2022 (7) TMI 1174 - SC - VAT and Sales Tax

Separate powers of the Central and the State - repugnancy owing to the application of the State laws to the vehicle permit issued under the law made by Parliament - Constitutional validity of sub-sections (7) and (8) of Section 4, Section 15 of the 1976 Act and Section 8A of the Kerala Motor Transport Workers Welfare Fund Act, 1985 - thrust of the challenge is on the ground that the State Legislature by way of stated amendments to the welfare legislation has effectively bootstrapped the obligation to make contribution to the workers welfare fund with the obligation to pay tax for operating motor vehicles - encroaching and overriding the relevant provisions of the Central legislation i.e., the Motor Vehicles Act, 1988, to paralyse the Stage and Goods Carriage Operation or to undermine the effectiveness of the transport permit provided under the 1988 Act - HELD THAT - As regards the 1976 Act enacted by the State Legislature, the same is ascribable to Entries 56 and 57 of List II State List. Entry 56 deals with taxes on goods and passengers carried by road or on inland waterways. Entry 57 deals with taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List III. In one sense, the law made by the State Legislature is also ascribable to Entry 35 of List III under which the Parliament has already enacted 1988 Act. However, as aforementioned, the law made by the Parliament, being 1988 Act, does not touch upon or deal with the field of manner of levy of vehicle tax and collection thereof. Whereas, the 1976 Act enacted by the State Legislature is to consolidate and amend the laws relating to the levy of tax on motor vehicles and on passengers and goods carried by such vehicles in the State of Kerala. The levy of tax is spelt out in Section 3 of this Act. Section 4 deals with payment of tax and issue of licence. From the scheme of the 1976 Act, it is amply clear that it is specific to levy of tax on motor vehicle and passengers and goods carried by such vehicle in the State of Kerala. It is not a law regulating the issuance of a permit by the Authority under the 1988 Act as such. Indisputably, the permit issued by the Authority is hedged with conditions including the condition of regular payment of vehicle tax. Section 15 provides for the consequences for non-payment of tax consistent with Sections 10 and 11 of the 1976 Act. Thus understood, there is no occasion for conflict between the two provisions much less repugnancy. As regards the argument regarding bootstrapping of liabilities of permit-holder under two different State legislations, it is to say the least tenuous. It is open to the Legislature to combine levies for other purposes, such as education cess, etc., for collection of tax due and payable by the same tax-payer. It is one thing to say that the person is being compelled to discharge liability under two different State enactments, although he is not liable under one of the two. That is not the argument of these writ petitioners. The petitioners are not disputing their liability under both the State Enactments. The argument, however, is that the writ petitioners may intend to invoke remedy of appeal and revision in respect of liability fastened under the 1985 Act. This argument has been rightly negatived by the High Court in paragraph 18 of the impugned judgment by observing that sufficient safeguard has been provided under the relevant enactment to file appeal/revision by remitting 50 per cent of the amount demanded - The High Court has already issued directions to extend similar benefit even in cases where review petition is filed within the prescribed time. The fact remains that no prejudice whatsoever is caused to the permit-holder who intends to pursue remedy under the 1985 Act against the demand received by him relating to the contribution of the Welfare Fund. Reverting to the 1985 Act enacted by the State Legislature, indisputably, it is a welfare legislation constituting a fund to promote the welfare of motor transport workers in the State of Kerala. This Act is ascribable to Entries 23 and 24 of List III Concurrent List. Entry 23 deals with social security and social insurance; employment and unemployment and Entry 24 deals with welfare of labour including conditions of work, provident funds, employers liability, workmen s compensation, invalidity and old age pensions and maternity benefits. Ostensibly, it may appear that the liability arising from the obligations under the 1985 Act have nothing to do with the subject of vehicle tax. However, the 1985 Act has been enacted with the objects and reasons noted. As a vast number of employees were being engaged in Motor Transport Industry in the State in the private sector, the Government thought it necessary to provide for the constitution of a Fund to promote the welfare of such of the motor transport workers in the private sector who are not covered by the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and the Payment of Gratuity Act, 1972. The activities of motor transport workers are directly linked to the use and operation of the motor transport vehicles having permit issued under the 1988 Act in that regard. Under the said Act, the permit-holder is obliged to ensure that the vehicle tax is paid regularly. The law clearly provides for action to be taken against the motor transport vehicle for failure to pay vehicle tax including to reject renewal of the permit. The stipulation in the 1985 Act is in the nature of ensuring that the vehicle owner/permit-holder discharges both the liabilities and does not commit default in contributing to the welfare fund as also pay vehicle tax on time. Non-payment of vehicle tax may entail in stopping of motor vehicle by the Officers of Police or Motor Vehicles Department in exercise of power under Section 10 of the 1976 Act including to seize and detain the same pending production of proof remittance of tax as predicated in Section 11 of the Act. Additionally, the vehicle owner may have to suffer penalty under Section 16 and face prosecution under Section 17, besides the permit being rendered ineffective if tax is not paid by virtue of Section 15. Considering the scheme of the State legislations, it is incomprehensible to countenance the argument that the two provisions (of 1988 Act on the one hand and of 1976 Act and 1985 Act on the other) are inconsistent in any manner whatsoever. Whereas, the State enactments are complementary and can be given effect to without any disobedience to the Central legislations. The 1988 Act does not cover the field of the manner of levy of vehicle tax and collection thereof. The same is covered by the State legislations. Concededly, the appellants have not disputed their liability to pay the vehicle tax levied under the 1976 Act as well as to pay contribution towards the workers welfare fund under the 1985 Act. So understood, the real grievance in these appeals by the motor transport vehicle owners/permit-holders is about compelling them to pay the welfare contribution dues as a precondition for collection of vehicle tax. We have no hesitation in taking the view that such dispensation cannot be construed as unconstitutional. Further, such a plea cannot be countenanced at the instance of someone who otherwise concedes liability to pay both the dues towards welfare fund contribution and vehicle tax. It is beyond comprehension that the vehicle owner/permit-holder can be heard to argue that he would not pay the dues under the 1985 Act and, yet, would continue with the business of motor transport as usual in the State of Kerala by exploiting the workers on the specious plea that the validity of the permit to operate transport vehicle cannot be interdicted under a State legislation - The liability of the vehicle owner/permit-holder to pay welfare fund contribution as well as to pay vehicle tax arises under the legislation enacted by the State Legislature. As such, there is nothing wrong in State Legislature making it compulsory to pay outstanding welfare fund contribution first before accepting the vehicle tax which had become due and payable. In this view of the matter, it would be unnecessary to dilate on the argument regarding validity of Section 15 of the 1976 Act because of lack of Presidential assent after coming into effect of the 1988 Act. There are no hesitation in concluding that the provisions of the 1976 Act and the 1985 Act, enacted by the State Legislature, are only intended to ensure that the vehicle owner/permit-holder does not remain in arrears of either the welfare fund contribution or the vehicle tax both payable under the State enactments. These provisions are in no way in conflict with the law made by the Parliament (1988 Act). The State enactments do not create any new liability or obligation in relation to the permit issued under the 1988 Act (Central legislation), but it provides for dispensation to ensure timely collection of the welfare fund contribution as well as vehicle tax payable by the same vehicle owner/permit-holder. These appeals must fail and the same are dismissed with costs.

