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2023 (8) TMI 110 - HC - VAT and Sales TaxAward of tender/auction for toll collection for lorry entry - forbearing the respondents from collecting any fee/toll charges for the lorries - It is the contention of the petitioner that the first respondent has no right to collect toll from the vehicles entering into the petitioner's premises - HELD THAT - On perusal of the Section 249 of the Coimbatore City Municipal Corporation Act, this Court is of the view that the above Section gives right to recover the expenses caused by extraordinary traffic in the Civil Court by proving the same. Except that, it does not permit to levy tax. Admittedly, there is no material whatsoever available on record so as to substantiate the submission of the first respondent to show that only because of the lorries entering into the petitioner's warehouse the roads suffered damages and to meet out that expenses recovery has to be made. In JINDAL STAINLESS LTD. AND ANOTHER VERSUS STATE OF HARYANA AND OTHERS 2006 (4) TMI 120 - SUPREME COURT the Hon'ble Apex Court has held that the compensatory tax is a charge for offering trade facilities and they are based on the principle of equivalence. Thus, as in the auction notice the amount has been fixed as Rs. 30,000/- and the same would not commensurate to the expected expenses as alleged in the counter. Such view of the matter, this Court is of the view that the action of the first respondent Corporation to collect toll only from the lorries entering the petitioner's premises is nothing but discriminatory and cannot be said to be compensatory in nature. The writ petition is allowed.
Issues Involved:
1. Legality of the toll collection by the first respondent. 2. Discrimination in the toll collection process. 3. Compensatory nature of the toll. 4. Petitioner's locus standi to file the writ petition. Issue-wise Detailed Analysis: 1. Legality of the Toll Collection by the First Respondent: The petitioner challenged the proceedings of the first respondent regarding the tender/auction for toll collection for lorry entry at Central Warehouse, Chitlapakkam, Chennai. The petitioner argued that the first respondent had no right to collect toll from vehicles entering the petitioner's premises and that the imposition of such entry tax was unjust and unreasonable. The first respondent countered that toll collection had been ongoing for over 30 years, supported by records from the Chitlapakkam Town Panchayat dating back to 1989. The respondent justified the toll as a compensatory measure for road repairs necessitated by heavy traffic due to the petitioner's operations. 2. Discrimination in the Toll Collection Process: The petitioner contended that the toll collection was discriminatory as it targeted only vehicles entering their premises, despite the General Council's resolution indicating a broader scope for the entire Chitlapakkam area. The court noted that the agenda for the Council meeting suggested a general levy for the Chitlapakkam area, but the tender was specifically for vehicles entering the petitioner's warehouse. This selective application was deemed discriminatory. The court emphasized that the toll collection should not be limited to the petitioner's premises alone if it was genuinely compensatory. 3. Compensatory Nature of the Toll: The first respondent argued that the toll was compensatory, intended to cover the costs of frequent road repairs due to heavy traffic from the petitioner's warehouse. The court referenced several judgments, including ITC Limited Vs. State of Tamil Nadu and State of Karnataka Vs. Hansa Corporation, which clarified that compensatory taxes must be commensurate with the services rendered. The court found that the toll amount of Rs. 30,000/- did not align with the alleged repair expenses, indicating that the toll was not genuinely compensatory. The court stressed that compensatory taxes should not exceed the cost of the facilities provided and should not be used to augment general revenue. 4. Petitioner's Locus Standi to File the Writ Petition: The first respondent claimed that the petitioner had no locus standi as they were not directly paying the toll; it was the vehicle owners who bore the cost. However, the court recognized the petitioner as an aggrieved party, noting that the toll collection could discourage traders from using the petitioner's warehouse, thereby causing prejudice. The court affirmed that the petitioner, being a Central Warehousing Corporation, had the standing to challenge the toll collection. Conclusion: The court concluded that the toll collection by the first respondent was discriminatory and not compensatory in nature. The impugned order was set aside, and the writ petition was allowed. The court emphasized that the toll should be applied uniformly if it is to be considered compensatory and should not target specific entities unfairly.
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