Yashoda Nandan, J.
1. This special appeal is directed against the judgment of a learned single Judge dismissing the appellants petition under Article 226 of the Constitution.
2. The material facts giving rise to the writ petition and this special appeal are that the appellant is the owner of a stage carriage No. U. P. C. 6547. He was granted a permit under Section 48 of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act) by the Regional Transport Authority to ply the vehicle on the Allahabad Derwa route. The permit was valid up to 16th May, 1975. The appellant fell in arrears of passenger tax leviable and payable to the State Government under the provisions of U. P. Motor Gadi (Yatri Kar) Adhiniyam, 1962 hereinafter called the Adhiniyam. A notice dated 26th June, 1973 was issued to the appellant by the Regional Transport Authority, Allahabad, intimating to him that a sum of Rs. 11,144.00 was due against him as passenger tax and that the same was in disregard of the conditions for the issue of the permit granted to him. By means of that notice, the appellant was asked to explain why action should not be taken against him under Section 60 (1) (a) of the Act. The appellant failed to show satisfactory cause for non-payment of the passenger tax and non-compliance of the conditions of the permit and consequently the Regional Transport Authority by order dated 18th August, 1973, suspended the appellant's permit with immediate effect until the entire arrears were cleared. The appellant invoked the powers of this Court under Article 226 of the Constitution and challenged the order of suspension of his permit and prayed for its quashing. He further prayed for a writ of mandamus directing the Regional Transport Authority not to interfere with the petitioner's (appellant's) right to ply his stage carriage on the route for which he held a permit till such time as it expired.
3. The permit held by the appellant contained a condition that it could be suspended for default of payment of passenger tax. This condition was imposed apparently under Rule 51-H (3) of the U. P. Motor Vehicles Rules. This rule provides that,
'The Regional Transport Authority may, to any permit granted or countersigned by it, attach the condition that in the case of a stage carriage or a contract carriage, the vehicle shall not at any time be used in any public place unless the tax due under the Uttar Pradesh Motor Gadi (Yatri Kar) Adhiniyam, 1962, has been paid in the prescribed manner by the holder of the permit.'
The rule purports to have been framed in exercise of powers under Section 68 (2) (hh) (ii) of the Act. The vires of this rule and the condition imposed in the permit thereunder were challenged by the learned counsel for the appellant before the learned single Judge who decided the writ petition, as well as before us in appeal. The provision of the Act under which Rule 51-H (3) purports to have been made to the extent relevant for our purposes is in the following terms:--
'68. Power to make rules for the purposes of this Chapter:-- (1) A State Government may make rules for the purpose of carrying into effect the provisions of this Chapter.
(2) Without prejudice to the generality of the foregoing power, rules under this section may be made with respect to all or any of the following matters, namely:
(hh) the conditions subject to which, and the extent to which, a permit granted in another State shall be valid in the State without countersignature;
(ii) the conditions to be attached to permits for the purpose of giving effect to any agreement such as is referred to in Clause (iv) of Sub-section (1) of Section 43.'
Learned counsel for the appellant urged before us, as he did before the learned single Judge, that Section 68 (2) (hh) (ii) of the Act does not contemplate the framing of such a rule as Rule 51-H (3). The learned single Judge while agreeing with the contention that the rule was not permissible under Section 68 (2) (hh) (ii) held that the State Government had power to frame such a rate in exercise of powers under Section 68 (1) of the Act and the mere fact that in the notification Section 68 (2) (hh) (ii) was mentioned did not render it invalid if its validity could be supported under Section 68 (1) of the Act. We are in complete agreement with the view taken by the learned single Judge. Sub-section (2) of Section 68 does not exhaust or otherwise limit or control the rule making power of the Government under Sub-section (1) of Section 68. It merely recognises that all the specific items mentioned therein are within the scope of the general power under Sub-section (1). The view taken by the learned single Judge finds ample support from the decisions in Emperor v. Sibnath Bannerji which was followed with approval by the Supreme Court in Santosh Kumar v. The State : 1951CriLJ757 . Similar views have been expressed by the Supreme Court in L. Hazari Mal Kuthiala v. Income-tax Officer : 41ITR12(SC) , Afzal Ullah v. State of Uttar Pradesh : 4SCR991 , Lekhraj Sathramdas v. N. M. Shah : 1SCR120 and N. B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd. : 1973ECR6(SC) .
