Civil Appeal No 3031 of 1987
From the Judgment and order dated 971985 of the Karnataka High Court in Writ Petition No 31533 of 1982 12 SS Javali Ravi P Wadhwani MRangaswamy NDB Raju C K 
Sucharita and Mrs CK Sucharita for the Appellant KL Sharma and M Veerappa for the Respondents
The Judgment of the Court was delivered by VENKATARAMIAH J
Aggrieved by the levy of additional tax under section 8 of the Karnataka Motor Vehicles Taxation Act 1957 hereinafter referred to as the Act  in respect of his motor vehicle which he has been running as a stage carriage under a permit issued under the provisions of the  the appellant herein questioned the levy of the said additional tax before the High Court of Karnataka in Writ Petition No 31533 of 1982
That writ petition was dismissed by the High Court following an earlier decision of a Division Bench of that Court in Noorullha Khan vs State of Karnataka Writ Petition No 8302 of 1980 and connected cases decided on 2661985
The appellant has filed this appeal by special leave against the decision of the High Court dismissing his writ petition The facts of the case are briefly these
The appellant is the registered owner of the motor vehicle which he has been running as a stage carriage under a permit issued by the Regional Transport Authority under the provisions of the 
He is liable to pay tax in respect of the said motor vehicle under section 3 of the Act which provides that a tax at the rates specified in Part A of the Schedule to the Act shall be levied on all motor vehicles suitable for use or roads
Item 4 in Part A of the Schedule to the Act as it stood in the year 1985 which related to the levy of tax on motor vehicles which were used as stage carriages reads thus Class of vehicles Quarterly tax for vehicle fitted with pneumatic tyres ____________________________________________________________ 1 2 ____________________________________________________________ 4
Motor Vehicles other than those mentioned in items 5 6 and 7 plying for hire and used for transport of passengers and in respect of which permits have been issued under the  13 i Vehicles permitted to carry in all Rs p a not more than three persons 4000 other than the driver b Four persons other than 7500 the driver c Five persons other than 9000 the driver d Six persons other than the driver 20000 ii1 Vehicles permitted to carry more than six persons and plying exclusively on routes within the limits of cities and towns notified by the Government and other vehicles not falling under 2 below a For every seated passenger 13000 other than the driver and the conductor which the vehicle is permitted to carry
b For every passenger other than 4500 the seated passenger the driver and the conductor which the vehicle is permitted to carry
2 Vehicles permitted to carry more than six persons and the total mileage of which exceeds 100 kilometers per day a For every seated passenger 16000 other than the driver and the conductor which the vehicle is permitted to carry
b For every passenger other than 4500 the seated passenger the driver and the conductor which the vehicle is permitted to carry
 14 Item 5 of part A of the Schedule to the Act as it stood during the relevant time
referred to the tax payable by motor vehicles which were used as contract carriages under permits issued under the 
Item 6 of part A of the Schedule to the Act has been repealed
Item 7 of Part A of the Schedule to the Act as it stood during the relevant period dealt with the tax payable in respect of omnibuses It read thus ____________________________________________________________ Class of Vehicles Quarterly tax for vehicles fitted with pneumatic tyres ____________________________________________________________ 1 2 ____________________________________________________________ 7
Omnibuses Rs p a permitted to carry not more than 10 5000 persons excluding the driver for every person which the vehicle is permitted to carry b permitted to carry 11 persons or 10000 more excluding the driver for every person which the vehicle is permitted to carry
The appellant was liable to pay at the time when he filed the writ petition Rs16000 per quarter for every seated passenger other than the driver and the conductor which the vehicle was permitted to carry and Rs45 per quarter for every passengers other than the seated passengers the driver and the conductor which the vehicle WAS permitted to carry
Section 8 of the Act which provides for payment of additional tax in respect of motor vehicles reads thus 8
Payment of additional tax When any motor vehicle in respect of which a tax has been paid is altered or proposed to be used in a such a manner as to cause vehicle to become a vehicle in respect of which a higher rate of tax is payable the registered owner or person who is in possession or control of such vehicle shall pay an additional tax or a sum which is equal to the difference between the tax already paid and the tax which is payable in respect of 15 such vehicle for the period for which the higher rate of tax is payable in consequence of its being altered or so proposed to be used and taxation authority shall not grant a fresh taxation card in respect of such vehicle so altered or proposed to be so used until such amount of tax has been paid
