JAIPRAKASHS vs State Of U. P. - 2004 Supreme(SC) 1074

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2004 Supreme(SC) 1074

SUPREME COURT OF INDIA
RUMA PAL, ARUN KUMAR, JJ.
JAIPRAKASH AND OTHERS - APPELLANTS
VERSUS
STATE OF U.P. AND OTHERS - RESPONDENTS
CIVIL APPEALS NO. 3686 OF 2003 WITH NOS. 3687-99 OF 2003, 6093-94 OF 2004, 6095 OF 2004, 6096 OF2004TT, 6097 OF 2004, 6098 OF 2004, 6099-6100 OF 2004, 2383-84, 3450-52, 3776-77, 4755 AND 5615 OF 2000,
DECIDED ON SEPTEMBER 14, 2004

Headnote:
A. U.P. Motor Vehicles Taxation Act, 1997, Sections 4 and 6 - Constitution of India, 1950, Schedule VII, List II, Articles 57 and 56 - Levy of tax on motor vehicles- Section 4 makes a distinction between "Motor Vehicles other than transport vehicles" and "transport vehicles"- The first is dealt with under sub-section (1) and the second under sub-section (2) of Section 4- A "transport vehicle" has been defined in sub-section(n) of Section 2 of the Act as meaning "a goods carriage or a public service vehicle"- The 'Appellants' vehicles would fall within the ambit of the levy under Section 4 sub-section (2) of the Act- The levy under the State Act is in respect of the motor vehicle and the taxable event is the "user of the vehicle in any public place" the 'public place' being the roads in the State of U.P. [Paras 10 to 12]
B. U.P. Motor Vehicles Taxation Act, 1997, Sections 4, 6 and 12 - U.P. Motor Vehicles Taxation Rules, 1998, Rule 22 - Nature of tax and additional tax sunder Sections 4 and 6 - Under Entry 57 of List II, the State Government is legislatively competent to levy taxes in respect of vehicles which are suitable for use on roads-The scheme of the Act would show that the charge under Section 4 is common to all vehicles- A distinction is made only with regard to the additional tax payable under Section 6(1),(1-A) and (2)- In all these cases the tax is with reference to the vehicle and in no case is the levy on the passengers themselves [Paras 15 to 17]
C. U.P. Motor Vehicles Taxation Act, 1997, Section 6(1) proviso - Constitution of India, 1950, Article 14 - Power of State Government to fix rates of tax under the proviso - Held the power is not arbitrator[Paras 18 and 20]
D. Motor Vehicles Act, 1988, Section 67(1) and (2) - Fixation of rates of fares of stage carriages and contract carriages - Prohibition of recovery of tax from passengers also provided by said circular - Validity of circular could not be questioned on the ground that Section 67 was not mentioned in the circular.( para 21)
E. U.P. Motor Vehicles Taxation Act, 1997, Sections 6(1), (1-A), (2) and Schedule IV, Article V(a) and Schedule V - Constitution of India, 1950, Article 14 - Preference to public undertaking over private undertakings- Held there was no violation of Article, having regard to the nature of the enterprise and general public services which such corporations are called upon to provide.[Para 20]
F. U.P. Motor Vehicles Taxation Act, 1997, Sections 2(n)(o) and 4(1) & (2) - Motor Vehicles Act, 1988, Section 2(35) - Meaning of expression "Public Service Vehicle"- Held it is the same as given in Section 2 (35) of Motor Vehicles Act, 1988.[Para 11]
G. U.P. Motor Vehicles Taxation Act, 1997, Section 6(1-A) (as inserted on 6.10.2001) - U.P. Motor Vehicles Taxation (Second Amendment) Ordinance, 2001, Section 2 - Section 6(1-A) omission of - Later Notification omitting the section did not exist - Supreme Court refused to express any opinion on whether the appellants would be liable to pay tax under Section 6(1-A) for the period ordinance was in operation.[Para 21]

ORDER

1. LEAVE GRANTED.

2. THE QUESTION INVOLVED IN ALL THESE APPEALS IS THE CONSTITUTIONAL VALIDITY OF SECTIONS 4 AND 6 OF THE UTTAR PRADESH MOTOR VEHICLES TAXATION ACT, 1997 (HEREINAFTER REFERRED TO AS "THE ACT"). IN SOME APPEALS THERE IS A SPECIFIC CHALLENGE TO AN AMENDMENT TO SECTION 6 IN 2001 AS ALSO TO A CIRCULAR ISSUED UNDER SECTION 67 OF THE MOTOR VEHICLES ACT, 1988.

3. THE FIRST SUBMISSION IS THAT THE ACT WAS REFERABLE TO ENTRY 56 OF LIST II OF THE SEVENTH SCHEDULE TO THE CONSTITUTION AND THAT THE STATE LEGISLATURE COULD LEVY THE TAX UNDER THE ACT ONLY ON PASSENGERS.

