State of
Maharashtra & Ors Vs. Madhukar Balkrishna Badiya
& Ors [1988] INSC 229 (17 August 1988)
Mukharji,
Sabyasachi (J) Mukharji, Sabyasachi (J) Sharma, L.M. (J)
CITATION:
1988 AIR 2062 1988 SCR Supl. (2) 482 1988 SCC (4) 290 JT 1988 (3) 381 1988
SCALE (2)376
ACT:
Bombay
Motor Vehicles Tax Act, 1958 (as amended by Maharashtra Act XIV of 1987,
Maharashtra Act XXXIII of 1987 and Maharashtra Act lX of 1988)-Challenging
validity of amended provisions of-Whether levy of one-time tax on motor cycles
or tricycles in the State was beyond the legislative competence of State
Legislature and beyond Entry 57 of List II of Seventh Schedule.
HEAD NOTE:
These
Civil appeals and special leave petitions centred round one point, namely, the
validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of
the Maharashtra Act XIV of 1987 and Section 6 of the said Act as amended by
Maharashtra Act XXXIII of 1987 and the Maharashtra Act IX of 1988.
Section
3 of the said Act XIV of 1987 added sub-section (IC) to provide for the levy of
one-time tax at 15 times the annual rate on all motor cycles in the State. The
said provisions further provided that in the case of motor cycles owned by a
company or other commercial organisation, the one-time tax was to be levied at
thrice the rate.
Section
6 of the said Act XIV of 1987 added sub-section (6) to section 9, enabling a
registered owner of a motor cycle or tricycle to obtain refund of `Lone_time
tax" under certain conditions.
Petitions
were filed in the High Court by the respondents in the appeals and petitioners
in the special leave petitions, challenging the amended provisions of the
principal Act. The High Court held that (i) the levy of the one-time tax was
beyond the legislative competence of the State Legislature and also beyond
Entry 57 of List II of the Seventh Schedule, and (ii) the provision for
imposition of levy at thrice the rates on the vehicles owned by a firm or
company, were neither discriminatory nor arbitrary. The High Court struck down
Act XIV of 1987. The appeals by leave were filed by the State and the special
leave petitions were fixed by the petitioners in this Court against the
decision of the High Court. In the meanwhile, the Maharashtra Legislature
enacted Maharashtra Act XXXIII of 1987, which deleted Section 3(4) of the
principal Act as amended by the PG NO 482 PG NO 483 Maharashtra Act XIV of
1987, whereby the existing provisions of refund for temporary non-user were
made inapplicable in cases of motor cycles and tricycles, restricting the right
of refund to Section 9(6) in the contingencies mentioned therein. It also
introduced sub-section (7) to section 9 conferring the right of refund in
respect of motor cycles and tricycles in accordance with the rates specified in
the Fifth Schedule. But the said schedule did not prescribe a separate rate of
refund for the company-owned vehicles.
Therefore,
the refund in respect of the company-owned vehicles was the same as that
payable to individual owned vehicles even though the tax paid on former class
of vehicles was three times. Soon thereafter, the Maharashtra Legislature
enacted Act IX of 1988, whereby the only relevant change for the present
purpose was that the rate of refund was enhanced to three times in respect of
the company-owned vehicles.
Before
this Court, the appellant-State submitted that the amendments enacted by the
Maharashtra Acts XXXllI of 1987 and IX of 1988 had brought the principal Act as
amended by the Maharashtra Act XIV of 1987 within the constitutional
requirements of making one-time tax's regulatory and compensatory tax and that
it was not necessary to decide if the Act as it stood when it was challenged
before the High Court? was beyond the legislative competence of the State
Legislature.
The
respondents in the appeals and the petitioners in the special leave petitions
urged that as even after the amendment no refund was available in respect of a
vehicle which had been registered for more than 13 years? the effect of that
was that no refund al all was available in respect.
of the
tax paid for a vehicle for the 14th and 15th years.The impugned levy of tax
ceased to be compensatory or regulatory and was void under Entry 57 of List II
and was violative of Article 301 of the Constitution.
Disposing
of the appeals and dismissing the special leave petitions the Court.
