ivil Appeal Nos
204 226 of 1978
Appeals by Special Leave from the order dated 29 11 1977 of the Commissioner Pune Division Pune in Passenger Tax Appeals Nos
POI 156 AR 12 24 27 32 42 SO and 17 other appeals
F section Nariman Ravinder Narain and K J John for the Appellant
V section Desai M C Bhandare In CA 20978 and M N Shroff for the Respondents
Ravinder Narain and K J
John for the Interveners Sandvik Asia Ltd section K F Cooper Engineering Ltd Bharat Forge Ltd and Bajaj Auto Ltd The Judgment of the Court was delivered by FAZAL ALI J
These appeals by special leave arc directed against an order of the Commissioner of Pune dated 29 11 1977 dismissing the appeals and holding that the challenge to the tax sought to be realised by the Revenue was not tenable and the appellants were liable to pay the tax as also the penalty
The appellants are a company registered under the Companies Act 1913 and have their factories at Pimpri and Chinchvad in the District of Pune Maharashtra
The appellants employ as many as 7000 workmen in those factories
In order to provide transport 359 facilities to their employees to come to the factories from their respective villages the appellants provided transport which would pick up passengers from Pune or Khed or Vadgaon or Alandi or places enroute to TELCO Factory at Pimpri or Chinchvad and back
For this journey a nominal charge of Rs 10 per month was realised by the appellants from the employees
Similarly for the transport facilities provided to the employees from Pimpri Railway Crossing and onwards to TELCO factory they were charged at the rate of Rs 5 per month
A charge of Rs 2 per month was levied for the transport of employees from Chinchvad Village to TELCo factory at Pimpri and back
the appellants further averred that these amounts were realised by the appellants only from a particular category of employees and no charges were levied in respect of those employees who were in the supervisory grades
In the course of the arguments it was pointed out that when the company was prepared to grant free transport facilities to the supervisory staff there was no reason why the same amenities should not be extended to the other employees and Mr Nariman learned counsel for the appellants frankly conceded that in future no charges would be realised from the employees and they would he provided free transport as in the case of supervisory staff
It is manifest that if the appellants had not levied any charge at all for the transport facilities granted to the employees they would not be exigible to passenger tax
Mr Nariman however argued that even if a nominal charge is realised from the employees that would not make the transport a public service vehicle carrying passenger so as to attract the provisions of section 3 which is the charging section of the Act
In our opinion the contention of the learned counsel is well founded and must prevail
The Bombay Motor Vehicles Taxation on Passengers Act 1958 hereinafter called the Act is a statute which authorises the levy of passenger tax
This Act has been amended several times right from the year 1960 to 1975
Before analysing the relevant provisions of the Act it may be necessary to extract the Preamble to the Act which runs thus 
Whereas it is expedient lo provide for the levy of a tax on passengers carried in certain classes of public service
vehicles in the State of Bombay
It is hereby enacted in the Ninth Year of the Republic of India as follows
 A perusal of the Preamble clearly reveals that the dominant object of the Act was to impose tax on certain classes of public service vehicles
In other words the Preamble indicates that vehicles which could not be termed as public service vehicles fell beyond the ambit of the taxing provisions of the Act
360 Section 27 of the Act defines stage carriage  thus  stage carriage  means 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 and includes such a carriage or other omnibus when used as a contract carriage within the meaning of the 
Section 3 which is the charging section runs thus 3
1 There shall be levied and paid to the State Government a tax on all passengers carried by road in stage carriages at such rate to be filed by the State Government from time to time by order in the official Gazette as would yield an amount not exceeding twenty per cent of the inclusive amount of fares payable to the operator of a stage carriage
2 After calculating the total amount of tax payable under sub section 1 out of the total amount received by an operator during each month on account of inclusive fares in respect of the stage carriage or stage carriages held by him the total amount of the tax shall wherever necessary be rounded off to the nearest naya paisa fractions of half a naya paisa and over being counted as one and less than half being disregarded
Thus section 3 authorises the levy of tax on all passengers carriages by road in stage carriages
This section contains two essential ingredients 1 that the transport concerned must carry passengers by road and 2 that such passengers must be carried in stage carriages
that is to say as defined in section 27 of the Act passengers must be carried for hire or reward at separate fares paid by or for individual passengers either for the whole journey or for stages of the journey
Rule 2i of the Bombay Motor Vehicle Rules 1940 framed under the Bombay defines passenger  thus  passenger  for the purposes of the rules in Chapter IV means any person travelling in a public service vehicle other than the driver or the conductor or an employee of the permit holder while on duty
361 A combined reading therefore of rule 2i and section 27 of the Act clearly indicates that the tax would be leviable only if the passengers are carried on a public service vehicle
It is true that the term public service vehicle  has not been defined either by the Act or by the Rules but that however does not create any difficulty because having regard to the Preamble of the Act we are of the opinion that the tax can be levied only on passengers who are carried by a stage carriage which is of the nature of a public service vehicle
