of Karnataka & Ors Vs. N. Madappa & Ors
 INSC 648 (2 May
K.Ramaswamy, K.G.B. Pattanaik (J)
JT 1996 (5) 453 1996 SCALE (4)644
2ND DAY OF MAY,1996 Present:
Mr.Justice K.Ramaswamy Hon'ble Mr.Justice G.B.Pattanaik M.Veerappa, Adv. for
the appellants. Mrs. Kiran Suri, Adv. for the Respondents.
O R D
following Order of the Court was delivered:
of Karnataka & Ors. V. N. Madappa & Ors. etc
APPEAL NO. 8851 OF 1996 (Arising out of SLP (C) No.3618 of l996
have heard learned counsel on both sides.
appeals by special leave arise against the judgments dated 18.10.1990 and
18.2.1991 of the Division Bench of the High Court of Karnataka made in W.P.
Nos.14029- 036/89 and 159/91. The appellant had introduced by the Karnataka
Motor Vehicles Taxation (Amendment) Act 14 of 1989, sub-section (4) of Section
3 which reads as under :
of Section 3:- After subsection (3) of Section 3 of the Karnataka Motor
Vehicles Taxation Act, 1957 (Karnataka Act 35 of 1957) (hereinafter referred to
as the principal Act), the following shall be inserted, namely:
Notwithstanding anything contained in sub-section (1) and (2), a special
additional tax at the rates specified in Part-D of the Schedule shall be levied
on motor vehicles suitable for use on roads carrying passengers or goods in
excess of the permitted capacity of the vehicles.
Insertion of new part 'D' after Part 'C' and before the Explanation, the
following shall be inserted, namely:-
--------------------------------------------------- Item Class of Vehicle
Special additonal tax No. for each occasion on which such excess is
carried.--------------------------------------------------- Rs. ps.
Passenger vehicles carrying passengers in excess of the permitted capacity, for
every such excess passenger. 20 - 00 xx xx xx xx xx xx
--------------------------------------------------- (6) In the Explanation, in
paragraph (3) after the words 'Corporation', the words 'Or a Bank or a Board or
a Co-operative Society or such other institution as may be notified by the
State Government in this behalf' shall be inserted.
Power to remove difficulty - If any difficulty arises in giving effect to the
provisions of the Principal Act, as amended by this Act, the State Government
may, by Notification in the official gazette make such provisions as may appear
to it to be necessary or expedient for removing the said difficulty.
that no such order shall be made after the expiry of a period of two years from
the date of commencement of this Act." The respondents have challenged the
validity of the above provisions. The Division Bench had held the State
Government is devoid of power to levy tax at the enhanced rate on the
passengers. It followed the ratio laid down by this Court in Automobile
Transport (Rajasthan) Ltd. etc. vs. State of Rajasthan & Ors. [AIR 1962 SC
1406] and held that there is no competence of the State Legislature to enact
sub-section (4) except to enforce Section 60 of the Motor Vehicles Act (4 of
1939) which is equivalent to Section 86 of the 1988 Act to levy tax on extra
passengers and goods.
question, therefore, is: whether the State Legislature is competent to enact
law to levy tax on excess passengers carried by the holder of a permit under
the Motor Vehicles Act? On an earlier occasion, when the State had amended
Section 8 and armed itself with power to levy additional tax, it came to be
challenged. Ultimately, this Court in M. Narasimhaiah VS. Dy.Commissioner for
Transport (1987) Supp. SCC 452] held that having regard to the power to levy
the tax on the capacity of the vehicle determined under Entry 4 of the Schedule
A read with Section 8 of the Act and the rates prescribed thereunder the State
Legislature has no power to impose additional tax on excess passengers. While
considering that question this Court in para 10 held thus:
There is another difficulty in applying Section 8 to stray cases of
overloading. Additional tax is payable for the period during which the vehicle
is proposed to be used for a purpose which will attract a higher rate of tax.
The rate of tax is fixed taking one quarter, i.e., 3 months as a unit of time
for taxation. Is it reasonably possible to determine the higher rate of tax
payable, if, say, on two days in a quarter, there has been overloading of the
vehicle for a few hours or minutes? The problem of computation of additional
tax becomes difficult in such cases." It is true that under Entry 57 of
List II of the Seventh Schedule to the Constitution, the State Legislature has
power to tax on vehicles, whether mechanically propelled or not, suitable for
use on roads subject to the provisions of Entry 35 of List III. There is no law
made by the Parliament occupying the field under Entry 35 of List III.
Therefore, the State Legislature has power under Entry 57 to make law levying
tax on vehicles.
seen that under Schedule A read with Section 8, the State Legislature has
already levied tax on the basis of the capacity of the passengers carried in
the motor vehicle as per the permit issued there under. Having had that power
the question emerges: whether the State Legislature can levy tax on excess
passengers on each of the occasion when the enforcing officers found the
vehicle to have been overloaded? The concept of tax on vehicle is not for a
single day or an hour when the passengers were found to be in excess of the
limit prescribed under the permit. The power to levy the tax is on the basis of
the user of the vehicle for the quarter under the Act. Under those
circumstances, the power to levy tax under the amended sub- section (4) of
Section 3 read with Schedule D on excess passengers obviously on each occasion
of overloading appears to be unsustainable. Under those circumstances, the
power to levy tax at the enhanced rate on the excess passengers on finding the
vehicle to be overloaded in excess of the prescribed limit, appers to be not
consistent with the scheme under Section 8 of the Act. Therefore, though for
different reasons,we hold that the amendment is not valid in law.
appeals are accordingly dismissed. No costs.