HELD:
The tax imposed on the motor vehicles or a class of motor cycles would not be
valid unless it is compensatory or regulatory or does not have any nexus with
the vehicles using the roads. In such a case. the levy would be Section of the
said Act XIV of 1987 added sub-section (IC) to provide for the levy of one-time
tax at 15 times the annual rate on all motor cycles in the State. The said
provisions further provided that in the case of motor cycles owned by a company
or other commercial organisation, the one-time tax was to be levied at thrice
the rate.
The
fact that the act, as at present, did not provide for refund in the 14th and
15th years, did no make the law outside the competence of the State Legislature.
he concept PG NO 484 of "regulatory and compensatory" tax does no
imply mathematical precision of quid pro quo. [489E] After the amendment, the
Act came with in the constitutional requirements of making he one-time tax a
regulatory and compensatory tax. It was true that the Act has no provided for
refund in the 14h and 15h years but that does no make he law out sides the
competence of the State Legislature. It is no mathematical precision that is
necessary nor can it be. there is in the provisions as amended, as amended, a
discernible and an identifiable object behind the levy and a nexus between the
subject and the object of the levy, [491E-F] Two principles have to be emphasised,
firstly, that the tax must be regulatory and compenstaory and secondly, there
must be no discrimination. A taxation law cannot claim immunity from the
equality clause in Article 14 of the Constitution, but in view of the intrinsic
complexity of fiscal adjustments of diverse elements, a considerable wide
discretion and latitude in the matter of classification for taxation purpose is
permissible. The life of Motor cycles and tricycles normally exceeds 25 years.
Non-refund for certain period is no conclusive of the matter. Even if
mathematical provision is no possible, it cannot be said that it is wholly unmathematical.
The collection of ax for a period of 15 ears at one point of time is a
convenient method enabling the owner o use he vehicle for more than 25 years
without having to pay the tax periodically and pay the enhanced tax at may be
levied during the 25 years of life of the vehicle. Regulatory and compensatory
tax can be levied to the extent e State is required to pay for rendering the
services. [491G;492A-C] The Act, as at present, is not violative of Article 145
of the Constitution. The fact that the company-owned vehicles are taxed that
three times the rate payable by individuals, does not make the legislation violatvie
of Article 14. Histrocially, the company-owned vehicles are always been taxed
at a rate higher that the individually- owned vehicles. he legislature has he
power to distribute tax burden in a flexible manner and the Court would no
interfere with the same. It could not be said that there was differentiation
without any basis and as such there was discrimination. [492E-H] In view of the
principles applicable to the taxation laws and various other factors, the
Maharashtra Act as amended from time to time does not suffer from any vice of
being not regulatory or compensatory taxation nor from the vice of being violative
of Article 14 of the Constitution, and the challenge to the provisions of the
Act as amended PG NO 485 after the judgment of the High Court could not be
maintained. [494G-;495A] After the amendments afore-mentioned the Act does no
suffer from the vice mentioned in the judgment of the High Court . The appeals
were allowed thus, and the challenge made in the special leave petitions was
dismissed. [495] The taxes would be realised in accordance with the Act and the
necessary adjustments would be made accordingly.
[495C]
Bolani Ors. Ltd. v. State of Orissa. [1975]
2 SCR 138; G.K. Krishnan v. The State of Tamil Nadu & Anr., [1975] 2 S.C.R.
715; Malwa Bus Service (P) Ld. v. State of Punjab and Ors., [1983] 2 S.C.R. 1009;' International ouris Corporation v. State
of Haryana & Ors., [1981] 2 S.C.R. 364; Income tax Officer, shillong & Anr.
v. N. Takim Roy Rymbai, etc., [1976] 2 SCR 413; Mrs. Meenakshi & Ors. v.,
State of Karnataka & Ors., AIR 1983 SC 1283; Anant Mills Co. Ltd. v. State
of Gujarat and Ors., [1975] 3 S>.C.R. 220; Khandige
Sham Bhat & Ors. v. The Agricultural Income tax Officer, [1963] 3 SCR 809
and State of Karnataka v. K. Gopalakrishna Shenoy and Another, A.I.R. 1987 S.C.
1911, refered to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 1631-33 of 1987 etc.
From
the judgment and order dated 10.7.1987 of the Bombay High Court in W.P. Nos.
941, 986 and 1012 of 1987.