4. The learned single Judge considered the validity of the rule and the condition incorporated in the permit in compliance thereto with reference to Section 68 (1) of the Act and held that the rule was valid. The learned single Judge further took the view that the appellant having accepted the permit on the condition imposed, it did not appear fair on his part to avoid to pay the arrears of tax which had amounted to Rs. 11,144/-.
5. Learned counsel for the appellant contended that in exercise of powers under Section 68 (1) of the Act, the State Government may frame rules only for the purposes of carrying into effect Chapter IV of the Act. He further urged that the Adhiniyam provided for a tax merely to raise the general revenues of the State and was akin to the Indian Income-tax Act. He submitted that the realisation of the tax payable under the Adhiniyam was not an action which carried out the purposes of the Act and consequently a rule of the nature under challenge fell outside the scope of Section 68 (1) of the Act. In support of his contention, learned counsel for the appellant urged that under Section 47 (1) (a) of the Act while granting a stage carriage permit the Regional Transport Authority had to take into account only matters which related to the interests of the travelling public. It was submitted that realisation of taxes due to the State may have an impact on the general interest of the public but was not directly connected with the interest of the travelling public. In support of his contention that a rule dealing with the realisation of taxes unconnected with the purpose of the Act and with the interest of the travelling public fell beyond the scope of Section 68 (1) of the Act, he placed reliance on the decision of the Madras High Court in K. Raman and Co. Tellicherry v. The State of Madras : 22ITR377(Mad) . This was a decision by means of which an order passed by the Collector refusing to renew a Yarn and Cloth Dealer's License on the sole ground that the petitioner before the Court had not produced the Income-tax and Excess profits tax verification certificates and the firm was in arrears relying upon a notification issued by the Madras Government was quashed by certiorari. The order disclosed that the Collector was using his powers under the Yarn Dealers Control Order for the purpose of collecting the amounts due to the Government of India. It was held by Subba Rao, J. (as he then was) that the fact that a person is in arrears of income-tax was not germane to the issue of a licence under the Yarn Dealers Control Order. The view was taken that the renewal of the licence had been refused on the basis of circumstance extraneous to the right of the petitioner before the Court to carry on his business. In our opinion, the abovementioned decision of the Madras High Court is clearly distinguishable. Section 4 of the Rajasthan Motor Vehicles Taxation Act, the scope of which came up for consideration before the Supreme Court in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan 0065/1962 : 1SCR491 , was in the following terms (at p. 1412):--
''4. Imposition of tax.-- (1) Save as otherwise provided by this Act or by rules made thereunder or by any other law for the time being in force, no motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the Schedule to this Act within the time allowed by Section 5 and, save as hereinafter specified, such tax shall be payable annually notwithstanding that the motor vehicle may from time to time cease to be used.
(2) An owner who keeps a motor vehicle of which the certificate of fitness and the certificate of registration are current, shall, for the purposes of this Act be presumed to keep such a vehicle for use.
(3) A person who keeps more than ten motor vehicles for use solely in the course of trade and industry shall be entitled to a deduction of ten per cent. On the aggregate amount of tax to which he is liable.
Explanation:-- The expression 'trade and industry' includes transport for hire'.
There were four Schedules to the Rajasthan Act. The result of reading of Section 4 of the Act with the Schedules was that no one could use or keep a motor vehicle in Rajasthan without paying the appropriate tax for it and if he did so he was made liable to the penalties imposed under Section 11 thereof. The Rajasthan Act fixed the quantum of tax with regard to the seating capacity is some cases and loading capacity to other cases just as the Adhiniyam does. The tax under consideration was held by the Supreme Court to be compensatory in character. S. K. Das, J., who delivered the majority judgment, observed that (at p. 1425):
'It seems to us that a working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities. It would be impossible to judge the compensatory nature of a tax by a meticulous test, and in the nature of things that cannot be done.
