STATE OF KARNATAKA & ORS. v. N. MADAPPA AND ORS. ETC.

The following Order of the Court was delivered :

Delay condoned. B Leave granted.

We have heard learned counsel on both sides.

These appeals by special leave arise against the judgments dated c 18.10.1990 and 18.2.1991 of the Division Bench of the High Court of Karnataka made in W.P. Nus. 14029-036/89 and 159/9 I. The appdlant had introduced by the Karnataka Motor Vehicles Taxation (Amendment) Act 14 of 1989, sub-section (4) of Section 3 which reads as under:

"Amendment of Section 3: After sub-Section (3) of Section 3 of D the Karnataka Motor Vehicles Taxation Act, 1957 (Karnataka Act 35 of 1957) (hereinafter referred to as the principal Act), the following shall be inserted, namely :

(4) Notwithstanding anything contained in sub-section (1) and (2), E a special additional tax at the rates specified in Part-D of the Schedule shall be levied on motor vehicle suitable for use on roads carrying passengers or goods in excess of the permitted capacity of the vehicles.

(5) Insertion of new part 'D' alter Part 'C' and before the Explana- F tion, the following shall be inserted, namely :

Item Class of Vehicle Special additional tax for No. each occasion on which such excess is carried. - Rs. Ps. G Passenger vehicles carrying 1. passengers in excess of the permitted capacity, for every such excess passenger. 20-00 xx xx xx H - - - .

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(G) In the Explanation, in paragraph (3) after the words A 'Corporation', the \VOrds 'Or a Bank or a Board or a Co-operative Society or such other institution as may be notified by the State Government in this behalf shall be inserted.

8. Power to remove difficulty - If any difficulty arises in giving effect to the provisions of the Principal Act, as amended by this Act, the B State Government may, by Notification in the official gazelle make such provisions as may appear to it to be necessary or expedient for removing the said difficulty.

Provided that no such order shall be made after the expiry of C a period of two years from the date of commencement of this Act."

The respondents have challenged the validity of the above provisions. The Division Bench had held the State Government is devoid of power to levy tax at the enhanced rate on the passengers. It followed the ratio laid down by this Court in Automobile Transport (Rajasthan) Ltd. Etc. v. State D of Rajasthan & Oi:>., AIR (1962) SC 1406 and held that there is no competence of the State Legislature to enact sub-section ( 4) except to enforce Section 60 of the Motor Vehicles Act (4 of 1939) which is equivalent to Section 86 of the 1988 Act to levy tax on extra passengers and goods. E

The question, therefore, is: whether the State legislature is competent to enact law to levy tax on excess passengers carried by the holder of a permit under the Motor Vehicles Act? On an earlier occasion, when the State had amended Section 8 an armed itself with power to levy additional tax, it came to be challenged. Ultimately, this Court in M. Narasimhaiah v. F Dy. Commissioner for Transp01t, [1987] Supp. SCC 452 held that having regard to the power to levy the tax on the capacity of the vehicle deter- mined under Entry 4 of the Schedule A read with Section 8 of the Act and the rates prescribed thereunder the State Legislature has no power to impose adc!itional tax on excess passengers. While considering that qucs- G tion this Court in para 10 held thus :

"10. There is another difficulty in applying Section 8 to stray cases of overloading. Additional tax is payable for the period during which the vehicle is proposed to be used for a purpose which will attract a higher rate of tax. The rate of tax is fixed taking one H

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A quarter i.e., 3 months as a unit of time for taxation. Is il 1 rea~onably possible lo determine the higher ralc of tax payable, if, say, on lwo days in a quarter, there has heen overloading of the vehicle for a few hours or minutes'? The problem of computation of additional tax becomes difficult in such cases."

B It is true that under Entry 57 of List II of the Seventh Schedule to the Constitution, the State Legislature has power lo tax on vehicles, whether mechanically propelled or not, suitable fur use on roads subject to the provisions of Entry 35 of List lll. There is no law made by the Parliament occupying the licld under Entry 35 of List IJI. Therefore, the C Stak Legislature has power under Entry 57 to make law levying tax on vehicles.

ll is seen that under Schedule A read with Section 8, lhe State Legislature has already levied tax on lhe basis of the capacity of the passengers carried in the motor vehicle as per the pcrn1it issucd there- D under. Having had that power the question emerges: \Vhcthcr the State Legislature can levy tax on excess passengers un each of th~ occasion when the enforcing officers found the vehicle to have been overloaded'! The concept of tax on vehic!~ is not for a single day or an hour when the passengers were found to be in excess of the limit prescribed under the permit. The power to levy the tax is on the basis of the user of the vehicle for the quarter under the Act. U ndcr those circumstances, the power to levy tax under the amended sub-section (4) of Section 3 read with Schedule D on excess passengers obviously on each occasion of overloading appear~ to be unsustainable. Under those circumstances, the power to levy tax at the enhanced rate on the excess passengers on finding the vehicle to be overloaded in excess of the prescribed limit, appears to be not consistent with the scheme under Section 8 of the Act. Therefore, though for different reasons, we hold that the amendment is not valid in law.

The appeals are accordingly dismissed. No costs.

R.P. Appeals dismissed.