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of <h1>Supreme Court upholds Karnataka Taxation Amendment Act, deems enhanced tax compensatory.</h1> <h3>Mrs. Meenakshi Alias Rama Bai Versus State of Karnataka</h3> Mrs. Meenakshi Alias Rama Bai Versus State of Karnataka - 1983 AIR 1283, 1983 (2) SCALE 317, 1984 Supp (1) SCC 326 Issues Involved:1. Whether the enhanced tax under the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1979 is compensatory and not violative of Article 301 of the Constitution.2. Whether the limited retrospectivity of the Taxation Amendment Act is permissible.3. Whether the enhanced tax is equitably distributed among different classes of transport vehicles.4. Whether the enhanced tax without a proportionate increase in fare structure is arbitrary and violates Article 14 and Article 19(1)(g) of the Constitution.Summary:Issue 1: Compensatory Nature of Enhanced TaxThe petitioners, operators of various transport vehicles in Karnataka, challenged the enhanced tax under the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1979, claiming it violated Article 301 of the Constitution. The Supreme Court held that the enhanced tax was compensatory in nature. It was established that regulatory measures or compensatory taxes for the use of trading facilities are outside the purview of Article 301. The Court referenced previous decisions, emphasizing that the tax revenue used for road construction and maintenance, terminal facilities, and other travel-related amenities qualifies as compensatory.Issue 2: Limited RetrospectivityThe petitioners argued that the Taxation Amendment Act, effective from March 31, 1979, unfairly imposed tax liability from March 1, 1979. The High Court agreed, ruling that the petitioners were not liable for the enhanced tax from March 1 to March 31, 1979, and restrained the authorities from demanding such tax for that period. The Supreme Court upheld this decision.Issue 3: Equitable Distribution of Enhanced TaxThe petitioners contended that the enhanced tax burden was not equitably distributed among different classes of transport vehicles. They argued that goods vehicles, which cause more wear and tear on roads, should bear a higher tax burden. The Supreme Court dismissed this contention, noting the Legislature's wide latitude in taxation matters. The Court found no statistical evidence to support the claim that the tax was disproportionately high for passenger vehicles compared to goods vehicles.Issue 4: Proportionate Increase in Fare StructureThe petitioners argued that the enhanced tax without a corresponding increase in fare structure made the transport business uneconomic, violating Article 14 and Article 19(1)(g). The Supreme Court rejected this argument, stating that the petitioners failed to provide tangible evidence, such as profit and loss accounts or income tax returns, to substantiate their claim of economic unviability. The Court emphasized that theoretical arguments without factual support could not be accepted.Conclusion:The Supreme Court dismissed all appeals and special leave petitions, finding no merit in any of the contentions. The Court directed that the balance of the tax in arrears, for which security was given, be paid in two equal installments within one year. The first installment was to be paid by March 31, 1984, and the second by September 30, 1984.
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