Summary

Issues Involved:
1. Constitutional validity of sub-sections (7) and (8) of Section 4 of the Kerala Motor Vehicles Taxation Act, 1976.
2. Constitutional validity of Section 15 of the Kerala Motor Vehicles Taxation Act, 1976.
3. Constitutional validity of Section 8A of the Kerala Motor Transport Workers' Welfare Fund Act, 1985.
4. Repugnancy between the State Acts and the Central Motor Vehicles Act, 1988.
5. Legislative competence of the State Legislature in enacting the amendments.
6. The effect of the amendments on the effectiveness of transport permits issued under the Central Act.
7. The impact of the amendments on the right to appeal and review under the Welfare Fund Act.

Detailed Analysis:

1. Constitutional Validity of Sub-sections (7) and (8) of Section 4 of the 1976 Act:
The amendments introduced by Act 24 of 2005 require the production of a receipt of remittance of welfare fund contribution before the payment of vehicle tax. The High Court upheld these provisions, stating that they were constitutionally valid. The Supreme Court agreed, noting that the amendments were intended to ensure compliance with both welfare fund contributions and vehicle tax payments. The Court found no repugnancy with the Central Act and emphasized that the amendments did not create new liabilities but ensured the timely collection of existing dues.

2. Constitutional Validity of Section 15 of the 1976 Act:
Section 15 stipulates that the validity of a transport vehicle permit becomes ineffective if the tax is not paid within the prescribed period. The appellants argued that this provision was repugnant to the 1988 Act, which provides for a permit's validity for five years. The High Court dismissed this challenge, and the Supreme Court concurred, stating that the provision was consistent with the scheme of the 1976 Act, which aims to ensure the payment of vehicle tax. The Court emphasized that the provision did not reduce the permit's validity period but ensured compliance with tax payment obligations.

3. Constitutional Validity of Section 8A of the 1985 Act:
Section 8A, introduced by Act 23 of 2005, mandates the production of a receipt of remittance of welfare fund contribution at the time of paying vehicle tax. The High Court upheld this provision, and the Supreme Court agreed, noting that it was a socially beneficial legislation intended to protect motor transport workers. The Court found no conflict with the Central Act and emphasized that the provision aimed to ensure compliance with welfare fund contributions.

4. Repugnancy Between State Acts and the Central Motor Vehicles Act, 1988:
The appellants argued that the State amendments were repugnant to the 1988 Act, which they claimed was a complete code on the subject of motor vehicle permits. The Supreme Court rejected this argument, noting that the 1988 Act did not cover the field of the manner of levy and collection of vehicle tax, which was within the State's legislative competence. The Court emphasized that there was no direct conflict between the State and Central Acts, and both could operate concurrently without disobedience to each other.

5. Legislative Competence of the State Legislature:
The Supreme Court affirmed the State Legislature's competence to enact the amendments under Entries 56 and 57 of List II and Entries 23 and 24 of List III of the Seventh Schedule to the Constitution. The Court noted that the State Acts were intended to ensure the timely collection of welfare fund contributions and vehicle tax, which were within the legislative domain of the State.

6. Effect of Amendments on the Effectiveness of Transport Permits:
The appellants contended that the amendments undermined the effectiveness of permits issued under the 1988 Act. The Supreme Court disagreed, stating that the amendments did not affect the validity of the permits but ensured compliance with tax and welfare fund obligations. The Court emphasized that the provisions were complementary and did not conflict with the Central Act.

7. Impact on Right to Appeal and Review:
The appellants argued that the amendments curtailed their right to appeal and review under the 1985 Act. The High Court addressed this concern by directing that if a review petition or appeal was filed within the prescribed time, a certificate to that effect should be issued, allowing the tax to be paid. The Supreme Court upheld this safeguard, noting that it effectively protected the right to appeal and review.

Conclusion:
The Supreme Court dismissed the appeals, upholding the constitutional validity of the challenged provisions in the State enactments. The Court found no repugnancy with the Central Act and affirmed the legislative competence of the State Legislature. The amendments were deemed necessary to ensure compliance with welfare fund contributions and vehicle tax payments, thereby protecting the interests of motor transport workers and ensuring the smooth operation of transport vehicles in the State.