Motor Transport Vs. State of M.P. & Ors  Insc 671 (19 October 2006)
Sinha & Dalveer Bhandari
out of S.L.P. (C) No. 22580 of 2005] WITH
CIVIL APPEAL NO. 4558 OF 2006 [Arising out of S.L.P. (C) No. 24087 of 2005]
S.B. SINHA, J :
validity of Clause (g) of Entry IV of the First Schedule of the Madhya Pradesh Motoryan
Karadhan Adhiniyam, 1991 (for short "the 1991 Act") as amended by
Madhya Pradesh Motoryan Sanshodhan Adhiniyam, 2004 read with Explanation (7) of
the First Schedule thereof is in question in these appeals which arise out of a
judgment and order dated 28.06.2005 passed by a Division Bench of the High
Court of Madhya Pradesh at Jabalpur.
herein are holders of contract carriage permits. On allegations that they have
been using their vehicles as stage carriage permits, the vehicles were
detained. They were asked to pay duty as if the vehicles were being plied
without any permit.
Parliament enacted Motor Vehicles Act, 1988 (for short "the 1988
Act") to consolidate and amend the law relating to motor vehicles in
exercise of its legislature power under Entry 35, List III of the Seventh
Schedule of the Constitution of India. The said Act is a self-contained code.
has been defined in Section 2(31) to mean "a permit issued by a State or
Regional Transport Authority or an authority prescribed in this behalf under
this Act authorizing the use of a motor vehicle as a transport vehicle".
carriage", "contract carriage" and "tourist vehicle"
have been defined under Sections 2(40), 2(7) and 2(43) of the 1988 Act as
"stage carriage" means a motor vehicle constructed or adapted to
carry more than six passengers excluding the driver for hire or reward at
separate fares paid by or for individual passengers, either for the whole
journey or for stages of the journey;
"contract carriage" means a motor vehicle which carries a passenger
or passengers for hire or reward and is engaged under a contract, whether
expressed or implied, for the use of such vehicle as a whole for the carriage
of passengers mentioned therein and entered into by a person with a holder of a
permit in relation to such vehicle or any person authorised by him in this
behalf on a fixed or an agreed rate or sum
a time basis, whether or not with reference to any route or distance; or
one point to another, and in either case, without stopping to pick up or set
down passengers not included in the contract anywhere during the journey, and
(i) a maxicab;
motorcar notwithstanding the separate fares are charged for its passengers;
"tourist vehicle" means a contract carriage, constructed or adapted
and equipped and maintained in accordance with such specifications as may be
prescribed in this behalf;" Section 66 of the 1988 Act deals with grant of
permit. Section 72 of the 1988 Act provides for grant of stage carriage permit.
In terms of Sub- section (1) thereof, a stage carriage permit may be granted or
refused to be granted in accordance with the application but subject to the
provisions of Section 71 and with such modification as it deems fit.
Sub-section (2) of Section 72 provides for the conditions as enumerated therein
for grant of such permit. Section 74 of the 1988 Act provides for grant of
contract carriage permit on almost similar terms. Sub-section (2) of Section 74
provides for grant of such permits on one or more of the conditions enumerated
of the vehicle in a specified area or on a specified route or routes;
rates of hiring should not exceed specified maximum rates; and
(ix) of Sub-section (2) of Section 74 of the 1988 Act empowers the Regional
Transport Authority to vary the conditions of permit or attach to the permit
further conditions. Clause (xii) of Sub-section (2) of Section 74 reads as
that, except in the circumstances of exceptional nature, the plying of the
vehicle or carrying of the passengers shall not be refused;" Sub-section
(3) of Section 74 reads as under:
(a) The State Government shall, if so directed by the Central Government,
having regard to the number of vehicles, road conditions and other relevant
matters, by notification in the Official Gazette, direct a State Transport
Authority and a Regional Transport Authority to limit the number of contract
carriages generally or of any specified type, as may be fixed and specified in
the notification, operating on city routes in towns with a population of not
less than five lakhs.
