1. On a reference made by one of us (Puttaswamy, J.) these cases were posted before a Division Bench for disposal.
2. As the questions that arise for determination in these cases are common or inter-connected, we propose to dispose of them by a common order. In order to appreciate the questions that arise for determination, we will first notice the facts of the cases.
3-1. W.Ps. Nos. 8302 and 8303 of 1980: Noorulla khan of Kanakapura Town, the original petitioner, who is now arrayed as petitioner-1, to be hereafter referred to as the petitioner, was the registered owner of a motor vehicle bearing registration No. MYM 9091 classified as an'Omnibus' with a seating capacity of 15+1 under the Motor Vehicles Act, 1939 (Central Act No. IV of 1939) (MV Act) and subjected to tax on that basis under Part-A Entry 7b of the Schedule to the Karnataka Motor Vehicles Taxation Act of 1957 (Karnataka Act No. 35 of 1957) ('the Act'). The vehicle which was not covered by a permit under the M.V. Act could be exclusively used for private purposes on which basis the taxes under the Act was levied.
3-2. On 18-12-1979 the petitioner was found plying his said vehicle on a public road as a stage carriage for hire on reward, on which ground the Regional Transport Officer Bangalore (RTO) by his notices dated 30-4-1980 (Annexures A and B) called upon the petitioner to pay a sum of Rs. 4,950/- and Rs. 6,270/- calculating the taxes on the basis of number of passengers carried in the vehicle on the two occasions. The petitioner challenged the said demands in Appeal No. TXA 9/80 before the Deputy Commissioner for Transport, Bangalore Division, Bangalore ('DC') who by his order dated 17-3-1980 (Annexure-C) dismissed the same. In Writ Petition Nos. 8302 and 8303 of 1980 the petitioner has challenged the orders of the DC and the RTO.
3-3. On 10-6-1981, the petitioner has transferred the said vehicle to one Khader Khan of Bangalore, who has come on record as petitioner-2.
4. W. P. No. 10951 of 1983: T. Muninarasappa the petitioner is the registered owner of a motor vehicle bearing registration No. DAM 574 classified as a 'luxury taxi' with a seating capacity of 6+1 and subjected to taxes under the Act on that basis. On 14-6-1983 an Inspector of Motor Vehicles attached to the office of the RTO intercepted the said vehicle when it was plying on Kanakapura Bangalore Road at a point called Vajramuneswara Temple Cross, checked the same and found 20 passengers in addition to the driver or carrying 14 passengers in excess of the permitted capacity ofthe vehicle. On delivering a check report under the M.V. Act (Annexure-A) the said IMV also seizedthe same exercising the powers conferred on him by Section 11-A of the Act for non-payment of taxes. In this Petition under Article 226 of the Constitution the petitioner has challenged the said order of seizure made by the IMV (Annexure-B). On 17-6-1983 this Court as an interim measure directed theRespondents to release the vehicle to the petitioner with which they have complied.
5. W.P.No. 1977_of 1983: One P.N. Satish of Ananthapur, was the registered owner of a motor vehicle bearing registration No. ANA 1233 registered in the State ofAndhra Pradesh with a seating capacity of 6+1. On 30-12-1982 the said vehicle was found carrying 9 adult passengers or three passengers in excess of the permitted capacity on Bangalore to Dharmastala Road situated in the State of Karnataka, on which ground the RTO called upon the said owner to pay a sum of Rs. 1944/- being the taxes due on excess passengers for a quarter and a composition fee of Rs. 100/-. Against the said demand notice of the RTO, Satish filed a belated appeal under the Act before the DC, who by his order dated 2-6-1983 dismissed the same as barred by time. On 11-3-1983 the said vehicle has been transferred to the name of P. V. Prabhamani of Bangalore, who as transferee of the vehicle or an assignee in interest, has challenged the orders of the DC and the RTO before us in this Petition under Article 226 of the Constitution.
6. W.P.No. 20835 of 1983 : I.D. Kusugal of Hubli who is the petitioner is the registered owner of a motor vehicle bearing registration No CHW 3631 classified as an 'Omni-bus' and subjected to taxes under the Act on that basis. On 17-11-1983 the said vehicle was found plying as a stagecarriage for hire or reward and, therefore, the RTO Dharwad by his tax demand notice dated 19-11-1983 (Annexure-B)has called upon him to pay a sum of Rs. 3,672/- as taxes on the said vehicle for the relevant quarter. In this petition under Article 226 of the Constitution, the petitioner has challenged the said demand notice.
