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TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1174
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....ds, the welfare legislation is intertwined with the compensatory legislation by the impugned Amendment Act of 2005 and together they substantially encroach and override the relevant provisions of the Central legislation i.e., the Motor Vehicles Act, 1988 for short, "the 1988 Act" or "the Central Act", as the case may be to paralyse the Stage and Goods Carriage Operation or to undermine the effectiveness of the transport permit provided under the 1988 Act. 3. The 1976 Act was enacted by the State Legislature when the erstwhile Motor Vehicles Act, 1939 for short, "the 1939 Act" was in force. It was so enacted under Entry 56 (Taxes on goods and passengers carried by road or on inland waterways) and Entry 57 (Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III) of List II of the Seventh Schedule to the Constitution. Section 15 of the 1976 Act postulates that non-payment of tax due in respect of a transport vehicle within the prescribed period would render the transport permit for such vehicle ineffective from the date of expiry of the said period until such time as the tax is actually....
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....ect conflict, the impugned provisions in the State Act(s) are ultra vires for want of legislative competence. 6. Notably, in the writ petitions filed before the High Court of Kerala, challenging the stated provisions in the State enactments, no relief or declaration was sought in respect of Section 8A of the 1985 Act. Moreover, the Division Bench of the High Court in the impugned judgment noted that the counsel for the petitioner(s) had given up the challenge to the validity of Section 15 of the 1976 Act. Being conscious of this indisputable position, it is urged that there can be no estoppel on legal questions or the concessions made by the counsel on the question of law before the High Court. That cannot come in the way of the appellants to pursue the challenge to the impugned provisions before this Court. 7. Be that as it may, the Division Bench of the High Court exhaustively considered the arguments canvassed on behalf of the parties and on thorough scrutiny thereof, it negatived the challenge vide impugned judgment dated 30.7.2007. The High Court opined that the combined effect of sub-sections (7) and (8) of Section 4 and Section 15 of the 1976 Act, is that if a clearance ce....
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....nnot be held to be invalid solely because it incidentally touches upon another legislation. The doctrine of pith and substance would clearly get attracted in the fact situation of the present case. Whilst dealing with the argument of the appellants that the right of appeal and review available to the appellants under the 1985 Act would be curtailed, the High Court in paragraphs 18 and 19 noted thus: "18. Petitioners, as we have already indicated, have raised a contention that because of the introduction of sub-sections (7) and (8) to Section 4 of the Taxation Act, remedy of filing a review as well as appeal under Section 8 of the Welfare Fund Act has been effectively curtailed. Sub-section (2) of Section 8 enables a person to file a review petition before the authority who had determined the arrears showing the detailed facts and reasons for reviewing the original determination. Right is also conferred on the aggrieved party if he is dissatisfied with the order passed by the authority on the review petition to file appeal before the District Labour Officer of the concerned district. To maintain an appeal he need remit only 50% of the amount demanded. The above right to file revie....
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.... neither a case of levy of tax not permitted under the 1988 Act nor deviating from the spirit of the said Act, which clearly predicates that for grant of stage carriage permit, the Regional Transport Authority is obliged to consider the satisfactory performance of the applicant as a stage carriage operator, including payment of tax by the applicant. The provision(s) in the State Legislation is not to suspend the permit issued under the 1988 Act, but the expression "ineffective" ought to be construed as enabling the permit holder to avail of the permit only upon payment of vehicle tax under the 1976 Act, as amended from time to time. On this analysis, the High Court rejected the challenge and dismissed the writ petitions and writ appeals vide impugned judgment. 11. The appellants have assailed the view taken by the High Court. It is urged by Mr. K. Parameshwar, learned counsel appearing for the appellants that the Central legislation i.e., the 1988 Act, occupies the entire field of permits and the said legislation is a self-contained code as expounded by this Court in Hardev Motor Transport vs. State of M.P. & Ors. (2006) 8 SCC 613 (paras 4, 11 and 12). He would submit that Chapter....
