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2013 Supreme(Kar) 1434
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
N. Kumar and B. Manohar, JJ.
Ramesh Tours and Travels – Appellant
Vs.
State of Karnataka and Ors. - Respondents
Writ Appeal Nos. 888 to 892 and 645 to 647 of 2013 (T-MVT)
Decided On : 05-04-2013
For the Appellant :Amit Deshpande, V. Suresh and R.P. Somashekaraiah, Advocates
For the Respondents:S. Sujatha, Additional Government Advocate
The main legal point established in the judgment is that unless a tax is confiscatory in nature, it cannot be interfered with as violative of Article 19(1)(g) of the Constitution of India.
Headnote:
Motor Vehicles Taxation - Amendment Act - Karnataka Motor Vehicles Taxation Act, 1957 - Section 3(1) - 2012 Amendment - Summary of Acts and Sections: The court discussed the amendments to the Karnataka Motor Vehicles Taxation Act, 1957, specifically the introduction of lifetime tax for motor cabs exceeding a certain value. The court analyzed the rationality and reasonableness of the tax rates, the classification of vehicles for taxation, and the retrospective effect of the amendments. The court also considered the relevance of the Income-tax Act, 1961 in examining the validity of the provisions of the Motor Vehicles Act, 1988.
Fact of the Case:
The appellants, engaged in renting motor cabs, challenged the amendment to the Karnataka Motor Vehicles Taxation Act, 1957, which introduced lifetime tax for motor cabs exceeding a certain value. They argued that the tax was confiscatory, arbitrary, and discriminatory, and imposed a double tax burden. The appellants' permits and fitness certificates were threatened to be terminated if the lifetime tax was not paid.
Finding of the Court:
The court found that the amendments to the Motor Vehicles Taxation Act were legal and valid. It held that the tax rates and classification were rational and reasonable, not confiscatory, and did not violate Article 14 or 19(1)(g) of the Constitution of India. The court also permitted the appellants to pay the tax in two installments and extended the benefit to all owners of old motor cabs falling within the scope of the amending Acts.
Issues: The issues before the court included the legality and validity of the amendments to the Karnataka Motor Vehicles Taxation Act, 1957, and whether the order of the learned Single Judge warranted interference.
Ratio Decidendi: The court relied on previous judgments and held that the amendments were legal and valid, and the tax rates and classification were rational and reasonable. It emphasized that unless a tax is confiscatory in nature, it cannot be interfered with as violative of Article 19(1)(g) of the Constitution of India.
Final Decision: The court dismissed the writ appeals, upholding the legality and validity of the amendments to the Karnataka Motor Vehicles Taxation Act, 1957, and affirming the order of the learned Single Judge.
N. Kumar, J.
1. These appeals are preferred against the common order passed by the learned Single Judge in Mrs. Bhagyalakshmi Radhakrishna Holla and Others v State of Karnataka and Others, 2013(1) Kar. LJ. 619 upholding the amendment to the Karnataka Motor Vehicles Taxation Act, 1957 (Act Nos. 14 and 29 of 2012). The appeals are taken up for consideration together.
2. The appellants are in the business of renting the motor cabs on daily basis to various companies as well as individuals. In case of renting cabs to individuals, bills are drawn on the basis of number of kilometers run by the motor cabs whereas in respect of the companies or firms the invoices are raised on the basis of the number of hours hired and the fixed number of kilometers. They were paying the annual tax in respect of their motor cabs and were getting their permits renewed. They also used to get fitness certificates every year at the time of payment of taxes. The appellants were subjected to tax under Section 3(1) of the Karnataka Motor Vehicles Taxation Act, 1957 (hereinafter referred to as "Act') as per item 4(1)(b) of Part "A' to the Schedule thereto at the rate of Rs. 100/- for every passenger permitted to be carried in the cab per quarter, irrespective of the age of vehicles. The appellants owned motor cabs manufactured by various companies and age of the vehicles possessed also varies.
3. It is submitted that while presiding over the 34th meeting of Transport Development Council organised by the Ministry of Road Transport and Highways on 13-2-2012, Dr. C.P. Joshi, the Union Minister for Road Transport and Highway urged all the State Governments to rationalise motor vehicle taxes and harmonise the rates to facilitate easy movement of vehicles across the country. In the said meeting, there was consensus on bringing of floor rate of motor vehicle tax in respect of cars, LMV at 6% lifetime tax using the sale price as the base rate. It was suggested to reduce barriers on inter-State movement of vehicles for both goods and passengers by rationalisation of motors vehicle taxes. The State of Karnataka, in this background, introduced the levy of lifetime in respect of motor cabs having capacity of 5 + 1 passengers and above.
4. The Act was amended with effect from 1-4-2012 by KMVT (amended Act of 2012) (Karnataka Act No. 14 of 2012). By the said amendment, for the first time, lifetime tax for motor cabs came to be introduced. Such tax is imposed for the motor cabs whose cost exceeds Rs. 10 lakhs at the rate of 15% of the total value of the vehicle in respect of new vehicles during the registration. For the purpose of imposing of lifetime tax on motor cabs, the total value of which consists the excise duty, sales tax, VAT, surcharge the cess. Entry tax payable in the State of Karnataka. The said imposition of tax is only in respect of motor cabs. The value is more than Rs. 10 lakhs. Subsequently, the Act came to be amended with effect from 1-4-2012 by Act No. 29 of 2012. The effect of the second amendment is for the purpose of levy of lifetime for motor cabs, the total value is more than Rs. 15 lakhs, as against Rs. 10 lakhs which was previously fixed. In respect of the new vehicles, the tax of 15% is calculated on the basis of total value of the vehicle and in respect of vehicles, which are already registered, its age is calculated from the month of the registration as on 13-2-2012. Irrespective of the market value of the vehicle, the value is fixed by deducting about 5% - 6% of the value every year and such value has been considered for the purpose of levy of tax.
5. It is the case of the appellants that by introducing such lifetime tax, the objective of inter-State movement of vehicles has not been achieved. On the contrary, huge unforeseen and arbitrary burden on the cab owners is fixed. Section 32 of Income-tax Act, 1961 prescribes rates of depreciation. Considering the fact that the vehicles which at are used in a business of running them as motor c