The word public  has got a well known connotation and means a carriage to which any member of the public can have free access on payment of the usual charges
It cannot by any process of reasoning or stretch of imagination be deemed to include employees of a private company who are given facilities not as members of the public but as holding a special status namely the employees of that company
Thus qua public the employees form a separate class and cannot be said to be public as contemplated by rule 2i
On the other hand the Bombay Motor Vehicles Rules 1959 define private service vehicles  as follows Private Service Vehicle  means any omnibus constructed or adapted to carry more than nine persons excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying persons for or in connection with his trade or business or otherwise than for hire or reward but does not include a motor vehicle used solely for Police purposes
The transport service in the present case which was registered as private service vehicle falls squarely within the ambit of the aforesaid definition Moreover in the instant case it is not disputed that the transport provided to the employees of the company was reserved for them only and no other member of the public even if he wanted to pay full charges could be carried on the said vehicle
In these circumstances therefore it cannot be said that the transport vehicle provided to the employees by the appellants could be a public service vehicle in any sense of the term
Mr Nariman drew our attention to a number of rules and forms in order to illustrate his point that private service vehicle was beyond the ambit of the charging section
In view of what we have already said it is not necessary for us to go into such meticulous details because the legal position appears to be clear enough
As counsel for the appellants has already undertaken not to charge any amount from the employees for providing transport facilities the point has now become more or less academic
The Commissioner appears to have dismissed the appeals of the appellants 5 978 SCI78 362 as he felt bound by the judgment of the Bombay High Court which had held that the transport vehicle provided to the employees by the company would be a public service vehicle
In view of our finding that such a transport vehicle is not a public service vehicle within the meaning of the provisions of the Bombay  the view taken by the Bombay High Court is clearly erroneous and must be overruled
For these reasons therefore the appeals are allowed and the order of the Commissioner imposing the tax is set aside
The appellants would he entitled to one set of costs
SR Appeals allowed


Summary:
The appellants are a Company registered under the Companies Act 1913 and provide transport facilities to their employees at a nominal rate from certain pick up places to their factories at Pimpri and Chinchvad in district Pune Maharashtra in their transport vehicle registered as private service vehicle within the meaning of the Bombay Motor Vehicles Rules 1959
The Bombay High Court held that the transport vehicle provided to the employees by the company would be a public service vehicle and therefore the respondents sought to levy a tax on passengers under the charging section 3 of the Bombay Motor Vehicles Taxation on Passengers Act 1958
A challenge to the said levy having been rejected by the Commissioner of Pune the appellant obtained special leave of this Court
Allowing the appeals the Court  HELD 1
The preamble to the Bombay Motor Vehicles Taxation on Passengers Act 1958 clearly reveals that the dominant object of the Act was to impose tax on certain classes of public service vehicles
In other words the Preamble indicates that vehicles which could not be termed as public service vehicles fell beyond the ambit of the taxing provisions of the Act
359 G H 2
Though the Act and Rules made thereunder do not define the term public service vehicle it is clear that from the Preamble of the Act that the tax can be levied only on passengers who are carried by a stage carriage which is of the nature of Public Service Vehicle
361A B 3
Section 3 of the Act which authorises the levy of tax on all passengers carried by road in state carriages contains two essential ingredients 1 that the transport concerned must carry passengers by road and 2 that each passengers must be carried in stage carriages that is to say as defined in Section 27 of the Act passengers must be carried for hire or reward at separate fares paid by or for individual passengers either for the whole journey or for stages of the journey
360F G 4
A combined reading of section 7 1 which defines passenger  and section 27 which defines stage carriage
Of the Act clearly indicates that the tax would be leviable only if the passengers are carried on a public service vehicle
361A 358 5
The word Public  has got a well known connotation and means a carriage to which any member of the public can have free access of payment of the usual charges
It cannot by any process of reasoning or stretch of imagination be deemed to include employees of a private company who are given facilities not as members of the public but as holding a status namely the employees of that company
Thus qua public the employees from a separate class and cannot be said to be public as contemplated by rule 2i
361 C 6
In the present case a The transport service which was registered as a private service vehicle falls squarely within the ambit of the definition of private vehicle service in the Bombay Motor Vehicles Rules 1959
361E b The transport provided to the employees of the company was reserved for them only and no other member of the public even if he wanted to pay full charges could be carried on the said vehicle
In these circumstances therefore it cannot be said that the transport vehicle provided to the employees by the appellants could be a public service vehicle in any sense of the term
Such a transport vehicle being not a public service vehicle within the meaning of the provisions of the Bombay Motor Vehicles Act the view taken by the Bombay High Court is clearly erroneous
361F G 362B