Where the number of contract carriages are fixed under clause
the Regional Transport Authority shall, in considering an application for the
grant of permit in respect of any such contract carriage, have regard to the
following matters, namely:
stability of the applicant;
performance as a contract carriage operator including payment of tax if the
applicant is or has been an operator of contract carriages; and
other matters as may be prescribed by the State Government" Section 192A
of the 1988 Act provides for a penal clause stating:
Whoever drives a motor vehicle or causes or allows a motor vehicle to be used
in contravention of the provisions of sub-section (1) of section 66 or in
contravention of any condition of a permit relating to the route on which or
the area in which or the purpose for which the vehicle may be used, shall be
punishable for the first offence with a fine which may extend to five thousand
rupees but shall not be less than two thousand rupees and for any subsequent
offence with imprisonment which may extend to one year but shall not be less
than three months or with fine which may extend to ten thousand rupees but
shall not be less than five thousand rupees or with both:
that the court may for reasons to be recorded, impose a lesser punishment.
Nothing in this section shall apply to the use of a motor vehicle in an
emergency for the conveyance of persons suffering from sickness or injury or
for the transport of materials for repair or for the transport of food or
materials to relieve distress or of medical supplies for a like purpose:
that the person using the vehicle reports about the same to the Regional
Transport Authority within seven days from the date of such use.
court to which an appeal lies from any conviction in respect of an offence of
the nature specified in sub-section (1), may set aside or vary any order made
by the court below, notwithstanding that no appeal lies against the conviction
in connection with which such order was made." The 1988 Act, thus,
contains penal provision for violation of the provisions of the said Act and/
or violating the terms and conditions of the permit. A penalty can be imposed
by a court. An order of penalty is an appellable one. The Central Government in
exercise of its power conferred upon it made rules known as the Central Motor
Vehicle Rules, 1989. Rules 85 and 85A of the Rules provide for additional
conditions of tourist permit.
1988 Act and the Rules made thereunder provide for a complete code. The matter
relating to the imposition of tax, however, is provided for under the statutes
enacted by each State. The State of Madhya Pradesh for the said purpose enacted the 1991 Act. Section 2(c) of
the 1991 Act defines 'tax' to mean a tax leviable under the Act. Section 3
provides that a tax shall be leviable on every motor vehicle used or kept for
use in the State at the rates specified in the First Schedule. Section 16
provides for power of entry, seizure and detention of motor vehicles in case of
non-payment of tax. Sub- sections (1) to (5) of Section 16 of the 1991 Act read
Power of entry, seizure and detention of Motor Vehicles in case of non-payment
of tax : (1) The Taxation Authority or any other officer, authorised by the
State Government in this behalf, may at all reasonable time enter into and
inspect any motor vehicle or premises where he has reason to believe that a
motor vehicle is kept for the purpose of verifying whether the provisions of
this Act or any rules made thereunder are being complied with:
that no officer shall be authorised under this sub-section with respect to
motor cycles and motor cars :
Any person driving a motor vehicle in any public place shall, on being so
required by the Taxation Authority or any officer authorised in this behalf by
the State Government, produceó
certificate of registration;
token in evidence of the payment of tax ; and
the certificate of insurance relating to the use of the vehicle and shall keep
such vehicle stationary for such time as may be required by such authority or
officer to satisfy himself that the tax in respect of such motor vehicle has
been paid :
that in the case of a motor vehicle other than a transport vehicle; the
certificates so required shall be produced for inspection within such period
and in such manner as may be prescribed under Sub-section (4) of Section 130 of
the Motor Vehicles Act, 1988.
The Taxation Authority or any officer authorised by the State Government in
this behalf may if 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.
Where a motor vehicle has been seized and detained under Sub-section (3), the
owner or the person incharge of such vehicle may apply to the Taxation
Authority or any officer authorised in this behalf by the State Government
together with the relevant documents for the release of the vehicle and if such
authority or officer after verification of such documents, is satisfied that no
amount of tax is due in respect of that vehicle, may by an order in writing
release such vehicle.
