that behalf by the Central Government. This was but the first basic step towards encouragin .....

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ds: "Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied". A coherent reading of Entry 57 of list II and Entry 35 of list III makes it abundantly clear that the power to levy taxes on vehicles suitable for use on roads vests solely in the State Legislature though it may be open to the Parliament to lay down the principles on which taxes may be levied on mechanically propelled vehicles. In other words the Parliament may lay down the .....

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ourse of a round trip from, say, Delhi to . Kanyakumari or Srinagar to Hyderabad tax will ordinarily have to be paid in all the half a dozen or so States. The burden will surely be intolerable and the whole object of sec. 63 (7), namely promotion of all India or-inter-state tourist traffic will be frustrated. The Central Government was alive to the problem and referred the matter to the Transport Development Council for its advice. The Transport Development Council is a non-statutory body consti .....

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heir taxation legislation exempting tourist vehicles registered in other states from payment of tax, if tax has already been paid in the home state. The Government of India accepted the E- suggestion and requested the State Governments and Union Administrations to issue necessary notifications. The suggestion ran into trouble right from the start. While the Governments of Andhra Pradesh, Bihar, Goa, Daman and Diu, Maharashtra, Nagaland and Uttar Pradesh readily agreed to issue such notifications .....

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ct of which each of the State Transport authorities of the States could grant All India permits. The last of the notifications specified that each State Transport authority could issue 50 permits for tourist omnibuses. Pursuant to the request of the Central Government to which all the State Governments finally agreed, notifications were issued exempting tourist vehicles holding permits under sec. 63 (7) from payment of tax, if tax had been paid in the home state. We are particularly concerned in .....

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thout counter signature in the state of Karnataka, provided that the tax payable in respect of such vehicles had been paid to the State in which the vehicles were registered and provided further that the said State granted similar exemption to tourist motor cabs and tourist omnibuses whose permits were endorsed in the State of Karnataka under Rule 123-A of the Karnataka Motor Vehicles Rules. On July IS, 1976, the Government of Karnataka issued a notification reducing the tax payable under the Mo .....

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taka under the authority of a permit granted under sec. 63 (7), provided that the tax payable in respect of the vehicle to the State in which it was registered had already been paid and provided further that similar exemption from payment of tax was granted in respect of similar vehicles of the State of Karnataka. This scheme for the grant of 'All India Permits', designed as it was to promote all India and inter-state tourist traffic. soon fell into abuse at the hands of scheming transpo .....

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ndesirable to make a distinction between State and State on what were perhaps thought to be elusive criteria and possibly the scheme was expected to give a boost to the transport business in the smaller and less advanced States. And, of course, it was necessary to obtain the agreement and cooperation of all the States. But, the result was that transport operators from, big and comparatively prosperous and advanced States, well versed in the intricacies of the transport business very soon flocked .....

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like Nagaland and Manipur is the nationalization of contract carriage service in States like Karnataka. Once the permits were obtained and the vehicles were registered, these small States saw the last of the operators. Having obtained the permits, the operators with their vehicles flocked back to the parent State of the operators (not of the vehicles) or to a State like Karnataka where all contract carriages having been nationalized no private contract carriage was available and there was theref .....

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the worthy object of sec. 63(7). Quick and easy money with the least trouble and in the shortest time, by whatever method, was the only object. In the counter-affidavit filed on behalf of the State of Karnataka in some of the Writ Petitions, it is stated. "Though the vehicles were registered outside the State of Karnataka, they have been permanently stationed in the State of Karnataka and particularly at Bangalore, and the vehicles were all being plied as Stage Carriages. Though All India .....

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the vehicle were not genuine tourists and the drivers or the persons incharge of the vehicles were not in a position to produce the trip sheet, name list with whom they entered into contract. It was also found that the passengers found in the vehicles had boarded the buses from one point without any contract or otherwise and without they being tourists. The passengers found in the tourist buses are regular passengers going from one place to another for purposes other than tourism. These vehicle .....

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unning as Stage Carriages by collecting individual fares and picking passengers from one point and setting down them at another point and bringing different passengers in the return journey. From the statements enclosed, it is clear that the operators of the tourist buses covered by All India Tourist permits have misused the Tourist Buses by running them as regular stage carriages, competing with the KSRTC buses and other private stage carriages within the State.. As a result of indiscriminate m .....

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their vehicles regularly as stage carriages. Most of the permits obtained under Section 63 (7) of the Central Act in the States other than the State of Karnataka are made use of for the purported use of running the tourist buses but actually the permits were misused to run the tourist vehicle either as stage carriages or as contract carriages". A survey made by the Transport Commissioner of Maharashtra revealed a similar state of affairs. The Transport Commissioner submitted a report to the .....

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India Tourist Buses on the other hand are exploiting the loopholes available in the law and operate point to point passenger services on routes where the volume of traffic is heavy viz. routes like Bombay Kolhapur, Bombay Mangalore (Mangalore), Bombay Panaji, Bombay-Belgaum, Bombay-Ahmedabad and Bombay-Indore. "On 9/10th April 1983, the Transport Commissioner had personally visited the Charoti Check Naka which is our border check post bordering Gujarat on the Bombay Ahmedabad road. From th .....

