TaxTMI 
TaxTMI 
2006 (10) TMI 421
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....idate and amend the law relating to motor vehicles in exercise of its legislature power under Entry 35, List III of the Seventh Schedule of the Constitution of India. The said Act is a self-contained code. "Permit" has been defined in Section 2(31) to mean "a permit issued by a State or Regional Transport Authority or an authority prescribed in this behalf under this Act authorizing the use of a motor vehicle as a transport vehicle". "Stage carriage", "contract carriage" and "tourist vehicle" have been defined under Sections 2(40), 2(7) and 2(43) of the 1988 Act as under: "2(40) "stage carriage" means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey; 2(7) "contract carriage" means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any pers....
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....opulation of not less than five lakhs. (b) Where the number of contract carriages are fixed under clause (a), the Regional Transport Authority shall, in considering an application for the grant of permit in respect of any such contract carriage, have regard to the following matters, namely:\027 (i) financial stability of the applicant; (ii) satisfactory performance as a contract carriage operator including payment of tax if the applicant is or has been an operator of contract carriages; and (iii) such other matters as may be prescribed by the State Government" Section 192A of the 1988 Act provides for a penal clause stating: "(1) Whoever drives a motor vehicle or causes or allows a motor vehicle to be used in contravention of the provisions of sub-section (1) of section 66 or in contravention of any condition of a permit relating to the route on which or the area in which or the purpose for which the vehicle may be used, shall be punishable for the first offence with a fine which may extend to five thousand rupees but shall not be less than two thousand rupees and for any subsequent offence with imprisonment which may extend to one year but shall not be less than ....
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....is kept for the purpose of verifying whether the provisions of this Act or any rules made thereunder are being complied with: Provided that no officer shall be authorised under this sub-section with respect to motor cycles and motor cars : (2) Any person driving a motor vehicle in any public place shall, on being so required by the Taxation Authority or any officer authorised in this behalf by the State Government, produce-- (a) the certificate of registration; (b) the token in evidence of the payment of tax ; and (c) the certificate of insurance relating to the use of the vehicle and shall keep such vehicle stationary for such time as may be required by such authority or officer to satisfy himself that the tax in respect of such motor vehicle has been paid : Provided that in the case of a motor vehicle other than a transport vehicle; the certificates so required shall be produced for inspection within such period and in such manner as may be prescribed under Sub-section (4) of Section 130 of the Motor Vehicles Act, 1988. (3) The Taxation Authority or any officer authorised by the State Government in this behalf may if he has reason to believe that a motor vehi....
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....under sub-section (8) of Section 88 of the Motor Vehicle Act, 1988 by the other State for each seat (other than the driver) which the vehicle is permitted to carry Rs. 40.00 per seat per day for the entire period vehicle remains in Madhya Pradesh 50 paise for ordinary bus and Re. 1 for deluxe/ air-conditioned bus per seat per 10 kms. or part thereof for the entire distance to be covered in accordance with the conditions of the permit, in addition to tax paid under clause (c), (d), (e) or (f)(2) as the case may be. (g) Motor Vehicle plying without permit (a) Vehicle permitted to carry exceeding 3 but not exceeding 29 passengers (excluding driver) \026 (b) Vehicle permitted to carry exceeding 29 passengers (excluding driver) Rs. 600 per seat per month in accordance with entire registered seating capacity; Rs. 1000.00 per seat per month in accordance with entire registered seating capacity." Explanation (7) of the First Schedule reads as under: "Explanation (7) - The words "plying without permit" in Clause (g) shall include plying of a public service vehicle on an authorised route or making a trip not authorised by a permit granted under the Motor Vehicles Act, 1988 ....
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....edom of trade and commerce may well be considered unimpaired. In such a case the imposition assumes the character of remuneration or consideration charged in respect of an advantage sought and received." The power of the State of Madhya Pradesh to seize a vehicle in terms of Section 16(6) of the 1991 Act came up for consideration before this Court in M.P. AIT Permit Owners Assn. and Another v. State of M.P. [(2004) 1 SCC 320]. The question which arose for consideration therein was that having regard to the fact that the Parliamentary Act provides for a lesser penalty as specified in Section 192A thereof, can the State by reason of the taxing statute impose a higher penalty? It was held: "Section 192-A of the MV Act provides that if a motor vehicle is driven in contravention of Section 66(1), that is, if a vehicle is driven or caused to be driven as a transport vehicle without permit, or in contravention of any condition thereof relating to the route on which or the area in which or the purpose for which the vehicle may be used, the user is punishable with fine for the first offence and imprisonment for the subsequent offence but this section does not provide for confiscation ....
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....t capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the States' action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital etc. but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden." In regard to compensatory tax, it was opined: "A tax can be progressive. However, a fee or a compensatory tax has to be broadly proportional and not progressive. In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities. Compensatory tax is based on the principle of "pay for the value". It is a sub-class of "a fee". From the point of view of the Government, a compensatory tax is a charge for offering trading facilities. It adds to the value of trade and commer....
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....nable compensation" is convenient but vague. The standard of reasonableness can only lie in the severity with which it bears on traffic and such evidence of extravagance in its assessment as come from general considerations. What is essential for the purpose of securing freedom of movement by road is that no pecuniary burden should be placed upon it which goes beyond a proper recompense to the State for the actual use made of the physical facilities provided in the shape of a road. The difficulties are very great in defining this conception. But the conception appears to be based on a real distinction between remuneration for the provision of a specific physical service of which particular use is made and a burden placed upon transportation in aid of the general expenditure of the State. It is clear that the motor vehicles require, for their safe, efficient and economical use, roads of considerable width, hardness and durability; the maintenance of such roads will cost the government money. But, because the users of vehicles generally, and of public motor vehicles in particular, stand in a special and direct relation to such roads, and may be said to derive a special and direct ben....
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....rovides for a inclusive definition stating that the words "plying without permit" in Clause (g) shall include plying of a public service vehicle on an authorized route or making a trip not authorized by a permit granted under the 1988 Act. The role of an explanation of a statute is well-known. By inserting an explanation in the Schedule of the Act, the main provisions of the Act cannot be defeated. By reason of an explanation, even otherwise, the scope and effect of a provision cannot be enlarged. It was so held in S. Sundaram Pillai, etc. v. R. Pattabiraman [AIR 1985 SC 582 : (1985) 1 SCC 591] in the following terms: "Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is\027 "(a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change ....
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....e defaulter is required to be established. The said decision is merely an authority for the proposition that a statute may provide for a fixed penalty or minimum penalty. But it was not laid down therein that penalty can be imposed without giving an opportunity of hearing to the defaulter or without satisfying the other conditions laid down therefor. [See also State of T.N. v. M. Krishnappan and Another, (2005) 4 SCC 53]. The transport authorities of the State indisputably have a power to check a vehicle so as to ascertain whether payment of tax is being evaded. They have been conferred with the power to detain a vehicle. They can release the vehicle only when tax as demanded is paid. Even the power of the court to release the vehicle has been taken away unless tax is paid and the court can satisfy itself as to whether a tax is paid or not only on the receipt of the certificate issued by the transport authorities of the State. The power of the transport authorities, therefore, is very wide. We, however, do not mean to suggest that only because a wide power has been conferred the same by itself would lead to a presumption that the same is capable of misuse or on that count alone ....