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TMI Blog1983 (4) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated March 19, 1981 issued by the Government of the State of Punjab under section 3(1) of the Act. The petitioners are owners of motor vehicles and are carrying on the business of running stage carriages in the State of Punjab. While the operation of the stage carriage services run by the petitioners is controlled by the provisions of the Motor Vehicles Act, 1939, which is a Central Act, they are liable to pay taxes on the motor vehicles owned by them under the Act. The Act is a pre- Constitutional one. After the Constitution came into force, the power to levy taxes on goods and passengers carried by road or on Inland waterways and the power to levy 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 of the Seventh Schedule to the Constitution are assigned to the States respectively by Entries 56 and 57 of List II of the Seventh Schedule to the Constitution. While the Act is traceable to Entry 57, the Punjab Passengers and Goods Taxation Act, 1952 is enacted by the State Legislature in exercise of its legislative power granted under Entry 56. Before the commencement of the Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981, section 3(1) of the Act reads thus: "3. (1) A tax shall be leviable on every motor vehicle in equal instalments for quarterly periods commencing on the first day of April, First day of July, first day of October and the First day of January at such rates not exceeding ₹ 35,009 per vehicle for a period of one year, as the State Government may by notification direct." Pursuant to the above section, as amended in 1981, and the newly inserted section 3-A of the Act which conferred power on it to raise the rates of tax under the Act with effect from October 1, 1980, the State Government issued the following Notification on March 19, 1981: "DEPARTMENT OF TRANSPORT NOTlFICATION The 19th March, 1981 No. S.O. 15/P.A. 4/24/S 3/Amd/81-In exercise of the powers conferred by sub-section (1) of section 3 read with section 3-A of the Punjab Motor Vehicles Taxation Act, 1924 (Punjab Act No. 4 1924) and all other powers enabling him in this behalf, the Governor of Punjab is pleased to make the following amendment in the schedule appended to the Punjab Government, Transport Department Notification no. S.O./50/P.A 4/24/S. 3/71 dated 10th November, 1971 with effect from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government has justified the impugned levy in the counter affidavit filed in the case, the deponent of which is a Joint Secretary . to the Government of Punjab, Transport Department. It is contended by the State Government inter alia that the plea of the petitioners that the revenue raised by the impugned Notification 'must be used only for the purpose of providing facilities pertaining to roads and bridges and or facilities connected with the transportation of goods and passengers' was misconceived having regard to the various other responsibilities of the State Government which it has to bear in connection with road transports and if the expenditure incurred on all items of relevant expenditure is taken into consideration, it would become clear that the levy in question is not excessive. It is urged that the levy is compensatory in character and is, therefore, not hit by Article 301 or Article 304 (b) of the Constitution. The State Government has also furnished certain figures relating to the expenditure incurred by it to show that the levy is neither arbitrary nor violative of Article 19 (1) (g) of the Constitution. We shall now proceed to examine the relevant cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is meant is that the said restrictions can be imposed by the State Legislatures only after satisfying the requirements of Art. 304 (b). It is not as if no restrictions at all can be imposed on the free movement of trade." The same question arose later on very sharply in The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan and Ors.(1) before a bench of seven learned Judges of this Court in which the correctness of the decision in the case of Atiabari Tea Co. Ltd. (supra) was questioned. In this case, the effect of Articles 301 to 304 of the Constitution on the power of the State Legislature to levy tax under Entry 57 of List II of the Seventh schedule to the Constitution arose for determination. There were three judgments in that case. The judgment of Das, Kapur and Sarkar, JJ. was delivered by Das, J. with whom Subba Rao, J. agreed in his concurring judgment. The minority judgment of Hidayatullah, Rajagopala Ayyangar and Mudholkar, JJ. was delivered by Hidayatullah, J. In that case, the contention of the appellant was that the tax levied under section 4 of the Rajasthan Motor Vehicles Taxation Act, 1951 read with its Schedules constituted a direct and immediat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Parliament may by law impose restrictions on such freedom in the public interest; and the said law can be made by virtue of any entry with respect where of Parliament has power to make a law. (4) The State also, in exercise of its legislative power, may impose similar restrictions, subject to the two conditions laid down in Art. 304(b) and subject to the proviso mentioned therein. (5) Neither Parliament nor the State Legislature can make a law giving preference to one State over another or making discrimination between one State and another, by virtue of any entry