Penalty for tax evasion on transport vehicles upheld as a valid deterrent under constitutional equality and trade freedoms.

Section 10(3) of the Uttar Pradesh Motor Vehicles Taxation Act, 1997 was upheld against constitutional challenge under Articles 14 and 19(1)(g). The Court applied the settled presumption of validity for fiscal and economic legislation and found no manifest arbitrariness, irrationality, or discrimination. The penalty of ten times the due tax or additional tax for transport vehicles plying without payment was treated as a compensatory and deterrent measure designed to secure statutory compliance and curb tax evasion, not as a confiscatory exaction. Refund and appeal mechanisms under the Act were noted as safeguards supporting the provision's reasonableness.

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Issues: Whether section 10(3) of the Uttar Pradesh Motor Vehicles Taxation Act, 1997, imposing a penalty equivalent to ten times the due tax or additional tax on transport vehicles found plying without payment of tax, is unconstitutional as violative of Articles 14 and 19(1)(g) of the Constitution.

Analysis: The provision was examined in the setting of the State's taxation scheme for motor vehicles, including the levy of additional tax on goods carriages and the differing treatment of vehicles plying under national permits. The Court applied the settled approach that fiscal and economic legislation enjoys a presumption of constitutionality and must be struck down only if manifestly arbitrary, irrational, or plainly discriminatory. It held that the penalty under section 10(3) is not a confiscatory exaction but a compensatory and deterrent measure enacted to secure payment of statutory dues and to curb tax evasion. The existence of refund and appeal mechanisms under the Act was treated as an additional safeguard against the charge of unreasonableness.

Conclusion: Section 10(3) is valid and does not infringe Articles 14 or 19(1)(g) of the Constitution; the challenge to the provision fails.

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