Where a motor vehicle has been seized and detained under Sub-section (3), the
Court taking cognizance of the offence shall not release such vehicle."
Section 23 of the 1991 Act empowers the State to amend the Schedule in regard
to the rates of tax by not more than fifty per cent of the rates specified
therein. As noticed hereinbefore, the rate of tax is specified in the First
Schedule appended to the said Act. Entry IV of the First Schedule provides for
public service vehicle. The relevant portions of Clauses (d), (f) and (g) of
Entry IV of the First Schedule read as under:
of Motor Vehicle Rate of Quarterly tax for Motor Vehicles IV.
SERVICE VEHICLE *** *** (d) Vehicles permitted to carry more than six
passengers plying as stage carriage on routes other than city routes *** (2)
In respect of vehicles permitted to play as ordinary service for every
passenger which the vehicle is permitted to carry and where the total distance
permitted to be covered by a vehicle in a day (i) does not exceed 100 kms.
for each 10 kms.
160 per seat per month Rs. 10 per seat per month.
Contract carriage *** (3) Vehicle permitted to carry more than six passengers
and plying as contract carriage covered by all India Tourist permit issued by
other State under sub- section (9) of Section 88 of the Motor Vehicles Act,
1988 for each seat (excluding driver) which the vehicle is permitted to carry.
(5) Vehicles permitted to carry more than six passengers and plying as contract
carriage on special permit granted under sub-section (8) of Section 88 of the
Motor Vehicle Act, 1988 by the other State for each seat (other than the
driver) which the vehicle is permitted to carry Rs. 40.00 per seat per day for
the entire period vehicle remains in Madhya Pradesh 50 paise for ordinary bus
and Re. 1 for deluxe/ air-conditioned bus per seat per 10 kms.
part thereof for the entire distance to be covered in accordance with the
conditions of the permit, in addition to tax paid under clause (c), (d), (e) or
(f)(2) as the case may be.
Motor Vehicle plying without permit (a) Vehicle permitted to carry exceeding 3
but not exceeding 29 passengers (excluding driver) (b) Vehicle permitted to
carry exceeding 29 passengers (excluding driver) Rs. 600 per seat per month in
accordance with entire registered seating capacity;
1000.00 per seat per month in accordance with entire registered seating
capacity." Explanation (7) of the First Schedule reads as under:
(7) - The words
"plying without permit" in Clause (g) shall include plying of a
public service vehicle on an authorised route or making a trip not authorised
by a permit granted under the Motor Vehicles Act, 1988 but shall not include
the plying of a public service vehicle under circumstances laid down in
Sub-section (3) of Section 66 of the Motor Vehicles Act, 1988." Sub-clause
(3) of Clause (f) and Clause (g) of Entry IV of the First Schedule were amended
in the following terms:
Vehicle permitted to carry more than six passengers and plying as contract
carriage covered by all India Tourist permit issued by other State under
sub-section (9) of Section 88 of the Motor Vehicles Act, 1988 for each seat
(other than the driver) which the vehicle is permitted to carry Rs. 200.00 per
seat per week or part thereof till the vehicle remains in Madhya Pradesh."
"(g) Motor vehicle plying without permit;
Vehicle permitted to carry upto 12 passengers (excluding driver) Rs. 1000.00
per seat per month in accordance with the entire registered seating capacity.
Vehicle permitted to carry more than 12 passengers (excluding driver) Rs.
1500.00 per seat per month in accordance with the entire registered seating
capacity." Tax imposed on motor vehicles in terms of the provisions of the
1991 Act is a regulatory one. It was so held in Bolani Ores Ltd. v. State of Orissa [(1974) 2 SCC 777] stating:
the vehicles do not use the roads, notwithstanding that they are registered
under the Act, they cannot be taxed" We may, however, hasten to add that
even if a vehicle is roadworthy and can be plied on a road, a tax may be
imposed, but if a vehicle is not capable of being plied on the road, no tax
would be leviable.