7. W. Ps. Nos. 1141 AND 1142 OF 1984 : One Vittal Jituri of Hubli, who is the common petitioner is the register-ed owner of a Motor Vehicle bearing registration No. MEZ 4404 classified as a 'delivery van' to be exclusively used for private purposes and is subjected to taxes under the Act on that basis. On 24-4-1980 and 20-10-1981 the vehicle was found carrying passengers for hire or reward and, therefore, the RTO, Dharwad by his two separate but identical demand notices dated 29-11-1983 (Annexures B and A) has called upon the petitioner to pay a sum of Rs, 1302/- and 2382/-being the difference of taxes on the said vehicle for therelevant quarters. In these petitions under Article 226 of the Constitution the petitioner has challenged the said demand notices.
8. The petitioners have urged that they had paid the taxes due on their vehicles determined under the Act or in the other State and the violations, if any, in the operation of their vehicles either by them or bytheir drivers/conductors irrespective of their nature, does not attract them for any fresh or additional liability of taxes under the Act. On this basis, they have urged that the demands and orders made against them are withoutjurisdiction and illegal.
9-1. In Writ Petitions Nos. 8302 and 8303 of 1930 the order of the DC had exhaustively dealt with the questions and upheld the demands made by the RTO in support of which the State has also filed its return, which is adopted in other cases.
9-2 In resisting the Writ Petitions, the Respondents have urged that the violations in the operation of thevehicles on roads in the State of Karnataka in addition to the liabilities under the MV Act, also attract fresh or additional liability to pay taxes under the Act, for which and other reasons, the demands and orders made against the petitioners are legal and valid.
10. Sri A.S. Viswanatb, learned Advocate for the petitioners in Writ Petitions Nos. 20835 of 1983, 1141 and 1142 of 1984 addressed leading arguments. Sriyuths P.R. Srirangaiah and S.V.Krishnaswamy, learned Advocates who appeared for the other petitioners adopted the arguments of Sri Viswanath and supplemented them. Sri S. Rajendra Babu, learned Government Advocate appeared for the respondents in all the cases.
11. Both sides have relied on a large number of rulings in support of their respective contentions. We will refer to them at the appropriate stages.
12. Sri Viswanath has urged that contraventions in the operation of vehicles like running a private vehicle as a public service vehicle for hire or reward or carryingpassengers in excess of the permitted seating capacity or other contraventions, can at best be dealt exclusively under the MV Act and does not attract for any fresh or additional liability of taxes under the Act.
13. Sri Babu refuting the contention of Sri Viswanath has urged that every violation in the operation of vehicles on public roads in the State attracts fresh or additionalliability for taxes under the Act.
14. The Act is one of the principal taxation measures for the State. The rules of construction applicable to taxation measures which are now well settled, some of which have been succinctly summarised by a Full Bench of this Court in C. Arunachalam -vs- Commissioner of Income Tax has ex-pressed thus :
'So far as the fiscal statutes are concerned we must remember one mere principle. The provisions in a fiscal statute are not to be so construed as to furnish a chance of escape and a means of evasion.'
The progressive rule of construction of statutes felicitously expressed by Lord Denning in Seaford Court EstatesLimited -v.- Usher approved by the Supreme Court in State of Karnataka and others-v.- M/s Hansa Corporation and K. P. Varghese -v.- Income Tax Officer, Ernakulam and Another are not alien or a taboo to a tax measure. In Murarilal Mahabir Prasad and others -v.- B.R. Vad and others Chandrachud, J. (as His Lordship then was)speaking for the majority again dealing with a taxation measure noticing theoft-quoted classical passage of Rowlatt, J. in Cape Brandy Syndicate -v.- Commissioner of Inland Revenue and the cases that have approved the same has expressed thus:
'28. The principle thus stated has hardly ever been doubted but it is necessary in the application of that principle to remember that though the benefit of an ambiguity in a taxing provision must go to the subject and the taxing provision must receive a strict construction, 'that is not the same thing as saying that a taxing provision should not receive a reasonable construction'. Commissioner of Wealth Tax -v.- Kripashankar : 81ITR763(SC) . If the statute contains a lacuna or a loophole, it is not the function of the Court to plug it by a strained construction in reference to the supposed intention of the legislature. The legislature must then step in to resolve the ambiguity and so long as it does not do so, the tax payer will get the benefit of that ambiguity. But' equally, Courts ought not to be astute to hunt out ambiguities by an un-natural construction of a taxing Section. Whether the statute, even a taxing statute, contains an ambiguity has to be determined by applying normal rules of construction for interpretation of statutes. As observed by Lord Gairns in Pryce vs. Mommonthshire Canal and Rly. Cox., (1879) 4 AC 197 cases which have decided that taxing acts are to be construed with strict ness and that no payment is to be exacted from the subject which is not2. 1949(2) All E.R. 155 3. : 1SCR823 4. : 131ITR597(SC) 5. : 1SCR689 6. (1921) 12 Tax Cas 358clearly and un-equivocally required by Act of Parliament to be made, probably meant little more than this, that inasmuch as there was not any a priori liability in a subject to pay any particular tax, nor any antecedent relationship between the tax payer and the taxing authority, no reasoning founded upon any supposed relationship of the tax payer and the taxing authority could be brought to bear upon the construction of the Act and therefore, the tax payer had a right to stand upon a literal construction of the words used, whatever might be the consequences.
