IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 1288 of 2001 with SPECIAL CIVIL APPLICATION No 1421 of 2001 with SPECIAL CIVIL APPLICATION No.3137 of 2001 For Approval and Signature: Hon'ble CHIEF JUSTICE MR DM DHARMADHIKARI and Hon'ble MR.JUSTICE K.R.VYAS ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : YES of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO @ AKHIL GUJARAT PRAVASI VAHAN SANCHALAK MAHAMANDAL Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 1288 of 2001 MR PRASHANT G DESAI for Petitioner No. 1-5 MR.SN SHELAT,AG for Respondent No. 1-5 2. Special Civil Application No. 1421 of 2001 MS.MITA S PANCHAL WITH MR SHAKTISINH GOHILfor Petr. MR.SN SHELAT,AG for Respondent No. 1 3. Special Civil Application No.3137 of 2001 MS.MITA S.PANCHAL for petitioner. MR.SN SHELAT,AG for Respdts. -------------------------------------------------------------- CORAM : CHIEF JUSTICE MR DM DHARMADHIKARI and MR.JUSTICE K.R.VYAS Date of decision: / /2001 CAV JUDGEMENT (Per : MR.JUSTICE K.R.VYAS) 1. The petitioners in this group of petitions have challenged Rule 5, sub-rule (1) and (2) of the Bombay Motor Vehicles Tax Rules, 1959 (in short'the Rules') as amended by Notification dated 6.2.2001 and circular dated 8.2.2001 issued by the State Government and section 3A (1) and 3A(2) of Bombay Motor Vehicles Tax Act, 1958 (in short 'the Act'). The petitioners of Special Civil Application No. 1288 of 2001 who are luxury bus operators, in their amended petition, also prayed to declare section 3A(1) and 3A(2) of the Act as ultra vires the Constitution. They have also prayed to declare Act No.11 of 2000 and Ordinance No. 2 of 2000 as ultra vires, violative of Articles 14 and 19(1)(g) of the Constitution of India and violative of Entry 56 and 57 of List II of Seventh Schedule to the Constitution. 2. The petitioners of Special Civil Application No. 1288 of 2001 are the Associations of which all the members are tour operators doing their business in the State of Gujarat. The petitioner of Special Civil Application No. 1421 of 2001 is the owner of omnibuses and is plying the said omnibuses all throughout the State of Gujarat and thereby earning his livelihood. 3. The petitioners of Special Civil application No. 3137 of 2001 are the owners of trucks and are doing business of lifting salt in their trucks loading the same from manufacturing site situated in the deserts of Kutch and unloading the same to nearer railway stations. The said business of the petitioners of lifting salt is available only from 1st March to 31st May every year and thereafter the said activity of lifting salt is not available because of the nature of work. According to the petitioners, they use their trucks only for three months and thereafter on account of non availability of work of lifting salt, the petitioners are keeping all the trucks for non use for 6 to 9 months. 4. According to the petitioners, because of the notification dated 6.2.2001 issued by the State Government, even though they are not using the vehicles, they are required to pay advance tax. It is the grievance of the petitioners that the said notification has virtually wiped off the original statutory rules provided by the State Government under the provisions of Bombay Motor Vehicles Tax Act whereby the petitioners were not required to pay tax for non use of the vehicle. The petitioners have, therefore, contended that the notification dated 6.2.2001 and the circular dated 8.2.2001 issued by the respondents are in contravention of the Act and Rules and, therefore, they are required to be declared ultra vires Articles 14 and 19(1)(g) of the Constitution of India. 5. With a view to appreciate the grievance, it is necessary to give certain factual details. The then Bombay State enacted Bombay Motor Vehicles Tax Act, 1958 which was adopted by the Gujarat State wherein there was power to levy tax on all the vehicles including Omni buses (Luxury Buses). The Bombay State had also enacted Bombay Motor Vehicles (Taxation of passengers) Act, 1958 which was adopted by the Gujarat State wherein there was power to levy taxes on passengers of state carriage whereas in the definition of 'state carriage', even the contract carriage is also included. Omni bus operators were making payment of passenger tax till 1982 under the provisions of Bombay Motor Vehicles (Taxation of Passengers) Act, 1958. 