National Transport Company Vs. State of
Bihar [1976] INSC 82 (25 March 1976)
GOSWAMI, P.K.
GOSWAMI, P.K.
KHANNA, HANS RAJ
CITATION: 1976 AIR 1074 1976 SCR (3) 897 1976
SCC (3) 363
ACT:
Bihar Taxation on Passengers and Goods
(Carried by Public Service Motor Vehicles) Act, 1961, s. 2(d)-Owner, who
is-'In-charge' of a vehicle, scope of
HEADNOTE:
Under s. 3(1) and (2) of the Bihar Taxation
on Passengers and Goods (Carried by Public Services Motor Vehicles) Act, 1961,
every owner shall pay to the State Government a tax on all passengers and goods
carried by a public motor vehicle. Under s. 2(d), 'owner' means not only the
owner of the specified type of vehicle but also includes, inter alia, "any
person for the time being in- charge of such vehicle". Under s. 4(1) every
owner liable to pay tax shall apply for registration, and under s. 6 every
owner shall furnish the prescribed return to the prescribed authority. Section
18 provides for penalties for failure to apply for registration or to submit
the return.
The assessee was the sole transporting
company of the cement of a manufacturing company. Since it did not have its own
fleet of trucks, it used to engage trucks for use in its transport work. It was
providing petrol and oil for the running of the trucks in the transport work
although the prices paid by the assessee were later on adjusted in the hiring
charges. The assessee was obtaining the receipts of delivery of the goods to
the various stockists indicating the quantities of cement received through a particular
vehicle. On delivery to the appellant of the buyers' receipt by the truck owner
or his representative, the bills of hire charges of the truck owner were paid
by the appellant as per the agreement between the appellant and the truck
owner. The assessee was maintaining a complete record of the trucks used by it
for the transport work, of the charges realisable and realised from me
stockists on account of freight payable by them, and of the charges actually
paid to the truck owners. The assessee was not registered under s. 4. After a
surprise check, the total taxable amount of the assessee was determined and the
tax and a penalty were imposed on the assessee. The assessee's appeal, revision
to the tribunal, and reference to the High Court, were all decided against the
assessee.
Dismissing the appeal to this Court, ^
HELD: The appellant was in-charge of the
trucks for the purpose of its business during the entire course of
transportation of the cement from the factory to the various stockists and, as
such, came within the definition of owner under s. 2(d). [904 D-E] (1) Whether
a certain person is in-charge of the vehicle for the time being depends on the
particular facts of each case. Being in-charge' of the vehicle, in the context
of the provisions of the Act, does not relate to mere physical charge or
control in the process of movement of the vehicle from one place to another but
'to charge or control' for fulfilment of the legal obligation under the Act for
payment of taxes for the carriage of goods or passengers. The words "for
the time being in-charge of such vehicle" have to be comprehended in the
context of the provisions of the taxing statute and these words have nexus with
the actual realisation and appropriation of the freight for the goods carried
by the vehicle. In a given case, the person, who is for the time being
in-charge of the loaded truck and who or on whose behalf some one like a driver
or conductor received the freight or fare. is also a owner within the meaning
of the definition in s. 2(d).[903 C-D; 904 C-D] (2) On the facts of the present
case the appellant took full responsibility for the carriage of the goods from
the factory to various destinations. The freight had been realised by the
appellant from the stockists and the truck 898 owner received only 'hire
charges.' There is nothing to show nor is there any averment by the appellant
that those charges included the taxes under the Act. The matter might have been
different if the truck owners had been given the tax collections in addition to
the hire charges. Further the absence of any provision for tax payment by the
truck owners in the agreement militates against the contention that it is only
the truck owners that are liable. [902 B-C, G-903 B] (3) The case of Jagir
Singh v. State of Bihar [1976] 2 SCR 809 was an application under Art. 32 of
the Constitution and was concerned with booking agents and forwarding agents
who were sought to be made liable under the Act at the instance the truck
owners but the truck owners were held to be liable. Unlike that case, the
liability to pay taxes was entirely upon the appellants in the present case as
the truck owners were entitled only to hire charges. [903 F-G;
904 A]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1462 of 1971.
Appeal by special leave from the Judgment and
Order dated 16th April 1971 of the Patna High Court in Tax Case No. 76/68.
A. K. Sen, S. T. Desai, Somen Bose, D. N.
Mukherjee and K. N. Jain, for the appellant.
V. S. Desai and B. P. Singh for the
Respondent.
The Judgment of the Court was delivered by
GOSWAMI, J. This appeal by special leave is directed against the judgment of
the Patna High Court in a reference under section 21B(1) of the Bihar Taxation
on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961
(briefly the Act) as amended.