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Bombay appear to have been issued by Manipur Nagaland and the Union Territory of Dadra Nagar Haveli". The petitioners, who are transport operators holding all- India permits, deny that any of them was guilty of any malpractice or misuse of the permits held by them. But, notwithstanding the petitioners' denial we do not have the slightest doubt that the allegations of misuse and malpractice made in the counter-affidavit, filed on behalf of the Karnataka Government, are generally and subs .....

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, from payment of the Karnataka Tax, if tax had already been paid in the home State was withdrawn by a notification dated 31st March, 81. It is this notification and the consequences of the notification that are in question in these several Writ Petitions. We are informed that the State of Andhra Pradesh has also issued a notification similar to that of the State of Karnataka withdrawing the exemption which it had granted earlier to vehicles operating on permits issued under sec. 63 (7) and regi .....

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The collection of tax by the other States is also resisted in these writ petitions. The power of the State Legislature to levy the particular tax, the power of the State Government to grant exemption from payment of tax under the authority delegated to it by the Legislature and the implied power of the State Government to withdraw an exemption granted by it are conceded. Yet a number of ingenious and platitudinous submissions have been though we must confess that many of them have only to be st .....

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arguments and prone certain others-judgments following suit. In fairness to the counsel who appeared - in the cases before us, we must say that everyone was brief and none over stated his case. It was submitted that see. 63 (7) of the Motor Vehicles Act was designed to promote All India and inter-state tourist traffic and thus to advance trade, Commerce and inter-course throughout the territory of India. It was implicit in sec. 63 (7) that the States would exercise their power of taxation in suc .....

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territory of India, guaranteed by Art. 301 of the Constitution was impaired. The withdrawal of exemption was, therefore, unconstitutional and bad in law. The transport operators of Karnataka who were not directly hit by the withdrawal of the exemption by the Government of Karnataka advanced a subtler argument and suggested that they were in fact the worst hit. The argument was that though despite the withdrawal of the exemption, they were paying no more tax to the State of Karnataka than they w .....

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mmerce and inter-course throughout the territory of India guaranteed by Art. 301 of the Constitution. We are wholly unable to see any force in these submissions The learned counsel for the parties on either side invited our attention to the Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan & Ors Bolani Ores Ltd. v. State of Orissa, G.K. Krishnan v. State of Tamil Nadu, International Tourist Corporation v. State of Haryana and Malwa Bus Service Pvt. Ltd. v. State of Punjab(5) to .....

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e and commerce by creating agreeable conditions and providing appropriate services. All that is necessary to uphold a tax which purports to be or is claimed to be a compensatory tax is "the existence of a specific, identifiable object behind the levy and a nexus between subject and the object of a levy".(') "If the object behind the levy is identifiable and if there is sufficient nexus between the subject and the object of the levy, it is not necessary that the money realised .....

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le to identify and measure with any exactitude the benefits received and the expenditure incurred and levy the tax according to the benefits received and the expenditure incurred". Nor is the court to interpose itself by assuming the role of a cost accountant and attempt to balance meticulously the cost of the services, benefits and facilities against the realisation from the levy. And, if the levy as a whole is justified by the need generally, it does not have to be separately justified wi .....

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compensate it for the services, benefits and facilities provided by it for motor vehicles operating within the territory of the State. Taxes resulting from such legislative activity are by their very nativity and nature, cast and character, regulatory and compensatory and, are therefore, not within the vista of Art. 301, unless, as we said, the tax is a mere pretext designed to injure the freedom of interstate trade, commerce and intercourse. The nexus between the levy and the service is so pat .....

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the State Legislature to impose a levy and to exempt from the levy. True again, Entry 57 of the State List is subject to Entry 35 of the Concurrent List and, as explained by us at the outset, it is therefore open to the Parliament to lay down the 17 principles on which taxes may be levied on mechanically propelled vehicles. But the Parliament while enacting S. 63 (7) of the Motor Vehicles Act refrained from indicating any such principles, either expressly or by necessary implication. The State&# .....

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t ever so desirable. The State is obliged neither to grant an exemption nor to perpetuate an exemption once granted. There is no question of impairing the freedom under Art. 301 by refusing to exempt or by withdrawing an exemption. Not to pat on the back is not to stab in the back. True, straw by straw, the burden of taxation on tourist vehicles increases as each State adds its bit of straw, but, then, each State is concerned with its coffers and has the right to tax vehicles using its roads; an .....

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re, the withdrawal has impaired the freedom under Art. 301 is but the same general sub- mission, seen through glasses of a different tint. It does not even have the merit that the withdrawal of the Karnataka exemption affects them directly. The submission is rejected. One of the submissions made to us was that if there was a misuse of the all-India permits, the remedy was to punish the wrong doers by taking appropriate action against the wrong-doers by cancelling the permit, if necessary, but no .....

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