29. The true implication of the principle that a taxing statute must be construed strictly is often misunderstood and the principle isunjustifiably extended beyond the legitimate field of its operation. Indeed, the more well expressed the principle as in the Cape Brandy case (1921) 12 Tax Cas 358, greater the reluctance to see its limitations. In that famous passage marked by a happy turn of phrase Rowlatt, J. said 'there is no equity about a tax. There is no presumption as to a tax.' here is no equity about a tax in the sense that a provision by which a tax is imposed has to be construed strictly, regardless of the hardship that such a construction may cause either to the treasury or to the tax payer. If the subject falls squarely within the letter of law, he must be taxed, howsoever inequitable the consequences may appear to the judicial mind. If the Revenue seeking to tax cannot bring the subject within the letter of law, the subject is free no matter that such a construction may cause serious prejudice to the revenue. In other words, though what is called equitable construction may be admissible in relation to other statutes or other provisions of a taxing statute, such a construction is not admissible in the interpretation of a charging or taxing provision of a taxing statute. Speaking for the Court in C.I.T. Madras-vs-Ajax Products Ltd. : 55ITR741(SC) Subba Rao, J. after citing the passage from the judgment of Rowlatt, J, in the Cape Brandy case said : 'To put it in other words, the subject is not to be taxed unless the charging provision clearly imposes the obligation''.
Another equally well settled principle is that in the guise of interpretation, a Court cannot legislate. Bearing these principles, we first propose to ascertain the nature of taxes levied and the true scope and ambit of the relevantprovisions touching on the question.
15. The taxes imposed by the State in exercise of the legislative powers available to it under the Constitution arecompensatory taxes imposed primarily to compensate the construction and maintenance of roads in the State to facilitate the free flow and movement of vehicles (Vide: Automobile Transport (Rajasthan) Limited etc.-v.- State of Rajasthan and others and M/s International Tourist Corporation etc.-v.- State of Haryana and others).
16. The Act, which is a consolidating and amending Act was enacted by the new State of Karnataka to levy taxes on motor vehicles by virtue of the legislative powers derived from Article 264(3) and Entry 57, List-II, State List of the 7th Schedule of the Constitution. The Act came into force from 1-1-1958. In the year 1961 the State in exercise of the powers derived from Article 246(3) and Entry 56 List-II, State List of the 7th Schedule of the Constitution enacted the Karnataka Motor Vehicles (Taxation on Passengers and Goods) Act, 1961 (Karnataka Act 10 of 1961) to levy taxes on passengers and goods in stage carriages and public carrier vehicles in the State. The 1961 Act has been re-pealed from 1-7-1976 by the Karnataka Motor Vehicles Taxation (Amendment) Act, 1976 however, merging the taxes levied under the Act. From 1-7-1976 the Act has pro-vided for levy of taxes on motor vehicles and on passengers and goods. With this brief backdrop, it is necessary to closely examine Sections 3, 3A, 4, 5, 6 and 8 of the Act that alone bear on the question.
17. Sections 3 and 3A are the charging Sections. The main charging Section is Section 3. Section 3A only provides for levy of surcharge on taxes levied by Section 3 of the Act, for which reason a further analysis of that provision is not necessary.
18. Section 3(1) regulates the levy of taxes on vehicles registered in the State of Karnataka suitable for use on roads. Section 3(2) regulates the levy of taxes on vehicles registered7. : 1SCR491 8. : 2SCR364 and stationed in other States but entering the State of Karnataka and using the roads of the State for short periods. Section 3(3) regulates the levy of taxes on vehicles covered by Inter-State agreements. The taxes under Section 3 are levied on the basis of classification of the vehicles and their proposed user on public roads in the State. Thus the levy and collection of taxes under the Act is based on theclassification, nature and user of the vehicles on roads in the State. The Act maintains a clear dichotomy between vehicles mean for private use and vehicles meant for public use as in the MV Act. The rates of taxes levied on vehicles meant for private use are lower to the higher rates levied on public service vehicles used for hire or reward. So also the taxes and the rates of taxes has correlation to the carryingcapacity of the vehicles. When a vehicle carries in excess of the seating capacity, the burden on the roads and their wear and tear will naturally be greater when it carries the permitted capacity. An illegal user of vehicles indisputably affects the roads constructed and maintained at huge cost by the State. What is true of passenger vehicles is also true of other classes of vehicles like goods vehicles.
