AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1988 (8) TMI 419
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....s the annual rate on all motor cycles used or kept for use in the State. The said provisions further provided that in case of motor cycles used or kept for use by a company or other commercial organisation, the one time tax was to be levied at thrice the rate. Section 6 of the Maharashtra Act 14 of 1987, added sub-section (6) to Section 9 of the principal Act. The new sub-section (6) enabled a registered owner of motor cycle or tricycle to obtain refund of "one time tax" in cases where (a) the vehicle is removed outside the State; and (b) the registration of vehicle is cancelled due to scrapping of the vehicle, or for a similar reason. The refund was to be paid in accordance with the Fourth Schedule. The Third and Fourth Schedules were introduced by the Maharashtra Act 14 of 1987. In the case of Luna Mopeds, the one time tax comes to ₹ 2925 which according to the petitioners in the S.t.P. Nos. 1 1673-75/87, is 86% of the ex-factory price of the Moped. In that view the petitions were filed by the respondents in the first batch of appeals and the petitioners in the second batch challenging the amended provisions of the Bombay Motor Vehicles Tax Act, 1958. On or abou....
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....ntions are judged, it is imperative to reiterate that the tax imposed on motor vehicles or a class of motor cycles would not be valid unless it is compensatory or regulatory or does not have any nexus with the vehicles using the public roads. In such a case the levy would be violative of Act. 301 of the Constitution and would not be protected by Act. 304 of the Constitution. In this connection reference may first be made to the observations of this Court in Bolani Ores Ltd. v. State of Orissa, [1975] 2 SCR 138 where at page 155 this Court observed that Entry 57 of List II of the Seventh Schedule was subject to the limitations, namely, the power of taxation cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads. If the vehicles do not use the roads, notwith-standing that these are registered under the Act, these cannot be taxed. More or less the same view was echoed in G. K. Krishnan v. The State of Tamil Nadu & Anr., [1975 ] 2 SCR 715. See also Malwa Bus Service (P) Ltd. v. State of Punjab & Ors.,[1983] 2 SCR 1009. On behalf of the appellant-State, the learned Advocate- General submitted that the amendments enacted by the Maharashtra Ac....
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....derably wide discretion in the matter of classification of taxation purposes. the fact that the tax falls more heavily on some in the same category, is by itself no ground to render the law invalid. Similar are he observations of this Court in Mrs. Meenakshi & Ors. v. State of Karnataka & Ors., AIR 1983 Sc 1283; Anant Mills Co Ltd. v. State of Gujarat & Ors.,[1975] 3 SC 220 and Khhandige Sham Bhat & Ors. V. The Agricultural Income ax Office, [1963] 3 SCR 809. PG NO 489 In the instant case, the impugned legislation had been subsequently amended to provide for the refund of a proportionate part of the one-time tax in the event of the vehicle not being used for a period of quarter or more than a quarter of a year as mentioned before. This was provided by substituting a new sub-section (7) to section 9 of the Act and also substituting new Fifth Schedule. Even after the amendment, however, no refund is available in respect of a vehicle which has been registered for more than 13 years. The effect of the same is that no refund at all is available in respect of the tax paid for a vehicle for the 14th and 15th years, it was urged on behalf of the respondents in the appeals and the petition....
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.... per year to be an adequate compensatory tax. However, by recovering the tax for the future period of 15 years in advance as a one time levy, the taxing authorities are in fact recovering not ₹ 65 per two wheeler per year but in reality about ₹ 356.79 per two wheeler per year. The respondents/petitioners sought to explain the position by submitting that if the two wheeler owner has an amount of ₹ 975 with him at the time of purchase of the vehicle, and is not compelled to make one-time payment, then he would initially pay only ₹ 65 as the tax for the first year. That would leave a balance amount of ₹ 9.10 which could be invested by him at an interest yield of 15% per annum. It was urged that the rate of interest that is recoverable as well as paid under the Income Tax Act is 15% per annum. The said amount of ₹ 910 would yield an interest of ₹ 136.50 in the first year. Out of that amount of ₹ 136.50 an amount of ₹ 65 would be paid by the two wheeler owner as tax at the beginning of the second year. Consequently, an amount of ₹ 71.50 would be available from out of the said interest earning of ₹ 136.50, which also could....
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....ears, that of motor cycles c) years and that of mopeds 5 years. But what was emphasised was that one-time levy of tax compelled owners of two wheelers to incur a further expenditure of about 70% of the cost of the vehicles purchased by them at the time they acquire the vehicle and that imposes heavy additional liabilities. It was, therefore, submitted that it was neither compensatory nor regulatory and further more, it was discriminatory. It was further submitted that section 3(IC)(c) exempts public trusts and recognised institutions. That was bad. In our opinion, after the amendment the mischief mentioned in the judgment and order of the High Court of Bombay has been remedied. On an examination of the various provisions of the Act as amended, we have come to the conclusion that after the amendment the Act comes within the constitutional requirement of making the one-time tax a regulatory and compensatory tax. It is true as was emphasised that the Act has not provided for refund in the 14the and 15th years but does not make the law outside the competence of the State Legislature. It is not mathematical precision that is necessary nor can it be. There is in the provisions as amende....
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....e of Article 14. Historically, the company-owned vehicles have always been taxed at a rate higher than the individually-owned vehicles. As appears from the records produced. the motor cycles and tricycles constituting 56 to 58 per cent of all types of vehicles contribute only 6.4 per cent of the total revenue earned through the tax imposed by the Act. It is well- settled that the Legislature has the power to distribute tax burden in a flexible manner and the Court would not interfere with the same. This principle has been reiterated in G.K. Krishnan etc. etc. v. The State of Tamil Nadu & Anr. etc., (supra) where this Court observed that in the context of commercial regulation, Article 14 is offended only if the classification rests on grounds wholly irrelevant to the achievement of the objective and this lenient standard is further weighted in the State's favour by the fact that a statutory discrimination will not be set aside if a state of facts may reasonably be conceived by the PG NO 493 Court to justify it. Tax laws have to respond closely to local needs and Court's familiarity with these needs is likely to be limited. Therefore, the Court must be aware of its own remot....