A.S. Bobde.
Adv. General. S. K. Dholakia and A.S, Bhasme for he Appellants.
Soli
J. Sorabjee, R.N. Sachhar, Mrs. Aruna Mathur, J. Wad, K.J. John and A.K. Sanghi
for the Respondents.
The
judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These civil
appeals and special leave petitions centre around one point, namely, the
validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of
the Maharashtra Act, XIV of 1987 as well as Section 6 of the said Act as
amended by Maharashtra Act XXXlll of 1987 as well as the Maharashtra Act IX of
1988.
PG NO
486 The Bombay Motor Vehicles Tax Act, 1958 prior to its amendment in 1987
provided for levy of tax on vehicles annually or quarterly. In 1987, by Section
3 of the Maharashtra Act No. XIV of 1987, sub-section (IC) was added to provide
for levy of one time tax at 15 times the annual rate on all motor cycles used
or kept for use in the State.
The
said provisions further provided that in case of motor cycles used or kept for
use by a company or other commercial organisation, the one time tax was to be
levied at thrice the rate. Section 6 of the Maharashtra Act 14 of 1987, added
sub-section (6) to Section 9 of the principal Act. The new sub-section (6)
enabled a registered owner of motor cycle or tricycle to obtain refund of
"one time tax" in cases where (a) the vehicle is removed outside the
State; and (b) the registration of vehicle is cancelled due to scrapping of the
vehicle, or for a similar reason. The refund was to be paid in accordance with
the Fourth Schedule. The Third and Fourth Schedules were introduced by the
Maharashtra Act 14 of 1987.
In the
case of Luna Mopeds, the one time tax comes to Rs.2925 which according to the
petitioners in the S.t.P. Nos. 1 1673-75/87, is 86% of the ex-factory price of
the Moped. In that view the petitions were filed by the respondents in the
first batch of appeals and the petitioners in the second batch challenging the
amended provisions of the Bombay Motor Vehicles Tax Act, 1958. On or about
9/10th July. 1987, a Division Bench of the Bombay High Court, Nagpur Bench held
that the levy of one time tax was beyond the legislative competence of the
State Legislature and also beyond Entry 57 of List II of the Seventh Schedule.
It
further held that the provisions for imposition of levy at thrice the rates so
far as the vehicles owned by the firm or the company, were neither
discriminatory nor arbitrary.
The
High Court, however, in view of the fact that the refund was restricted to the
circumstances mentioned above. struck down Act 14 of 1987. According to the
High Court, the absence of provisions for refund in cases of temporary non-
user made the Maharashtra Act XlV of 1987, confiscatory in character and not
regulatory or compensatory which alone was in the competence of the State
Legislature. The State preferred applications for leave to appeal against the
impugned judgment and the special leave having been granted, are the
subject-matter of Civil Appeals Nos. 1631- 33/877. The petitioners also, filed
special leave applications which are the subject-matter of Special Leave
Petitions Nos. 11673-75/87 which have been heard along with these appeals.
While the State's appeal against the High Court's judgment was pending before
this Court, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987.
It deleted Section 3(4) of the principal Act, as PG NO 487 amended by
Maharashtra Act XIV of 1987. That provision made the existing provisions of
refund for temporary non-user inapplicable in cases of motor cycles and
tricycles, restricting the right of refund to Section 9(6) in contingencies
mentioned above. It also introduced sub- section (7) to Section 9 conferring
right of refund in respect of motor cycles and tricycles in accordance with the
rates specified in the Fifth Schedule and prescribed the rates of refund in the
Fifth Schedule. But the said Schedule did not prescribe a separate rate of
refund for company- owned vehicles. Therefore, the refund in respect of
company- owned vehicles would be same as that payable to individual- owned
vehicles, even though the tax paid on former class of vehicles was three times.
Soon thereafter the Maharashtra Legislature enacted Act 9 of 1988 The only
relevant change for the present purpose was that the rate of refund was
enhanced to three times in respect of company-owned vehicles.
