Actual use governs motor vehicle tax, and separate tax liability may arise despite a contract carriage permit.

Motor vehicle taxation turns on the actual use of the vehicle during the relevant period, not merely on the permit description. A vehicle used for individual passenger fares without being hired as a whole under one prior contract may be treated as a stage carriage for tax purposes, even if a contract carriage permit is held. Breach proceedings under the Motor Vehicles Act for permit violations are separate from tax proceedings under the Taxation Act, so action under one statute does not bar levy under the other. The controlling test is the real character of use, and tax is attracted according to the class in which the vehicle is in fact used.

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Issues: (i) whether a public service vehicle hired under a contract carriage permit can be treated as a stage carriage for tax purposes when it is actually used by collecting individual fares; (ii) whether the levy of stage carriage tax depends on the nature of the permit held by the owner or on the actual use of the vehicle; and (iii) whether action for breach of permit conditions under the Motor Vehicles Act bars levy of tax under the Taxation Act.

Issue (i): Whether a public service vehicle hired under a contract carriage permit can be treated as a stage carriage for tax purposes when it is actually used by collecting individual fares.

Analysis: The distinction between the two classes turns on the real character of the user. A contract carriage requires a prior contract, express or implied, for the use of the vehicle as a whole for a fixed or agreed sum, ordinarily under the control of a single person or party. Where there is no such single contract and separate passengers independently contract and pay individual fares, the vehicle is not being used as a contract carriage. The presence or absence of passengers being picked up en route is not the ining test; the essential test is whether the vehicle was hired as a whole under one contract.

Conclusion: The vehicle was rightly treated as a stage carriage for tax purposes.

Issue (ii): Whether the levy of stage carriage tax depends on the nature of the permit held by the owner or on the actual use of the vehicle.

Analysis: Tax under the Taxation Act is imposed on every motor vehicle used or kept for use in a public place, and the notification specifies the class and rate of tax. The determining factor is the nature of the use of the vehicle, not the description of the permit. If the class of the vehicle changes by reason of its actual use during the relevant period, the higher rate applicable to that class becomes leviable.

Conclusion: Tax liability depends on actual use and not on the permit held by the owner.

Issue (iii): Whether action for breach of permit conditions under the Motor Vehicles Act bars levy of tax under the Taxation Act.

Analysis: Proceedings for cancellation or suspension of permit for breach of permit conditions and proceedings for levy of tax are distinct. The former is concerned with violation of permit terms, while the latter is concerned with the class and use of the vehicle. Nothing in the scheme of the statutes prevents simultaneous or separate action on both counts.

Conclusion: Levy of tax was not barred by the initiation of proceedings under the permit provisions.

Final Conclusion: The vehicle having been found to be used as a stage carriage on the facts, the higher tax was lawfully levied and the writ petitions were liable to fail.

Ratio Decidendi: For motor vehicle taxation, the controlling criterion is the actual use of the vehicle during the relevant period; a vehicle becomes taxable according to the class in which it is in fact used, regardless of the permit held, and a contract carriage is not converted into a stage carriage merely because individual fares are collected if the vehicle is hired as a whole under a single prior contract.

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