The facts as appearing from the statement of
case annexing the various orders of the authorities may briefly be stated:
The appellant, M/s. National Transport
Company, is a transport undertaking without its transport. The appellant
(hereinafter to be described as the assessee) was the sole transporter by road
of the cement manufactured by the Associated Cement Company at Sindri (briefly
the company) from Sindri to different stockists at various places in Bihar and
West Bengal. In order to have some sort of uniformity in price at different
places the manufacturing company used to fix the transport charges according to
a schedule. The assessee's contract with the manufacturing company commenced
some time on October 12, 1963. Since the assessee did not have its own fleet of
trucks, it used to engage thirty-six trucks covered by public carrier permits
belonging to various persons at different times for transporting the cement.
The assessee was not registered under section 4 of the Act. On September 3,
1966, there was a surprise inspection of the office of the assessee and certain
books of accounts containing accounts of transport charges realised by the
assessee for transporting of cement from the Sindri factory to the stockists in
Bihar and West Bengal were seized. The assessee also produced some books of
accounts during the hearing before the Officer. The assessee maintained his
accounts ledger-wise in respect of the transport charges realised and
realisable from different stockists of Bihar and West Bengal for transport of
cement by it from the Sindri factory to their godowns. There were two ledgers.
One was party-wise showing charges realised or realisable from the stockists
and other truck-wise showing hire charges 899 paid to various trucks. The
assessee also produced a list of trucks showing the names of the truck owners
with their respective places of residence. Out of thirty-six trucks,
twenty-four were registered in Bihar and twelve in West Bengal. Agreements with
the truck owners were also produced by the assessee. The Bills from the petrol
supplying company which were paid by the assessee were also filed showing the
total amount and the truck-wise amount. The ledger party- wise showed rates
charged from the stockists. The ledger truck-wise showed hire charges and also
deductions on account of petrol, diesel and other lubricants and also for loss
in the way as per agreement.
On the basis of the statement furnished by
the assessee as corroborated by the books of accounts maintained by it the
Assessing Officer determined the total taxable amount and imposed a tax of Rs.
1,41,618.37 by his order of November 1, 1966. A penalty of Rs. 5000/- was also
imposed under section 7(5) of the Act.
The assessee appealed to the Additional
Deputy Commissioner of Commercial Taxes without success. Thereafter the
assessee preferred an application in revision before the Commercial Taxes
Tribunal, Bihar, which also met with the same fate.
The Tribunal, however, on the application of
the assessee under section 218(1) of the Act referred the following question of
law to the High Court:
"Whether in the facts and circumstances
of the case the Tribunal has rightly held the applicant to be the 'owner' of
the vehicles within the meaning of section 2(d) of the Act and whether the
imposition of tax and levy of penalty was legal and justified".
The High Court noted the facts found by the
Tribunal as follows:
(a) The assessee was the sole transporting
company of the cement of the manufacturing company, (b) it had engaged certain
trucks for use in his (sic) transport work, (c) it was providing petrol and oil
for the running of the trucks in the transport work, although the prices paid
by the assessee were later on adjusted in the hiring charges, (d) it was
obtaining receipts for delivery of the goods to the stockists, (e) it was
maintaining a complete record of the trucks used by it for the transport work,
(f) it was keeping a complete record of the charges realisable and realised
from the stockists on account of freight payable by them, (g) it was keeping a
complete record of the charges actually paid to the real owners of the trucks,
and 900 (h) the receipts given by the stockists indicated that they had
received from the assessee, certain quantities of cement by a particular
vehicle".
From the above eight factors the Tribunal
came to the conclusion that the assessee was in-charge of the trucks for the
time being within the meaning of section 2(d) of the Act. The High Court agreed
with the Tribunal in the following words:- "In any case, even if the
conclusion that the assessee was in-charge of the trucks, for the time being,
be a conclusion in law, I do not think that any error in law has been committed
by the Tribunal, in arriving at its conclusion against the contentions raised
on behalf of the assessee. Relevant facts have been found and a relevant
finding has been given on them, before saddling the assessee with
liability".
The High Court thereupon upheld the
Tribunal's decision against the assessee.
The only question that is canvassed by Mr. A.
K. Sen on behalf of the appellant is that, on the various facts found by the
Tribunal, it has erred in law in holding that the assessee is an 'owner' within
the meaning of section 2(d) of the Act. We may, therefore, immediately turn to
the definition of owner as given under section 2(d) 2(d) " 'owner' means
the owner of a public service motor vehicle in respect of which a permit has
been granted by a Regional or State Transport Authority under the provisions of
the Motor Vehicles Act. 1939 (IV of 1939) and includes the holder of a permit
under the said Act in respect of a public service motor vehicle or any person
for the time being in charge of such vehicle or responsible for the management
of the place of business of such owner".