Before
the contentions are judged, it is imperative to reiterate that the tax imposed
on motor vehicles or a class of motor cycles would not be valid unless it is
compensatory or regulatory or does not have any nexus with the vehicles using
the public roads. In such a case the levy would be violative of Act. 301 of the
Constitution and would not be protected by Act. 304 of the Constitution. In
this connection reference may first be made to the observations of this Court
in Bolani Ores Ltd. v. State of Orissa, [1975] 2 SCR 138 where at page 155 this
Court observed that Entry 57 of List II of the Seventh Schedule was subject to
the limitations, namely, the power of taxation cannot exceed the compensatory
nature which must have some nexus with the vehicles using the roads. If the
vehicles do not use the roads, notwith-standing that these are registered under
the Act, these cannot be taxed. More or less the same view was echoed in G. K.
Krishnan v. The State of Tamil Nadu & Anr., [1975 ] 2 SCR 715.
See
also Malwa Bus Service (P) Ltd. v. State of Punjab & Ors.,[1983] 2 SCR
1009.
On behalf
of the appellant-State, the learned Advocate- General submitted that the
amendments enacted by the Maharashtra Act No. 33 of 1987 and No. 9 of 1988,
have brought the principal Act as amended by the Maharashtra Act No. XIV of
1987 within the constitutional requirements of making `one time tax' a
regulatory and compensatory tax. It was submitted by him that this development
had made it unnecessary for this Court to decide if the Act, as it stood when
it was challenged before the High Court, was beyond the legislative competence
of the State Legislature. It was PG NO 488 further emphasised that the fact
that the Act at present, does not provide for refund in the 14th & v 15th
years, does not make the law outside the competence of the State Legislature. It
was urged that the concept of "regulatory and compensatory tax" does
not imply mathematical precision.
In
this context one may refer to the observations of this Court in International
Tourist Corpn. v. State of Haryana & Ors., [1981] 2 SCR 364, where at page
374 Justice Chinnappa Reddy speaking for this Court observed as follows :
"But
to say that the nature of a tax is of a compensatory and regulatory nature is
not to say that the measure of the tax should be 'proportionate to the
expenditure incurred on the regulation provided and the services rendered. If
the tax were to be proportionate to the expenditure on regulation and service
it would not be a tax but a fee.
While
in the case of a fee it may be possible to precisely identify and measure the
benefits received from the Government and levy the fee according to the
benefits received and the expenditure incurred, in the case of a regulatory and
compensatory tax it would ordinarily be well high impossible to identify and
measure, with any exactitude, the benefits received and the expenditure
incurred and levy the tax according: to the benefits received and the
expenditure incurred. What is necessary to uphold a regulatory and compensatory
tax is the existence of a specific. identifiable object behind the levy and a
nexus between he subject and he object of he levy." Earlier this principal
had been sated in Income tax officer Shillong & Anr.v. N. Takim Roy Rymbai
etc.,[1976] 3 SAC 413, where this Court observed though taxation law could not
claim immunity from the equality clause i n Article 14 of the Constitution, it
must be remembered that in view of the intrinsic complexity of fiscal
adjustments of diverse element, he State has a considerably wide discretion in
the matter of classification of taxation purposes. the fact that the tax falls
more heavily on some in the same category, is by itself no ground to render the
law invalid.
Similar
are he observations of this Court in Mrs. Meenakshi & Ors. v. State of
Karnataka & Ors., AIR 1983 Sc 1283; Anant Mills Co Ltd. v. State of Gujarat
& Ors.,[1975] 3 SC 220 and Khhandige Sham Bhat & Ors. V. The
Agricultural Income ax Office, [1963] 3 SCR 809.
PG NO
489 In the instant case, the impugned legislation had been subsequently amended
to provide for the refund of a proportionate part of the one-time tax in the
event of the vehicle not being used for a period of quarter or more than a
quarter of a year as mentioned before. This was provided by substituting a new
sub-section (7) to section 9 of the Act and also substituting new Fifth
Schedule.