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.... Uttar Pradesh & Ors. (1956) SCR 393. Reliance is also placed on Thirumuruga Kirupananda Variyar Thavathiru Sundara Swamigal Medical Educational & Charitable Trust vs. State of Tamil Nadu & Ors. (1996) 3 SCC 15 (para 26); and Kulwant Kaur & Ors. vs. Gurdial Singh Mann (Dead) by LRs. & Ors. (2001) 4 SCC 262 (para 14). 13. It is urged that as there is repugnancy, the State of Kerala ought to have obtained Presidential assent in respect of the 1976 Act after coming into force of the 1988 Act as was obtained under the proviso to Article 304(b) of the Constitution on 25.3.1976 in reference to the provisions of the 1939 Act. In absence of such Presidential assent, Section 15 of the 1976 Act is rendered ultra vires, being repugnant with Section 81 of the 1988 Act. Reliance is placed on Kaiser-I-Hind Pvt. Ltd. & Anr. vs. National Textile Corpn. (Maharashtra North) Ltd. & Ors. (2002) 8 SCC 182 (paras 72 to 76). For the same reason, the State of Kerala ought to have obtained Presidential assent under Article 304(b) of the Constitution in respect of amended provisions vide the Amendment Act of 2005. Reliance is also placed on Hoechst Pharmaceuticals Ltd. & Ors. vs. State of Bihar & Ors. (198....
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.... and, hence, it is open to the appellants to challenge the validity of this provision in the present appeals. In his submission, Entry 57 of List II (State List) is made subject to Entry 35 of the Concurrent List (List III). Hence, the impugned amendments in Section 4 of the 1976 Act cannot encroach and override the Central legislation i.e., the 1988 Act, much less undermine the Stage and Goods Carriage Operations as per the permit issued under that Act. 17. It is further urged that Entry 57 of List II (State List) is not made subject to Entry 24 of the Concurrent List and for which reason, the 1976 Act cannot be made subservient to the 1985 Act. The 1985 Act is a labour welfare legislation, whereas the 1976 Act is a legislation which is compensatory in nature. In any case, the 1988 Act is a complete code and a regulatory legislation. In his submission, the welfare legislation has been intertwined by the State of Kerala with the compensatory legislation vide impugned amendments/insertions and together these provisions substantially encroach and override the dispensations and provisions predicated in the 1988 Act concerning issuance of permits and its effectiveness. In his submissi....
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....not refuse to do so much less to impact the Stage and Goods Carriage Operations with valid permits issued under the Central legislations i.e., the 1988 Act. The permit so issued cannot be rendered ineffective by a State legislation. In that sense, the impugned amendments/insertions are hit by Article 254(1) and 254(2) of the Constitution. The presumption of constitutionality cannot come to the aid of the impugned amendments/insertions which are vitiated by manifest legislative arbitrariness and have deleterious impact on the permit of Stage and Goods Carriage Operations. The impugned insertions, therefore, fall foul of Article 19(1)(g) of the Constitution as well. Reliance is placed on Ajay Hasia & Ors. vs. Khalid Mujib Sehravardi & Ors. (1981) 1 SCC 722 (para 16) and K. Shyam Sunder Supra at Footnote No.36 (paras 50 to 53). It is, therefore, submitted that the appeals be allowed and the impugned provisions in the State enactments be declared as unconstitutional. 20. Mr. Abraham Mathews, learned counsel appearing for the State of Kerala, has adopted the reasons recorded by the Division Bench of the High Court in the impugned judgment. Additionally, it is submitted that the appella....
