Permit Owners Assn. & Anr Vs. State of Madhya Pradesh  Insc 600 (28 November 2003)
Babu & G.P.Mathur. Rajendra Babu, J. :
Appeal (civil) 5172 of 2001
batch of writ petitions was filed before the High Court of Madhya Pradesh
challenging the constitutional validity of Sections 16(6), (7) & (8), 20-A
and 20-B of the Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991 [hereinafter
referred to as 'the Act'], inserted by the Madhya Pradesh Motoryan Karadhan [Sanshodhan]
Adhiniyam, 1999 [hereinafter referred to as 'the Amendment Act'], published in
the official Gazette on 8.12.1999 received the assent of the Governor on
Petitioners before the High Court contended that Sections 16(6), (7) & (8),
20-A, 20-B and 20-C of the Act are repugnant to the Motor Vehicles Act, 1988
[hereinafter referred to as 'the MV Act'] enacted by Parliament in exercise of
its powers under Entry 35, List III of the Seventh Schedule to the
Constitution, which has been in force since 1st July 1989; that the amendments
introduced by Act 27 of 1999, by which the impugned provisions are introduced
in the Act, deal with the subject-matter covered by Section 66 read with
Section 192-A of the MV Act; that the impugned provisions provide for
confiscation of the vehicle thereby enhancing the penalty provided by the MV
Act which sets out only certain amounts of fine and thus repugnancy arises;
that there are provisions in the Act for recovery of tax and, therefore, the
provision for confiscation of the vehicle is uncalled for.
behalf of the State, it is contended that the Act and the amendments made
thereto are within its competence as they fall under Entries 56 and 57, List II
of the Seventh Schedule to the Constitution and is within the legislative
competence and the MV Act does not set out any principle of taxation subject to
which the enactments made Entry 56, List II of the Seventh Schedule to the
Constitution can operate. A contention had been raised on behalf of the State
that the Act had obtained the assent of the President and the subsequent
amendment is only supplemental in nature and, therefore, does not require any
further assent of the President. However, this contention is not pursued before
High Court held that the impugned provisions are not repugnant to the
provisions of the MV Act and the two enactments are not enacted in the same
field and, therefore, they operate in totally different fields and stated that
holding of a permit is a cognate matter and there is no encroachment made on the
MV Act by the Act including the Amendment Act; that plying of a motor vehicle
must be only with a permit and such a permit can be obtained only on payment of
requisite tax and, therefore, "having a valid permit for the purpose, is
the sine qua non of incident of tax under the Karadhan Adhiniyam, 1991; that
holding of a permit is pith and substance of the incident of taxation under the
M.P. Motoryan Karadhan Adhiniyam; that if a person is plying without permit he
is essentially avoiding the taxation which is the pith of the permit; that
permit is intrinsically connected with the taxation; that applying the test of
pith and substance, the Amendment Act is within the ken of Entry 57 List II,
Seventh Schedule; that it is not rendered invalid even assuming it incidentally
touches upon matters reserved for federal legislature; that the power of
forfeiture being an incidental power to taxation there is no conflict in the
provisions of Section 192-A of the MV Act and Section 16(6) of the Act; that
under Section 16(6) of the Act, confiscation will be by the taxation authority
whereas a criminal prosecution of a person is initiated under the MV Act and
Section 192-A is an alternate to confiscation proceeding;
there are adequate safeguards with regard to the confiscation procedure;
the power of confiscation can co-exist with the power to prosecute the offender
and the provisions in the Act do not conflict with each other and on that basis
dismissed the writ petitions. Hence these appeals by special leave.
learned Senior Advocate appearing on behalf of the appellants, contended that
the Act is a law relating to levy of tax on motor vehicles relatable to Entry
57, List II of the Seventh Schedule to the Constitution.
submitted that Parliament has enacted MV Act in exercise of powers under Entry
35, List III of the Seventh Schedule to the Constitution, which specifically
covers motor vehicles and in terms of Article 254 of the Constitution prevails
over any State law covering the same field; that levy of tax on motor vehicles
is within the exclusive domain of the State Legislature and similarly
regulatory provisions under the MV Act fall under Entry 35, List III of the
Seventh Schedule to the Constitution and the Union has already enacted a law in
that regard. He submitted that a careful reading of Section 16(6) of the Act
would indicate that the cause or the incident which attracts confiscation is
violation of the provisions of Sections 66 and 192-A of the MV Act and not for
the purpose of the taxation.