4. THE SUBMISSION IS SOUGHT TO BE SUPPORTED WITH REFERENCE TO THE LEGISLATIVE HISTORY OF THE ACT AND ALSO WITH REFERENCE TO THE STATEMENT OF OBJECTS AND REASONS FOR THE ACT. AS FAR AS THE LEGISLATIVE HISTORY IS CONCERNED, IT WAS STATED THAT UNDER THE GOVERNMENT OF INDIA ACT, 1935, "MECHANICALLY PROPELLED VEHICLES" WERE TAXABLE UNDER ENTRY 20 OF LIST III. IN EXERCISE OF THIS POWER, THE UTTAR PRADESH MOTOR VEHICLES TAXATION ACT, 1935 HAD BEEN ENACTED. A DISTINCTION WAS DRAWN IN THIS ACT BETWEEN "GOODS VEHICLES" AND "PASSENGER VEHICLES" FOR THE PURPOSES OF LEVYING TAX. AS FAR AS THE GOODS VEHICLES WERE CONCERNED, TAX WAS LEVIED ON THE BASIS OF THE LADEN WEIGHT. AS FAR AS THE PASSENGER VEHICLES WERE CONCERNED, THE TAX WAS LEVIED ON THE BASIS OF THE SEATING CAPACITY. THIS POSITION CONTINUED TILL THE ENACTMENT OF THE V.P. MOTOR GADI (YATRI-KAR) ADHINIYAM, 1962 (FOR SHORT "THE 1962 ACT"). SECTION 3 OF THE 1962 ACT ALSO, LIKE THE 1935 ACT, PROVIDED FOR A TAX ON PASSENGERS AT A PERCENTAGE OF THE FARE FOR THE JOURNEY MADE. BOTH THE 1935 AND THE 1962 ACTS, ACCORDING TO THE APPELLANTS, WERE THEREFORE CLEARLY REFERABLE TO ENTRY 56 OF LIST II OF THE SEVENTH SCHEDULE TO THE CONSTITUTION A WHICH READS:

"56. TAXES ON GOODS AND PASSENGERS CARRIED BY ROAD OR ON INLAND WATERWAYS."

AND NOT TO ENTRY 57 OF LIST II WHICH PROVIDES:

"57. TAXES ON VEHICLES, WHETHER MECHANICALLY PROPELLED OR NOT, SUITABLE FOR USE ON ROADS, INCLUDING TRAMCARS SUBJECT TO THE PROVISIONS OF ENTRY 35 OF B LIST III."

THE IMPUGNED ACT WAS AN ACT WHICH, ACCORDING TO THE APPELLANTS, MERELY REPLACED AND CONSOLIDATED THE EARLIER STATUTES ON THE QUESTION OF TAXATION ON PASSENGERS. THE SECOND SUBMISSION OF THE APPELLANTS THAT THE ACT WAS REFERABLE TO ENTRY 56 OF LIST II IS BASED UPON THE SCHEME OF THE ACT AND THE BASIS OF THE LEVY. IT IS CONTENDED IN THIS CONNECTION THAT THE TAX LEVIED FROM C SRTC WAS ON THE BASIS OF ACTUAL GROSS RECEIPTS WHICH WAS AN INDICATION OF THE NATURE OF THE TAX. OUR ATTENTION WAS ALSO DRAWN TO THE SUBMISSION MADE IN THE COUNTER-AFFIDAVIT FILED ON BEHALF OF THE RESPONDENT STATE IN ONE OF THE WRIT PETITIONS BEFORE THE HIGH COURT, ADMITTING THAT THE ACT WAS REFERABLE TO ENTRY 56 OF LIST II. IN THESE CIRCUMSTANCES, ACCORDING TO THE APPELLANTS, THE TAX WAS IN EFFECT A PASSENGER TAX AND THE LEVY THEREUNDER COULD ONLY RELATE TO THE D NUMBER OF ACTUAL PASSENGERS CARRIED.

5. IT IS FURTHER SUBMITTED ON BEHALF OF THE APPELLANTS THAT THE ACT WAS VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION INASMUCH AS AN UNREASONABLE DISTINCTION WAS SOUGHT TO BE DRAWN BETWEEN VEHICLES OPERATED BY THE STATE ROAD TRANSPORT CORPORATION (IN SHORT "SRTC") AND OTHER OPERATORS. IT IS SUBMITTED THAT THE CALCULATION OF THE TAX AS FAR AS SRTC WAS CONCERNED WAS E MADE WITH REFERENCE TO THE ACTUAL USER OF THE VEHICLE WHEREAS TAX WAS CHARGED FROM OTHER OPERATORS AT SLAB RATES IRRESPECTIVE OF THE DISTANCE COVERED BY THE VEHICLE AND WITHOUT REFERENCE TO THE NUMBER OF PASSENGERS BEING CARRIED. A CHALLENGE WAS ALSO MADE TO THE PROVISO TO SECTION 6(1) OF THE ACT ON THE GROUND THAT IT CONFERRED ARBITRARY AND UNCANALISED POWER ON THE STATE F GOVERNMENT TO FIX RATES OF TAX.

6. THE ACT WAS AMENDED ON 6-10-2001 BY THE INTRODUCTION OF SUB-SECTION (1-A) TO SECTION 6. OVER AND ABOVE THE TAX PAYABLE UNDER SECTIONS 4 AND 6(1), AN ADDITIONAL TAX WAS SOUGHT TO BE LEVIED IN RESPECT OF PARTICULAR KINDS OF PASSENGER VEHICLES. THE OPERATION OF THE A

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