1955 (9) TMI 61 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the toll tax levied on motor vehicles entering and leaving the Hardwar Union Municipality.
2. Availability and adequacy of alternative remedies.
3. Alleged suppression of material facts by the petitioners.
4. Impact of the toll tax on the petitioners' business and fundamental rights.
5. Whether the impugned notification is discriminatory under Article 14 of the Constitution.

Detailed Analysis:

1. Legality of the Toll Tax:
The petitioners challenged the imposition of toll tax on motor vehicles entering and leaving the Hardwar Union Municipality, arguing that it affected their right to carry on business. The toll tax was levied under notifications dated 29-10-1941 and 22-2-1955. The court examined the legality of these notifications under the United Provinces Municipalities Act, 1916. The 1941 notification imposed a toll tax on vehicles entering or leaving the municipal limits, which was later amended in 1955 to increase the rate. The court found that while the Municipal Board had the power to impose tolls on vehicles entering the municipality, there was no provision in the Act for imposing a toll tax on vehicles leaving the municipality. Thus, the notification exceeded the powers conferred by the Act.

2. Availability and Adequacy of Alternative Remedies:
The respondents argued that the petitioners had an alternative remedy available and had already availed of it by filing a representative suit for a permanent injunction. The court acknowledged that while the existence of an alternative remedy is not an absolute bar to the exercise of powers under Article 226, it should be considered. The court emphasized that in cases involving fundamental rights or issues of public importance, the High Court can exercise its jurisdiction under Article 226 even if an alternative remedy is available. The court concluded that the alternative remedy in this case was not equally adequate and efficacious, and thus, the preliminary objection was dismissed.

3. Alleged Suppression of Material Facts:
The respondents contended that the petitioners had suppressed material facts by not disclosing the pending suit and the fact that passengers traveling by rail also paid a pilgrim tax. The court held that the omission to mention the pending suit was not material to the relief claimed under Article 226, as the existence of an alternative remedy was not a bar to granting relief. Similarly, the omission to mention the pilgrim tax was not considered a suppression of material fact. Therefore, the court found no merit in the preliminary objections regarding suppression of facts.

4. Impact of the Toll Tax on Petitioners' Business and Fundamental Rights:
The petitioners argued that the toll tax adversely affected their business, making road transport less popular compared to rail transport. The court noted that the toll tax was levied on the vehicles, not directly on the passengers, and the liability to pay the tax was on the vehicle owners. The court recognized that the petitioners had the right to challenge the notifications as they were directly affected by the toll tax.

5. Discrimination under Article 14 of the Constitution:
The petitioners claimed that the toll tax was discriminatory as passengers traveling by rail did not pay any tax, while those traveling by motor vehicles had to pay the toll tax. The court clarified that the toll tax was imposed on vehicles using municipal roads, not on passengers. Since trains did not enter the municipal limits or use municipal roads, no tax could be imposed on train passengers. Therefore, the court held that the impugned notification was not discriminatory and did not violate Article 14 of the Constitution.

Conclusion:
The court allowed the petition in part, directing the respondent not to levy toll tax on vehicles leaving the Hardwar Union Municipality. The stay order was discharged, and each party was ordered to bear its own costs.