IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 24TH JUNE 2009 / 3RD ASHADHA 1931 WP(C).No. 37653 of 2004(G) ------------------------------------ PETITIONER(S): --------------- 1.POSTMASTER GENERAL, CENTRAL REGION, KERALA CIRCLE, KOCHI-682 018. 2.THE SENIOR MANAGER, MAIL MOTOR SERVICE, ERNAKULAM, KOCHI-682 016. 3.THE SUPERINTENDENT OF POST OFFICES, IDUKKI DIVISION, THODUPUZHA-685 584. 4.THE SUPERINTENDENT OF POST OFFICES, ALAPPUZHA DIVISION, ALAPPUZHA-688 012. 5.THE SENIOR SUPERINTENDENT OF POST OFFICES, THRISSUR DIVISION, THRISSUR-680 001. BY ADV. SRI.S.KRISHNAMOORTHY, CGC RESPONDENT(S): ----------------------- 1.STATE OF KERALA, REPRESENTED BY ITS SECRETARY (TRANSPORT), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001 2. TRANSPORT COMMISSIONER, OFFICE OF THE TRANSPORT COMMISSIONER, THIRUVANANTHAPURAM. 3. REGIONAL TRANSPORT OFFICER, OFFICE OF THE R.T.O., ERNAKULAM-682 030. 4. THE JOINT REGIONAL TRANSPORT OFFICER, OFFICE OF THE JT. R.T.O., THODUPUZHA. 5. REGIONAL TRANSPORT OFFICER, OFFICE OF THE R.T.O., ALAPPUZHA. 6. REGIONAL TRANSPORT OFFICER, OFFICE OF THE R.T.O., THRISSUR. R1 TO R6 BY GOVT. PLEADER MR. V.K. SHAMSUDEEN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24/06/2009 ALONG WITH WPC NO. 15432 OF 2006, THE COURTON THE SAME DAY DELIVERED THE FOLLOWING: P.R.RAMACHANDRA MENON J. -------------------------------------------------- WP(C) No.37653/2004 & WP(C)15432/2006 ----------------------------------------------------------- DATED THIS THE 24th DAY OF JUNE 2009 JUDGEMENT Whether the vehicles owned,possessed and used by the Postal Department are liable to pay the tax leviable under Section 3 of the Kerala Motor Vehicles (Taxation) Act 1976, is the moot point in both these Writ Petitions. 2. For the purpose of proper adjudication, sequence of events or the factual controversy is not a matter to be looked into, as the contention is mainly based on the legal prepositions referring to Article 285 of the Constitution of India, whereby it has been specifically provided that the property of the Union shall, save in so far as the Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. 3. Placing reliance on the constitutional mandate, the learned Counsel for the petitioner submits that, since there is total exemption from 'all taxes', the vehicles belonging to WP(C) No.37653/2004 & WP(C)15432/2006 2 the Postal Department, being a property of the Union, are not liable to suffer any tax liability imposed by the State under S.3 of the Kerala Motor Vehicles Taxation Act 1976. Reference is also made to the reciprocal provision as it appears under the Article 289 of the Constitution of India, whereby a similar exemption from the taxation by the Union is provided in respect of the property and income of the State as well. Viewed in such circumstances, the learned Counsel submits, that the course and proceedings pursued by the respondents imposing tax under the Act for the vehicles being used by the Postal Department is not correct or sustainable under any circumstance. The learned Counsel for the petitioner also placed reliance on the decision rendered by the High Court of Punjab and Hariyana reported in A.I.R 1990 (Punjab & Hariyana) 183 to contend that the event of taxation will not be attracted to the case in hand. WP(C) No.37653/2004 & WP(C)15432/2006 3 4. The learned Govt.pleader, in response to the contentions taken by the petitioner, submits that the reliance placed on Article 285 of the Constitution is thoroughly wrong and misconceived. It is pointed out that the source of power is very much available in view of 'entry No.57' of the 2nd list under the 7th Schedule of the Constitution of India; which undisputedly is a 'State subject' and as such, no challenge can be raised against the charging provision. It is also pointed out that, as per the law declared by the Apex Court reported in [2004] 136 STC 641 SC, it has been clearly held that the protection under Article 285(1) is available only in respect of “direct taxes” and that, it is having absolutely no application with regard to the “indirect taxes” as in the instant case. 5. In the Sea Customs Act case (AIR 1963 SC 1760), a '9- Judges' Bench of the Apex Court opined , by a majority, that article 285 envisaged immunity from 'direct taxes' and WP(C) No.37653/2004 & WP(C)15432/2006 4 not from 'indirect taxes' such as sales tax. The decision in Sea Customs Act case [1964] 3 SCR 787 was considered by another '9-Judges Bench' in the case of New Delhi Municipal Committee v. State of Punjab (1997) 7 SCC 339, and was affirmed. Both the above verdicts were considered and relied on in 136 STC 641. From the above judgments, it is clear that Union is not exempted from the levy of 'indirect tax' under Article 285 of the Constitution. 