19. Sections 4 and 5 regulate the payment of taxes and the receipts for payment to be noted in what is now called as a 'taxation card' or a 'taxation licence' which was the earlier pattern.
20. Section 6 of the Act requires the owner or the person in possession of a vehicle that makes payment of taxes to fill up and sign a declaration in Form No.14 and make payment of taxes on the basis of his proposed user in the State. On a combined reading of Sections 2 and 6, it is manifest that taxes are paid on the basis of classification and the proposed user of vehicles in the State. The user should and must conform itself to the declaration,determination of taxes made and payment made to the State on a vehicle under the Act. When a vehicle is used for a purposeother than for a purpose for which taxes have been determined and paid, such user will be clearly for a purpose other than the purpose for which taxes had been determined, paid and collected. Whether in such a case, Section 8 of the Act is attracted ornot is the next question.
21-1. Section 8 of the Act which is material reads thus :
'8. Payment of additional tax - 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 the vehicle to become a vehicle in respectof which a higher rate of tax is payable, the registered owner or person who is ispossession 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 used and taxation authority shall not grant a fresh taxation card in respect of such vehicle so altered of proposed to be so used until such amount of tax has been paid'.
This Section provides for payment of additional taxes or regulates the payment of additional taxes in the situations contemplated therein.
21-2. When a vehicle is structurally altered, the first part of Section requires that additional taxes should be paid on the basis of such structural alterations of the vehicle. In these cases, we are not concerned with such a situation.
21-3. The second part of the Section provides for payment of additional taxes where a vehicle is proposed to be used in a manner different than the earlier manner on the basis of which taxes had been determined and paid.
21-4. Sri Viswanath laying great stress on the words 'or proposed to be used' has urged that they cannot be read as cases of actual user with or without notice or the permission of the authority; Sri Viswanath is right that the Section employs the words 'or proposed to be used' anddoes not employ 'or is used'. But, whether such an omission in Section 8 should lead to the construction suggested by Sri Viswanath.
21-5. When Section 8 provides for payment of additional taxes for the proposed user in a different manner, a fortiori, that very Section should be held to be applicable to cases of actual user in a manner different to the manner on the basis of which taxes have been paid earlier to the State. If that is not the position, the Court will be placing a premium on illegality or blesses a person who violates law designedly or covertly and only catches an honest and a law abiding person and penalises him only. After all the very law that prohibits must necessarily be held to view with disfavour the actual violation of that very law also. If such a construction is not placed, the Court will be making a mockery of law. On any legal principle, that can never be the position. On this analysis itself we will be justified in holding Section 8 applies to cases of actual user also. Even otherwise, we are of the view that the construction suggested for thepetitioners on Section 8 of the Act is too literal, defeats the purposes of the Act and does not achieve the scheme and object of Section 8 of the Act. We must, therefore read the words 'proposed to be used as 'when used' or alternatively read the words 'or is used' in between the words 'or proposed to be used' and 'in such a manner'. We are clearly of the view that this will not amount to legislation in the guise ofinterpretation but would only be a case of proper interpretation that achieves the purposes of the Act.
22. We are of the view that the above construction of Section 8 is also supported by authority.
23-1. In Payne -v.- All cock the facts in brief were these:- Payne who had paid taxes on his passenger motor car with a particular seating capacity at a lower rate as9. 1932 (2) KB 413against cars constructed or adopted for the conveyance of goods subjected to higher rates of taxes, used the back portion of the car on 21-5-1931 for carrying the goodsconsisting of vegetables, fruits and boxes of flowers without making any alteration in the vehicle or adopting the same for carrying goods and paying the higher rate of taxes for the same. He had similarly used the car for the same purpose now and then for the conveyance of goods inconnection with his trade. All cock, an Inspector attached to the local authority that administered the tax measure prosecuted Payne in a Criminal Court for such user without payment of higher taxes under the English Finance Act of 1922 ('Finance Act'), which convicted Payne for an offence under Section 14 of that Act On appeal by Payne, the Kings Bench Division, by majority upheld the said conviction.