Even
after the amendment, however, no refund is available in respect of a vehicle
which has been registered for more than 13 years. The effect of the same is
that no refund at all is available in respect of the tax paid for a vehicle for
the 14th and 15th years, it was urged on behalf of the respondents in the
appeals and the petitioners in the S.L.Ps. It was submitted on their behalf
that so far as four-wheelers are concerned, Section 9(1) of the act provided
for refund of the proportionate amount of tax for every completed calendar
month for which the vehicle has not been used. It was urged on behalf of the
respondents in the appeals and the petitioners in the S.L.Ps. that there is no
justification what so ever for the non-grant of the refund of the proportionate
amount of tax paid in respect of a two wheeler or three wheeler, which is not
used in its 14th and/or 15th year. On this score, it was urged on their behalf
that the impugned levy of tax ceases to be compensatory or regulatory and as
such is void under Entry 57 of List II and thus violative of Article 301 of the
Constitution.
In our
opinion the fact that the Act, as at present, does not provide for refund in
the 14th and 15th years, does not make the law outside the competence of the
State Legislature. The concept of "regulatory and compensatory" tax
does not imply mathematical precision of quid pro quo.
This
aspect was emphasised in International Tourist Corporation etc. etc. v. State
of Haryana & Ors., (supra) as noted before.
It was
further submitted on behalf of the owners of two wheelers that the impugned
one-time levy of Rs.975 has been worked out at Rs.65 per two wheeler per annum
for 15 years and is sought to be recovered from the two wheeler owner as a
one-time down payment at the time the two-wheeler is purchased by him. On
behalf of the respondents/petitioners it was contended that having regard to
the extent of road user by a two wheeler, in comparison with the road user by a
four wheeler, the Legislature considered that. a tax of Rs.65 per two wheeler
per annum would be a reasonable and adequate compensatory levy. While the
maximum annual rate of tax was fixed at Rs. 200 per annum for motor cars
weighing not more than 750 kg and Rs.36O per annum for motor cars PG NO 490
weighing between 750 kg to 1500 kg it may be noted that the tax on four
wheelers has not been increased. But as far as two wheelers are concerned the
one-time tax for the period of 15 years is exactly 15 times the amount of tax
of Rs.65 per year. It is clear from these factors, it was submitted by the
owners of the two wheelers, that the Legislature continues to consider the tax
of Rs.65 per two wheeler per year to be an adequate compensatory tax. However,
by recovering the tax for the future period of 15 years in advance as a one
time levy, the taxing authorities are in fact recovering not Rs.65 per two
wheeler per year but in reality about Rs.356.79 per two wheeler per year. The
respondents/petitioners sought to explain the position by submitting that if
the two wheeler owner has an amount of Rs.975 with him at the time of purchase
of the vehicle, and is not compelled to make one-time payment, then he would
initially pay only Rs.65 as the tax for the first year. That would leave a
balance amount of Rs.9.10 which could be invested by him at an interest yield
of 15% per annum. It was urged that the rate of interest that is recoverable as
well as paid under the Income Tax Act is 15% per annum. The said amount of
Rs.910 would yield an interest of Rs. 136.50 in the first year. Out of that
amount of Rs. 136.50 an amount of Rs.65 would be paid by the two wheeler owner
as tax at the beginning of the second year. Consequently, an amount of Rs.71.50
would be available from out of the said interest earning of Rs. 136.50, which
also could be invested at a yield of 15% per annum. Consequently, the amount of
interest that would be earned by the vehicle owner in the second year would
come to Rs. 147. 23, out of which only Rs.65 would have to be paid as tax in the
beginning of the third year, leaving a balance of Rs.82.23 available for
further investment. It was submitted that by compelling the vehicle owner to
make the one-time down payment of Rs.975 at the time of the purchase of the
vehicle, the owner is in reality being deprived of a total amount of Rs.4376.
19 over the said period of 15 years. If this amount is divided by 15, the
resultant figure will be Rs.291.79. The effective tax burden has thus in fact
been multiplied by about 5 times only as a result of the one-time levy, it was
urged. It was submitted that the said one-time levy was unreasonable,
discriminatory and not regulatory or compensatory. The fact that a tax on motor
vehicles must be compensatory and regulatory in order to be valid, was emphasised
in the decision of this Court in Stare of Karnataka v. K. Gopalakrishna Shenoy
and another, A.I.R. 1487 S.C. 1911 where at page 1915 of the report, it was
observed that tax on motor vehicles is a compensatory tax levied for the use of
the roads and it is not a tax on ownership or possession of motor vehicles. It
was emphasised on behalf of the owners of the vehicles that the impugned
legislation is based on PG NO 491 the assumption that two wheelers and three
wheelers have an approximate life of 15 years. It is on that basis and footing
that the rates of tax have been fixed. It was contended that the life of two
wheelers and three wheelers is as much as 25 to 30 years and therefore, the
recovery of the one time tax for the period of 15 years actually constitutes
the conferment of a benefit on the owners of two wheelers and three wheelers.
