TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 633
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.... carrying goods from Bhilai Steel Plant to Sonepat, the tanker in question entered the State of U.P and after unloading the goods returned from Sonepat. While doing so, the tanker crossed the U.P. border at Masaura and when it was about 8 kms. in the State of M.P., the vehicle was seized by the Assistant Regional Transport Officer, Lalitpur on 4.3.2002. On 5.3.2002, Sukhpal made an application for release of his vehicle on which the Assistant RTO passed an order directing Sukhpal to pay Rs. 5100/- as composite tax plus ten times penalty under section 10(3) of the said 1997 Act, as amended by U.P. Amending Act No.25 of 2001. The order of penalty was challenged by Sukhpal vide writ petition in the High Court of Allahabad, in which the validity of section 10(3) was put in issue. We have quoted the facts in the case of Sukhpal as a representative matter in the group of similar matters. Smt. Shobha Dixit, learned senior counsel appearing on behalf of the appellant-State submitted that on account of huge evasion of tax, the legislature had to enact section 10(3) providing for a deterrent penalty as the State of U.P. has a vast boundary and the vehicles could enter from distant corner....
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....under section 10 of the 1997 Act, no transport vehicle under temporary permit granted under section 87 of the M.V. Act, 1988 or under national permit granted under section 88(12) of the M.V. Act, 1988 or under permit by section 88(9) of the said M.V. Act, 1988 can ply in U.P. without payment of tax at the specified rate for each of the three categories. According to the learned counsel in the present case, we are concerned with section 10(1)(b) of the 1997 Act, as the offending vehicle was a transport vehicle under national permit granted under section 88(12) of the M.V. Act, 1988 by a authority in State of M.P. and, therefore, it was liable to pay additional tax under section 5 at the rate mentioned in clause 'B' of the third schedule to the 1997 Act. Learned counsel submitted that since the offending vehicle was found plying in the State of U.P. without payment of additional tax, it became liable to ten times penalty. Learned counsel further pointed out that section 12 of the 1997 Act provides for refund and in cases where refund is refused, the aggrieved person is entitled to move the appellate authority and, therefore, determination and adjudication is also provided fo....
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.... 5100/- and on default, they are liable to penalty of Rs. 51000/-, which according to the respondent was unreasonable, discriminatory and violative of their rights under article 14 of the Constitution. Before dealing with the aforestated contentions, we may analyse the provisions of the U.P. Motor Vehicles Taxation Act, 1997. The Act was enacted to provide for imposition of tax in the State on motor vehicles. The Act was also enacted to provide for imposition of additional tax on motor vehicles engaged in the transport of passengers and goods for hire. Section 2(a) defines "additional tax" to mean a tax imposed under section 5 or section 6 in addition to the tax imposed under section 4. Section 2(d) defines "goods carriage" to mean any motor vehicle constructed or adapted wholly or partly for use for the carriage of goods, or any motor vehicle not so constructed or adapted when actually used for the carriage of goods, and includes a trailer. Section 2(h) defines "owner" in respect of a motor vehicle to mean the person whose name is entered in the certificate of registration issued in respect of such vehicle. Section 2(n) defines "transport vehicle" to mean a goods carriage or a pu....
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....y permit granted under the 1988 Act unless the vehicle has paid a tax under section 4 calculated at the appropriate rate specified in the first schedule, as also additional tax under section 5 calculated at the appropriate rate specified in the sixth schedule. Under section 10(1)(b), no transport vehicle shall ply in U.P. under a national permit granted under section 88(12) of the M.V. Act, 1988 by an authority having jurisdiction outside U.P. unless the vehicle has paid additional tax under section 5 at the rate specified in clause 'B' of the third schedule. The main question in these civil appeals is whether section 10(3) inserted by Amending Act No.25 of 2001 imposing ten times penalty is void for infringement of respondent's rights under articles 14 and 19(1)(g) of the Constitution as held by the impugned judgment. Therefore, we are concerned with the validity of the said section which reads as follows: "10. Vehicles not to be used in Uttar Pradesh without payment of tax. (3) If such transport vehicle is found plying in Uttar Pradesh without payment of the tax or additional tax payable under this Act such tax or additional tax along with a penalty, equivalen....
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....the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. The legislature understands and correctly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and its discrimination are based on adequate grounds. There may be cases where the legislation can be condemned as arbitrary or irrational, hence, violative of article 14. But the test in every case would be whether the provisions of the Act are arbitrary and irrational having regard to all the facts and circumstances of the case. Immorality, by itself, cannot be a constitutional challenge as morality is essentially a subjective value. The terms "reasonable, just and fair" derive their significance from the existing social conditions. In the light of the above judgments as applicable to the provisions of the said 1997 Act, we are of the view that the High Court had erred in striking down section 10(3) as ultra vires articles 14 and 19(1)(g) of the Constitution. "Penalty" is a slippery word and it has to be understood in the context in which it is used in a given statute. A penalt....
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.... State stated before us and we record her statement that cases of this type would come under section 18. Learned counsel for the State also pointed out that in appropriate cases where the transport vehicle carries perishable goods, the vehicle is released on the driver depositing the relevant documents with the Tax Officer so that payment could be made within a stipulated period. Although section 18 refer to appellate authority, in our view, on an examination of the scheme of the Act, we find from the provisions of section 18 that the authority deciding appeals against orders passed by Tax Officer under section 12 is really exercising initial jurisdiction and that under the Act, there are sufficient safeguards and conditions which are not onerous and which provide a forum for the aggrieved party to get redressal and, therefore, the High Court had erred in striking down section 10(3) of the Act. In the case of Rahimbhai Karimbhai Nagriwala v. B.B. Patel & Others reported in (1974) 97 ITR 660, penalty under section 271(1)(c) of the IT Act, as it stood at the relevant time, was levied on the assessee at Rs. 13,854/-, equal to 100 per cent of the alleged concealed income. The assessee....