JUDGMENT

SARKARIA, J.:— Whether a motor vehicle passing through the territory of the State of Mysore on way to its destination in another State is a motor vehicle "kept" in the State of Mysore (now Karnataka) within the contemplation of Section 3 (1) of the Mysore Motor Vehicles Taxation Act, 1957 (hereinafter referred to as the Taxation Act), is the short question that falls for consideration in this appeal by special leave directed against a judgment, dated April 14, 1969, of the High Court of Mysore. The material facts bearing on the question are as follows :

2. The respondent, M/s. T. V. Sundaram Iyengar & Sons. Pvt. Ltd., whose registered office is in the State of Tamil Nadu, is a dealer in motor vehicles which are manufactured at Bombay. Some of those vehicles are sold in Mysore State, while others are sold outside Mysore State. But those vehicles which are sold outside the State of Mysore in other States passed through its territory under temporary registration number plates issued after receipt of token tax by the Bombay Motor Vehicles Authority. Such vehicles entered the State of Mysore at its border in Belgaum District and go out at its border in Kolar District, thus running through the territory of Mysore State by road over a distance of about 400 miles.

3. The R. T. O., Belgaum, issued a communication, dated September 27, 1966, to the respondent demanding tax on such vehicles (new cars and chassis) passing through the territory of Mysore. After exhausting his remedies under the Taxation Act, the respondent filed a petition under Article 226 of the Constitution, to challenge the validity of the demand notices and the Circular, dated October 10, 1966, issued by the Transport Commissioner, directing recovery of tax at the rates specified in Part B of the Schedule to the Taxation Act, in respect of those vehicles which do no more than pass through the State of Mysore to reach their destination.

4. The Division Bench of the High Court, who heard the writ petition, held that such vehicles which merely pass through Mysore State are not those kept in the State of Mysore within the meaning of Section 3 (2) of the Taxation Act, and, as such, are not taxable under the Taxation Act. In the result, the High Court allowed the writ petition and quashed the direction of the Commissioner in paragraph 6 of his Circular of October 10, 1966, for the recovery of the tax in question from the respondent. Hence this appeal by the State.

5. The material part of Sec. 3 reads as follows :

"S. 3. Levy of tax.- (1) A tax at the rates specified in Part A of the Schedule shall be levied on all motor vehicles suitable for use on roads, kept in the State of Mysore :

Provided that in the case of motor vehicles kept by a dealer in or manufacturer of such vehicles for the purpose of trade, the tax shall only be levied and paid by such dealer or manufacturer on vehicles permitted to be used on roads in the manner prescribed by rules made under the Motor Vehicles Act, 1939.

Explanation.- A motor vehicle of which the certificate of registration is current shall, for the purpose of this Act, be deemed to be a vehicle suitable for use on roads.

(2) Notwithstanding anything contained in sub-section (1), taxes at the rates specified in Part B of the Schedule shall be levied on motor vehicles belonging to or in the possession or control of persons, not ordinarily residing in the State of Mysore and kept in the State of Mysore by such persons for periods shorter than a quarter, but not exceeding thirty days.

(3) .........."

6. The appellant-State maintains that sub-section (2) of the section was applicable to such vehicles because while passing through the territory of the State, they use the roads of the State over a distance of 400 miles during their journey interspersed by halts in the State, and therefore, it can be said that such vehicles are kept for use on roads in the State within the meaning of S. 3 (2). According to the learned counsel for the appellant the t