he submitted that if for any reason it is to be held that it is also for the
purpose of recovery of taxes, he contended that an examination of the scheme of
the provisions of the Act and Rules framed thereunder are vague leading to such
arbitrariness as to vitiate the provisions in terms of Article 14 of the
Constitution. He submitted that while a provision has been made for the purpose
of seizure of a motor vehicle for non-payment of tax and such vehicle, as
provided under the Act and the Rules framed thereunder, has to be released the
moment the tax is paid and even if in respect of such vehicle a mere report is
filed in terms of Section 16(6) of the Act, the vehicle is liable to be
confiscated thereby the object of the Act to recover the tax is not fulfilled
but on the other hand, it results only in imposing further penalty upon the
owner or the driver of the vehicle and in turn results in enhancing the penalty
provided under the MV Act, which clearly would result in repugnancy in the
provisions thereof. In this regard, he adverted to the decisions of this Court
in Ch.Tika Ramji & Ors. etc. vs. The State of Uttar Pradesh & Ors., 1956 SCR 393, M. Karunanidhi
vs. Union of India & Anr., 1979 (3) SCC 431, and T. Barai vs. Henry Ah Hoe &
Anr., 1983 (1) SCC 177. He further submitted that even otherwise in respect of
a motor vehicle where tax has not been paid on prosecution a fine of maximum of
Rs.300/- is provided and there are provisions under the Act by which the tax
can be levied and collected with penal interest. If that is so, he submitted,
the motor vehicles worth several lakhs of rupees cannot be confiscated for non-
payment of tax, may be running in a few thousands of rupees. He contended that
such an action is wholly disproportionate exercise of power and calls for
Parasaran, learned Senior Advocate appearing for the owners of the motor
vehicles, who had entered into a hire purchase agreement, submitted that in the
first place confiscation is really directed against the ownership of the motor
vehicles and the owner had, in no way, committed any breach of the Act or the
Rules as the primary liability to pay the taxes is that of the hire purchaser
and thus the provisions cannot be applied to such owners. He further submitted
that even if confiscation is to be ordered for non-payment of tax by hire
purchaser, what can be confiscated is only the extent of the interest of the
hire purchaser and not beyond that. He further contended that the onwership of
the appellants does not get affected by the reason of confiscation.
learned Advocate General for the State of Madhya Pradesh, contended that the
Act in question is aimed at curbing the user of the motor vehicles not covered
by a permit or using the permit in violation of its condition subject to the
exceptions available under Section 16(6) of the Act and under the Act, tax has
to be paid in advance by such user and, therefore, plying of a vehicle having a
contract carriage permit as a stage carriage amounts to plying without a permit
within the meaning of Explanation VII of the Schedule I to the Act and in this
context, drew our attention to not only Explanation VII of the Schedule I to
the Act but also to the definition of contract carriage as defined under Section
2(7) of the MV Act; that the two categories of motor vehicles, namely, contract
carriages and the stage carriages have different rates of taxation; that unless
such tax has been paid no permit will be available; that operation of a vehicle
without a permit obviously means that tax due to the State has not been paid
under the Act. He, therefore, submitted that the provisions under the Act are
valid and fall within the competence of the State legislature and he fully
supported the view taken by the High Court that there is absolutely no
repugnancy between the MV Act and the Act inasmuch as they operate in two
different fields one is a regulatory measure while the other is the taxation
measure. He, therefore, submitted that we should dismiss these appeals.
purposes of convenience, we set out the relevant provisions of the Act
Power of entry, seizure and detention of Motor Vehicle in case of non-payment
xxx xxx xxx (2) xxx xxx xxx (3) xxx xxx xxx (4) xxx xxx xxx (5) xxx xxx xxx (6)
Subject to the provisions of sub-section (8), where, the taxation authority
upon receipt of report about the seizure of the vehicle under sub-section (3)
is satisfied that the owner has committed offence under Section 66 read with
Section 192-A of the Motor Vehicles Act, 1988 of plying vehicle without permit
and he may by order in writing and for reasons to be recorded confiscate the
vehicle seized under said sub- section. A copy of order of confiscation shall
be forwarded without any undue delay to the Transport Commissioner.
