Jaika Automobiles (Private) Limited & another vs State of Maharashtra & another

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1992 Supreme(Bom) 369

IN THE HIGH COURT OF BOMBAY
(NAGPUR BENCH)
Mohta V.A. Sambre W.M., JJ.
Jaika Automobiles (Private) Limited another .... Petitioners.
Versus
State of Maharashtra another.... Respondents.
Writ Petition Nos. 7 of 1988, 1165 of 1989, 527, 977, 2229, 2269, 2270, 2349, 2350, 2763, 2949, 3000, 3055 of 1990 802, 978, 1905 2019 of 1991, decided on 7-8-1992.
Advocates appeared :
Sunil Manohar, P.G. Palshikar, S.P. Palshikar, S.P. Dharmadhikari, V.P. Kukday, P.N. Deopujari, T.D. Khade, S.J. Dhanrajani M.K. Kulkarni, for petitioners.
S.G. Aney, B.T. Patil, G.P., C.S. Kaptan, B.P. Jaiswal, S.A. Bobde, H. Ahmed, G.C. Choube, D.N. Kukade, S.G. Jagtap, S.G. Charde V.V. Naik, for respondents.

Headnote:Article 265.
       See Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act (42 of 1987) Sections 3 (1), (3).

       MAHARASHTRA TAX ON ENTRY OF MOTOR VEHICLES INTO LOCAL AREAS ACT, 1987
       Sections 1,2 (b) and 3-Constitution of India- Knst. UU Entry 52-Constitutional validity of Act-Challenged-List of Legislature-Legislative competence to State legislature to levy tax on entry of vehicles into local areas for purpose of use or sale- The term local area defined-Under Section 2 (h) comprised of entire area of State in totality not justified with reference to expression ‘local area’ as used in Entry 52 of list 11 of Constitution.
       Though the definition of local area encompasses several varieties of local areas governed by different local bodies which when clubbed together comprise the entire area of the State, the taxable event is entry of vehicle in local area for use or sale therein. Impost of tax is upon entry into one of several local areas. The fact that Act refers to more that one local area and all areas together cover the entire area of the State would not put the Act beyond the legislative competence of the State legislature competence of the State Legislature under Entry 52 of List II.
       Sections 3 (1), (3)-Constitution of India-Article 265-Levy of entry tax on Motor Vehicle-Entering into local area for purpose of use or sale in addition to Octroi duty payable to local authorities- Whether entry suffering from vice of double taxation-Octroi duty and entry tax Imposed by two different authorities for two different purposes-No taxation of same goods twice by same authority and/or for same purpose-Levy of entry tax not resulting in double taxation.
       Octrol duty and entry tax are imposed by two different authorities and for entirely two different purposes. Former is for augmenting the resources of the local body and the latter is for compensating the loss of revenue of the State au account of diversion of transactions of sale and purchase of vehicles to the nighbouring State of Union Territories due to difference in the rate of Sales-tax, Goods taxable are not the same, though some may be common, e. g. vehicle brought in the local area after 15 months of its registration under the Motor Vehicles Act in areas outside the State. Thus there is no taxation of the same goods twice by the same authority and/or for the same purpose and hence there is no" double taxation.

JUDGMENT - MOHTA V.A., J.:---Constitutional validity of the Maharashtra Tax on Entry of Motor Vehicles into Local Areas Act, 1987 ('The Act') is impugned in this batch of seventeen petitions.

2. Broadly stated, grounds are:

(a) Want of legislative competence in the State Legislature.

(b) Colourable exercise of legislative power.

(d) Vice of double taxation.

(e) Arbitrariness.

3. State Governor promulgated the Maharashtra Tax on Entry of Motor Vehicles into Local Areas Ordinance, 1987 ('The Ordinance') on 30th September, 1987 after receiving instructions from the President as required under Article 213(1) of the Constitution. The Act which repeals the said ordinance received the President's assent on 18th December, 1987. The object of the Act will be crystal clear from the following statement appended to the ordinance:

"From 1984 onwards some States and the Union Territories adjoining the State of Maharashtra have reduced the rate of Sales Tax on motor vehicles and chassis substantially. Such reductions in tax rates by the neighbouring States have resulted in diversion of trade to those areas and the manufacturers of motor vehicles in Maharashtra, for want of market, had to resort to branch transfers to these areas and cater to the needs of consumers in Maharashtra, from those areas. This resulted in the avoidable loss of legitimate sales tax revenue to a large extent by the State of Maharashtra. With a view to compensate such loss of legitimate revenue, the State Government has decided to levy with immediate effect a tax on entry of motor vehicles purchased outside the State and brought in the local areas of the State for use or sale."

4. Section 2 defines certain expression. Most important and material definition is of the expression “local area” given in Clause (h). It means the area within the limits of---

(i) a Municipal Corporation established under the Bombay Municipal Corporation Act, the Bombay Provincial Municipal Corporations Act, 1949, and the City of Nagpur Corporation Act, 1948;

(ii) a Municipal Council established under the Maharashtra Municipalities Act, 1965;

(iii) a Zilla Parishad established under the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961;

(iv) a notified area Committee or a cantonment board constituted or established under any law for the time being in force.

Some definitions pertain to the authorities entrusted with the task of enforcing the provisions of the Act. Sub-section (2) mentions that the words and expression not defined in the Act shall have the meaning assigned to them under the Bombay Sales Tax Act, 1959 (The BST Act). Other expressions defined are, 'Accessories', 'Entry of Motor Vehicle into a local area', 'importer', 'purchase value' etc.

5. Chapter II deals with 'Incidence and levy of tax'. Section 3---the charging section---reads thus:

"3(1) Subject to the provisions of this Act and Rules made thereunder, there shall be levied and collected a tax on the purchase value of a motor vehicle, an entry of which is effected into a local area for use or sale therein and which is liable for registration in the State under the Motor Vehicles Act, 1939, at such rate or rates as may be fixed by the State Government by notification in the Official Gazette but not exceeding the rates prescribed for motor vehicles in the schedules appended to the Bombay Sales Tax Act, or fifteen paise in the rupee whichever is less:

Provided that, no tax shall be levied and collected in respect of a motor vehicle which was registered in any Union Territory or any other State under the Motor Vehicles Act, 1939 for a period of fifteen months or more before the date on which it is registered in the State under that Act.

(2) The tax shall be payable and paid by an importer within 15 days from the entry of motor vehicle into the local area or before an application is made for registration of the vehicle under the Motor Ve

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday

1992 Supreme(Bom) 369

Cases Referred (1)

Judicial Analysis