Nor do we think that it will make any difference that the money collected from the tax is not put into a separate fund so long as facilities for the trades people who pay the tax are provided and the expenses incurred in providing them are borne by the State out of whatever source it may be. In the cases under our consideration the tax is based on passenger capacity of commercial buses and loading capacity of goods vehicles; both have some relation to the wear and tear caused to the roads used by the buses. In basing the taxes on passenger capacity or loading capacity, the legislature has merely evolved a method and measure of compensation demanded by the State, but the taxes are still compensation and charge for regulation.'
Applying the test laid down by the Supreme Court, we find that the Passenger Tax leviable under the Adhiniyam is a compensatory tax. Section 3 (1) of the Adhiniyam provides that,
'From and after the coming into force of this section there shall be levied and paid to the State Government a tax on every passenger carried by a stage carriage at a rate equivalent to five per cent of fare payable by such passenger to the operator of the stage carriage in respect of his journey in the State :
Provided that ............
Explanation I.-- When a passenger is carried by stage carriage at a concessional rate or without being charged any fare, the fare normally payable for the journey shall, for the purposes of this section be deemed to be the fare payable by such passenger.
Explanation II.-- In the case of a contract carriage the fare payable for the carriage divided by the number of passengers therein shall be deemed to the fare payable by each such passenger, provided that when the fare payable for the carriage is less than seventy-five per cent, of that worked out at the maximum rates, if any, fixed for contract carriages in pursuance of the provisions of the Motor Vehicles Act, 1939, such seventy-five per cent, shall be deemed to be the fare payable for the carriage.'
The tax as in the case of the Rajasthan Act was based on passenger capacity of commercial buses which clearly has relation to the wear and tear caused to the roads used by the buses. It is thus reasonable to hold that the tax payable under the Adhiniyam is compensatory in character. Its object clearly is to raise funds for providing better roads and maintaining them and providing other facilities to the travelling public. Thus whether the holder of a stage carriage permit is in arrears of such tax or not is a relevant consideration under Section 47 (1) (a) of the Act. Their collection is evidently connected with the organization of the transport system in the State and the user of the highway by 'the public service vehicles. Imposition of a condition about payment of a transport tax was held to be valid and within the scope of Section 47 (1) of the Act in Arbind Kumar Singh v. Nand Kishore Prasad : AIR1968Pat254 . It was urged before the High Court that Bihar Act XVII of 1950 and the rules made thereunder contained ample provision for realisation of the tax provided for by that Act and for that purpose it was not necessary to impose such a condition while granting permit. Rejecting the argument, it was observed by Narasimhan, C. J. (as he then was) speaking on behalf of the Court that (at p. 256),
'Once it is conceded (quite properly) that, in granting a permit, the R. T. A. shall have regard to the interests of the travelling public using the roads in the State and once it is clearly established that transport taxes are in the nature of compensatory taxes, it is always open to the Authority to insist on payment of such taxes before granting permit because such a condition will be in the interests of the general travelling public using motor vehicles. It may be that the transport tax is a tax on the persons travelling in the vehicles and not on the vehicles themselves but this makes no distinction in principle so far as the existence of a direct nexus between the condition imposed and the purpose of Section 47 of the Motor Vehicles Act is concerned.'
These observations are relevant because the passenger tax leviable under the Adhiniyam is also payable by the passengers, though it has to be collected and paid to the State Government by the owner of the vehicle. An appeal preferred against the judgment of the Patna High Court was dismissed by the Supreme Court in Arbind Kumar Singh v. Nand Kishore Prasad : 3SCR322 , though the validity of the condition was not allowed to be challenged. It was contended before the Supreme Court that the imposition of a condition that the appellant shall produce a clearance certificate in respect of the transport tax was invalid and the condition was liable to be ignored by the appellant since it was beyond the scope of Clauses (a) to (f) of Sub-section (1) of Section 47. The Supreme Court, however, observed that (at p. 1231),
'We need express no opinion on that argument. If the argument raised by counsel for the appellant has any substance, and if it be held that the grant of a permit is to be subject only to such of the conditions as may be prescribed under Section 48, the order made by the Regional Transport Authority must be deemed to be an order refusing the permit. The appellant could, if so advised, have challenged the validity of the imposition of the condition relating to the payment of tax, but he could not ignore the conditions subject to which the permit was granted.'