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....tors pursuant to permit issued under the Central legislation. The workers engaged by them may not be eligible to avail of the pension and provident fund scheme. In most of the cases, they are typically unorganised and part of the informal workforce of the country and often left to fend for themselves. The 1985 Act is to reach out to such workers and provide them with support on the basis of the collection made from the Stage and Goods Carriage Operators. In the past, there has been any number of instances where the operators had deliberately avoided to pay and contribute to the workers' welfare fund which was frowned upon even by the High Court warranting amendments to the State legislations which are impugned in the present proceedings. 23. It is, thus, urged that the challenge set forth by the appellants is devoid of merit. In that, the provisions of the State enactments, which are impugned in the present proceedings, do not undo the permit issued under the Central legislation as such, but merely restates the mandate of the Central legislation itself that the vehicle cannot be used without permit and payment of vehicle tax. Merely because permit is issued under the Central legis....
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....e 1985 Scheme provide for determination of the amount due under the Act and the Scheme from the employer, employee and self-employed person. It provides for remedy of review petition before the authority, who determined the arrears; an appeal before the District Labour Officer; and, in cases where arrears in dispute exceed Rs.1,00,000/-, a second appeal to the Kerala Motor Transport Workers Welfare Fund Board. The appeal can be entertained only if 50% of the amount, as mentioned in the order under challenge, is paid. It was noticed that mandate of the 1985 Act and the 1985 Scheme was not being complied with in most of the cases. This aspect was taken note of by the High Court in O.P. No.7440 of 2003 filed by the Kerala Private Bus Operators Federation and pursuant to the directions issued by the High Court, not only the Scheme was amended, but Section 8A came to be inserted in the 1985 Act vide Act 23 of 2005. Simultaneously, by Act 24 of 2005, the 1976 Act came to be amended by inserting sub-Sections (7) and (8) in Section 4 of that Act. The purport of the inserted sub-Sections (7) and (8) of Section 4 was more or less in line with the regime specified in Section 15 of the 1976 Ac....
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....ce of non-payment of such tax. Whereas, the 1976 Act has been enacted by the State Legislature under Entry 57 of List II of the Seventh Schedule to the Constitution, which is exclusively within the domain of the State Legislature. The regime regarding payment of tax in respect of motor vehicles and the consequence of non-payment, are, therefore, exclusive to the 1976 Act. Thus understood, there is no question of repugnancy between the provisions of the 1988 Act and the State legislation in the field occupied by the 1976 Act. Suffice it to observe contends the learned senior counsel that Section 15 of the 1976 Act does not reduce the period of validity of the permit issued under the 1988 Act, but it only stipulates that the vehicle tax due in respect of transport vehicle must be paid within the prescribed period and thereby declaring that in case of non-payment of tax, the validity period of permit cannot come in the way of initiating action against the vehicle used or kept for use within the State of Kerala without payment of vehicle tax. If so understood, there is no conflict between the period prescribed in terms of Section 81(1) of the 1988 Act and the provisions in the State le....
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....upananda Variyar Thavathiru Sundara Swamigal Medical Educational & Charitable Trust Supra at Footnote No.25 wherein the Court observed in paragraph 26 as follows: "26. It cannot, therefore, be said that the test of two legislations containing contradictory provisions is the only criterion of repugnance. Repugnancy may arise between two enactments even though obedience to each of them is possible without disobeying the other if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field. The contention of Shri Sanghi that there is no repugnancy between the proviso to Section 5(5) of the Medical University Act and Section 10-A of the Indian Medical Council Act because both can be complied with, cannot, therefore, be accepted. What has to be seen is whether in enacting Section 10-A of the Indian Medical Council Act, Parliament has evinced an intention to cover the whole field relating to establishment of new medical colleges in the country." 34. Keeping in mind the exposition of this Court in the aforementioned decisions, we would immediately turn to the Act enacted by the Parliament in 1988. This Act had ....
