THE HON’BLE THE CHIEF JUSTICE SHRI DEVINDER GUPTA THE HON’BLE DR. JUSTICE MOTILAL B. NAIK THE HON’BLE SRI JUSTICE V. ESWARAIAH THE HON’BLE SRI JUSTICE G. ROHINI AND THE HON’BLE SRI JUSTICE DALAVA SUBRAHMANYAM WRIT PETITION Nos.11463, 11464, 11899, 12072, 12073, 12074, 12077, 12085, 12089, 12095, 12171, 12190, 12222, 12256, 12295, 12356, 12397, 12437, 12505, 12515, 12516, 12589, 12394, 12939, 13060, 13109, 13168, 13169, 13265, 13272, 13383, 13526, 13527, 13621, 13630, 13983, 14084, 14113, 14270, 14422, 14616, 14734, 14776, 15034, 15872, 16085, 16847, 16937, 17052, 17054, 17149, 17548, 17568, 17780, 18159, 18432, 18715, 18719, 19107, 19114, 19303, 19510, 19768, 20118, 20222, 20437, 20947, 23010, 23087, 23141, 23607, 25596 OF 2002, W.P.Nos.280, 337, 723, 1130, 1393 and 1403 OF 2003 Dated 05-02-2004 L.Royal Reddy and others … Petitioners Vs Government of A.P. rep. by its Principal Secretary Transport Roads and Buildings (Tr.II) Departments, Secretariat, Hyderabad and others Counsel for Petitioner : Mr.E.Manohar Mr.P.Rajagopala Chary Mr.S.R.Ashok Counsel for Respondent : The Additional Advocate General for Special Govt.Pleader for taxes. JUDGMENT: (Per the HON’BLE THE CHIEF JUSTICE SHRI DEVINDER GUPTA, FOR SELF AND FOR MS. JUSTICE G. ROHINI AND SRI JUSTICE DALAVA SUBRAHMANYAM) *** Whether the decisions rendered by two Full Benches of this Court in Y. PEDA VENKAIAH v. THE REGIONAL TRANSPORT OFFICER and in V. GOVINDARAJULU v. THE REGIONAL TRANSPORT OFFICER, ANANTAPUR holding that under the scheme of the Andhra Pradesh Motor Vehicles Taxation Act, 1963 (A.P. Act No.5 of 1963), (hereinafter referred to as the “Taxation Act”) the State is competent to collect the tax from the permit holders of stage carriage/contract carriage at higher rate for violation of the conditions of permit needs reconsideration in view of the later decision of the Supreme Court in M. NARASIMHAIAH v. DEPUTY COMMISSIONER FOR TRANSPORT, BANGALORE and the decision of another Full Bench of this Court in KANAPALA RAMA RAO v. REGIONAL TRANSPORT OFFICER, SRIKAKULAM is the question that arises for consideration in this batch of cases referred to for an authoritative pronouncement by the Larger Bench. We have had the advantage of going through the opinion of Dr. Justice Motilal B. Naik and Brother Justice V. Eswaraiah in their separate draft judgments circulated. Dr. Justice Motilal B. Naik in his separate Judgment has recorded his opinion that the earlier view taken by the two Full Benches of this Court in Peda Venkaiah’s case and Govindarajulu’s case cannot be held to be good law in view of the decision of the Supreme Court in M. Narasimhaiah’s case and has approved the view taken by the Full Bench of this Court in Rama Rao’s case (supra). He has proceeded to hold that the Motor Vehicles Act, Act 1988 (Central Act No.59 of 1988), (hereinafter referred to as “the M.V. Act”) provides for issuance of permit under Section 87 or sub-section (8) of Section 88 of the said Act. The permits issued under the M.V. Act are subject to the conditions attached to the permits. If there is any violation of the conditions of the permit, appropriate authority is competent to take action under Sections 53, 192 and 192-A of the M.V. Act. The scheme underlined under the M.V. Act provides punishment and penalty for using the vehicle in deviation of the conditions of permit, which includes cancellation of registration of the vehicle and prosecution of the permit holder. The State, therefore, cannot take recourse to levy additional tax or collect tax under Taxation Act at higher rate when there is violation of conditions of permit while using the vehicle, which is used either as stage carriage or contract carriage. Tax under the A.P.M.V. Taxation Act is compensatory in nature and not ex-proprietary. Tax cannot be levied as fine or penalty for contravention of permit conditions and as such penalty cannot be treated as part of recovery of compensatory tax. Brother Dr. Justice Motilkal B. Naik has opined that in Peda Venkaiah’s case (supra), the Full Bench of this Court held that as soon as class of vehicle is changed, the rate of tax which applies to that class according to the notification is automatically attracted and there is no need for the Taxation Act to provide specifically that if there is a change in the class of vehicle, the authorities can levy tax afresh on that vehicle as belonging to that class. The power contained in Section 3 read with Section 4 of the Taxation Act is sufficient to enable the Government to levy tax from time to time when the class of the vehicles is changed. He further opined that the Full Bench decision in Govindarajulu’s case reiterated the earlier view taken by the Full Bench in Peda Venkaiah’s case. After analysing the judgment of the Supreme Court in Narasimhaiah’s case and of the Full Bench in K. Ramarao’s case, it was held that the view taken in the earlier two Full Bench decisions in Peda Venkaiah’s case and Govindaraluu’s case is no longer good law in view of the decision of the Supreme Court in Narasimhaiah’s case. Brother Justice Eswaraiah in his separate opinion has not agreed with the view taken by Brother Dr. Justice Motilal B. Naik and has held that the view expressed by the two Full Benches in Peda Venkaiah’s case and Govindarajulu’s case is