1971 (11) TMI 145 - SC - VAT and Sales Tax

Tax on Chasis - merely because bodies were going to be attached by the ultimate purchasers, it cannot be said that the running of the chassis on the roads of Andhra Pradesh would not attract taxes.

Summary

Issues:
Appeals against imposition of taxes under Andhra Pradesh Motor Vehicles Taxation Act; Interpretation of provisions regarding levy on motor vehicles and chassis; Exemption under Section 9 of the Act; Constitutional validity under Article 301 and Article 304(b) of the Constitution.

Analysis:
The appeals challenged taxes imposed under the Andhra Pradesh Motor Vehicles Taxation Act. The first two appeals involved Automotive Manufacturers (P.) Ltd., a dealer of motor chassis and vehicles received from manufacturers outside Andhra Pradesh. The appellants contested the levy on motor chassis from Ashok Leyland Ltd. and vehicles from Mahindra & Mahindra Ltd. and Bajaj Auto Ltd. The High Court rejected their contentions, leading to the appeals before the Supreme Court.

The primary contention revolved around Section 3 of the Act, which authorizes tax levy on motor vehicles "used or kept for use in a public place in the State." The appellants argued that a chassis cannot be considered "used" until a body is attached. However, the Supreme Court held that a chassis can be used on public roads even without a body, attracting the levy. The definition of "motor vehicle" under the Act includes a chassis without a body, supporting the imposition of tax.

Another argument focused on Section 9, which provides exemptions for chassis "driven to another place in order that a body may be attached." The appellants claimed exemption based on this provision, asserting that all chassis require bodies to be attached. The Court disagreed, emphasizing that the exemption applies only when a chassis is driven for the explicit purpose of attaching a body, not for general transportation.

Furthermore, the appellants raised constitutional concerns under Article 301, arguing that the tax impedes free trade and commerce. The Court noted that while registration under the Motor Vehicles Act is effective throughout India, states can impose reasonable restrictions in the public interest under Article 304(b). The appellants did not pursue the argument regarding the lack of the President's sanction for the tax bill, leaving it open for future proceedings.

Ultimately, the Supreme Court dismissed the appeals, upholding the imposition of taxes under the Act. The judgment was delivered after a re-hearing following the demise of one of the judges. The appellants were directed to bear the costs of the proceedings.