It appears that on some stray occasions prior to the institution of the writ petition it had been found that in the motor vehicle which the appellant was operating as a stage carriage there were few passengers in excess of the number of passengers which he was allowed to carry under the permit issued to him under the in respect of the said motor vehicle
The taxation authority under the Act therefore issued a demand for payment of additional tax under the provisions of section 8 of the Act on the ground that the appellant had proposed to use the motor vehicle in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax was payable following the decision of the High Court in Noorullha Khan s case supra
Aggrieved by the said demand he filed the writ petition
As mentioned above that petition having been dismissed this appeal by special leave has been filed
Since the judgment of the High Court under appeal is based on the decision in Noorullha Khan s case supra it is necessary to set out briefly the facts in that case
Noorullha Khan who was the petitioner in that case was the registered owner of a motor vehicle classified as an omnibus  with a seating capacity of 15 1 under the provisions of the and was subjected to tax on that basis under item 7b of Part A of the Schedule to the Act
He was liable to pay at the rate of Rs 100 per seat per quarter under the said provision
He was however called upon by the taxation authority to pay an additional sum by way of tax on two different occasions calculating the tax on the basis of the number of passengers carried in the vehicle on those two occasions
He challenged the said demands before the Deputy Commissioner for Transport in appeal
That appeal having been dismissed he filed Writ Petition No 8302 of 1980 referred to above on the file of the High Court
The High Court took the view that the petition in that writ petition having used the vehicle on two occasions for carrying passengers in excess of the number of passengers which he was allowed to carry under the permit he had become liable to pay additional tax for the proposed user  of the motor vehicle in a manner different from the manner in which he was permitted to run it
In support of its decision the High Court 16 relied strongly on the decision in Payne vs Allcock 119321 2 K B 413 in which the conviction of the owner of a motor vehicle in respect of which he had obtained a licence to use it as a private motor car for having used it for the conveyance of goods had been upheld
The is a central act which was enacted pursuant to Entry 20 of List III of the Seventh Schedule to the Government of India Act 1935 corresponding to Entry 35 of List III of the Seventh Schedule to the Constitution of India
The Act under which a tax is leviable on motor vehicles has been enacted by the Karnataka State Legislature in exercise of its powers under Entry 57 of List II of the Seventh Schedule to the Constitution of India
Thus the scope of the Act and the scope of the are entirely different Section 42 of the provides that no owner of a transport vehicle shall use or permit the use of the vehicle in any public place whether or not such vehicle is actually carrying any passenger or goods save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or the Commission authorities the use of the vehicle in that place in the manner in which the vehicle is being used
The expression permit  is defined under section 220 of the as a document issued by the Commission or a State or Regional Transport Authority authorizing the use of a transport vehicle as a contract carriage or stage carriage or authorizing the owner as a private carrier or public carrier to use such vehicle
Section 229 of the defines the expression stage carriage  as a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers either for the whole journey or for stages of the journey
Section 2j of the Act provides that the words and expressions used but not defined in the Act shall have the meanings assigned to them in the 
Section 483vi of the provides that the Regional Transport Authority if it decides to grant a stage carriage permit may grant the permit specifying the maximum number of passengers that may be carried in the motor vehicle in respect of which the stage carriage permit is issued
Section 60 of the empowers the Regional Transport Authority to cancel or suspend a permit for such period as it thinks fit on the breach of any of the conditions attached to the permit
Thus a person who has obtained a stage carriage permit exposes himself to the cancellation of the permit itself under section 60 of the Act if he carries passengers in excess of the 17 maximum number of passengers that he is permitted to carry under the permit
Under clause 2 of item 4 of Part A of the Schedule to the Act the owner of a vehicle used as a stage carriage the total mileage of which exceeded 100 kilometers per day had to pay for every quarter during the relevant time Rs160 for every seated passenger other than the driver and the conductor and Rs45 for every passenger other than the seated passenger the driver and the conductor which the vehicle was permitted to carry