It is clear that the above definition is an
inclusive definition. Owner means not only the owner of the specified type of
vehicle but also includes the permit holder in respect of such a vehicle as
also any person for the time being in charge of such vehicle or any person
responsible for the management of the place of business of such owner.
The definition has fairly widened the meaning
of "owner".
We are only concerned in this appeal with one
category included in the definition, namely, that an owner is a person for the
time being in charge of a public service motor vehicle. There is no dispute
that the trucks in question are public service motor vehicles. We are only
required to consider whether the assessee is a 'person' "for the time
being in-charge of such vehicle".
As the preamble shows the Act is to provide
for the levy of tax on passengers and goods carried by public service motor
vehicles. The taxing event is, thus, the carriage of goods and passengers by
public service motor vehicles.
By section 2(a) 'business' means the business
of the owner for the purpose of this Act.
901 Section 3 in the charging section and may
be read:
3(1) "On and from the date on which this
Act is deemed to have come into force under sub-section (3) of section 1, there
shall be levied and paid to the State Government a tax on all passengers and
goods carried by a public service motor vehicle; such tax shall be levied and
paid at the rate of twelve and a half per centum of the fares and freights
payable to the owner of such vehicle;
* * * * (2) Every owner shall, in the manner
prescribed in section 9, pay to the State Government, the amount of tax due
under this section.
(3) Every passenger carried by a public
service motor vehicle and every person whose goods are carried by such vehicle
shall be liable to pay to the owner the amount of tax payable under this
section and every owner shall recover such tax from such passenger or person,
as the case may be." * * * * Under section 4(1) every owner liable to pay
tax shall apply for his registration within such period and in such manner as
may be prescribed. Under sub-section (2) of section 4, if the application is in
order, the prescribed authority shall grant a certificate of registration in the
prescribed form.
Under section 6 every owner shall furnish to
the prescribed authority such returns, within such period, as may be
prescribed. There is a provision under this section for imposition of penalty
on failure to submit a return without any reasonable cause.
Section 18 is the penal section for various
offences under the Act including failure to apply for registration or to submit
return or for contravention of any other provision of the Act of the Rules and
the offender is punishable with fine which may extend to Rs. 1000/-, and when
the offence is a continuing one, with a daily fine not exceeding fifty rupees
during the period of the continuance of the offence.
By section 3(h) of the Act, a 'public service
motor vehicle' means any motor vehicle used or adopted to be used for the
carriage of passengers and goods for hire or reward and includes a motor cab, a
stage carriage, a contract carriage or a public carrier.
For the purpose of tax under the Act not
every public service motor vehicle but only such a vehicle carrying goods and
passengers is exigible to tax for the carriage of those goods and passengers
under the Act. The tax again is a percentage of the fares or freights realised.
The fares and freights have to be realised as a fact. Such a vehicle carrying
goods and passengers driven by employees of the owner of the 902 vehicle would
ordinarily be in-charge of that owner or of the permit holder wherever it may
ply. The physical presence of the owner or the proprietor or of the permit
holder in the running vehicle is not essential. Even if the driver or the
conductor realises the freight it is done on behalf of the owner of the vehicle
or of the permit holder and the former is accountable to the latter. Suppose
the conductor misappropriates the collection en route, that will not absolve
the permit holder from liability to pay the tax actually realised for the
carriage of the goods or the passengers.
In view of the terms of the agreement, on
which great reliance has been placed by Mr Sen, it can be safely assumed that
the appellant took full responsibility for the carriage of the goods from the
Sindri factory to various destinations. This is manifest even in absence of
production by the appellant of agreements, if any, between it and the company or
the stockists. Cement bags will not be loaded on any and every vehicle that
reports at the factory but only on those vehicles whose registration numbers
must have been communicated to the company or which were taken there by the
appellant's representative who has to be present at the time of loading the
trucks with cement as will appear from clause (1) of the agreement. Clause (1)
reads "Cement will be loaded into your lorry at the Sindri Works through
us". The Sindri factory, therefore, entrusted the carriage of their cement
bags to the appellant for delivery to various stockists who again in turn, at
destinations, gave buyer's receipts as per clause (3) of the agreement. Clause
(3) States:
"You will obtain proper receipts for
such deliveries from the consignees on the challans handed over to you and
bring back all the documents including the challan duly signed by the
consignees leaving one copy of the challan with the consignees".
On delivery to the appellant of the buyer's
receipt by the truck owner or his representative."the bills of hire
charges" of the truck owner are paid with three weeks thereafter at the
rates "as per our schedule" agreed between the appellant and the
truck owners". Clause (12) of the agreement says:
"Your bills of hire charges as per our
schedule will be prepared every fortnight and will be paid within 3 weeks
thereafter." The truck owners, in this case, received as per agreement,
only "hire charges" and there is nothing to show nor is there any
averment by the appellant that those charges included taxes under the Act
although freight had been admittedly realised by the appellant from the
stockists.