Automobile Transport (Rajasthan) Ltd. etc. v. The State of Rajasthan and Others [1963 (1) SCR 491], it
were addressed at some length on the distinction between a tax, a fee and an
excise duty. It was also pointed out to us that the taxes raised under the Act
were not specially ear- marked for the building or maintenance of roads.
not think that these considerations necessarily determine whether the taxes are
compensatory taxes or not. We must consider the substance of the matter and so
considered, there can be no doubt that the taxes imposed are no hindrance to
the freedom of trade, commerce and intercourse. If a statute fixes a charge for
a convenience or service provided by the State or an agency of the State, and
imposes it upon those who choose to avail themselves of the service or
convenience, the freedom of trade and commerce may well be considered
unimpaired. In such a case the imposition assumes the character of remuneration
or consideration charged in respect of an advantage sought and received."
The power of the State of Madhya Pradesh to seize a vehicle in terms of Section
16(6) of the 1991 Act came up for consideration before this Court in M.P. AIT
Permit Owners Assn. and Another v. State of M.P. [(2004) 1 SCC 320]. The
question which arose for consideration therein was that having regard to the
fact that the Parliamentary Act provides for a lesser penalty as specified in
Section 192A thereof, can the State by reason of the taxing statute impose a
higher penalty? It was held:
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 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 is concerned, it 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 has 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." The said decision, however, was rendered
on the premise that the State Act is repugnant to the Central Act.
however, not in dispute that the 1991 Act has received the assent of the
President of India. While considering the question of constitutionality of the
provisions of the 1991 Act, therefore, Article 254(2) of the Constitution of
India may not have any role to play.
at this juncture notice that the concepts of tax, compensatory tax and fees
having regard to diverse decisions rendered by this Court over a number of
years were referred to a Constitution Bench. The decision of the Constitution
Bench of this Court is since reported in Jindal Stainless Ltd. & Anr. v.
State of Haryana & Ors. [JT 2006 (4) SC 611].
The Constitution Bench of this Court made a deep analysis of the nature of tax,
principles of imposition of tax, compensatory tax and levy of fee and stated
the law, thus:
is levied as a part of common burden. The basis of a tax is the ability or the
capacity of the taxpayer to pay. The principle behind the levy of a tax is the
principle of ability or capacity. In the case of a tax, there is no
identification of a specific benefit and even if such identification is there,
it is not capable of direct measurement. In the case of a tax, a particular
advantage, if it exists at all, is incidental to the States' action. It is
assessed on certain elements of business, such as, manufacture, purchase, sale,
consumption, use, capital etc. but its payment is not a condition precedent. It
is not a term or condition of a licence. A fee is generally a term of a licence.
A tax is a payment where the special benefit, if any, is converted into common
burden." In regard to compensatory tax, it was opined:
tax can be progressive. However, a fee or a compensatory tax has to be broadly
proportional and not progressive. In the principle of equivalence, which is the
foundation of a compensatory tax as well as a fee, the value of the
quantifiable benefit is represented by the costs incurred in procuring the
facility/services which costs in turn become the basis of
reimbursement/recompense for the provider of the services/facilities.
Compensatory tax is based on the principle of "pay for the value". It
is a sub-class of "a fee". From the point of view of the Government,
a compensatory tax is a charge for offering trading facilities. It adds to the
value of trade and commerce which does not happen in the case of a tax as such.
A tax may be progressive or proportional to income, property, expenditure or
any other test of ability or capacity (principle of ability). Taxes may be
progressive rather than proportional. Compensatory taxes, like fees, are always
proportional to benefits. They are based on the principle of equivalence.
However, a compensatory tax is levied on an individual as a member of a class,
whereas a fee is levied on an individual as such. If one keeps in mind the
"principle of ability" vis-`-vis the "principle of
equivalence", then the difference between a tax on one hand and a fee or a
compensatory tax on the other hand can be easily spelt out. Ability or capacity
to pay is measurable by property or rental value. Local rates are often charged
according to ability to pay. Reimbursement or recompense are the closest
equivalence to the cost incurred by the provider of the services/facilities.
