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2017 Supreme(Guj) 1060
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
M.R. SHAH, B.N. KARIA, JJ.
VIJAYKUMAR NARANBHAI DHOLA – Appellant
Versus
STATE OF GUJARAT & 5 - Respondents
SPECIAL CIVIL APPLICATION NO. 5651 of 2011 With SPECIAL CIVIL APPLICATION NO. 4157 of 2012 With SPECIAL CIVIL APPLICATION NO. 964 of 2013
Decided on : 09-06-2017
Advocate Appeared:
For the Appellant :MR RAMKRISHNA B DAVE, ADVOCATE
For the Respondent:MR KAMAL TRIVEDI, ADVOCATE GENERAL with MS SANGITA VISHEN, ASSISTANT GOVERNMENT PLEADER, MR MP SHAH, ADVOCATE, MR PM DAVE, ADVOCATE, MS BHARGAVI G THAKAR, ADVOCATE, MS. KRUTI M SHAH, ADVOCATE with MS JASMIT MITTAL, ADVOCATE
Important Point
a)Validity of tax laws can be questioned with respect to the provision of the Constitution has to be exercised with circumspection, bearing in mind that the power of the State to levy taxes for the purpose of governance and for carrying out its welfare activities is a necessary attribute of sovereignty and in that sense it is a power of paramount character.
b)Validity of tax cannot be questioned once the legislature concerned has been found to possess the requisite power to levy the tax. It is observed that motive for the imposition of tax in such circumstances would be immaterial and irrelevant.
c)Though taxation of the same thing under different names is nonetheless ‘double taxation’ in popular sense, the expertise exposition of the topic seem to also lean in favour of the revenue, in that the legislature has been considered to possess the power to levy one or more tax or rates of tax on the same taxable vent and since in these areas large latitude and wide discretion has always been allowed to the State to choose its own method are kind of tax or mode and purpose of levy and recovery, unless there is any prohibition in the Constitution or the very law enacted by the legislature itself prevents such a thing happening no infirmity can be said to vitiate such a levy.
Headnote:Bombay Motor Vehicles Tax Act, 1958— Section 3(1A)— Ultra Vires as to Entry 57 of List II in Schedule VII and to Article 265—levy of tax on vehicles at the time of change of ownership due to sale of such vehicles— Petitioner argued that State do not have legislative competence and its double taxation. Further argued that tax on vehicles can be imposed on the use of the vehicles and not on the ownership of the motor-vehicle thus levy of tax by the State on sale/transfer of the motor vehicle is illegal and unlawful— Held: Inspite the original owner had paid the lump sum money under Section 3(1), the liability to pay tax in sale is on the future owner, thus liability to pay tax is upon different person—it cannot be said that once the lump sum tax is paid on such motor vehicle as per section 3(1) of the Act, 1958, any further tax as per section 3(1A) of the Act, 1958 shall be double taxation as contended on behalf of the petitioners.— On legislative competence, State is authorized to levy the taxes on vehicles, whether mechanically propelled or not, suitable for use on roads. However, the same shall be subject to provision of Entry 35 of List III – concurrent List. Therefore, considering Entry 57 of List II and Entry 35 of List III, if any tax is imposed by the Union, in that case only, the State cannot impose the tax on the same subject. Nothing has been pointed out that any tax has been imposed by the Union as imposed / levied under Section 3(1A) of the Act, 1958— In present case, levy is specific, definite and positive in terms, with a definitely disclosed object leaving no room for any doubt or any exercise to clear such assumed doubts thus cannot be said to be beyond the legislative competence and can safely be concluded that considering Entry 57 of List II, the State is authorized to levy tax on vehicles and there can be different eventualities / events and different aspects to levy the tax.
Result: Petition Dismissed
M.R. SHAH, J.
1.0. As common question of law and facts arise in this group of petitions, all these petitions are heard, decided and disposed of together by this common judgment and order.
1.1. In all these petitions under Article 226 of the Constitution of India, the respective petitioners have prayed to declare subsection (1A) of section 3 of the Bombay Motor Vehicles Tax Act, 1958 (hereinafter referred to as “Act, 1958”) as ultra vires.
1.2. For the sake of convenience, Special Civil Application No.4157/2012, which has been preferred by the petitioner – Ahmedabad Used Car Dealers’ Welfare Association, be treated as a lead matter.
2.0. That subsection (1A) of Section 3 of the Act, 1958 has been enacted by the Gujarat Act No.5 of 2010 which has come into force with effect from 01.04.2010. That by the said provision, which is under challenge, there shall be a levy of tax on vehicles at the time of change of ownership due to sale of such vehicles. That the levy of such tax shall be in addition to the tax paid at the time of registration. Subsection (1A) of Section 3 of the Act, 1958, which is under challenge, is as under:
“3(1A). Notwithstanding anything contained in subsection (1), a tax in lumpsum in respect of a motor vehicle, for which lumpsum tax has been paid and ownership of such motor vehicle is transferred on sale, shall be payable at such rates, as may be specified by the State Government, by notification in the official gazette, but not exceeding 25% of the lumpsum tax paid.”
That the respective petitioners have challenged the vires/ constitutional validity of subsection (1A) of Section 3 of the Act, 1958 as ultra vires to Entry 57 of List II in Schedule VII to the Constitution of India and also ultra vires to Article 265 of the Constitution of India.
3.0. Shri Ramkrishna B. Dave, learned Advocate has appeared on behalf of the petitioners and Shri Kamal Trivedi, learned Advocate General has appeared with Ms. Sangita Vishen, learned Assistant Government Pleader appearing on behalf of the State.
4.0 Shri Dave, learned Advocate appearing on behalf of the petitioners has vehemently submitted that subsection (1A) of Section 3 of the Act, 1958 has been enacted under the alleged authority of Entry 57 of List II of Schedule VII to the Constitution of India. It is submitted that Entry 57 of List II provides that the taxes on vehicles can be imposed on such vehicles which are suitable for use on roads. It is submitted that therefore tax on vehicles can be imposed on the use of the vehicles and not on the ownership of the motor-vehicle, which is transferred on sale, as provided under subsection (1A) of Section 3 of the Act, 1958. It is, therefore, submitted by Shri Dave, learned Advocate appearing on behalf of the petitioners that the impugned levy and subsection (1A) of Section 3 of the Act, 1958 by which a tax is imposed on transfer of the vehicle is beyond the legislative competence of the State Government.
4.1. It is vehemently submitted by Shri Dave, learned Advocate appearing on behalf of the petitioners that therefore, the impugned levy is without authority under the law and therefore, ultra vires to Article 265 of the Constitution of India. It is vehemently submitted by Shri Dave, learned Advocate appearing on behalf of the petitioners that as per Article 265 of the Constitution of India, there shall not be levied any tax without the authority under the law. It is submitted that even the collection of tax also cannot be without authority under the law. It is submitted that therefore, the impugned levy and subsection (1A) of Section 3 of the Act, 1958 is, therefore, ultra vires to Article 265 of the Constitution of India.
4.2. It is further submitted by Shri Dave, learned Advocate appearing on behalf of the petitioners that even Entry 57 of List II provides that taxes on vehicles, whether mechanically propelled or not, suitable for use on roads including tram cars, subject to provisions of Entry 35 of List III. It is subm