6. The State of Gujarat, by Gujarat Bill No. 14 of 1982 enacted the Bombay Motor Vehicles (Taxation of Passengers) (Gujarat Amendment) Act, 1982 wherein for luxury or tourist omni buses or ordinary omni buses, the rates are prescribed of additional tax on monthly, weekly or daily buses by amending section 2 of the said Act. 7. Section 3A was introduced by Gujarat Act No.9 of 1976 and thereafter by Gujarat Act No.20 of 1992 wherein Bombay Motor Vehicles Tax Act, 1958 was amended. The statement of object and reasons of the said amendment is very clear.It says that as it was considered necessary to augment the financial resources of the State to meet the huge expenditure on account of natural calamities like scarcity, flood and cyclone and as the Gujarat Legislative Assembly was not in session, the Bombay Motor Vehicles Tax (Gujarat Amendment) Ordinance, 1975 ( Gujarat Ordinance 8 of 1975) was promulgated to levy enhanced tax at the rate of 10%, on the amount of motor vehicles tax payable in respect of certain types of motor vehicles under the Bombay Motor Vehicles Tax Act, 1958. Section 3A originally reads as under: "3A. Levy of enhanced tax --(1) On and from the 1st day of December 1975, there shall be levied and collected, on all motor vehicles specified in clauses (i) and (VI) of Class A in Part I of the First Schedule and on all motor vehicles of like description falling under Part II of the said Schedule which are used or kept for use in the State, a tax (hereinafter referred to as 'the enhanced tax'), in addition to the tax leviable under section 3, at the rate of ten percent, of the amount of tax levied under section. (2) The enhanced tax leviable under subsection (i) shall be paid in advance by every registered owner or any person having possession or control of the motor vehicles--- (i) annually at the rate specified in subsection (1), or (ii) for one or more quarters, at one-fourth of the rate so specified for each such quarter, or (iii) for any period less than a quarter expiring on the last day of the quarter, at one-fourth of the rate so specified less one-twelfth of the said rate for every complete calendar month which has expired during such quarter. Provided that--- (i) where any such owner or person has, before the commencement of the Bombay Motor Vehicles Tax (Gujarat Amendment) Ordinance, 1975 (Guj.Ord. 8 of 1975), paid the tax leviable under section 3 for the period of the year or for the period of one or more quarters expiring on the 31st day of March 1976, such owner or person may pay the enhanced tax for the month of December 1975 and for the quarter commencing on the 1st day of January 1976, within the period prescribed for the payment of tax leviable under section 3 for the year or the quarter commencing on the 1st day of April 1976. (ii) where any such owner or person has not paid the tax leviable under section 3 for the said period before such commencement, he may pay the enhanced tax for the month of December 1975, within the period prescribed for the payment of tax leviable under section 3 for the quarter commencing on the 1st day of January 1976. (3) Except as otherwise provided in subsection (1) and (2), the provisions of this Act and the rules made thereunder shall, so far as may be, apply in relation to the enhanced tax leviable under subsection (i), as they apply in relation to the tax leviable under section 3. 8. Thereafter Bombay Motor Vehicles (Tax) Act, 1958 was further amended by Act No.29 of 1982 wherein section 3A was substituted by new Section 3A whereby monthly, weekly and daily rates were prescribed under the said Act. Substituted section 3A reads as under: "3A. Levy of additional tax--- (1) On and from the first day of April, 1982, there shall be levied and collected, on all omnibuses which are exclusively used or kept for use in the State as contract carriages, a tax in addition to the tax levied under section 3, at the rates fixed by the State Government, by notification in the Official Gazette, but not exceeding the maximum rates specified in the table below: T A B L E A. Ordinary omnibuses--- (i) Monthly rate of Rs. 240 per passenger permitted to be carried. (ii) Weekly rate of Rs./.80 per passenger permitted to be carried. (iii) Daily rate of Rs. 16/- per passenger permitted to be carried. B. Luxury or tourist omnibuses--- (i) Monthly rate of Rs. 360 per passenger permitted to be carried. (ii) Weekly rate of Rs.120/- per passenger permitted to be carried. (iii) Daily rate of Rs. 24/- per passenger permitted to be carried. (2) The additional tax levied under subsection (1) shall be paid in advance by every registered owner or any person having possession or control of the omnibuses- (i) monthly at the rate specified in the table in subsection (i), or (ii) for any period less than a month, weekly or daily at the rates specified in the table in subsection (i). (3) Except as otherwise provided in subsection (1) and (2), the provisions of this act and the rules made thereunder shall, so far as may be, apply in relation to the additional tax leviable under subsection (1) as they apply in relation to the tax leviable under section 3. 