In this connection, on the other hand it is of importance to note that the
Department of Heavy Industry, Ministry of Industry, Government of India, had
commissioned a report from an eminent firm of Chartered Accountants on Long
Term Demand Projections for Automotive Vehicles (including two wheelers and
three wheelers). The said report concludes, after an exhaustive analysis of
statistical data including the data provided by vehicle manufacturers and also
studies made in the past, that the average life of scooters is 10 years, that
of motor cycles c) years and that of mopeds 5 years. But what was emphasised
was that one-time levy of tax compelled owners of two wheelers to incur a
further expenditure of about 70% of the cost of the vehicles purchased by them
at the time they acquire the vehicle and that imposes heavy additional
liabilities. It was, therefore, submitted that it was neither compensatory nor
regulatory and further more, it was discriminatory.
It was
further submitted that section 3(IC)(c) exempts public trusts and recognised
institutions. That was bad.
In our
opinion, after the amendment the mischief mentioned in the judgment and order
of the High Court of Bombay has been remedied. On an examination of the various
provisions of the Act as amended, we have come to the conclusion that after the
amendment the Act comes within the constitutional requirement of making the
one-time tax a regulatory and compensatory tax. It is true as was emphasised
that the Act has not provided for refund in the 14the and 15th years but does
not make the law outside the competence of the State Legislature. It is not
mathematical precision that is necessary nor can it be. There is in the provisions
as amended, a discernible and an identifiable object behind the levy and a
nexus between the subject and the object of the levy.
In
this matter two principles have to be emphasised, firstly. that the tax must be
regulatory and compensatory and secondly, there must be no discrimination.
About discrimination it is well to remember that a taxation law cannot claim
immunity from the equality clause in Article 14 of the Constitution. But in
view of the intrinsic complexity of fiscal adjustments of diverse elements, a
considerably wide discretion and latitude in the matter of classification PG NO
492 for taxation purpose is permissible. See the observations of this Court in
Income Tax Officer, Shillong and Anr. etc. v. N. Takim Roy Rymbai etc. etc.,
(supra). Also see the observation in Mrs. Meenakshi and others v. State of
Karnataka, (supra); Anant Mills Co. Ltd. v. State of Gujarat & Ors.,
(supra) and Khandige Sham Bhat and Ors. v. The Agricultural Income-tax Officer,
(supra). The evidence on record shows that the life of motor cycles and
tricycles normally exceeds 25 years. The so-called non-refund for certain
period is not conclusive of the matter. Even if mathematical precision is not
possible, we cannot say that it is wholly unmathematical. The collection of tax
for a period of 15 years at one point of time is a convenient method enabling
the owner to use the vehicle for more than 25 years, without having to visit
the office to pay the tax periodically, and pay enhanced tax that may be levied
during the 25 years of life of the vehicle. Regulatory and compensatory tax can
be levied to the extent the State is required to pay for rendering the
services. According to the State, the evidence on record shows that the cost of
services is twice the total amount recovered from all types of vehicles. The
balance of expenditure is met by the State from the general revenues. Even from
this half collection, the motor cycles and tricycles contribute only 6.4 per
cent.
The
percentage of motor cycles and tricycles is 56 to 58 percent of all vehicles.
Thus, even insubstantial increase in their rates cannot be said to be not a
"regulatory or compensatory" tax measure.
The
Act, as at present, is not violative of Article 14 of the Constitution. The
fact that company-owned vehicles are taxed at three times the rate payable by individuals,
does not make the legislation violative of Article 14.
Historically,
the company-owned vehicles have always been taxed at a rate higher than the
individually-owned vehicles.
