Case: State of Maharashtra and Others Etc Vs. Madhukar Balkrishna Badiya and Others

3. In the case of Luna Mopeds, the one time tax comes to Rs.2925 which according to the petitioners in the S.t.P. Nos. 1is 86% of theprice of the Moped. In that view the petitions were filed by the respondents in the first batch of appeals and the petitioners in the second batch challenging the amended provisions of the Bombay Motor Vehicles Tax Act, 1958. On or about 9/10th July. 1987, a Division Bench of the Bombay High Court, Nagpur Bench held that the levy of one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule. It further held that the provisions for imposition of levy at thrice the rates so far as the vehicles owned by the firm or the company, were neither discriminatory nor arbitrary. The High Court, however, in view of the fact that the refund was restricted to the circumstances mention ed above. struck down Act 14 of 1987. According to the High Court, the absence of provisions for refund in cases of temporarymade the Maharashtra Act XlV of 1987, confiscatory in character and not regulatory or compensatory which alone was in the competence of the State Legislature. The State preferred applications for leave to appeal against the impugned judgment and the special leave having been granted, are theof Civil Appeals Nos. 163133/877 . The petitioners also, filed special leave applications which are theof Special Leave Petitions Nos.which have been heard along with these appeals. While the States appeal against the High Courts judgment was pending before this Court, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987.

Reasoning:
8. In our opinionthe fact that the Act, as at present, does not provide for refund in the 14th and 15th years, does not make the law outside the competence of the State Legislature. The concept of "regulatory and compensatory" tax does not imply mathematical precision of quid pro quo. This aspect was emphasised in International Tourist Corporation etc. etc. v. State of Haryana &Ors., (supra) as noted before.after the amendment the mischief mentioned in the judgment and order of the High Court of Bombay has been remedied. On an examination of the various provisions of the Act as amended, we have come to the conclusion that after the amendment the Act comes within the constitutional requirement of making thetax a regulatory and compensatory tax. It is true as was emphasised that the Act has not provided for refund in the 14the and 15th years but does not make the law outside the competence of the State Legislature. It is not mathematical precision that is necessary nor can it be. There is in the provisions as amended, a discernible and an identifiable object behind the levy and a nexus between the subject and the object of the levy.It appears that in the instant case, the State Government has specifically averred that thevehicles travel more and use roads more often. No evidence have been produced to the contrary. In view of theprinciples, we cannot say that there was without any basis and as such there was discrimination.It further appears that the Government of India has liberalised the licensing policy and granted large number of industrial licences for the manufacture of two wheelers.Having regard to these factors and having regard to the principles applicable to taxation laws, we are of the opinion that the Maharashtra Act as amended from time to time and mentioned hereinbefore, does not suffer from any vice of being not regulatory or compensatory taxation nor from the vice of being violative of Article 14 of the Constitution.In that view of the matter, the challenge to the provisions of the Act as amended after the judgment of the Bombay High Court cannot be maintained.