The Madras High Court recently struck down the expression “per entry” appearing along with the rate of tax indicated in the second column of the Ninth Schedule to the Tamil Nadu Motor Vehicles Taxation Act, 1974, as against Clause (c) therein covering contract carriages of omnibuses, by finding it as unconstitutional. The highlights of the judgment are given below.
By an amendment made under Tamil Nadu Act 13 of 2012, to the Ninth Schedule to the Tamil Nadu Motor Vehicles Taxation Act, 1974, the State of Tamil Nadu imposed a tax of a fixed amount per seat or berth per entry, upon omni buses hired on contract carriage for a period not exceeding 7 days, 30 days and 90 days. The petitioners, who are omni bus operators,filed a writ petition before the Court challenging the said amendment on the following grounds:
While countering the above averments, the State conteded that the temporary licences issued to contract carriages under Tamil Nadu Motor Vehicles Taxation Act, 1974 are more often misused by the operators, to make more than one trip within the duration for which such licences are granted and hence, there arose a necessity to plug the loophole. It was further argued that that the Government decided to impose the levy for the purpose of augmenting its resources and to utilise the revenue derived therefrom, for the welfare of the people, including the laying and maintenance of roads and the floating of several public welfare schemes; and lastly, that an amendment made for the purpose of plugging the hole in the law and for regulating the same, cannot be said to be illegal.
The Court was of the opinion that the actual worry of the State, that led to the enactment of the impugned law was that contract carriage operators used to take temporary licences for a specified duration of time and thereafter, make number of trips with different sets of passengers.Further, the contention that the impugned provision is penal in nature has to be upheld.
While analyzing whether the section is compensatory or confiscatory, Justice V. Ramasubramaniam, expressed a view that, “in the case on hand, the question of the petitioners discharging the initial burden may not arise at all for one important reason. Logically, the tax that was originally levied, namely Rs.600/- per seat or berth for an omni bus plying on contract carriage for a period of seven days, can be multiplied by the number of trips made, for finding out the number of times the facility is used. But, the impugned levy is not directed against every trip made into the State within the period of seven days for which a special permit or temporary licence is granted. It is made per entry and as we have pointed out earlier, multiple entries can be made even before one trip is completed. In any case, the State has not come out with any data either in their original counter affidavits or in their additional common counter affidavits. In some places in their counter-affidavits, the State has described the levy as something intended to prevent misuse. In some places, the State has admitted to justify the levy by pointing out the cost of construction of roads, bridges, etc. In some cases, the State has very vaguely spoken about additional expenditure involved for the maintenance of facilities, without clearly indicating the nature of the facilities and the cost of maintaining them. Therefore, the impugned levy appear to be confiscatory and not compensatory in nature.”However, the Court refused to accept the contention of the petitioner that the said provision is violative of Art.14.
On the basis of the above findings, the Court declared the expression “per entry” appearing along with the rate of tax indicated in the second column of the Ninth Schedule to the Tamil Nadu Motor Vehicles Taxation Act, 1974, as against Clause (c) therein covering contract carriages of omni buses, as ultra vires and unconstitutional.
Read the full text of the Judgment here.
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