TMI Blog1983 (9) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... roads and bridges in the State and hence the tax imposed at the enhanced rate under the Taxation Amendment Act, 1979 is violative of freedom of trade, commerce and intercourse guaranteed by Article 301 of the Constitution and the enhanced tax is not shown to be compensatory in character and hence not saved. The second contention was that the impugned Taxation Amendment Act was brought into force with effect from March 31, 20 1979, yet the petitioners were made liable to pay tax from March 1, 1979 and this limited retrospectivity given to the impugned legislation is impermissible and must be struck down. 3. The Division Bench of the High Court while partly allowing all the petitions held that the enhanced tax under the impugned legislation was compensatory in character and was not violative of Article 301 of the Constitution. The second contention of the petitioners found favour with the High Court and it was held that as the impugned Act came into force from March 31, 1979, the petitioners did not incur any liability to pay enhanced tax under Section 4 of the Act from March 1, 1979 and if any such demand is made the same is without the authority of Jaw and the authority under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arriage of passengers by itself without anything more restricts or thwarts freedom of trade, commerce and intercourse throughout the territory of India guaranteed by Article 301 is no more res integral It was in fact conceded that revenue collected by such tax if employed for purposes which would not only not restrict or impede but facilitate smooth and unhampered trade, commerce and intercourse throughout the territory of India, such tax would not be violative of Article 301 of the Constitution. Thus regulatory measures or measures imposing compensatory taxes for the use of trading facility are outside the purview of Article 301 of the Constitution. This in fact was not disputed and could not be disputed in view of the decisions of this Court in Atiabari Tea Co. Ltd. v. The State of Assam and Ors. M/s. Sainik Motors, Jodhpur and Ors. v. The State of Rajasthan; The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan and Ors. The Malwa Bus Service (Pvt.) Ltd. v. State of Punjab. Expanding the concept of what are called compensatory taxes as to be outside the purview of Article 301, it can be said that the augmentation of revenue by such taxes which would be available for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral revenue which suffered depletion on account of abolition of octroi. While publishing the Karnataka Motor Vehicles Taxation (Amendment) Bill, 1980, simultaneously the Statement of Objects and Reasons was published which may be extracted: Statement of Objects and Reasons. In view of the abolition of octroi in the State, Government increased the Motor Vehicles Tax in respect of goods vehicles by the Karnataka Motor Vehicles Taxation (Second Amendment) Act, 1979. Aggrieved by this enhancement, the lorry owners in the State went on strike on 27th September, 1979 to protest against the hike in the Motor Vehicles Tax. The entire issue was reconsidered and it is decided to reduce the tax under the above Act to the previous level with effect from 1st October 1979 upto 31st March, 1980. After referring to the Statement of Objects and Reasons hereinabove extracted, it was urged that the motivation behind enhancement of tax only on transport vehicles used for carriage of passengers was the subjugation of the Government against the combined action of the owners and players of transport vehicles used for carriage of goods and the loss of revenue on account of abolition of octroi. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not only the enhanced tax does not lose the character of being compensatory on the ground that it was enhanced to compensate the loss suffered by the State in its revenues on account of abolition of octroi but as a matter of fact on this very ground it acquires the character of being compensatory. 8. The second limb of the submission was that as the State failed to maintain the levy of enhanced tax on goods vehicles against the combined resistance by the operators of the goods vehicles, it back tracked in the face of it and passed on the burden on the docile owners of passenger vehicles who are small in number and not well organised. There may be some truth in the submission but thereby the tax does not lose the character of being regulatory and compensatory if it is otherwise so. In the matter of taxation, the Constitution gives a wide latitude to the Legislature in classification for taxation. In East India Tobacco Co. v. State of Andhra Pradesh 1963 1 SCR 40. this Court held that : A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rales for taxation if it does so reasonably. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that from year to year, the figures available from the State budget clearly indicate that the difference between the receipt of revenue and the expenditure on maintenance and construction of roads is widening with the result that the surplus goes into augmenting the general revenue of the State which is impermissible. The figures are viewed from a refractory media. The figures from the budget do not take into account expenditure on other facilities such as abolition of octroi, construction of approach roads, passenger facilities, construction of tourist bungalows which may be accounted under other heads and therefore, such bald figures are far from convincing. On the other hand, Mr. R.P. Bhatt, learned counsel for the State of Karnataka gave us the following figures which when not controverted would be sufficient to repel the contention of the appellants. Expenditure (In Crores) s. Year (Receipt On PWD For Irrigation, Estt. Total No. (In crores) Roads Forest roads, expenses Taluka Board roads-grants 1. 1980-81, 47.37, 37.47, 1.50, 1.24, 40.21 2. 1981-82, 55.30, 43.26, 2.00, 1.51, 46.77 3. 1981-83, 59.91, 47.59, 2.50, 2.00, 52.09 4. 1983-84, 55.00, 3.00, 2.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they should be subjected to higher tax. Therefore, it was urged that the levy of enhanced tax on passenger vehicles is discriminatory or at any rate the enhanced tax on passenger vehicles is neither regulatory nor compensatory. As stated earlier, in the matter of taxation the rate of tax and the objects to be taxed are to be determined by the Legislature and unless it is found to be so unreasonable, the Court would not interfere with the latitude enjoyed by the Legislature in this behalf. Now when a passenger tax is raised, the individual passenger may have to pay the same as and when there is upward revision of structure. But when tax on goods vehicles is raised the incidence of enhanced tax would fall on consumers of commodities transported. The transported goods may comprise essential commodities like foodgrains. sugar, fuel and the common man would have to pay the higher price. Further even in the matter of taxation, goods vehicles and passenger vehicles, even on account of use of the same road would not form the same class and no statistical information was supplied to the Court as to the degree of were and tear inflicted by the goods vehicles passing over roads than by the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Bench of the Karnataka High Court the appellants and the petitioners obtained interim relief to the effect that the future tax shall be paid regularly but for the arrears, 50% of the tax in arrears had to be deposited as directed by the Court and for the balance of 50%, security to the satisfaction of the concerned authority was to be given. Mr. Shanti Bhushan urged that if none of his contentions finds favour with the Court and the petitions are likely to be dismissed, some time should be given to the petitioners to pay the balance because the burden would be unbearably heavy if the tax in arrears has to be paid forthwith. We find this request to be quite reasonable. We therefore, direct that the balance of the tax in arrears shall be paid by the petitioners and the appellants in two equal installments of six months duration, meaning thereby that the balance will be paid within one year; the first installment being half the amount payable shall be paid by 31st March, 1984 and the balance by 30th September, 1984. 15. Having examined all the contentions meticulously we find no merit in any of them and therefore all these appeals and special leave petitions fail and are dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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