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PATNA HIGH COURT
Bisheshwar Prasad Singh and B.P.Sharma JJ.
Tata Engineering And Locomotive Company Limited
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 3788 of 1995 ;
Decided On : JULY 3, 1998
The impugned Taxation Act, 1994 (Bihar Act 8 of 1994) (hereinafter referred to as "the Act") was challenged on the ground of legislative competence, arbitrariness, and unworkability. The Court held that the Act was a valid piece of legislation and the petitioners could not deny their liability to pay annual tax at the rates specified. However, the Court partly allowed one of the writ petitions and directed the Taxing Officer to hear the petitioner on the question of assessment of tax and imposition of penalty and to pass fresh orders in accordance with law.
Fact of the Case:
The petitioners challenged the constitutional validity of the impugned Taxation Act, 1994 (Bihar Act 8 of 1994) on the ground of legislative competence, arbitrariness, and unworkability. The petitioners also challenged the demands made under Sec. 6 of the impugned Taxation Act.
Finding of the Court:
The Court held that the impugned Taxation Act was a valid piece of legislation and the petitioners could not deny their liability to pay annual tax at the rates specified. However, the Court partly allowed one of the writ petitions and directed the Taxing Officer to hear the petitioner on the question of assessment of tax and imposition of penalty and to pass fresh orders in accordance with law.
Issues: 1. Whether the impugned Taxation Act was a valid piece of legislation? 2. Whether the petitioners could deny their liability to pay annual tax at the rates specified? 3. Whether the impugned Taxation Act was arbitrary and unworkable?
Ratio Decidendi: 1. The Court held that the impugned Taxation Act was a valid piece of legislation as it was enacted by the State legislature under Entry 57 of List II of the Seventh Schedule and the legislative competence of the State legislature could not be disputed. 2. The Court held that the petitioners could not deny their liability to pay annual tax at the rates specified as the impugned Taxation Act and the Taxation Rules laid down the guidelines for the exercise of power under the impugned Taxation Act by the concerned authorities. 3. The Court held that the impugned Taxation Act was not arbitrary and unworkable as it provided for an assessment to be made by the Taxing Officer and also laid down the manner in which such tax shall be paid and recovered.
Final Decision: The Court partly allowed one of the writ petitions and directed the Taxing Officer to hear the petitioner on the question of assessment of tax and imposition of penalty and to pass fresh orders in accordance with law. The remaining writ petitions were dismissed.
B.P.SINGH, J.
1. :-
In this batch of writ petitions, the legal issues being common, the writ petitions have been heard together and are being disposed of by this common judgment. The writ petitioners have challenged the constitutional validity of the Bihar Motor Vehicles Taxation Act, 1994 , particularly Sec. 6 thereof whereunder a tax at an annual rate has been levied on a manufacturer or a dealer in motor vehicles in respect of the motor vehicles in his possession, in the course of his business as such manufacturer or dealer under the authorisation of trade certificate granted under the Central Motor Vehicles Rules, 1989 . The said Act shall be hereinafter referred to as "the impugned Taxation Act." The petitioners have also challenged the demands made under Sec. 6 of the impugned Taxation Act. The petitioner in CWJC No. 3788 of 1995(R) is M/s. Tata Engineering and Locomotive Company, Ltd. a Company registered under the Indian Companies Act. The aforesaid Company claims to carry on business of manufacturing chassis at its manufacturing Unit situated at Jamshedpur in the State of Bihar.CWJC No. 2708 of 1995(R) has been filed by M/s. Chotanagpur Chamber and Commerce and Industry espousing the cause of its members who have been called upon to pay the tax levied under Sec. 6 of the impugned Taxation Act. The petitioner in the remaining three writ petitions are dealers who deal in Scooters, Motorcycles and Autorickshaws etc. i.e. in two or three wheeler vehicles. Apart from the challenge to the constitutional validity of the impugned Taxation Act, some of the petitioners have also challenged the action of the taxing authority on other grounds, which shall be dealt with separately, since the facts in each case have to be considered having regard to the provisions of the impugned Taxation Act and the Rules framed thereunder.
2 I shall notice the basic facts stated in CWJC No. 3788 of 1995(R) which are relevant for a proper consideration of the challenge to the vires of the impugned Taxation Act.The petitioner carries on business of manufacturing chassis at its manufacturing unit at Jamshedpur. It is averred that the manufacturing unit of the petitioner-Company is fenced with brick built boundary wall throughout. The roads inside and outside the manufacturing unit, and in the TELCO Colony, are private roads maintained by the Company at its own cost. The entry into the factory premises is regulated by issuance of entry pass and such entry is managed and controlled by the Personnel belonging to the security department of the petitioner-Company. Entry to the premises of the petitioner manufacturing unit may be refused in the absence of proper authority. The maintenance of the roads is also done by the petitioner-Company since the roads within the establishment are not public roads of the State of Bihar. All the machines and the offices of the Company are located within one campus. The manufacture of Chassis is undertaken and completed inside the manufacturing unit/factory premises and after the chassis is fitted with tyres and other accessories, it remains inside the manufacturing unit and is not taken on the public road. After manufacture of chassis, and after the same is fitted with necessary accessories, the chassis is taken to the Company test yard for testing purposes. The test yard is also located within the premises of the Company and the roads connecting the test yard to the place of manufacture is also within the factory premises maintained by the Company. Even such roads are not public roads.Under Sec. 39 of the Motor Vehicles Act, 1988 enacted by the Parliament (hereinafter referred to as "the Central Act"), it is necessary to register a vehicle which is to be driven in any public place, but the proviso to Sec. 39 makes it clear that the said provision does not apply to a motor vehicles in possession of a "dealer", subject to such conditions as may be prescribed by the Central Government. The petitioner-Company being
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