order of confiscating any vehicle shall be made under sub- section (6) unless
the Taxation Authority:-
an intimation in the form prescribed about initiation of proceedings for
confiscation of vehicle to the Magistrate having jurisdiction to try the
offence on account of which the seizure has been made;
a notice in writing to the person from whom the vehicle is seized and to the
affords an opportunity to the persons referred to in clause (b) of making a
representation within such reasonable time as may be specified in the notice
against the proposed confiscation; and
to the officer effecting the seizure and the persons to whom notice has been
issued under clause (b), a hearing on due date to be fixed for such purpose.
order of confiscation under sub-section (6) of any vehicle shall be made if any
person referred to in clause (b) of sub-section (7) proves to the satisfaction
of the Taxation Authority that such vehicle was used under valid documents
required under the Act.
Appeal against order of confiscation-
Any person aggrieved by an order of confiscation may, within thirty days of the
order or if fact of such order has not been communicated to him, within thirty
days of the date of knowledge of such order, prefer an appeal in writing
accompanied by such fee and payable in such form as may be prescribed, and by
certified copy or order of confiscation to the Appellate Authority.
The time requisite
for obtaining certified copy of order of confiscation shall be excluded while
computing period of thirty days referred to in the sub-section.
The appellate Authority shall send intimation in writing of lodging of appeal
to the Taxation Authority.
appellate Authority may pass such order of interim nature for custody, or
disposal, if necessary of the confiscated vehicle as may appear to be just in
the circumstances of the case.
the date fixed for hearing of the appeal or on such date to which the hearing
may be adjourned, the appellate Authority shall peruse the record and hear the
parties to the appeal if present in person, or through a legal practitioner and
shall thereafter proceed to pass an order of confirmation, reversal or modification
of the order of confiscation.
The appellate Authority may also pass such orders of consequential nature, as
it may deem necessary.
Copy of final order or of order consequential nature, shall be sent to the
Taxation Authority for compliance.
Revision before Court of Session against order of Appellate Authority-
the owner of a vehicle aggrieved by final order or by order of consequential
nature passed by the Appellate Authority in respect of confiscated vehicle, he
may within thirty days or the order sought to be impugned, submit a petition
for revision to the Court of Session only on a point of law within the Session
division where the headquarters of the Appellate Authority are situate.
Explanation:- In computing the period of thirty
days under this sub- section, the time requisite for obtaining certified copy
of order of Appellate Authority shall be excluded.
court of Session may confirm, reverse or modify any final order or an order of
consequential nature passed by the Appellate Authority.
of the order passed in revision shall be sent to the Appellate Authority and to
the Taxation Authority for compliance or for taking such further action as may
be directed by such Court.
For entertaining, hearing and deciding a revision under this Section, the Court
of Session shall, as for as may be, exercise the same powers and follow the
same procedure as prescribed for hearing and deciding a revision under the Code
of Criminal Procedure,1973 (No. 2 of 1974)."
192-A of the MV Act provides that if a motor vehicle is driven in contravention
of Section 66(1), that is, if a vehicle is driven or caused to be driven as a
transport vehicle without permit, or in contravention of any or in
contravention of any condition thereof relating to the route on which or the
area in which or the purpose for which the vehicle may be used, the user is
punishable with fine for the first offence and imprisonment for the subsequent
offence but this section does not provide for confiscation of the vehicle.
Section 16(6) of the Act provides that subject to the provisions of sub-section
(8), where upon receipt of report about the seizure of the vehicle under
sub-section (3), the taxation authority is satisfied that the owner has
committed offence under Section 66 read with Section 192-A of the MV Act of
plying vehicle without permit and he may by order in writing and for reasons to
be recorded confiscate the vehicle seized under the said provision. Under
Section 16(3) of the Act, a vehicle seized for non-payment of tax or other dues
is liable to be returned on showing that tax has been paid. Thus if tax with
regard to the seized vehicle is paid that vehicle has got to be released. So
far as the link that is sought to be established with taxation procedures,
snaps the moment tax is paid and vehicle is released. In such an event also
motor vehicle can be confiscated on a report that such vehicle had been seized.
The cause or basis for confiscation of motor vehicle is driving such vehicle
contrary to Section 66 of the MV Act read with Section 192-A of the MV Act and
a report of seizure under Section 16(3) of the Act.
