IMPORTANT POINT
Provisions of Section 16(3) of M.P. Motoryan Karadhan Adhiniyam, providing for confiscation of vehicle are repugnant to Section 66 r/w Section 192-A of Motor Vehicles Act and hence invalid as State law had not complied with requirement under Article 254(2) of Constitution of India.

Headnote:Madhya Pradesh Motoryan Karadhan Adhiniyam, 1996 (as amended by Amendment Act, 1999)-Sections 16(6), (7), (8) and 20-A and 20-B-Constitutional validity of provisions which provided for confiscation of vehicle where owner of vehicle was found to have committed offence under Section 66 r/ws 192-A of M.V. Act, 1988-Such provision could not have been enacted without the assent of the President in terms of Article 254(2) of the Constitution of India-Provisions of Section 16(6) of the Act and consequential provisions thereto are repugnant to Section 66 r/w 192-A of MV Act and hence invalid as State Law had not complied with requirements under Article 254(2) of the Constitution of India.
       Held : Sub-section (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. Sub-section (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. It is 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. Under 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 Parliament. In 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. (Para 10)
       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 law. (Para 12)

JUDGMENT

Rajendra Babu, J.-A batch of writ petitions was filed before the High Court of Madhya Pradesh challenging the constitutional validity of Sections 16(6), (7) and (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 30.11.1999.

2. The Petitioners before the High Court contended that Sections 16(6), (7) and (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.

3. On 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 us.

4. The 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; that there are adequate safeguards with regard to the confiscation procedure; that 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.

5. Sri K.K. Venugopal, learned Senior Advocate appea

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2003 Supreme(SC) 1208

IMPORTANT POINTProvisions of Section 16(3) of M.P. Motoryan Karadhan Adhiniyam, providing for confiscation of vehicle are repugnant to Section 66 r/w Section 192-A of Motor Vehicles Act and hence invalid as State law had not complied with requirement under Article 254(2) of Constitution of India.

Cases Referred (5)

IMPORTANT POINT
Provisions of Section 16(3) of M.P. Motoryan Karadhan Adhiniyam, providing for confiscation of vehicle are repugnant to Section 66 r/w Section 192-A of Motor Vehicles Act and hence invalid as State law had not complied with requirement under Article 254(2) of Constitution of India.