6. It is brought to the notice of this Court, that the stand being taken by the departmental authorities as clearly reflected in Ext.p4 demand notice is that the petitioners, if aggrieved, had to approach the Government/State,for obtaining 'exemption' as provided under Section 22 of the Kerala Motor Vehicles (Taxation) Act. 7. The learned Standing Counsel appearing for the petitioners submits that the 'entry 57' of 'list 2' of the 7th WP(C) No.37653/2004 & WP(C)15432/2006 5 schedule is only a general provision, which is applicable to all vehicles. In the instant case, the vehicles belonging to the Postal Department being a property owned by the Union, it clearly comes within the sphere of Article 285(1) and hence that the stand taken by the respondents is not correct and is liable to be interfered with. It is further added that the tax imposed/levied under S.3 of the Kerala Motor Vehicles Act 1976 is actually on the vehicles ie. on the property of the Union and hence it is having all the colour and characteristics of a 'direct tax' . 8. It is very much relevant to note that the very scheme of the statute ie. Kerala Motor Vehicles Taxation Act is never to tax the vehicle as such, but is only to impose the tax for the 'user' of the road in the State. This being the position, it cannot be said that the tax is actually imposed on the vehicle, so as to make it a direct tax, to attract Article 285. In short, the legal position that the benefit of Article 285(1) WP(C) No.37653/2004 & WP(C)15432/2006 6 can be availed of only with respect to 'direct tax' stands settled and is no more open to challenge. 9. It is to be noted that the stand of the respondents, right from the beginning, was never that the vehicles belonging to the petitioner can't be given the benefit of exemption under any circumstances and on other hand, it was being let known that the remedy was only to approach the Government/State claiming exemption as pointed out in Exhibit P4; the power being actually vested with the Government under S.22 of the above Act which is extracted below: S.22 of the K.M.V. Act deals with exemption from or reduction of tax. “The Government may, if they are satisfied that it is necessary in the public interest so to do , by notification in the gazette make an exemption or reduction in the rate or other modification either prospective or retrospective, in regard to the tax WP(C) No.37653/2004 & WP(C)15432/2006 7 payable under this Act or under the Kerala Motor Vehicles Taxation Act,1963 (24 of 1963) or the Kerala Motor Vehicles (Taxation of Passengers & Goods) Act 1963 (25 of 1963): (i) by any person or class of person;or (ii) in respect of any motor vehicles or class of motor vehicles; (iii) in respect of any motor vehicles or class of motor vehicles using a specified route subject to such terms and conditions as they may deem fit”. This being the position, it is for the petitioners to approach the 1st respondent/Government of Kerala by filing appropriate representation, claiming exemption under S.22 of the Act and it is for the first respondent to look into the same and to pass appropriate orders thereon, particularly taking note of the reciprocal provisions in this regard. 10. In the above circumstances the petitioners are permitted to file appropriate representation before the 1st WP(C) No.37653/2004 & WP(C)15432/2006 8 respondent/State within one month and on such an event, the 1st respondent is directed to consider the same as aforesaid and pass appropriate orders after giving an opportunity of being heard to the petitioners within 2 months thereafter. Since there was an interim order in both the cases, the same will continue, till final orders are passed by the 1st respondent as above. The Writ Petitions are disposed of accordingly. P.R.RAMACHANDRA MENON, JUDGE pkk WP(C) No.37653/2004 & WP(C)15432/2006 9 APPENDIX PETITIONER'S EXHIBITS: (W.P (C) NO. 37653/2004 G) EXT.P1: COPY OF THE COMMUNICATION OF DEPARTMENT OF POSTS DATED 13.10.1989 EXT.P2: COPY OF THE RELEVANT PORTION OF THE AUDIT REPORT FOR THE YEAR MARCH 2002 EXT.P3: COPY OF THE LETTER DATED 12.12.2003 ISSUED BY THE 2ND PETITIONER. EXT.P4: COPY OF THE LETTER DATED 8.1.2004 ISSUED BY THE R.T.O, ERNAKULAM. EXT.P5: COPY OF THE LETTER DATED 28.11.2003 ISSUED BY THE 3RD PETITIONER. EXT.P6: COPY OF THE LETTER DATED 12.11.2004 ISSUED BY THE R.T.O EXT.P7: COPY OF THE LETTER DATED 26.7.2003 ISSUED BY THE R.T.O,ALAPPUZHA. EXT.P8: COPY OF THE CHECK REPORT DATED 13.10.2004 ISSUED BY THE M.V.I, ALAPPUZHA. EXT.P9: COPY OF THE JUDGMENT IN CIVIL APPEAL NO. 6532/2002 DATED 21.10.04 OF THE HON'BLE SUPREME COURT. EXT.P10: COPY OF THE LETTER DATED 11.8.2008 ISSUED BY THE 2ND RESPONDENT. RESPONDENT'S EXHIBITS: NIL. // TRUE COPY// SD/- P.A. TO JUDGE. WP(C) No.37653/2004 & WP(C)15432/2006 10 APPENDIX PETITIONERS'S EXHIBITS: (W.P(C) NO. 15432/2006 K: EXT. P1: COPY OF THE CIRCULAR DATED 13.10.1989. EXT.P2: COPY OF THE RELEVANT PORTION OF THE REPORT OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA FOR THE YEAR ENDING MARCH 2002. EXT.P3: COPY OF THE ORDER DATED 7.1.2005 IN W.P(C) NO. 37653/04 OF THIS HON'BLE COURT. EXT.P4: COPY OF THE LETTER DATED 27.3.2006 GIVEN TO THE 3RD RESPONDENT EXT.P5: COPY OF THE JUDGMENT IN CIVIL APPEAL NO. 6532/2002 OF THE HON'BLE SUPREME COURT OF INDIA DATED 21.1.2004. RESPONDENT'S EXHIBITS: NIL. // TRUE COPY// SD/- P.A. TO JUDGE.