still a good law. He has tried to distinguish the decision of the Supreme Court in M. Nrasimhaiah’s case and has opined that in the said case neither usage of the vehicle was changed nor it was altered. The only allegation in the said case was that on two occasions there has been violation of the conditions of permit issued and since the vehicle had not been altered and the vehicle had been used only as a stage carriage for which stage carriage permit was granted and there was no provision to tax higher rate of tax for carrying the extra passengers in a stage carriage and being a stray case of overloading, additional tax under section 8 of the Karnataka Motor Vehicles Taxation Act was held not leviable. In his opinion, it cannot be said that the Supreme Court has taken a view, which goes contrary to the view expressed by the Full Benches of this Court in Peda Venkaiah’s case and Govindarajulu’s case. He has further opined that even in the later Full Bench decision of this Court in Ramarao’s case the vehicle was having a town service stage carriage permit and deviation was made in the route for a day for one reason or the other. This act did not make the vehicle as having been plied without any permit and for that reason the Full Bench held that extra tax cannot be levied. The Full Bench further held that the liability to pay maximum rate of tax attaches itself to the vehicle the moment it plies on a route other than the one authorised by the permit or without obtaining any permit at all and the very fact that the vehicle deviated from the permitted route which is within the town service cannot empower the taxation authority to levy any tax treating it as a mofussil route other than the town service. Therefore, according to him, the said decision of the Full Bench in Ramarao’s case has not taken a view which can be said to be contrary to the earlier two Full Bench decisions of this Court. V. Eswaraiah, J has opined that the earlier two Full Benches of this Court had gone on the usage of the vehicle but not on the actual permit. He came to the conclusion that tax is leviable based on usage of the vehicle and not on the actual permit. Tax will automatically attract as per usage of the vehicle. The amendment impugned in the Writ Petition has made only sub-classification in respect of the contract carriages used as stage carriages. In his view a stage carriage is a class by itself, therefore, it cannot be said that the said classification is not authorised either under the M.V. Act or under the Taxation Act or the rules made thereunder. With due respect, we are unable to subscribe to the view expressed by V. Eswaraiah, J. While broadly agreeing with the view expressed by Dr. Motilal B. Naik, J in coming to his conclusions, we are giving our separate opinion. We need not state the facts since the same have elaborately been stated in the two opinions circulated to us leading to the issuance of impugned notifications thereby amending the First Schedule of the Taxation Act, 1963. In Peda Venkaiah’s case two questions were raised for consideration by the Full bench. They are (1) whether the petitioner is entitled to the benefit of the concession in tax according to G.O.2401 and (2) whether the petitioner is not liable to pay penalty. With the permission of the Full Bench, the petitioner was permitted to raise a broader question that no tax at all can be demanded from the petitioner in addition to what he had paid in the beginning of the quarter for a contract carriage. This question was permitted to be raised since in the writ petition the said question had been raised and it was urged that the A.P. Taxation Act and the rules made thereunder do not empower the authority to levy the difference of tax and penalty in the event of a contract carriage being used as a stage carriage and in such a case only proceedings under the Motor Vehicles Act 1939 can be resorted to. The Full Bench did proceed to analyse the charging section 3 as also Sections 4, 6, 7 and 9 of the Taxation Act and also Rules 3, 12 and 12-A of the A.P. Motor Vehicles Taxation Rules, 1963 and the First Schedule appended to the said Act and also noticed the facts of the case while considering the third question that at the beginning of the quarter the petitioner was using the vehicle as a contract carriage and had paid the tax on the footing that it was a contract carriage. Later on by the order impugned it was found that the petitioner was using the vehicle as a stage carriage and therefore he became liable to pay tax for the quarter on the footing that the vehicle was being used as a stage carriage. In that view of the matter, the Full Bench held that at the beginning of the quarter when the vehicle belongs to a particular class referred to in that notification, tax is levied on that footing and an entry is also made in the certificate of registration to that effect, but it does not follow that if the class of vehicle is changed during the quarter by reason of its use, tax can be levied according to the class to which the vehicle then belongs. As soon as the class of vehicle is changed, the rate of tax, which applies to that class according to the notification, is automatically attracted. There is no need for the Taxation Act to provide specifically that if there is a