The theory of compensatory tax is that it rests upon the principle that if the
government by some positive action confers upon individual(s), a particular
measurable advantage, it is only fair to the community at large that the
beneficiary shall pay for it. The basic difference between a tax on one hand
and a fee/compensatory tax on the other hand is that the former is based on the
concept of burden whereas compensatory tax/fee is based on the concept of
recompense/reimbursement. For a tax to be compensatory, there must be some link
between the quantum of tax and the facility/services. Every benefit is measured
in terms of cost which has to be reimbursed by compensatory tax or in the form
of compensatory tax. In other words, compensatory tax is a recompense/reimbursement.
that compensatory tax being a judicially evolved concept, it was observed that
the scope and effect thereof must be construed within the said parameters.
G.K. Krishnan and Others v. State of Tamil Nadu and Others [(1975) 1 SCC 375], Mathew, J. stated the law, thus:
speaking, a compensatory tax is based on the nature and the extent of the use
made of the roads, as, for example, a mileage or ton-mileage charge or the
like, and if the proceeds are devoted to the repair, upkeep, maintenance and
depreciation of relevant roads and the collection of the exaction involves no
substantial interference with the movement. The expression "reasonable
compensation" is convenient but vague. The standard of reasonableness can
only lie in the severity with which it bears on traffic and such evidence of
extravagance in its assessment as come from general considerations. What is
essential for the purpose of securing freedom of movement by road is that no
pecuniary burden should be placed upon it which goes beyond a proper recompense
to the State for the actual use made of the physical facilities provided in the
shape of a road.
difficulties are very great in defining this conception. But the conception
appears to be based on a real distinction between remuneration for the
provision of a specific physical service of which particular use is made and a
burden placed upon transportation in aid of the general expenditure of the
State. It is clear that the motor vehicles require, for their safe, efficient
and economical use, roads of considerable width, hardness and durability; the
maintenance of such roads will cost the government money. But, because the
users of vehicles generally, and of public motor vehicles in particular, stand
in a special and direct relation to such roads, and may be said to derive a
special and direct benefit from them, it seems not unreasonable that they
should be called upon to make a special contribution to their maintenance over
and above their general contribution as taxpayers of the State. If, however, a
charge is imposed, not for the purpose of obtaining a proper contribution to
the maintenance and upkeep of the road, but for the purpose of adversely
affecting trade or commerce, then it would be a restriction on the freedom of
trade, commerce or intercourse." We are not oblivious of a recent decision
of this Court in Vijayalashmi Rice Mill and Others v. Commercial Tax Officers, Palakol
and Others [(2006) 6 SCC 763], although we are not strictly concerned therewith,
but we notice that herein the application of Jindal Stainless Ltd. (supra) was
kept limited stating:
may be noted that the decision in Jindal Stainless was given in connection with
Article 301 of the Constitution, and it was not regarding the nature of a fee.
Hence, it cannot be regarded as an authority explaining the nature of a
fee." We, however, feel that this Bench is bound by the Constitution Bench
decision of this Court.
issue which arises for our consideration in the light of the aforementioned
authoritative pronouncement, as noticed hereinbefore, is whether the impugned
provision specifies the test laid down by the Constitution Bench.
3 of the 1991 Act is the charging section. It provides that the tax shall be
levied on every motor vehicle used or kept for use in the State at the rates
specified in the First Schedule. The levy of tax, therefore, is on the motor
vehicles. Its rate may vary keeping in view its use or the nature thereof.
