2024 (7) TMI 536 - SC - Indian Laws

Legality of different State Governments levying and collecting Authorization Fee/Border Tax in violation of All India Tourist Vehicles (Permit) Rules, 2023 - HELD THAT - The State enactments, rules and regulations being not under challenge, it cannot be said that the demand of Border Tax/Authorization Fee at the borders by the respective State Governments is bad under law. The petitioners, in order to succeed, have to consider challenging the State provision contained in the Act. There is another reason why we are not entertaining the matters on merit is that the petitioners ought to have first approached their jurisdictional High Courts to challenge their respective State enactments. These petitions are disposed off without interfering with the demands being raised by the State Governments while giving liberty to the petitioners to approach the jurisdictional High Courts for their reliefs. It is made clear that we have neither entered into the merits of the matter nor examined the same.

Issues Involved:
Challenging the legality of State Governments levying Authorization Fee/Border Tax in violation of All India Tourist Vehicles (Permit) Rules, 2023.

Detailed Analysis:

1. Petitions Filed by Transporters and Tour Operators:
The batch of 117 petitions includes four contempt petitions filed by transporters and tour operators under Article 32 of the Constitution of India. The petitions challenge the legality of different State Governments levying and collecting Authorization Fee/Border Tax in violation of the All India Tourist Vehicles (Permit) Rules, 2023. The relief claimed in all petitions is regarding the levy and collection of Border Tax/Authorization Fee.

2. Challenge to Rules and Motor Vehicles Act:
Some petitions challenge the All-India Tourists Vehicles (Authorisation of Permit) Rules, 2021, and certain provisions of the Motor Vehicles Act, 1988. However, these challenges were made before the Rules, 2023 came into effect. Consequently, the reliefs sought have been amended to seek compliance with the provisions of the Rules, 2023. Additionally, some petitioners have requested refunds of Border Tax/Authorization Fee already collected by State Authorities.

3. Multiple States Implicated:
Initially, the State of Tamil Nadu was accused of collecting Border Tax/Authorization Fee. Subsequently, several other States were also reported to be collecting similar fees despite vehicles having already paid the necessary taxes/fees under the Rules, 2023. Consequently, notices were issued to these other States as well.

4. Purpose of Rules, 2023:
The Rules, 2023 replaced the All-India Tourists Vehicles (Authorization/Permit) Rules, 2021. The new rules aimed to eliminate the power of State Governments to levy/collect Border Tax/Authorization Fee from vehicles with All India Tourists Permit at border check posts. The objectives were to facilitate seamless movement of tourist vehicles across States and ensure revenue generated by the Centre is shared proportionately with State Governments without reducing their previous revenue.

5. Grounds of Challenge:
Transporters faced difficulties and alleged harassment at State borders where they were asked to pay Border Tax/Authorization Fee again. The challenge against this demand was based on grounds such as double taxation, lack of legal authority for the levy, violation of Rules, 2023 framed under the Constitution, and other legal arguments.

6. Interim Relief and State Responses:
Notices were issued to States, and interim relief was granted restraining them from further collection of Border Tax/Authorization Fee. States defended their actions, claiming the demands were made under rules framed under specific provisions of the Constitution and were lawful. They argued that petitioners should have approached High Courts under Article 226 of the Constitution instead of directly approaching the Supreme Court.

7. Disposition of Petitions:
The Court refrained from delving into the merits of the matter at that stage. The fundamental question was whether State taxes were covered by Acts and Rules framed under specific provisions of the Constitution. Since State enactments were not challenged, the demands for Border Tax/Authorization Fee were not deemed unlawful. The Court disposed of the petitions, allowing petitioners to approach High Courts for relief. The Court did not examine the merits of the case or the tax already collected, leaving it subject to the outcome of future High Court petitions.

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