Tax on motor vehicles is compensatory in nature and must have a nexus with vehicles using public roads. Vehicles exclusively used within private roads are not liable to tax.

(Petition filed under Article 226 of the Constitution of India for the issuance of writ of certiorarified mandamus calling for the records in Letter No.135410/Transport-I/95-12 dated 21.4.1998 on the file of the first respondent herein conforming the order in R.No.C-3/44267/97 dated 6.1.98, on the file of the 3rd respondent herein and quash the same and direct the respondents herein to make tax exemption endorsement in the R.C.Books of the transport vehicles of the petitioner Corporation which are plying on the private roads of the petitioners’ Corporation.)

The present writ petition has been filed by M/s.Neyveli Lignite Corporation Limited, hereinafter referred to as “the Corporation”. The aforesaid Corporation is a Government of India undertaking, the primary business of which is to mine lignite from its two mines and generate electricity from its Thermal Power Stations and production of Urea, Leco and other commercial by-products. Two mines, Thermal Power Stations and others were located in the area owned by the Corporation. There is a Township meant for its employees over an extent of about 650 acres of land inhabited by about two lakhs persons. To provide transport facilities for the employees and their family members, including the school going children, the Corporation has evolved a transport system. Such system consists of transport and non-transport vehicles. The transport vehicles are of two categories, namely, goods carriage vehicles and stage carriage vehicles, which are solely and exclusively used in the private roads constructed and maintained by the Corporation within its own area and such vehicles are not used nor kept in use in any public road, outside the area belonging to the Corporation. The present writ petition relates to the vehicles which are exclusively used inside the area belonging to the Corporation and have no occasion to go on the public roads. From the very inception, such vehicles plying on the private roads within the area belonging to the Corporation have been exempted from payment of tax leviable under the Tamil Nadu Motor Vehicles taxation Act. While the matter stood thus, the third respondent, namely, the Regional Transport Officer of Cuddalore district issued demand notice in R.No.C-3/44267/97 dated 6.1.1998 calling upon the Corporation to pay road tax of Rs.4,28,02,292/- for the period from 1.4.1985 to 31.3.1998 in respect of 243 vehicles which were plying within the private roads of the Corporation. The said notice was purportedly issued under Section 3 of the Tamil Nadu Motor Vehicles Taxation Act, 1974. The Corporation filed a representation to the first respondent, namely, the Government of Tamil Nadu, against such demand notice dated 6.1.1998 on the ground that such notice was contrary to the provisions of the Central Motor Vehicles Act as well as Tamil Nadu Motor Vehicles Taxation Act, 1974 (hereinafter referred to as “the M.V. Taxation Act”). In the representation, the Corporation’s request was to continue the exemption from payment of motor vehicle tax. The first respondent, however, denied such prayer by letter No.135410/Transport-I/95-12 dated 21.4.98. The relevant portion of such letter is to the following effect:-

“... I am directed to refer your letter second cited and to state that the Government have examined your request to exempt the stage carriages and goods vehicles plying within the private premises of Neyveli Lignite Corporation Limited, from payment of Motor Vehicles tax as was done prior to 1985. The request is not admissable in terms of the provisions under section 3 of the Tamil Nadu Motor Vehicle Taxation Act 1974. Besides, Government’s competence to levy tax with effect from 1985 has been upheld by the High Court, in its orders dated 6.1.95, in W.P.No.8055/85.”

The petitioner has sought for quashing the order contained in letter-dated 21.4.1998.

2. Before adverting to the main contentions raised in the writ petition, it is also necessary to take note of