23-2. Section 14 of the Finance Act under which Payne was prosecuted and convicted read thus:,
' Sub-Section 1 : 'Where a licence has been taken out for a mechanically propelled vehicle at any rate under the Second schedule to the Finance Act, 1920, and the vehicle is at any time while such licence is in force used in an altered condition or in a manner or for a purpose which brings it within, or which if it was used solely in that condition or in that manner or for that purpose would bring it within a class or description of vehicle to which a higher rate of duty is applicable under the said schedule, duty at such higher rare shall become chargeable in respect of the licence for the vehicle'.
Sub. Section 2: 'Where a licence has been taken out for a mechanically propelled vehicle, and by virtue of such user as aforesaid, a higher rate of duty becomes chargeable, and duty at the higher rate was not paid before the vehicle was so used, the person so using the vehicle shall be liable to a penalty of an amount equal to three times the difference between the duty actually paid on the licence and the amount of duty at such higher rate or twenty pounds, whichever amount is the greater.'
Avory, J. in dismissing the appeal of Payne with whom Lord Hewart, CJ. in a separate opinion concurred, expressed thus;
'....With all respect to the judgment of my brother Macnaghtes, J. and to the argument of Mr. Marriott, it appears to me that to say that it is accessary, in order to bring a case within Section 14, to show that the vehicle has been either constructed or adopted for use for the conveyance of goods, is to ignore the fact that the words in the section arc in the alternative. The Section refers to cases where the vehicle, while the licence is in force, has been used in an altered condition or in a manner or for a purpose which brings it within, or which if it was used solely in that condition or in that manner or for that purpose would bring it within a class or description of vehicle to which a higher rate of duty is applicable'. It seems to me that, to construe that section, one has only to see what is the purpose for which the car is being used which will bring it within the class to which a higher rate of duty is applicable, The purpose which here brings it within para 5, as distinguished from para 6 of Schedule II, is the purpose of conveyance of goods under the Act of 1920 and the schedule and that must be a conveyance of goods in the course of trade. There is no question in this case that the goods were conveyed in the course of trade'....For the moment, all we have to decide, and all that I do decide, is that the magistrate in this case, upon the facts, was right in coming to the conclusion that the appellant was in fact using this vehicle 'for a purpose' - namely, for the purpose of the conveyance of goods in the course of trade, which brought it within the class or description of vehicle to which a higher rate of duty was applicable under the said schedule, and that therefore, this appeal ought to be dismissed.'
Macnaghten, J. dissented and differed from Avory, J.
23-3. Section 8 of the Act though not similar to Section 14 of the Finance Act has been enacted to achieve that very purpose.
24. In State of Mysore -v.- Syed Ibrahim the facts in brief were these:- Syed Ibrahim who was the owner of a private car used the same for carrying passengers for hire or reward, for which he was prosecuted before a Magistrate, who acquitted him following a ruling of this Court in Jayaram -v.- State of Mysore which was upheld by this Court in an appeal filed by the State. On an appeal by the State, the Supreme Court reversed the decision of this10. : 1967CriLJ1215 11.1962 Mys. L.J. 382Court and the Magistrate and convicted Syed Ibrahim for an offence under Section 42 of the M.V. Act. In reversing the decision of this Court, the Supreme Court at para 6 relied on and referred to with approval the dicta of Avory, J. in Payne's case'. In the earlier para the Court expressed thus :
'....Therefore, any motor vehicle used for carriage of passengers for hire or reward is regarded, when so used as a public service vehicle and, therefore, a transport vehicle. It is the use of the motor vehicle for carrying passengers for-hire or reward which determines the category of the motor vehicle whether it is adopted for that purpose or not. It must follow that even if a motor vehicle is occasionally used for carrying passengers for hire or reward it must be regarded when so used as a public service vehicle and, therefore, a transport vehicle....'
What follows from this enunciation though made in dealing with a criminal case is that user of a vehicle for a purpose other than a purpose or in a manner different than the one for which it has been permitted and on the basis of which taxes shave been paid, was impermissible and illegal and such user necessarily makes the owner liable for additional taxes also under the Act.
25. In his order made against the petitioner in Writ Petition No. 8302 and 8303 of 1980, the DC has relied on the ruling of the Supreme Court in Syed Ibrahim's case to sustain the additional payment of taxes. In his notices, the RTO, Dharwad has also relied on the same. We are of the view that the reliance placed by them for sustaining the additional payment of taxes is correct.