However, the use of a motor vehicle so far as public service vehicles are
concerned would depend upon the nature of permit held by it. It is not in
dispute that Appellants herein have been granted permit for plying their buses
as contract carriage. Allegation against this is that they have been violating
the terms and conditions of the permit by plying their vehicles as stage
carriage. It is, however, not in dispute that the rate of tax of a contract
carriage permit is more than the stage carriage. Clause (g) of Entry IV
specifies the rate of tax of motor vehicle plying without permit at the rate of
Rs. 1500/- per seat per month.
(7) of the First Schedule of the 1991 Act does not create any legal fiction. It
provides for a inclusive definition stating that the words "plying without
permit" in Clause (g) shall include plying of a public service vehicle on
an authorized route or making a trip not authorized by a permit granted under
the 1988 Act.
role of an explanation of a statute is well-known. By inserting an explanation
in the Schedule of the Act, the main provisions of the Act cannot be defeated.
By reason of an explanation, even otherwise, the scope and effect of a
provision cannot be enlarged. It was so held in S. Sundaram Pillai, etc. v. R. Pattabiraman
[AIR 1985 SC 582 : (1985) 1 SCC 591] in the following terms:
from a conspectus of the authorities referred to above, it is manifest that the
object of an Explanation to a statutory provision is "(a) to explain the
meaning and intendment of the Act itself, (b) where there is any obscurity or
vagueness in the main enactment, to clarify the same so as to make it
consistent with the dominant object which it seems to subserve, (c) to provide
an additional support to the dominant object of the Act in order to make it
meaningful and purposeful, (d) an Explanation cannot in any way interfere with
or change the enactment or any part thereof but where some gap is left which is
relevant for the purpose of the Explanation, in order to suppress the mischief
and advance the object of the Act it can help or assist the Court in
interpreting the true purport and intendment of the enactment," [See also
Swedish Match AB and Another v. Securities & Exchange Board of India and
Another, (2004) 11 SCC 641] We have noticed that the Constitution Bench
categorically states that compensatory tax cannot be progressive. We have
furthermore noticed that, according to the Constitution Bench, imposition of
tax cannot be a term or condition of a licence. If a permit has been granted,
the holder of a permit is liable to comply with the conditions of permit. If he
violates the terms and conditions of permit, law will take its own course. A
permit is granted under the 1988 Act. If there is violation of the terms of
permit, the consequences, therefor, shall ensue as contained in Section 192A of
the 1988 Act. A distinction must be borne in mind that a tax cannot be imposed
by way of penalty although penalty can be imposed for non-payment of tax or
evasion of tax. The State may make suitable legislations in this behalf. But
the same would not mean that while specifying a rate of tax, the executive
government of the State can indirectly levy a penalty which it cannot do
attention has been drawn to a decision of this Court in State of U.P. and Others v. Sukhpal Singh Bal [(2005) 7 SCC 615]
and in particular the following passage:
the case of State of Madras v. V.G. Row (AIR at p. 200, para 15) this Court
observed as follows:
p. 607) "It is important in this context to bear in mind that the test of
reasonableness, wherever prescribed, should be applied to each individual
statute impugned, and no abstract standard, or general pattern of
reasonableness can be laid down as applicable to all cases. The nature of the
right alleged to have been infringed, the underlying purpose of the
restrictions imposed, the extent and urgency of the evil sought to be remedied
thereby, the disproportion of the imposition, the prevailing conditions at the
time, should all enter into the judicial verdict."" Kapadia, J. in
that case was dealing with the constitutionality of a penal provision. It was
stated that before a penalty can be imposed, mens rea on the part of the
defaulter is required to be established. The said decision is merely an
authority for the proposition that a statute may provide for a fixed penalty or
minimum penalty. But it was not laid down therein that penalty can be imposed
without giving an opportunity of hearing to the defaulter or without satisfying
the other conditions laid down therefor. [See also State of T.N. v. M. Krishnappan and Another, (2005) 4 SCC 53].
transport authorities of the State indisputably have a power to check a vehicle
so as to ascertain whether payment of tax is being evaded.
have been conferred with the power to detain a vehicle. They can release the
vehicle only when tax as demanded is paid. Even the power of the court to
release the vehicle has been taken away unless tax is paid and the court can
satisfy itself as to whether a tax is paid or not only on the receipt of the
certificate issued by the transport authorities of the State. The power of the
transport authorities, therefore, is very wide. We, however, do not mean to
suggest that only because a wide power has been conferred the same by itself
would lead to a presumption that the same is capable of misuse or on that count
alone the provisions of Article 14 of the Constitution of India would be
attracted. But, when a statue confers a wide power upon a statutory authority,
a closer scrutiny would be required.