According to the above provision if the owner of a motor vehicle which is used as a stage carriage who is permitted to carry say 45 person including the driver and the conductor of whom 40 are seated passengers and 3 are standing passengers he has to pay Rs6535 for every quarter
The question is whether he is liable to pay and additional tax under section 8 of the Act if he carries on any occasion any passengers in excess of the number of passengers he is permitted to carry Let us assume that the registered owner of the motor vehicle in the above case has carried on one occasion in a given quarter 47 passengers inclusive of the driver and the conductor and on another occasion in the same quarter 50 passengers inclusive of the driver and the conductor
In this illustration the question which arises for consideration is whether the registered owner is liable to pay Rs6535 for that quarter or Rs6535 plus the additional tax in respect of two more passengers or Rs6535 plus the additional tax for five more passengers during that quarter
Section 8 of the Act PROVIDES that when any motor vehicle in respect of which a tax has been paid is altered or proposed to be used in such a manner as to cause vehicle to become a vehicle in respect of which a higher rate of tax is payable the registered owner or person who is in possession or control of such vehicle shall pay an additional tax of a sum which is equal to the difference between the tax already paid and the tax which is payable in respect of such vehicle for the period for which the higher rate of tax is payable in consequence of its being altered or so proposed to be used and the taxation authority shall not grant a fresh taxation card in respect of such vehicle so altered or proposed to be used until such amount of tax has been paid
The crucial words in section 8 of the Act are when any motor vehicle   is altered or proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable 
The payment of additional tax arises therefore only on two occasions i when the motor vehicle is altered in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable or 2 when any motor vehi 18 cle is proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable
Admittedly the vehicle in question has not been altered The question which remains to be considered is whether in the given case the vehicle is proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable
The vehicle in question has been used only as a stage carriage even when two or five extra passengers have been carried
There is no other provision in Part A of the Schedule to the Act which requires a higher rate of tax to be paid in respect of a vehicle which is being used as a stage carriage on the basis of a larger number of passengers that are carried in it
In order to bring the case within the scope of section 8 of the Act it must be first shown that there is a provision in the Act which makes a stage carriage vehicle which carries a larger number of passengers than what is permitted under the permit issued in respect of it is subject to a higher rate of tax
The highest rate of tax in respect of a stage carriage that can be levied under the Act is incorporated in clause 2 of item 4
Sub clause a of clause 2 of item 4 of the Schedule to the Act provides that for every seated passengers other than the driver and the conductor which the vehicle is permitted to carry the registered owner is liable to pay Rs160 and for every passenger other than the seated passenger the driver and the conductor which the vehicle is permitted to carry has to pay Rs45 per passenger per quarter
In both the sub clauses the liability of the registered owner is governed by the number of passengers that he is permitted to carry under the permit issued in his favour under the and thus his liability is limited by the condition incorporated in the permit
It would have been possible to levy higher tax on the appellant p only if the words which the vehicle is permitted to carry  in item 42 of Part A to the Schedule to the Act had been omitted The Court cannot ignore those words while construing the said item since it relates to the levy of a tax
Moreover the provision in section 8 is specific
It says that the additional tax shall be equal to the difference between the tax already paid and the tax which is payable in respect of such vehicle for the period for which the higher rate of tax is payable is consequence of its being altered or so proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable
There is another difficulty in applying section 8 to stray cases of overloading
Additional tax is payable for the period during which the 19 vehicle is proposed to be used for a purpose which will attract a higher rate of tax
The rate of tax is fixed taking one quarter ie 3 months as a unit of time for taxation
Is it reasonably possible to determine the higher rate of tax payable if say on two days in a quarter there has been overloading of the vehicle for a few hours or minutes The problem of computation of additional tax becomes difficult in such cases There is another important circumstance which persuades us to disagree with the construction placed by the High Court on the relevant provision of taxation in the Act