9. The said section 3A was amended by Gujarat Bill No. 29 of 1991 with effect from 1.4.1991 wherein instead of monthly, weekly and daily rates, annual rate of Rs. 1000/- per passenger permitted to be carried in ordinary designated omnibus and luxury or tourist designated omni buses were prescribed. 10. The Luxury omnibuses and omnibuses were not defined anywhere except in Explanation of section 3A. After 1991, time and again, the rates in respect of composite tax were changed. However, in the year 1991, instead of additional tax, passenger tax was imposed which includes the vehicle tax as well as passenger tax. 11. The State of Gujarat has also enacted Bombay Motor Vehicles Rules, 1959. Rule 5 provides for certificate of nonuser. Subsection (5) of section 3A provides for nonuser. Subsection 5A allows refund of tax for a period of nonuser is more than three months and clause (b) of subsection (5) provides for refund of tax for more than three months which can be claimed only if the owner or the person in possession of the vehicle proves to the satisfaction of the authorised officer that the vehicle was not used for reasons beyond his control. It appears that one of the petitioners challenged the provision of clause (b) of subsection 5 of section 3A on theground that if the vehicle is not used on the road, no tax can be levied as per Entry 56 and 57 of List II of Seventh Schedule to the Constitution as per the decision of the apex Court by filing Special Civil Application No. 10356 of 1996. This Court by decision dated 23.4.1998, allowed the petition and the words "for reasons beyond the control of such owner or the person" occurring in clause (b) of subsection (5) of section 3 are struck down as being beyond the competence of legislation (See Kaushikbhai Patel Vs. State, 1998 (2) GLR 1093). The State Government filed Special Leave Petition before the Supreme Court of India which was admitted and stay was granted. During that period, by Act No.11 of 2000, the Bombay Motor Vehicles Tax Act is amended and more particularly clause (b) of the subsection (5) of section 3A was also amended and instead of three months, one month is substituted. It is also provided that designated omnibuses in respect of which tax has been paid has not been used or used for a period of one month on account of accident which is registered before the police or in a competent court or the Government authority. The said Act NO.11 is also challenged in the present petition. 12. The Supreme Court of India dismissed the appeal filed by the State of Gujarat by judgment and order dated 9.5.2000 (See State of Gujarat Vs. Kaushik Patel, AIR 2000 SC 1217). As nonuse applications were not considered as per the decision of the Supreme Court, one of the petitioners filed Special Civil Application before this Court. This Court (Coram: M.S.Shah,J.), on 11.9.2000, directed the State Government to consider the NT Forms submitted by the petitioner by deciding the question whether the vehicles in question were actually used on road or not during the relevant period without considering as to whether nonuser was for reasons beyond the control of the owners of the vehicles. Thereafter, by Ordinance No.3 of 2000, the State Government amended Bombay Motor Vehicles Tax Act. The said Ordinance is also under challenge in this petition. 13. In order to know the reasons for issuance of notification dated 6.2.2001 and circular dated 8.2.2001, it is necessary to refer to Rule 5 of Bombay Motor Vehicles Tax Rules 1959 which reads as under: "Rule 5: Certificate for nonuser: (1) A registered owner of, or any person who has possession or control of, a motor vehicle, not intending to use or keep for use such vehicle in the State and desiring to be exempted from payment of tax on that account shall, before the expiry of the current period for which the tax on such vehicle has been paid, or for which a declaration of nonuse as herein provided has been made, make a declaration in Form NT for any specified period not exceeding beyond the financial year in which it is made, to the appropriate Taxation Authority along with the Certificate of taxation.The declaration in Form 'NT' shall be accompanied by a fee of rupees ten and shall be presented either in person to