As
appears from the records produced. the motor cycles and tricycles constituting
56 to 58 per cent of all types of vehicles contribute only 6.4 per cent of the
total revenue earned through the tax imposed by the Act. It is well- settled
that the Legislature has the power to distribute tax burden in a flexible
manner and the Court would not interfere with the same. This principle has been
reiterated in G.K. Krishnan etc. etc. v. The State of Tamil Nadu & Anr. etc., (supra) where
this Court observed that in the context of commercial regulation, Article 14 is
offended only if the classification rests on grounds wholly irrelevant to the
achievement of the objective and this lenient standard is further weighted in
the State's favour by the fact that a statutory discrimination will not be set
aside if a state of facts may reasonably be conceived by the PG NO 493 Court to
justify it. Tax laws have to respond closely to local needs and Court's
familiarity with these needs is likely to be limited. Therefore, the Court must
be aware of its own remoteness and lack of familiarity with the local problems.
Classification is dependent upon peculiar needs and specific difficulties of
the community. The needs and the difficulties of a community are constituted
out of facts and information beyond the easy ken of the Court.
It
appears that in the instant case, the State Government has specifically averred
that the company-owned vehicles travel more and use roads more often. No
evidence have been produced to the contrary. In view of the well- settled
principles, we cannot say that there was without any basis and as such there
was discrimination.
It
further appears that the Government of lndia has liberalised the licensing
policy and granted large number of industrial licences for the manufacture of
two wheelers. In Maharashtra itself following is the new
registration of two wheelers during the last four and five year:
"
1983-84 - 1,13,949 1984-85 - 1,24,877 1985-86 - 1,66,124 1986-87 -
2,01,904" In 1986-87 per working day on an average 929 new two wheeler
have been registered. There was tremendous strain on Motor Vehicles Department
due to increase in the number of two wheeler. The following statistics and
figures indicate the position that one time tax on two wheelers have beneficient
effect:
"As
on 1.4.1987 there were 10,93,170 two wheelers in Maharashtra and total number of vehicles was 1841 lakhs.
In
1985-86 the total revenue by way of Motor Vehicles Tax was Rs.98 crores out of
which only Rs. 6 to 7 crores was from two wheelers.
That means
58% vehicles (3 wheelers) used to give only 6.4% Motor Tax for which 22,000 man
days were required to be spent.
All
the two wheeler owners were required to come to R.T.O. for payment of tax every
year.
PG NO
494 Almost 70 to 75% Motor Vehicle Tax arrear cases were of 2 wheelers.
Because
of new system of one time tax if the owner pays it, he is not required to pay
the tax again during the life time of the 2 wheeler.
Any
further increase in one time tax rate will not be applicable to the 2 wheelers
which have already paid the one time tax.
Statistics
show that the 2 wheelers are being used for more than 25 years.
The
rate of increase of 2 wheelers because of easy availability and affordability
is almost 25%. The total number of two wheelers projections in the State will
be as follows:
By the
end of 1986-87 -10.94 lakh 1987-88 -13.33 lakh 1988-89 -16.20 lakh 1989-90
-19.69 lakh 1990-91 -23.77 lakh 1991-92 -28.73 lakh Existing vehicles will have
to pay one time tax in sliding scale rate. Older the vehicles, less will be the
tax.
This
tax system is already in existence in Karnataka since 1.4.1986 and also in Gujarat, Rajasthan.
This
new system will definitely give relief to the two wheeler owners as they will
not be required to come to R.T. Office for annual payment." Having regard
to these factors and having regard to the principles applicable to taxation
laws, we are of the opinion that the Maharashtra Act as amended from time to
time and mentioned hereinbefore, does not suffer from any vice of being not
regulatory or compensatory taxation nor from the vice of being violative of
Article 14 of the Constitution.
In
that view of the matter, the challenge to the provisions of the Act as amended
after the judgment of the PG NO 495 Bombay High Court cannot be maintained.
In
that view of the matter, Civil Appeals Nos. 1631-1633 of 1987 are disposed of
by saying that after the amendments noted here in before the Act does not
suffer from the vice mentioned in the judgment of the High Court of Bombay. The
appeals are, therefore, allowed and disposed of accordingly.
In
that view of the matter the challenge made in the special leave petitions Nos.
11673-75 of t987 is dismissed.
In the
facts and circumstances of the case, there will be no orders as to costs. Interim
orders, if any, are vacated. The taxes will be realised in accordance with the
Act and necessary adjustments will be made accordingly.
S.L.
Back