(3) of Section 16 states that the taxation authority or any other officer authorised
by the State Government in this behalf may if it or he has reason to believe
that a motor vehicle has been or is being used without payment of tax, penalty
or interest due, seize and detain such motor vehicle and for this purpose take
or cause to be taken any step as may be considered proper for the temporary
safe custody of such motor vehicle and for the realisation of tax due.
(3) is only intended as a step for recovery of the tax, penalty or interest due
and the vehicle is detained until such time as such tax or other liabilities are
realised. The mere fact that such vehicle is seized for that purpose by itself
will not result in confiscation of the vehicle. For confiscation of the vehicle
the factor that weighs with the authority as provided under Section 16(6) of
the Act is that the owner of the vehicle should have committed an offence under
Section 66 read with Section 192-A of the MV Act for which provision has been
made in the MV Act itself and that provision clearly sets out the nature and
degree of punishment but does not include confiscation.
clear that confiscation would arise only in the event if an offence is
committed under Section 66 read with Section 192-A of the MV Act and,
therefore, such provision could not have been enacted without the assent of the
President as the same directly impinges upon Article 254 of the Constitution.
Article 254 of the Constitution, the law made by Parliament will prevail in
respect of subjects covered under List III of the Seventh Schedule to the
Constitution. An exception is carved out in clause (2) of Article 254 of the
Constitution whereby the law made by the State Legislature will prevail if the
Presidential assent is received. But before this clause can be invoked there
must be a repugnancy between the State Act and an earlier Act made by
effect, the scheme is that Article 254(2) gives power to the State Legislature
to enact a law with the assent of the President, on any subject covered under
List III of the Seventh Schedule to the Constitution, even though the Central
Act may be inconsistent operating in that State relating to that subject.
short question, therefore, for consideration arises is whether there is any
conflict or repugnancy between the State Law and the Union Law.
In T. Barai
vs. Henry Ah Hoe's case (supra) this Court has held :
State law would be repugnant to the Union law when there is direct conflict
between the two laws. Such repugnancy may also arise where both laws operate in
the same field and the two cannot possibly stand together, for example, where
both prescribe punishment for the same offence but the punishment differs in
degree or kind or in the procedure prescribed" In the case on hand the
prescription of punishment is for the same offence arising under Section 66
read with Section 192-A of the MV Act and further punishment is prescribed
under the State MV Taxation Act for forfeiture of the vehicle. Thus, there is
clear conflict between the two enactments. Therefore, we hold that the
provision of Section 16(6) of the Act and the consequential provisions thereto
are repugnant to Section 66 read with Section 192-A of the MV Act and hence,
invalid as the State law has not complied with requirements under Article
254(2) of the Constitution of obtaining assent of the President to the State
is sought to be drawn by placing reliance on S. Satyapal Reddy & Ors. vs..Government
of A.P. & Ors., 1994 (4) SCC 391, and Dr. Preeti Srivastava & Anr. vs.
State of M.P. & Ors., 1999 (7) SCC 120, wherein prescription of higher
qualification in the context of admission in colleges or appointment to posts
was considered. Analogy is neither apt nor sound in law.
qualification prescribed by one authority is binding on the other authority. If
higher qualifications are prescribed by the other authority who has to make
selections for admission in colleges or appointment to posts what it does is to
enhance the quality of qualification prescribed without adversely affecting the
same and adds further the intent and purpose of prescription of the
qualification by the other authority and, therefore, is not in conflict with
in the case of imposition of punishments for offences, one legislature provides
a lenient punishment and other a more stringent punishment or burden will necessarily
interfere with the exercise of powers of legislature.
the offences arising upon the Union Law and the State Law respectively are
substantially identical, but additional penalties are imposed for the
contravention by the provision of the State Law it would be inconsistent with
the law of the Union and, therefore, invalid. In the
instant case, apart from what is available under Section 192-A of the MV Act,
there are additional penalties arising under Section 16(6) of the Act.
discussion is enough to dispose of this case and we do not propose to deal with
other contentions raised by the learned counsel of the appellants and are left
appeals are thus allowed quashing Section 16(6) and the consequential
provisions of Sections 16(7), 16(8), 20-A and 20-B of the Act and the order of
the High Court stands set aside.