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....ament and State Legislature) is possible without disobeying the other. We shall elaborate on this aspect while dealing with efficacy of the law made by the State Legislature a little later. Suffice it to observe that the argument regarding repugnancy is devoid of merit. 35. As regards the 1976 Act enacted by the State Legislature, the same is ascribable to Entries 56 and 57 of List II - State List. Entry 56 deals with taxes on goods and passengers carried by road or on inland waterways. Entry 57 deals with taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List III. In one sense, the law made by the State Legislature is also ascribable to Entry 35 of List III under which the Parliament has already enacted 1988 Act. However, as aforementioned, the law made by the Parliament, being 1988 Act, does not touch upon or deal with the field of manner of levy of vehicle tax and collection thereof. Whereas, the 1976 Act enacted by the State Legislature is to consolidate and amend the laws relating to the levy of tax on motor vehicles and on passengers and goods carried by such vehicles in the State ....
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....spector may, if he has reason to believe that a taxable motor vehicle is used or kept for use in the State without paying the tax, seize and detain that vehicle and make arrangements for the safe custody of that vehicle pending production of proof of payment of the tax." Concededly, the validity of these two provisions have not been assailed by the writ petitioners and, failure to do so, may have some bearing on the view that we propose to take. Additionally, we may also advert to Section 15 of the Act which is the subject-matter of challenge in these proceedings. The same reads thus: "15. Transport Vehicle permit to be ineffective if tax not paid.- Notwithstanding anything contained in the Motor Vehicles Act, 1939 (Central Act 4 of 1939) if the tax due in respect of a transport vehicle is not paid within the prescribed period, the validity of the permit for that vehicle shall become ineffective from the date of expiry of the said period until such time as the tax is actually paid." 36. From the scheme of the 1976 Act, it is amply clear that it is specific to levy of tax on motor vehicle and passengers and goods carried by such vehicle in the State of Kerala. It is not a law re....
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....e legislation constituting a fund to promote the welfare of motor transport workers in the State of Kerala. This Act is ascribable to Entries 23 and 24 of List III - Concurrent List. Entry 23 deals with social security and social insurance; employment and unemployment and Entry 24 deals with welfare of labour including conditions of work, provident funds, employers' liability, workmen's compensation, invalidity and old age pensions and maternity benefits. Ostensibly, it may appear that the liability arising from the obligations under the 1985 Act have nothing to do with the subject of vehicle tax. However, the 1985 Act has been enacted with the objects and reasons noted. As a vast number of employees were being engaged in Motor Transport Industry in the State in the private sector, the Government thought it necessary to provide for the constitution of a Fund to promote the welfare of such of the motor transport workers in the private sector who are not covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the Payment of Gratuity Act, 1972. In other words, this Act came into being to ameliorate the difficulties encountered by the motor transport worker....
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....ellants have not disputed their liability to pay the vehicle tax levied under the 1976 Act as well as to pay contribution towards the workers' welfare fund under the 1985 Act. So understood, the real grievance in these appeals by the motor transport vehicle owners/permit-holders is about compelling them to pay the welfare contribution dues as a precondition for collection of vehicle tax. We have no hesitation in taking the view that such dispensation cannot be construed as unconstitutional. Further, such a plea cannot be countenanced at the instance of someone who otherwise concedes liability to pay both the dues towards welfare fund contribution and vehicle tax. It is beyond comprehension that the vehicle owner/permit-holder can be heard to argue that he would not pay the dues under the 1985 Act and, yet, would continue with the business of motor transport as usual in the State of Kerala by exploiting the workers on the specious plea that the validity of the permit to operate transport vehicle cannot be interdicted under a State legislation. The provision in the form of Section 15 of the 1976 Act is in the nature of restating the consequences flowing from Sections 10 and 11 of the....
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....tion as well as vehicle tax payable by the same vehicle owner/permit-holder. 43. While parting, we must note that the writ petitioners through their counsel had fairly accepted during oral argument that after the 2005 amendment, for all these years they have been following the dispensation provided under the State legislations without exception. In that sense, the challenge has become academic. Be that as it may, we have negatived the stand taken by the writ petitioners regarding the validity of the amended provisions being repugnant to the law made by the Parliament. 44. In view of the above, these appeals must fail and the same are dismissed with costs. Pending application(s), if any, stands disposed of. Foot Note 6 4. Payment of tax and issue of license.- (1) The Tax levied under Sub Section (1) of Section 3 shall be paid in advance with such period and in such manner as may be prescribed, by the registered owner or person having possession or control of the Motor Vehicle, for a quarter or year, at his choice, upon a quarterly or annual licence to be taken out by him. Provided that, in the case of fleet owner, the Government may direct that the tax shall be paid in monthl....
