Rule Mandating Clearance of Tax for Fitness Certificate for Vehicle clears Constitutional Test: Madhya Pradesh HC [Read Judgment]

The Madhya Pradesh High Court upheld the vires of Rule 48 of Madhya Pradesh Motor Vehicles Rules, 1994 which mandates tax clearance certificate for fitness application of vehicle.

A division bench comprising of Chief Justice Hemant Gupta and Justice Vijay Kumar Shukla was hearing a writ petition filed by Rajesh Kumar Miglani, an individual who challenged the legality of Sub-Rule (2) of Rule 48 of Madhya Pradesh Motor Vehicles Rules, 1994 to the extent it requires that fitness application for vehicle shall be accompanied with a tax clearance certificate in Form.

The petitioner is engaged in the business of operating bus and has 74 buses. The buses are required to have fitness certificate in terms of Motor Vehicles Act, 1988 whereas the passenger tax is payable under M.P. Motoryan Karadhan Rules, 1991 and Motoryan  Karadhan Adhiniyam, 1991. The grievance in the case was that levy and collection of tax doesn’t correlate with issuance of witness certificate as both operate in separate legislative scheme.

According to the petitioner, the fitness certificate is covered by central law under Act of 1988 whereas tax governed by 1991 Act. Therefore, condition of clearance of tax cannot be a condition precedent for grant of fitness certificate.

The petitioner in his petition had pointed out that there is system for levy of tax and penalty for failure to pay tax and they also have power of entry, seizure and detention of motor vehicle in case of non-payment of tax but without issuing any notice of payment of tax, the tax assessment is not done and arbitrarily the motor vehicle owner is asked to pay the tax and when he fails to meet the demand, the fitness certificate is not issued.

The petitioner argued that issuance of no due certificate of tax as a condition precedent for issuance of fitness certificate, give rise to conflict between central and state government law.

He further argued that non-updation of tax status in the web portal violate the right of petitioner to carry on business under Article 19(1)(g) of the Constitution of India and strongly criticized the states procedure regarding this was illegal and unsustainable.

Section 65(2)(d) of the Act of 1988 empower the state to frame rule regarding issue of fitness certificate and rule of 1994 define its procedure.so the payment of tax made conditional for issuing fitness certificate.

In view with foregoing provision and rules laid down by Supreme Court, the court observed that an application for issue or renewal of certificate of fitness shall be accompanied with a tax clearance certificate in Form M.P.M.V.R. – 23 (TCC) is not inconsistent with any provision of the Central Legislation (Act of 1988). Therefore, the offending clause i.e. Sub-Rule (2) of Rule 48 of the Rules of 1994 cannot be said to be illegal or beyond the legislative competence of the State.

The Court found no merit in the contention that the web portal is not updated and that without finalizing the orders under the 1991 Act or the Rules framed the demand is raised.

“We find that argument is based upon apprehensions. There is a presumption that the official acts are performed regularly in terms of Sub-section (e) of Section 114 of the Evidence Act. Therefore, there will be presumption of correctness of the information available on the website. But if any demand is reflected on the website though it may not actually exist, an owner has a right to file declaration, determination and payment of tax payable in terms of Rule 8A of the Rules of 1991. An order of imposing penalty is required to be passed under Section 13 of the Act. Therefore, an aggrieved transporter cannot be permitted to come to the writ Court that data on the website is not updated and is reflecting nonpayment of tax,” the bench said.

The court also directed the web portal should have entire data of tax paid of each vehicle and resentful person have the opportunity to reconcile such payment by submitting online request. Such transparent process will redress the grievance of the aggrieved person(s) such as the petitioners to a large extent.