In the above background of facts and
circumstances, there is no escape from the conclusion that the appellant was in
charge of the trucks for the purpose of the 'business' of the appellant during
the entire course of transportation of the cement bags from the Sindri factory
to the various stockists and as such comes within the third clause of the
definition under section 3(d) of the Act.
903 The fact that under the terms of the
agreement some incidental arrangement involving contingent financial
implications in respect of carriage of the goods had been entered upon does not
entitle the appellant to be relieved of the "charge" of the loaded
truck for the purpose of tax under the Act for the carriage of the goods. The
matter would have been different if the truck owners had been given the tax
collections in addition to the hire charges, but absence of any provision for
tax payment by the truck owners in the agreement militates against the
contention that in this case the truck owners are liable for the payment of tax
under the Act for the carriage of the cement bags.
The owner of the truck under a public carrier
permit or a public carrier permit holder is undoubtedly an 'owner' under
section 2(d) of the Act. But in a given case, the person who is for the time
being in-charge of the loaded truck and who or on whose behalf someone received
the freight or fare is also an 'owner' within the third clause of the
definition under section 2(d) of the Act.
The significant words "for the time
being in charge of such vehicle" have to be comprehended in the context of
the provisions of the taxing statute and these words have nexus with the actual
realisation and appropriation of the freight for the goods carried by the
vehicle. The meaning given to the words "in-charge of vehicle" in
connection with traffic cases in criminal prosecution, as has been referred to
by Mr. Sen citing two English cases, is of no avail to the appellant in this
case.
Mr. Sen forcefully submits that the present
case is squarely covered by a decision of this Court in Jagir Singh & Ors.
etc. v. State of Bihar and Anr.(1) This was a case where the same Act with some
identical Acts from other States came up for consideration. It is submitted by
Mr. Sen that the truck owners lost in that decision and in this appeal also,
therefore, they cannot escape from their legal liability by shifting it to the
appellant.
We must bear in mind that those applications
were under article 32 of the Constitution while the present matter comes to us
out of a reference in the fifth tier of litigation after the matter had been
gone into in great detail taking note of various facets of the rival pleas by
the respective authorities and lastly by the High Court. In Jagir Singh's case
(supra) this Court was concerned merely with Booking Agents and Forwarding
Agents who were sought to be made liable under the Act at the instance of the
permit holders of the public service vehicles who did not own their liability
for payment of tax under the Act. This Court observed in that case as follows:-
"If the permit holder lets out the vehicle to any person on hire it is a
matter of internal arrangement between the owner who is the permit holder and
the person who is allowed by the permit holder to hire the vehicle to collect
tax in order to enable the owner to discharge the liability. If the owner does
not make adequate provision in that behalf the owner cannot escape liability by
pleading that the hirer of the vehicle is liable to pay tax and the owner is
not liable".
904 From the terms of the agreement in the
present case, it is clear that the liability to pay taxes was entirely upon the
appellant as the owners of the trucks were only entitled to "hire
charges".
Legal liability for payment of tax under the
Act is well known to the appellant carrying on transport business.
The appellant has taken charge of the
vehicles for the purpose of the collection of tax for the carriage of the
goods. The appellant has actually collected the freight from the stockists on
delivery of cement bags. The appellant has only paid to the truck owners
"the hire charges" as per its own schedule of rates without any
mention of tax. These facts clearly distinguish the present case from what appears
to have been pleaded in the writ application in Jagir Singh's case (supra) and
he decision is of no aid to the appellant.
Being "in charge" of the vehicle in
the context of the provisions of the Act does not relate to mere physical
charge or control in the process of movement of the vehicle from one place to
another but to charge or control for fulfillment of the legal obligation under
the Act for payment of taxes for the carriage of goods or passengers. Whether a
certain person is in charge of the vehicle for the time being depends always on
the particular facts of each case and the answer cannot be put in the
straitjacket of a formula. On the facts of the present case we are clearly of
opinion that the appellant comes within the meaning of the third clause of the
definition under section 2(d) of the Act.
We should observe that once the tax is
realised for a particular transaction from one category of owner as defined, no
further tax can be collected for the same carriage from any other person even
though that person also may come within the definition of "owner"
under the Act.
The Tribunal was, therefore, justified in
holding the appellant as "owner" for the purpose of the Act. The High
Court was right in not interfering with the conclusion of the Tribunal and in
answering the question against the assessee.
In the result the appeal is dismissed but we
make no order as to costs.
V.P.S. Appeal dismissed.
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