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.... 10 years' licence shall not exceed forty times and tax for 15 years' licence shall not exceed sixty times, the tax for a quarterly licence. (1A) Notwithstanding anything contained in any other provision of this Act, 'year' in relation to a motor vehicle in respect of which tax has to be paid yearly upon an annual licence in pursuance of the second proviso to sub section (1), shall mean a period of twelve months commencing on the first day of the quarter in which the vehicle has been or is, first registered in the State and annual tax licence in respect of such a vehicle shall be taken accordingly: Provided that if the tax in respect of a motor vehicle for any portion of the year so reckoned has already been paid, the tax payable for the remaining period of that year shall be calculated at the rate of one-twelth of the annual tax for each calendar month or part thereof. Provided further that in the case of a motor vehicle in respect of which tax has to be paid yearly upon an annual licence in pursuance of the second proviso to sub-section (1), the tax for the period from the 1st day of April 1985, to the commencement of the year in relation to such a vehicle shal....
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.... transport undertaking liable to pay contribution (other than autorickshaws covered under the provisions the Kerala Autorickshaw Workers' Welfare Fund Scheme, 1991) shall, at the time of making payment of the tax under the Kerala Motor Vehicles Taxation Act, 1976 (19 of 1976) produce before the Taxation Officer the receipt of remittance of the contribution to the fund upto the preceding month. 8 81. Duration and renewal of permits.-(1) A permit other than a temporary permit issued under section 87 or a special permit issued under sub-section (8) of section 88 shall be effective from the date of issuance or renewal thereof for a period of five years: Provided that where the permit is countersigned under sub-section (1) of section 88, such counter-signature shall remain effective without renewal for such period so as to synchronise with the validity of the primary permit. 9 87. Temporary permits.-(1) A Regional Transport Authority and the State Transport Authority may without following the procedure laid down in section 80, grant permits to be effective for a limited period which shall, not in any case exceed four months, to authorise the use of a transport vehicle temporarily- ....
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....d under a contract, express or implied, for the use of the vehicle as a whole without stopping to pick up or set down along the line of route passengers not included in the contract, and in every case where such special permit is granted, the Regional Transport Authority shall assign to the vehicle, for display thereon, a special distinguishing mark in the form and manner specified by the Central Government and such special permit shall be valid in any other region or State without the countersignature of the Regional Transport Authority of the other region or of the State Transport Authority of the other State, as the case may be. ..... 16 82. Transfer of permit.-(1) Save as provided in sub-section (2), a permit shall not be transferable from one person to another except with the permission of the transport authority which granted the permit and shall not, without such permission, operate to confer on any person to whom a vehicle covered by the permit is transferred any right to use that vehicle in the manner authorised by the permit. (2) Where the holder of a permit dies, the person succeeding to the possession of the vehicle covered by the permit may, for a period of ....
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....the nature specified in sub-section (1), may set aside or vary any order made by the court below, notwithstanding that no appeal lies against the conviction in connection with which such order was made. 19 177. General provision for punishment of offences.-Whoever contravenes any provision of this Act or of any rule, regulation or notification made thereunder shall, if no penalty is provided for the offence be punishable for the first offence with fine which may extend to five hundred rupees, and for any second or subsequent offence with fine which may extend to one thousand and five hundred rupees. 20 207. Power to detain vehicles used without certificate of registration permit, etc.-(1) Any police officer or other person authorised in this behalf by the State Government may, if he has reason to believe that a motor vehicle has been or is being used in contravention of the provisions of section 3 or section 4 or section 39 or without the permit required by sub-section (1) of section 66 or in contravention of any condition of such permit relating to the route on which or the area in which or the purpose for which the vehicle may be used, seize and detain the vehicle, in the presc....