change in the class of vehicle, the authorities can levy tax afresh on that vehicle as belonging to that class. The power contained in Sections 3 and 4 of the Taxation Act was held to be sufficient to enable the Government to levy the tax from time to time when the class of the vehicle is changed. The Full Bench further held that the provisions of the Motor Vehicles Act have no application insofar as the levy of tax on motor vehicles is concerned. The levy, payment and recovery of tax are wholly governed by the Taxation Act. The mere absence of a specific provision in the Act empowering the authorities to levy tax on any vehicle as a stage carriage on which tax was paid earlier as contract carriage, does not make the levy of tax illegal. The provisions of the Act make it clear that the levy of tax is based on the nature of user of the vehicle. As the scheme of the Act is that the minimum period for which tax payable is a quarter where it is found that a particular vehicle has been used or kept for use as stage carriage even for a day or a part of the quarter, it must be, for the purpose of the Act, held as a stage carriage liable for tax on that basis. The mere fact that tax is already paid as a contract carriage and the operator did not intend to use it as a stage carriage, would not in any way disentitle the authorities from levying tax on such a vehicle as stage carriage when it was used during the quarter as a stage carriage. This view of the Full bench was reiterated by the later Full Bench in Govindarajulu’s case, which concurred with the reasons and conclusions of the Full Bench decision in Peda Venkaiah’s case. We may at this stage notice one important aspect. Both in Peda Venkaiah’s case and Govindrajulu’s case, the proviso to sub-section (2) of Section 3 of the Taxation Act, 1963 and Rule 5 of the Rules made thereunder were not at all noticed and considered. The charging provision being section 3 of the Taxation Act says that Government may by notification from time to time direct that a tax shall be levied on every motor vehicle used or kept for use, in a public place in the State and that notification issued under sub-section (1) shall specify the class of motor vehicles on which, the rates for the periods at which, and the date from which, the tax shall be levied. But the proviso says that the rates of tax shall not exceed the maximum specified in Column (2) of the First Schedule in respect the classes of motor vehicles fitted with pneumatic tyres specified in the corresponding entry in Column (1) thereof; and one and a half times the said maximum in respect of such classes of motor vehicles as are fitted with non-pneumatic tyres. Charging section nowhere authorises or deals with the situation where there is change in the category of the vehicle. Rule 5 of the Rules was substituted by G.O.Ms.No.430 TR & B (Tr.II) dated 25.11.1982 requiring filing of declaration when motor vehicle is altered. Elaborate procedure has been laid down to be followed for change of category of user of any vehicle. First Schedule appended to Taxation Act specifies the class of motor vehicles and maximum tax payable for quarter. Entry 4 deals with those motor vehicles plying for hire or used for transport of passengers in respect which permits have been issued under the Motor Vehicles Act specifying different rates for different classes of vehicles permitted to carry different number of passengers. Each sub- category uses the words “vehicle permitted to carry”. Classes of vehicles are defined under the Motor Vehicles Act, which also deal with the grant of permit. Penalties are provided for various classes of vehicles in case vehicle is used whether without permit or in violation of permit conditions. Change of vehicle is also dealt with under the provisions of the Motor Vehicles Act and the consequences, which have to follow. Rule 5 of the Rules which was substituted by G.O.Ms.No.430 dated 25.11.1982 reads as under: 5. Filing of declaration when motor vehicle is altered: (1) When in respect of any motor vehicle, additional amount of tax becomes payable, consequent to any alterations made to a motor vehicle or due to proposal involving increase either in the total distance permitted to be covered in a day in the case of stage carriage or the laden weight in the case of a goods vehicle or due to a proposal to change the category of use of vehicle, the registered owner of such vehicle or any other person having possession or control thereof shall file declaration in Form No.4 with the Licensing officer concerned together with certificate of registration and evidence of payment of additional amount of tax payable in respect of that vehicle. The additional amount of tax payable in respect of such vehicle for that quarter, half-year ort year shall bear the same proportion to the difference between the amount already paid and the amount payable at the higher rate for that quarter, half-year or year as the unexpired portion of the quarter, half-year or year bears to the quarter, half- year or year. Explanation: (i) For the purpose of calculation of the unexpired portion of the quarter, half-year or year, part of month shall be construed as a full month. (ii) The provision in this rule shall not apply to a case where the motor vehicle in respect