Compensatory motor vehicles tax upheld as a valid fiscal levy, with no arbitrary classification or business restraint shown.

An enhanced motor vehicles tax was upheld as compensatory because the levy substantially corresponded to the cost of roads, bridges and related transport facilities, so it did not fall within the prohibition in Articles 301 or 304(b). Differential treatment of stage carriages and goods carriers was also sustained because taxation may classify distinct vehicle classes on a rational basis, and no arbitrary or hostile discrimination was shown under Article 14. The challenge under Article 19(1)(g) failed because a fiscal burden is not unconstitutional merely for making business less profitable; the levy was not shown to be confiscatory or an unreasonable restraint. The impugned tax and notification were upheld.

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Issues: (i) whether the enhanced motor vehicles tax and the retrospective notification were compensatory in character and therefore outside the mischief of Articles 301 and 304(b) of the Constitution; (ii) whether the levy offended Article 14 by arbitrary or hostile discrimination between different classes of motor vehicles; and (iii) whether the levy imposed an unreasonable restriction on the freedom to carry on business under Article 19(1)(g) of the Constitution.

Issue (i): whether the enhanced motor vehicles tax and the retrospective notification were compensatory in character and therefore outside the mischief of Articles 301 and 304(b) of the Constitution.

Analysis: A levy on motor vehicles under the State taxing power may fall outside Part XIII if it is truly compensatory, that is, if it is levied to meet the cost of facilities such as roads, bridges and connected transport infrastructure, and if the burden does not patently exceed the cost of those facilities. Exact arithmetical correlation is not required, and the Court may look to the substance of the levy, including related expenditure on transport administration and road-related services. On the material placed, the receipts and expenditure over the relevant period showed that the levy substantially corresponded to the facilities provided to motor vehicle operators.

Conclusion: The levy was held to be compensatory and did not contravene Articles 301 or 304(b).

Issue (ii): whether the levy offended Article 14 by arbitrary or hostile discrimination between different classes of motor vehicles.

Analysis: Taxation laws may classify persons or vehicles differently if the classification is reasonable and has a rational nexus with the object sought to be achieved. Stage carriages and goods carriers were treated as distinct classes having different operating characteristics and economic incidents. The material before the Court did not establish that the classification was arbitrary or that the rate structure was manifestly discriminatory.

Conclusion: The challenge under Article 14 failed.

Issue (iii): whether the levy imposed an unreasonable restriction on the freedom to carry on business under Article 19(1)(g) of the Constitution.

Analysis: A fiscal burden does not become unconstitutional merely because it makes a business less profitable or more onerous. The relevant inquiry is whether the levy is so excessive as to amount to a confiscatory or unreasonable restraint. On the facts, the Court found no sufficient material to hold that the levy had that effect, and the claim that the business had become uneconomical was not established.

Conclusion: The challenge under Article 19(1)(g) failed.

Final Conclusion: The impugned tax and notification were upheld, and the writ petitions were dismissed.

Ratio Decidendi: A motor vehicles tax is constitutionally valid if it is compensatory in substance and does not patently exceed the cost of the transport facilities provided, while differential taxation of distinct classes of vehicles is permissible when supported by a reasonable classification.

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