The rate of taxation in this case is not based on the number of passengers actually carried during any period in a motor vehicle used as a stage carriage but it is related to the number of passengers which the motor vehicle is permitted to carry under the permit
If the number of the passengers carried during any period is less than what is permitted the registered owner of the motor vehicle does not get any rebate He has to pay the tax at the rate determined by the number of maximum passengers mentioned in the permit even when the stage carriage is run without any passengers
When that is the position there appears to be no justification to hold that the registered owner or whoever is liable to pay the tax should be made to pay the additional tax merely because on some stray occasions the motor vehicle is found to have carried a few more passengers than the number permitted under the permit since the tax is not levied on the basis of the number of passengers actually carried
The decision in Payne vs Allock supra is clearly distinguishable from the present case
In that case the appellant had paid the duty under para 6 of the Schedule II to the Finance Act 1922 which was a residuary clause under which he had to pay 16 for taking out the licence for using his motor vehicle as a private motor car
But he was found to be using the vehicle for the purpose of carrying goods for a fairly long period which brought the vehicle under the 5th para of that schedule which levied a higher rate of tax
In the case before us as we have already pointed out the vehicle could not be subjected to a higher rate of tax under any other item in Part A to the Schedule to the Act The argument urged on behalf of the State Government that the liability of the registered owner to pay tax in respect of a stage carriage depends upon the number of passengers carried in a vehicle on a given date does not appeal to us because in that event the words 20 which the vehicle is permitted to carry in item 42 become meaningless and ineffective
The High Court in Noorullha Khan s case supra overlooked the presence of the words which the vehicle is permitted to carry  which are found in clause b of item 7 of the Act also
It is no doubt true that it is not in the public interest that a registered owner of a motor vehicle should be allowed to carry more passengers than the maximum number of passengers that he is allowed to carry under his permit and such a tendency on the part of any registered owner should be checked That fact however cannot be relied upon for the purpose of construing the items in Part A of the Schedule to the Act liberally and in favour of the State Government
It is needless to say that a law which imposes a tax should be construed strictly
If the action on the part of the registered owner is contrary to the provisions of the there is sufficient provision in that Act to take appropriate action against him and either to cancel the permit or to suspend it
In the instant case we feel that when a registered owner of a motor vehicle which is permitted to be used as a stage carriage cannot be asked to pay additional tax under section 8 of the Act merely because he has carried on some occasions more passengers than the maximum number of passengers that he is permitted to carry under the permit
The tax which he is liable to pay is limited by the maximum number of passengers he is entitled to carry under the permit
We therefore do not agree with the decision of the High Court in Noorullha Khan s case supra
We overrule it The judgment of the High Court against which this appeal is filed is liable to be set aside
It is accordingly set aside
The respondents are directed not to levy additional tax on the appellant under section 8 of the Act for carrying more passengers than what he was permitted to carry on some occasions during the period in question
But we however impress upon the authorities the need to enforce the provision in section 60 of the strictly
The appeal is accordingly allowed
No costs SL Appeal allowed


Summary:
 In a batch of Writ Petitions filed in this Court the petitioners challenged the imposition of sales tax and surcharge on bread rusk and bun under the AP Sales Tax Act 1957 as illegal contending that bread and biscuits belonged to one homogeneous class but had been treated differently for purposes of taxation under Schedule 1 Item No 117 and Item No 129 of the Act that the purchasers and sellers of bread and biscuits had been differently taxed and that the multiple point tax violated Article 191g of the Constitution
Dismissing the writ petitions  HELD The economic wisdom of a tax or lack of it are within the exclusive domain of the legislature
The only question for the Court to consider is whether there is rationality in that behalf of the legislature that capacity to pay the tax increased by and large with the increase of receipts
From any point of view there is rationality in this proposition
It is sound commonsense and is in consonance with social justice
Therefore the challenge to the imposition under Article 14 as well as Article 191g of the Constitution is not sustainable
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