of which a higher rate of tax or additional tax is payable has been used without the filing of declaration and payment of additional amount before such use. (iii) the rule shall not apply to a case where a motor car in respect of which lumpsum tax has been paid is misused as a goods vehicle, a motor cab or a stage carriage. (2) In respect of a motor vehicle of which lumpsum tax is paid under Section 3 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963, changed into another category attracting higher rate of tax or tax on quarterly basis, the tax payable for such a motor vehicle shall be the tax applicable to the new category with a [proportionate deduction at the rate of 2% per quarter or part thereof the lumpsum tax applicable to a new motor vehicle in the earlier category. This deduction of tax shall be applicable only till the expiry of a period of 12 years from the month of registration. It was not disputed before us that Sections 52, 66, 84, 86 and 192-A of the Motor Vehicles Act exclusively deal with alteration in the motor vehicles, necessity for permits, general conditions attaching to all permits, cancellation and suspension of permits in the eventuality of violation of the conditions, imposing of penalties and consequences of using vehicles without permits. The Supreme Court in Narasimhaiah’s case dealt with Section 8 of the Karnataka Motor Vehicles Taxation Act, 1957 in respect of motor vehicles which have been running as stage carriages under a permit issued under the Motor Vehicles Act, 1939 and on the question of levy of additional tax under section 8 of the Karnataka Taxation Act. Section 8 of the Karnataka Taxation Act read: 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 vehicle 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 use and the taxation authority shall not grant a fresh taxation car in respect of such vehicle so altered or proposed to be used until such amount of tax has been paid. The Supreme Court held that 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 payable”. Thus according to the Supreme Court, the payment of additional tax arose only on two occasions. 1) 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 vehicle is proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which higher rate of tax is payable. In the said case, the Court found that the vehicle was only a stage carriage even when extra passengers were carried and there was no provision in the Karnataka Taxation Act which authorises or require 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 and consequently Supreme Court held that in the absence of any such provision in the charging section, higher tax could not be recovered when the vehicle was being used only as a stage carriage even there has been violation of the conditions of permit and extra passengers had been carried in the vehicle. The Supreme Court held that the scope of the Karnataka Taxation Act and the scope of Motor Vehicles Act are different. The Motor Vehicles Act do provide for consequences in case there is violation of the terms of the conditions of permit. A person having obtained stage carriage permit exposes himself to penalties provided in the Motor Vehicles Act in case he violates the conditions of permit. In Karnataka Taxation Act, the charging provision Section 8 laid down the circumstances when liability to pay additional tax would have arisen ie “when any motor vehicle is altered or proposed to be used in such a manner as to cause the vehicle in respect of which a higher rate of tax is payable”. The Supreme Court turned down the arguments on behalf of the State government that the liability of the registered owner to pay higher tax in respect of a stage carriage depends on the use of vehicle and number of passengers carried in a vehicle on a given date. The reason to turn down such submission was that in case such a submission is accepted, it would make the words “which the vehicle is permitted to carry” in item 4(2) to become meaningless and ineffective. The Supreme Court thus observed and held: 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. The 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 Motor Vehicles Act, 1939, there is sufficient provision in that Act to take appropriate action against him and either to cancel the permit or to suspend it. Similar question had also come up for consideration before the Rajasthan High Court wherein more elaborate reasons were given by Division Bench of the Rajasthan High Court in INDER KUMAR GOYAL AND OTHERS v. STATE OF RAJASTHAN. In the said decision, Rajasthan High Court was considering similar provisions of Rajasthan Motor vehicles Taxation Act, 1951 and also the provisions of Motor Vehicles Act, 1939 and opined that the provisions of Rajasthan Taxation Act, 1951 do not deal with the acts relating to violation of permit or conditions of permit. Violation of permits granted under the Motor Vehicles Act or contravention of the provisions of the permit are dealt with under the Motor Vehicles Act. Specific provisions have been made in the Motor Vehicles Act to deal with the cases relating to contravention of the provisions of the Act and the conditions of permit and in that background it was held that additional tax or special tax cannot be imposed for an act which