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2013 Supreme(Raj) 1796

RAJASTHAN HIGH COURT
Vineet Kothari, J.
Satyanarayan Fidoda - Appellant
Versus
State of Rajasthan and others - Respondent
S.B. Civil Writ Petition Nos. 11628, 11643 of 2013.
Decided On : 17-09-2013

Advocates:
For the Petitioner:Mahesh Bora, Sr. Advocate with Nishant Bora, Advocate.

Gram Panchayats do not have the power to levy vehicle tax on motor vehicles or mechanically propelled vehicles under Section 65 of the Rajasthan Panchayati Raj Act, 1994.

Headnote:
TAXATION - RAJASTHAN PANCHAYATI RAJ ACT, 1994 - SECTION 65 - VEHICLE TAX - GRAM PANCHAYAT - POWER TO LEVY - JUDICIAL REVIEW - CONTRACTUAL RIGHTS - NATURAL JUSTICE.
Fact of the Case:

The petitioners were awarded a contract for the collection of vehicles tax imposed by the respondent Gram Panchayat. The contract period was extended for the next year with a 10% increase in the tender amount. However, the Gram Panchayat subsequently informed the petitioners to stop the collection of the tax following a judgment of the Jaipur Bench of the Rajasthan High Court, which held that the levy of vehicles tax by Gram Panchayats was beyond the scope of Section 65 of the Rajasthan Panchayati Raj Act, 1994.
Finding of the Court:

The High Court held that the impugned order passed by the Gram Panchayat in compliance with the directions of the Jaipur Bench was valid and could not be assailed. The Court noted that the Jaipur Bench had held that Gram Panchayats could not levy vehicle tax on motor vehicles or mechanically propelled vehicles, and that the tax sought to be realized by the Gram Panchayat was analogous to road tax, which was leviable only by the State Government.
Issues: 1. Whether the Gram Panchayat had the power to levy vehicle tax under Section 65 of the Rajasthan Panchayati Raj Act, 1994? 2. Whether the impugned order passed by the Gram Panchayat in compliance with the directions of the Jaipur Bench was valid? 3. Whether the petitioners' contractual rights were affected by the curtailment of the contract period?
Ratio Decidendi: 1. The Court held that Section 65(1)(c) of the Rajasthan Panchayati Raj Act, 1994, which empowers Gram Panchayats to impose vehicle tax, is subject to the third proviso, which prohibits the levy of tax on motor vehicles as defined in the Motor Vehicles Act, 1988, or any other mechanically propelled vehicle. 2. The Court held that the impugned order passed by the Gram Panchayat was valid and could not be assailed, as it was in compliance with the directions of the Jaipur Bench, which had held that Gram Panchayats could not levy vehicle tax on motor vehicles or mechanically propelled vehicles. 3. The Court held that the petitioners' contractual rights were affected by the curtailment of the contract period, but that this was a contractual matter between the parties, which could be resolved through appropriate civil proceedings.
Final Decision: The Court dismissed the writ petitions filed by the petitioners.

JUDGMENT

1. - Heard learned counsel for the petitioners.

2. Both these writ petition, involving similar controversy, are being decided by this common order and the facts of the CW No. 11628/2013, Satyanarayan Fidoda v. State of Rajasthan & Ors. , are taken illustratively.

3. The petitioners were awarded contract for collection vehicles tax imposed by the respondent- Gram Panchayat, Randhisar, Panchayat Samiti- Sujangarh, District: Churu, for the year 2012-13. The said period of contract was extended in the case of the petitioners by the order of the Gram Sevak-cum-Secretary vide order Annex.7 dated 30.03.2012 (01.04.2012 to 31.03.2013). Further increasing the tender amount by 10%, the period of contract was renewed for the next year i.e. 2013-14 i.e. up to 31.03.2014 vide order dated 12.02.2013 (Annex.P/8). However, by the impugned communication (Annex.P/14) dated 27.08.2013, the respondent- Gram Panchayat, Randhisar, has informed the petitioner to immediately stop the collection of the said vehicles tax in pursuance of decision of this Court at Jaipur Bench in SBCWP No. 8221/2012, Arjun Singh v. State of Rajasthan & Ors., decided on 13.02.2013 by which a coordinate bench of this Court, struck down the said levy of vehicles tax by the respondent- Gram Panchayt as beyond the scope of Section 65 of the Rajasthan Panchayati Raj Act, 1994.

4. Mr. Mahesh Bora, Sr. Advocate assisted by Mr. Nishant Bora, learned counsel for the petitioners urged that the impugned order Annex.P/14 dated 27.08.2013 has been passed by the respondent No.4- Gram Panchayat, Randhisar, without giving any opportunity of hearing to the petitioner and thus in breach of principles of natural justice, and since the petitioner was not a party before the Jaipur Bench in SBCWP No. 8221/2012, Arjun Singh v. State & Ors. , therefore, he was not bound by the said judgment and thus the contract period of the petitioner(s) could not be curtailed prior to 31.03.2014 and the impugned order, therefore, deserves to be quashed by this Court.

5. Having heard the learned counsel for the petitioners and after going through the record, this Court is satisfied and is of the firm opinion that the impugned order passed in compliance of directions of this Court in the judgment in rem in the case of Arjun Singh (supra), dated 13.02.2013, the impugned order dated 27.08.2013 cannot be assailed validly. A coordinate bench of this Court at Jaipur Bench in the case of Arjun Singh (supra), has held as under:-

"On hearing learned counsel for the parties and perusing the impugned order, I deem it appropriate to reproduce Section 65 of the Act of 1994 as under:

65. Taxes which may be imposed by a Panchayat (1) Subject to the rules and any orders by State Government in this behalf, a Panchayat may impose one or more of the following taxes, namely,

(a) a tax on buildings owned by persons not exceeding such rate as may be prescribed,

(b) an octroi on animals or goods brought within the Panchayat Circle for consumption or use therein,

(d) pilgrim tax,

(e) a tax for arranging the supply of drinking water within the Panchayat Circle,

(f) a tax on commercial crops,

(g)any other tax which the State Legislature has, under the Constitution, power to impose in the State and which has been sanctioned by the Government.

(2) The taxes under sub-section (1) shall be imposed, assessed and raised in such manner and paid or realized at such times, as may be prescribed.

(3) The State Government may, by notification in the Official Gazette, require any Panchayat to impose, subject to the provisions of sub-section (2), any of the taxes specified in sub-section (1) from such date at such rates, as may be specified in the notification.

(4) While any notification under sub-section (3) is in force, the Panchayat shall proceed to impose the tax or taxes therein specified, as if a resolution of the Panchayat had been passed for the imposition there

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2013 Supreme(Raj) 1796

RAJASTHAN HIGH COURTVineet Kothari, J.Satyanarayan Fidoda - AppellantVersusState of Rajasthan and others - RespondentS.B. Civil Writ Petition Nos. 11628, 11643 of 2013.Decided On : 17-09-2013

Gram Panchayats do not have the power to levy vehicle tax on motor vehicles or mechanically propelled vehicles under Section 65 of the Rajasthan Panchayati Raj Act, 1994.

RAJASTHAN HIGH COURT
Vineet Kothari, J.
Satyanarayan Fidoda - Appellant
Versus
State of Rajasthan and others - Respondent
S.B. Civil Writ Petition Nos. 11628, 11643 of 2013.
Decided On : 17-09-2013