26. In E.S. Ramakrishna Setty -v.- State of Andhra Pradesh the facts, in brief, were these: Ramakrishna Setty who was the owner of a lorry for which purpose a permit had been issued by this State, authorising its use on certain specified inter-State routes passing in the States of Andhra Pradesh and Karnataka, had been exempted from payment of taxes12. : AIR1965AP420 under Andhra Pradesh Motor Vehicles Taxation Act of 1931 (Andhra Act of 1931). On one day, the said vehicle was operated on a route not authorised by the permit for which he was prosecuted and convicted under the Andhra Act of 1931. In dismissing the revision of Ramakrishna Setty, a Division Bench of the Andhra Pradesh High Court consisting of Basi Reddy and Anantanarayana Ayyar, JJ. dissenting from an earlier ruling of Sharfuddin Ahmed, J. expressed thus:
'17. In the result, we find as follows :
The finding of fact of both the lower Court, with which we agree, is sufficient to show that the petitioner used the public road which was not covered by the permit (Ex. Dl) on 26-1-1962. This amounted to use of the public road for the purpose of Section 4(1) and Section 5(1) of the Act. To constitute use of public road for the purpose of Section 4(1) and attract the provisions of Section 5(1) of the Act, it is sufficient if there is plying oi' vehicles, even if such plying is casual and not usual. Such use of the road need not be regular and constant or more than once or twice for the purpose of coming under Section 4(1) and Section 5(1) of the Act. In this respect, we respectfully differ from the view of our learned brother Sharfuddin Ahmed, J. in AIR 1964 A P 33. The first contention is not tenable.
18. The conviction is right. The sentence is not excessive. We confirm the conviction and sentence and dismiss the revision petition.'
In Sunkara Venkateswara Rao -v.- The Joint Regional Transport Officer, Krishna, Vijayawada and others a Division Bench of the Andhra Pradesh High Courtconsisting of Kondaiah (as His Lordship then was) and Shiramulu, J. followed the above dicta to cases of tourist Vehicles plying as stage carriages and sustaining the additional demand of taxes from owner under the uniform Andhra Pradesh Motor Vehicles Taxation Act of 1963 that had repealed the earlier 1931 Act. Therein the Court repelling a similar contention as urged before us expressed thus:
1971 Tax. L.R. 556
'15. Under Article 265 of the Constitution, no tax shall be levied or collected except by authority of law. We shall first turn to the contention of the petitioner's counsel that the levy of tax in the instant case is illegal and without jurisdiction as there is no specific provision in this regard. True, as contended by the petitioners, there is no specific provision in the Act empowering the authorities to levy tax on any vehicle as a stage carriage on a motor vehicle on which tax was paid as a contract carriage when used as stage carriage. But, the mere absence of a specific provision in the Act would not in any way make the levy of tax in these cases illegal or without jurisdiction. Section 3 as pointed out earlier empowers the authorities under the Act to levy tax on any vehicle used in public place within the State. The basis on which the levy of tax under Section 3 is made is on the user or the intention to use the motor vehicle on public roads constructed and maintained by the State. The State has to construct and maintain public roads and the owner of the motor vehicle has been charged for the use of the vehicle on such public roads or places within the State. Even if the vehicle is kept for use in apublic place though not in fact used, still tax is exigible on such a motor vehicle. It is the nature of the user but not the permit that decides the nature of the vehicle whether a stage carriage or a contract carriage. Sub-sections (1)and (2) to Section 8 provide for a notification by the State Government to be made specifying the class of motor vehicles on which the rates for the period at which and the date from which the tax shall be levied. Hence, if a motor vehicle is used or kept for use as a stage carnage, the tax payable in respect of such a vehicle will be Rs. 67-50 per seat. A combined reading of the provisions of subsections (1) and (2) to Section 3 and the notification madethere under manifests that the levy of rate of tax on the motor vehicles is based upon the nature of the user of the vehicle in question but not the permit of vehicle.'