in the Lists, infringing the said freedom. (6) This ban is lifted in the case of Parliament for the purpose of dealing with situations arising out of scarcity of goods in any part of the territory of India and also in the case of a State under Art. 304(b), subject to the conditions mentioned therein. And (7) the State can impose a non-discriminatory tax on goods imported from other States or the Union territory to which similar goods manufactured or produced in that State are subject." It is not necessary to refer here to the views expressed in the minority judgment. The gist of the majority decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred in providing them are borne by the State out of whatever source it may be We were addressed at some length on the distinction between a tax, a fee and excise duty. It was also pointed out to us that the taxes raised under the Act were not specially ear-marked for the building or maintenance of roads. We do not think that these considerations necessarily determine whether the taxes arc compensatory taxes are not. We must consider the substance of the matter." The same principle is followed and reiterated in G. K Krishnan etc. etc. v The State of Tamil Nadu & Anr. etc.(1) and in International Tourist Corporation etc. etc. v. State of Haryana & Ors.(2) It is undeniable that there have been vast changes in the road systems of all the States in India during recent years and the State of Punjab is no exception. The roads themselves have very greatly increased in extent. There is also a like increase in road traffic. The number of motor vehicles, both passengers vehicles and goods vehicles which use the road has gone up. The cost of maintenance of roads has gone up correspondingly. The spiralling inflation has added to the mounting costs. Naturally the rates of taxes on m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered and the cost so incurred because such exact correlation is in the very nature of things impossible to attain. There may be in some cases a little excess recovery by way of taxes. That by itself should not result in the nullification of the law imposing the tax if the extent of such excess is marginal having regard to the total cost involved. The petioners have relied on certain figures furnished in the budget estimates for the year 1981-82 in support of their case that the State of Punjab was raising in all ₹ 49,31,00,000 from taxes on motor vehicles levied under the Act and taxes on passengers and goods levied under the Punjab Passengers and Goods Taxation Act, 1952 while the State was spending only ₹ 34,03,00,000 on roads and bridges. It is apparent that the amount of expenditure referred to above does not include the expenditure incurred by the State Government on other heads connected with road transport such as the Directorate of Transport, the transport authorities, provision of bus stands, lighting, traffic police, cost of maintenance of roads within the jurisdiction of local bodies such as Corporations, Municipalities and Gram Panchayats which are recipien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the previous year or years would have to be added to the expenditure on roads and bridges during the year in question. The arithmetical result in the case before us cannot, therefore, be much different. It may also be stated that a comparison between the total revenue from taxation on motor vehicles and the expenditure incurred on providing facilities such as roads and bridges etc. in a single year may sometimes present a distorted picture. The figures furnished by the State Government in respect of nine years i.e. 1973-74 to 1981-82 (both inclusive) show that the total receipts from the taxes levied under the Act and the taxes levied under the Punjab Passengers and Goods Taxation Act, 1952 is in the order of ₹ 2,52,26,83,000 and the total expenditure during the same period on roads and bridges alone is ₹ 2,35,66,89,000. The other relevant items of expenditure incurred in connection with road traffic are not included in the above expenditure. If they are included, the total expenditure is likely to be more than the receipts. In Kewal Krishan Puri & Anr. v. State of Punjab & Ors.(1) where the question of a fee was involved, this Court said that if at least a good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odern legislature to utilise the measures of taxation introduced by it for the purpose of achieving maximum social goods and one has to trust the wisdom of the legislature in this regard. Unless the fiscal law in question is manifestly discriminatory the Court should refrain from striking it down on the grounds of discrimination. These are some of the broad principles laid down by this Court in several of its decisions and it is unnecessary to burden this judgment with citations. Applying these principles it is seen that stage carriages which travel on an average about 260 kilometers every day on a specified route or routes with an almost assured quantum of traffic which invariably is over crowded belong to a class distinct and separate from public carriers which carry goods on undefined routes. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. The amount of wear and tear caused to the roads by any class of motor vehicles may not always be a determining factor in classifying motor vehicles for purposes of taxation. The reasons given by this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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