the appropriate Taxation Authority (and the Taxation Authority shall duly acknowledge its receipt) or send by registered post acknowledgment due. Provided that where a vehicle is rendered incapable or being used or kept for use on account of an accident, mechanical defect or any other sufficient cause, which make it impossible to give an advance declaration as aforesaid, then such declaration shall be given within a period of seven days from the date of occurrence of such accident, mechanical defect or such other cause, either in person or by registered post AD. (2) If the Taxation Authority is satisfied that the motor vehicle, in respect of which a declaration in Form 'NT' has been made, has not been used, or kept for use for the whole or part of the period mentioned in the declaration and for which tax has not been paid, it shall certify that the motor vehicle has not been or kept for use for the whole or part of such period as the case may be by making an endorsement in the certificate of taxation to that effect; Provided that nothing contained in this sub-rule shall affect the right of the Taxation Authority to recover the tax and penalty due for the period of nonuse so certified if, at any time, it is found that the vehicle was actually used or kept for use in the State during such period. 2A(i): Where the nonuse of the designated omnibus as referred to in section 3A exceeds three months declaration in form 'NT' shall be made to the State Government in this behalf, through the appropriate Taxation Authority. (ii) If the State Government or the authorised officer is satisfied that designated omnibus in respect of which a declaration in form 'NT' has been made has not been used or kept for use for the whole or the part of the period mentioned in the declaration and for which the tax has not been paid, it shall certify that such omnibus has not been used or kept for use for the whole or part of such period and endorsement to that effect shall be made in the certificate of taxation. (3) The declaration in Form 'NT' given under the proviso to subrule (1) shall be accompanied by a fee of rupees ten and documentary evidence, if any, or any other proof evidencing such nonuse of the vehicle and the period thereof. Where the appropriate Taxation Authority, on considering the evidence adduced, if any, and on making such inquiries as it deems fit refuses to admit the declaration of nonuse or to certify the period of nonuse, it shall record in writing its reason therefor and communicate to the applicant." 14. According to the affidavit of Joint Director of Transport, the respondent no.2 herein, the provisions relating to grant of exemption from payment of tax on account of nonuse of a motor vehicle as appearing in Rule 5 were not in conformity with provisions of Rules 13 and 16(A) of the Rules. Moreover, the cases had come to the notice of the Government indicating that many a times, motor vehicles which purported to have been put to nonuse were operated clandestinely resulting in evasion of tax and loss of revenue to the Government and the said pre-amended provisions also created contradiction with the provisions of subsection (5) of section 3A which provide for grant of refund on account of nonuse of designated omnibuses. With a view to remove this contradiction and to prevent evasion of tax by using vehicles declared in nonuse, Rule 5 has been amended by the impugned notification dated 6.2.2001. The petitioners, however, have challenged the said notification dated 6.2.2001 on the ground that the same is in colourable exercise of powers. According to the petitioners, having failed before this Court as well as before the Supreme Court, the State Government in colourable exercise of power, issued notification dated 6.2.2001. 15. The petitioners of Special Civil Application No. 1288 of 2001 have challenged the constitutional validity of sections 3A (1) and 3A(2) which are reproduced as under: "3A.Levy and Payment of tax on certain Omnibuses. (1) On and from the 1st day of April 1991, there shall be levied and collected on all omnibuses which are used or kept for use in the State exclusively as contract carriages (hereinafter in this section and subsection (1A) of section 4 referred to as the designated omnibuses) a tax at the rates specified in the table below: Table --------------------------------------------------------- Description of Designated Annual rate of tax Omnibuses. -------------------------------------------------------- 1(a) Ordinary designated omnibuses Rs.2700/- per permitted to be carried not passenger more than 20 passengers. permitted to be carried. (b) Ordinary designated omnibuses Rs.4050/- per permitted to be carried more passenger to be than twenty passengers. carried. 