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....cant had been punished twice or more for any of the following offences within twelve months reckoned from fifteen days prior to the date of consideration of the application committed as a result of the operation of a stage carriage service by the applicant, namely:- (i) plying any vehicle- (1) without payment of tax due on such vehicle; (2) without payment of tax during the grace period allowed for payment of such tax and then stop the plying of such vehicle; (3) on any unauthorised route; (ii) making unauthorised trips: Provided that in computing the number of punishments for the purpose of clause (b), any punishment stayed by the order of an appellate authority shall not be taken into account: Provided further that no application under this sub-section shall be rejected unless an opportunity of being heard is given to the applicant. (5) Where a permit has been renewed under this section after the expiry of the period thereof, such renewal shall have effect from the date of such expiry irrespective of whether or not a temporary permit has been granted under clause (d) of section 87, and where a temporary permit has been granted, the fee paid in respect of such temporary pe....
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....on shall be entertained unless the amount in accordance with the order against which the appeal has been preferred is paid. (8) If the appellate authority in an appeal decides that the amount paid is in excess of what is due from the appellant, it may, by order, direct for the refund of the excess amount. (9) An officer or authority exercising the power of appeal under sub-section (5) of section 8 of the Kerala Motor Transport Workers' Welfare Fund Act. 1985, immediately before the commencement of the Kerala Motor Transport Workers' Welfare Fund (Amendment) Ordinance, 2005 shall continue to exercise such powers, in respect of the case pending before such officer or authority. 45 3. Levy of Tax.- (1) Subject to the provisions of this Act, on and from the date of commencement of this Act, a tax shall be levied on every motor vehicle used or kept for use in the State, at the rate specified for such vehicle in the Schedule: Provided that no such tax shall be levied on a motor vehicle kept by a dealer in, or a manufacturer of, such vehicle, for the purpose of trade and used under the authorization of a trade certificate granted by the registering authority; provided furthe....
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....8) and registered in any State other than the State of Kerala and entering the State of Kerala and staying therein, then, the tax payable for such vehicle shall be- (a) if such stay. does not exceed seven days one-tenth of the quarterly tax; and (b) if such stay exceeds seven days but does not exceed thirty days one third of the quarterly tax (6) In the case of motor vehicles in respect of which any reciprocal arrangement relating to taxation has been entered into between the Government of Kerala and any other State Government, the levy of tax shall, notwithstanding anything contained in this Act be in accordance with the terms and conditions of such reciprocal arrangement.: Provided that the terms and conditions of every such reciprocal arrangement shall be published in the Gazette and a copy thereof shall be placed before the Legislative Assembly of the State. 50 71. Procedure of Regional Transport Authority in considering application for stage carriage permit.- (1) A Regional Transport Authority shall, while considering an application for a stage carriage permit, have regard to the objects of this Act. (2) A Regional Transport Authority shall refuse to grant a stage carria....
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....uals; and "director", in relation to a firm, means a partner in the firm. 51 8.Production of certificate of insurance.- Every registered owner or person having possession or control of a motor vehicle shall, at the time of making payment of the tax, produce before the Taxation Officer a certificate of insurance in respect of the vehicle, which is valid at the time of making such payment, complying with the requirements of Chapter VIII of the Motor Vehicles Act, 1939 (Central Act 4 of 1939). 52 9.Liability to payment of tax by persons succeeding to the ownership, possession or control of motor vehicles.- (1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before payment of tax has transferred the ownership of such vehicle or has ceased to be in possession control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall be liable to pay the said tax. (2) Nothing contained in Sub-section (1) shall be deemed to affect the liability to pay the said tax of the person who has transferred the ownership or has ceas....