Y. Peda Venkaiah -vs- The Regional Transport Officer, Nellore a Full Bench of the Andhra Pradesh High Court upholding the levy of additional tax under the Andhra Pradesh Motor Vehicles Taxation Act of 1963 on a contract carriage vehicle that had paid lower taxes but had been used as a stage carriage subjected to a higher rate of taxes, approved the above statement of law in Sunkara Venkateswara Rao's case and expressed thus:
'12. The submission made on behalf of the petitioner is that his vehicle was registered as a contract carriage and he paid tax on that footing in accordance with the previsions of the notification specifying the tax. An entry to that effect was made in the certificate of registration. In accordance with Section 4(3)(a)(ii) a licence was granted to him to ply the motor vehicle as a contract carriage. Once the vehicle was registered as a contract carriage and tax is paid on that footing there is no provision in the Act which enables the authorities to levy tax again on the vehicle as a stage carriage, if it is found to be used as a stage 'carriage. The Petitioner may be liable for action under the provisions of the Motor Vehicles Act for contravening the conditions which enable him to use the vehicle only as a contract carriage. But, there is nothing in the Motor Vehicles Taxation Act whichauthorise a further levy of tax as a stage carriage. There is also no machinery provided in the Act for such levy. This submission in our view proceeds upon a misconception of the true scope of the Act. Section 3 of the Act authorises the Government to levy tax on every motor vehicle used or kept for use in a public place in the State by means of a notification issued under that Section. Section 3(2) provides that the notification shall specify the class of motor vehicles on which the rates for the period at which and the date from which the tax shall be levied.In view of this provision, the Government is authorised to levy different rate of tax on different classes of vehicles and it has accordingly done so. Further, Section 4 provides that tax levied shall be paid in advance either quarterly, half yearly or annually on a licence to be taken out by the owner of the vehicle. If therefore, at the beginning of the quarter, 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 the use it was put to tax cannot be levied according to the class to which the vehicles 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 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 is sufficient to enable the Government to levy the tax from time to time when the class of the vehicle is changed. The same question was considered elaborately in S.V. Rao-v.- Joint R.T.O., Vijayawada (1971) Tax L.R. 556 . It was pointed out that the provisions of the Motor Vehicles Act have noapplication in so far as the levy of tax on motor vehicles is concerned. The levy, payment and recovery of tax arc wholly governed by the Motor Vehicles 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 stage carriage, would not in any way disentitle the authorities from levying the tax on such a vehicle as a stage carriage when it was used during the quarter as a stage carriage. The learned Judges followed other decisions of this Court to the same effect which were referred to in paragraphs 17 to 19 of the judgment. We are wholly in agreement with the decision in S.V. Rao-v.- Joint R.T.O. Vijayawada (1971) Tax L.R. 558, so far as this aspect is concerned'.
We are of the view that the principles stated in all these cases while dealing a similar enactment, with respect to the learned Judges that decided them, is correct and we are in respectful agreement with their views.
27. Even if Section 8 of the Act for any reason is held to be inapplicable, then also for the very reasons found by the Andhra Pradesh High Court in the above cases forcontraventions, the petitioners would be liable for payment of additional taxes under the Act.
28. In Nalla Gounder vs Deputy Transport Commissioner and Another on which great reliance was placed for the petitioners, the facts in brief, were these : Nalla Gounder obtained a special permit under Section 63(6) of the M.V. Act from 12-8-1970 to 20-8-1970 for his motor vehicle bearing registration No. MDL 1591 registered in the State of Tamilnadu from the RTO, Salem. On 18 8-1970 the said15. W.P. No. 1687 of 1974 dated 27-1-1976vehicle was found plying in Bangalore as a regular stage carriage or contrary to the terms of the permit issued under Section 63(6) of the MV Act for which only, there was total exemption from payment of taxes by Government in Notification No. HD 72 TMT 61 dated 22-11-1962 made under Section 16 of the Act. On that basis, the RTO called upon Nallagounder to pay the taxes and penalty under the Act which was affirmed in appeal by the appellate authority, the correctness of which was challenged by him before this Court in Writ Petition No. 1687 of 1974. On 27-1-1976 Srinivasa Iyengar, J. allowed the same by expressing thus:
'The exemption granted under the notification referred to above does not become unavailable if there is violation of any of the conditions mentioned in permit. If the conditions are violated action may be taken against the person under the other provisions of the Motor Vehicles Act'.
In reaching this conclusion the learned Judge relied on a ruling rendered by Jagannatha Shetty, J. in Kumarappa-v.- Commissioner for Transport and a Division Bench ruling of this Court in Writ Petition No. 2432 of 1966. In Kumarappa's case, Jagannatha Shetty, J. examining a case of a public carrier vehicle of Andhra Pradesh covered by reciprocal inter-State agreement for Counter-signature and also taxes on an unauthorised route, accepting a similar plea expressed thus :
'8. In the present case, if the petitioner was found plying his vehicle once on an unspecified route, it may be a good reason to take action against the petitioner as he has contravened the condition of the grant and the countersignature. But, the authorities cannot say that the vehicle is not entitled to the exemption provided by the said notification, so long as the said vehicle was registered in the State of Andhra Pradesh and permitted to ply on the inter-state route agreed upon by the reciprocal arrangement between the two States. Breach of a condition of the permit or its counter signature has to be dealt with under the appropriate law and not by withdrawing the exemption provided by the said notification.'
29. In Nallagounder's and Kumarappa's cases, both the Learned Judges have relied on a Division Bench ruling of this Court in D. Vengaiah Setty-v.- The Transport Commissioner, Bangalore and Others, We will now examine whether the ratio in that case supports that conclu-sion.