2.Luxury or tourist designated Rs.4500/- per Omnibuses permitted to be passenger carried not more than 20 permitted to be passengers. carried. (b)Luxury or tourist designated Rs.6000/-per Omnibuses permitted to be carried passenger more than 20 passengers. permitted to be carried. ------------------------------------------------------- Provided that in the case of designated omnibuses used solely for the purpose of transporting students of educational institutions in the State in connection with any of the activities of such educational institutions, a tax shall be levied and collected under subsection (1) of section 3 and not under this subsection. (2)(a) The tax leviable under subsection (1) shall be paid in advance by every registered owner or any person having possession or control of the designated omnibuses either annually at the annual rate specified in the Table appearing in subsection (1) or in monthly instalments of one twelfth of the annual rate. (b) The annual payment of tax or the payment of monthly instalment of tax shall be made within such period and in such manner as may be prescribed." 12. The learned Counsel for the petitioners Mr. P.G.Desai challenged these provisions on the following grounds: (i) The State Government has discriminatorily provided additional composite tax only to luxury buses having a contract carriage permit excluding state carriages within sweep of provision of section 3A. It was elaborated that in respect of stage carriages who are also engaged in a contract carriage are not required to pay tax as per section 3A and they are required to pay the tax on passenger basis, viz. on actual income basis. This is a clear discrimination so far as omnibuses are concerned. (ii) There is no reasonable classification and the classification also has no rational so as to achieve the object of the Act and therefore also this provision is bad. (iii) As per the Supreme Court judgment, the tax can be levied only on those vehicles which are actually used on road. This is in consonance with Entry 56 and 57 of List II of Seventh Schedule to the Constitution and, therefore, any provision in respect of Bombay Advance Tax on monthly or yearly basis is bad in law which is not in consonance with the provisions of the Constitution and also not in consonance with the judgment of the Hon'ble Supreme Court. (iv) Earlier from 1982 till 1991, the taxes are collected on daily, weekly and monthly basis. That procedure was discontinued only to disadvantage of the bus operators without any reasons and arbitrarily. (v) Amendment to Rule : 5 by notification dated 6.2.2001 is also bad as bus operators were asked to compulsorily pay the tax even though they do not intend to use the vehicle on road. Even for deciding the refund application, no time is prescribed under the Rules or the Act. Therefore, the intention of the Government is only to collect money and not to refund the amount, thereby killing the luxury bus industry. (vi) If the Government has no power to levy tax and if the person is not liable to pay tax at any time, the collection of tax from him with a possible contingency of refund at a later stage will not make the original levy valid. (vii) Some of the members of the petitioner Association also filed NT forms for one day, 2 days, 3 days as the vehicles were not used during the month for a refund of the amount. Though the said NT forms were accepted, the State Government did not want to give refund in view of the provisions of the Act. Therefore, if the Act is to be read as read by the State Government, it is violative of Articles 14, 19 (1)(g) of the Constitution of India and Entry 56 and 57. In order to make good these submissions, learned Counsel placed reliance on the decisions rendered in: (1) AIR 1975 SC 17 Bolani Ores Limited Vs.State of Orissa. (2) AIR 1980 SC 1547 Travancore Tea Co.Vs.State of Kerala (3) 39(2) GLR 1092 (Kaushik K.Patel Vs.State) (4) AIR 2000 SC 2175(State of Gujarat Vs. Kaushik K.Patel) (5) 20 STC 290 Bhawani Cotton Mills Vs.State of Punjab and Haryana. (6) AIR 1987 SC 1911 State of Karnataka Vs.K.Gopalkrishna Shenoy 13. Learned Counsel appearing for other petitioners, by adopting the submissions of Mr. Desai, submitted that unless the vehicle is used on road, no tax can be recovered. They submitted that in the hope of getting refund, no advance tax can be recovered as the parties have never decided the cases of refund to operators