1991 Act also does not make any provision for compliance of the principles of
natural justice or for determination of a question as to whether the conditions
of permit have been violated by an independent authority.
have paid tax. They have paid tax as specified for in permits granted in their favour
as a contract carriage. The rate of tax payable by a contract carriage is
higher than the rate of tax imposed on a stage carriage. For non-payment of tax
or for payment of tax for a wrong purpose, a penalty can be imposed but it is
difficult to conceive that a different rate of tax which is not contemplated
under Section 3 of the 1991 Act can be imposed by way of penalty.
interpretation clauses contained in the 1988 Act are incorporated in the 1991
Act by reference. The interpretation of the expressions "permit",
"contract carriage" and "stage carriage" must, thus, be
understood on the premise that the said expressions carry the same
interpretation as contained in the 1988 Act.
distinction between "contract carriage" and "stage
carriage" has been noticed by this Court in State of A.P. and Others v. B.
Noorulla Khan and Another [(2004) 6 SCC 194] stating:
distinction between a stage carriage permit or a contract carriage permit as envisaged
by the legislature has to be maintained as the two types of permits are
intended to meet different requirements. The contract carriages are for those
who want to hire the vehicle collectively or individually for a group or a
party for their transport to a destination/destinations. The vehicle has to be
hired as a whole for the carriage of passengers mentioned in the contract.
There has to be only one contract for carrying the passengers mentioned in the
contract from one destination to another. An agent or a group of
persons/individuals cannot hire a public service vehicle for going from one
place to another with passengers having different purposes. If such a
construction is put then there would be no distinction between stage carriage
or contract carriage permits. If contract carriage permit-holder is permitted
to pick up an individual or a few of them from the starting point of the
journey and drop them at the last terminus of the route it would virtually be a
stage carriage with corridor restriction. Stage carriage is intended to meet
the requirements of the general public travelling from one destination to
another having different purposes whereas a contract carriage is meant for
those who want to hire a public service vehicle as a whole collectively for
their transport from one destination to another having the same purpose"
As a logical corollary the mode and manner in which the permits are granted
must necessarily be considered to be part of the provisions of the 1991 Act.
Article 254(2) of the Constitution of India as such may not be attracted but it
is a trite law that the executive while fixing a rate of duty cannot be
permitted to usurp the legislative power and make a provision which would be
inconsistent with the substantive provision of the statute. In other words, the
provisions contained in the Schedule must be in consonance with the substantive
provisions in the main Act. It must be in conformity with the charging Section.
As in terms of Section 3 of the 1991 Act, the legislature directed that the tax
can be levied on motor vehicles subject to the rates fixed; by taking recourse
to Explanation (7), firstly, no new definition could be introduced and,
secondly, an owner of a vehicle having one kind of permit could not have been
treated as having no permit at all only because the transport authorities have
reasons to believe that the conditions of permit have been violated. By way of
example we may notice that recently a Constitution Bench of this Court in State
of Kerala and Others v. Maharashtra
Distilleries Ltd. and Others [(2005) 11 SCC 1] has laid down guidelines for
reading of the entries in the Schedule vis-`-vis the provisions of the Act.
the reasons aforementioned, Clause (g) of Entry IV of the First Schedule of the
Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991 (for short "the 1991
Act") as amended by Madhya Pradesh Motoryan Sanshodhan Adhiniyam, 2004
read with Explanation (7) of the First Schedule is declared unconstitutional.
The appeals are allowed. No costs.