These observations of the Supreme Court lend support to the view taken by the learned single Judge that it did not appear fair on the part of the appellant to avoid to pay the arrears of tax.
6. Section 6A of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 provided that 'no motor vehicle plying under a permit granted by a competent Transport Authority of any other State under the provisions of the Motor Vehicles Act, 1939 (IV of 1939) shall be used or kept for use in Bihar unless there has been paid in respect thereof, a tax on fortnightly basis, calculated at the appropriate rate specified in the second Schedule to this Act.' In Dilraj Singh v. The Minister of Transport, Bihar : AIR1971Pat409 the petitioner before the Court applied for grant of a stage carriage permit on the route Bhabhua to Buxar via Chausa. The South Bihar Regional Transport Authority -- hereinafter to be referred as S.B.R.T.A. -- by a resolution dated 13th February, 1965, decided to grant the permit to the petitioner subject to production of all valid documents of 1965 model bus within one and a half months from the date of the order, that is, up to the 30th March, 1965, failing which the sanction of permit in his favour would stand automatically revoked, and the permit was to be given to the next deserving candidate, Nand Kishore Prasad who figured as respondent No. 4 before the Patna High Court on production of all valid documents of 1965 model bus along with clearance certificate of transport tax within one week and of 1965 model bus within one month from the date of revocation of sanction. In substantial compliance of the aforesaid order the petitioner before the Court filed (a) registration certificate of 1965 model bus being R. J. O. 998, (b) tax token, (c) insurance certificate and (d) challan showing deposit of Rs. 90/- only. The sanction of the permit was revoked because of the petitioner's failure to comply with the imperative terms of the resolution. Against the Order of the revocation, the petitioner preferred an appeal before the State Transport Appeal Board and the said authority dismissed the appeal of the petitioner holding that in the absence of certificate of fitness in view of Section 38 (1) of the Act on the relevant date the petitioner could not have put the vehicle on the road without any let or hindrance, and there was non-compliance of the imperative order passed by the S.B.R.T.A., because the petitioner failed to produce another valid document, namely, tax token, A revision filed by the petitioner was dismissed by the Transport Minister. The orders passed by the Transport Minister was challenged by the petitioner by means of a writ petition. It was urged by the counsel for the petitioner before the High Court that the S.B.R.T.A. but no jurisdiction while granting a permit to the petitioner to impose a restriction to the effect that he must produce valid documents, like certificate of fitness and tax token. The contention was rejected by the Division Bench, which heard the writ petition, firstly on the ground that if the petitioner thought that the imposition of such a condition by the S.B.R.T.A. was itself invalid, he should have challenged it before the superior authority in appeal or revision. It was held that having accepted the condition as valid and having attempted to claim the benefit of the order on the ground that he had fulfilled these conditions, he cannot now be permitted to take up the plea that the conditions themselves were Invalid as being outside the scope of the Act. It was further held that it could not be said that the grant of permit made subject to production of the certificate of fitness and tax token was invalid and that the condition was liable to be ignored. Tax token was required in respect of the tax payable under the Bihar and Orissa Motor Vehicles Taxation Act. Section 6-A whereof has been quoted earlier. Rejecting the contention, the Court held that.
'The tax is of compulsory nature, and its collection is connected with the transport system in the State and the user of the roads by the public service vehicles. Hence, the requirement of payment of Bihar Tax and the production of tax token before stage carriage permit can be given to an applicant cannot be struck down as being wholly unconnected with the subject........
We have already held that the tax is connected with the transport system. It is always open to the authority to insist on payment of such tax before granting the permit because such a condition shall be in the interests of the general travelling public using motor vehicles.'
In our judgment thus the rule impugned was validly framed by the State Government in exercise of the powers under Section 68 (1) of the Act and the condition could legally be incorporated in the permit granted to the appellant. Since there was a breach of the condition, the Regional Transport Authority was perfectly within its legal rights in suspending it under Section 60 (1) (a) of the Act.
7. There is, in our opinion, no merit in this appeal, which is hereby dismissed. The appellant shall be liable to pay costs to the respondents. Interim order, if any, is hereby vacated.