30. In Veugaiali Setty's case I7 the facts, in brief, were these. Vengaiah Setty held a stage carriage permit on an inter State route between Tambadapalli and Chintamani countersigned in Karnataka and exempted from payment of taxes under a reciprocal inter - State, agreement. For the period from 4-3-1964 to 18-12-1964 Vengaiah Setty who had sought for renewal of his countersignature but not renewed then but later renewed was found plying his vehicle regularly in the area lying in this State for which period also he claimed exemption from payment of taxes in this State in term of the Notification No. HD 128(2) MVA dated 28-3-1959, which was not acceded to by the authorities, the validity of which was challenged by Vengaiah Setty before this Court in Writ Petition No. 2432 of 1966. On 7-7-1969 a Division Bench of this Court consisting of Sadasivayya and Chandrasekhar. JJ. (as Their Lordships were then)interpreting the terms of exemption notification and the meaning of the term 'regularly' occurring therein, accepted the said Writ petition and quashed the demand of taxes by the authorities against Vengaiah Setty. We are of the view that the decision in this case turned on the terms of the notification and the exemption claimed on the peculiar facts of that case. We are also of the view that the broad pro-position stated in Kumarappa's and Nallagounder's cases, with great respect to the Learned Judges do not flow from Vengaiah Setty's case. We are of the view that this case is distinguishable. We, therefore, do not consider itnecessary to refer the question of correctness of the enunciation in this case to a larger Bench, though such a course may be called for in a more appropriate case, for more than one reason, some of the reasons which we have noticed earlier and for the more important reason that the word 'regularly' does not mean that the operator operating continuously but legally or with the authority of law. With great respect to the Learned Judges, we are of the considered opinion that the decision in Vengaiah Setty's case which has not noticed Section 8 of the Act, its requirements and the binding ruling of the Supreme Court, has been renderedper-incuriam for which reason also, we consider it unnecessary to refer the correctness of the same to a Full Bench.
31. In Kumarappa's and Nallagounder's cases, we find that the attention of the learned Judges was drawn to the statutory provision, in particular to Section 8 of the Act analysed by us, the binding ruling of the Supreme Court and the persuasive rulings of the Andhra Pradesh High Court. With great respect to their Lordships, these rulings are not in accord with the provisions of the Act and are not sound. We, therefore, with great respect, regret our inability to subscribe to the views expressed in these cases and we over-rule them.
32. In S.A. Wahab -v.- R.T.O Bangalore and Another one of us (Puttaswamy, J.) only followed the ruling in Nallagounder's case without examination of its correctness which now transpires, was wrong. In this view that decision cannot be of any avail to the petitioners.
33. Sri Babu also relied on a ruling rendered by Rama Jois, J. in Masthan Sahib-v.- R.T.O Bangalore which order itself is pending in a Writ Appeal before this Court.18. W.P. 27185 & 27188 of 1981 dated 18-8-19841981 (1)KLJ 99As the order made in this case is seized in a writ appeal, we refrain to refer and rely on the same.
34. On the foregoing discussion, we hold that there is no merit in the contentions urged for the petitioners and we reject the same.
35. On the violations noticed by the authorities and the correctness of the additional taxes demanded in each case, learned counsel for the petitioners have not taken exception to them. Hence, on the basis of our earlier finding, they do not call for our interference.
36. In Syed Rafiq Ahmed and Another -v.- Regional Trans-port Officer and Others a Division Bench of this Court speaking through one of us (Puttaswamy, J.) has indicated the procedural requirements for determination of arrears of taxes and their recoveries (videpara 51 to 58). We are of the view that those procedural requirements are required to be followed by the authorities before the determination of additional taxes for violations also. We do hope and trust that the authorities will not violate them and willscrupulously follow them in the determination of liabilities under the Act.
37. In the light of our above discussion, we hold that these Writ Petitions are liable to be dismissed.We, there fore, dismiss these Writ Petitions and discharge the rule issued in these cases We, however, direct that the security furnished in Writ Petitions Nos. 8302 to 8303 of 1980 shall be in force till the recoveries are effected against the petitioners in those cases, which however does not preclude the authorities from recovering the amounts in all other modes under theAct. We permit the authorities to adjust the deposits, if any made by the petitioners in pursuance of the interim orders 1984 (1) KLJ 281made in the respective cases and recover the balances, if any due in accordance with law. Liberty reserved to theauthorities to determine the additional taxes due by the petitioner in Writ Petition No. 10951 of 1983 and recover them in accordance with law.