SABYASACHI MUKHARJI - (1.) THESE civil appeals and special leave petitions centre around one point, namely, the validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by S. 3 of the Maharashtra Act, XIV of 1987 as well as S. 6 of the said Act as amended by Maharashtra Act XXXIII of 1987 as well as the Maharashtra Act IX of 1988.
(2.) THE Bombay Motor Vehicles Tax Act, 1958 prior to its amendment in 1987 provided for levy of tax on vehicles annually or quarterly. In 1987, by S. 3 of the Maharashtra Act No. XIV of 1987, sub-section (1C) was added to provide for levy of one time tax at 15 times 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-sec. (6) to S. 9 of the principal Act. THE new sub-sec. (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 Thrird and Fourth Schedules were introduced by the Maharashtra Act 14 of 1987. In the case of Luna Mopeds, the one time tax comes to Rs. 2925.00 which according to the petitioners in the S.L.P. Nos. 11673-75/87, 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 about 9/10th July, 1987, a Division Bench of the Bombay High Court, Nagpur Bench held that the levy of one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule. It further held that the provision for imposition of levy at thrice the rates, so far as the vehicles owned by the firm or the company, were neither discriminatory nor arbitrary. The High Court, however, in view of the fact that the refund was restricted to the circumstances mentioned above, struck down Act 14 of 1987. According to the High Court, the absence of provisions for refund in cases of temporary non-user made the Maharashtra Act XIV of 1987, confiscatory in character and not regulatory or compensatory which alone was in the competence of the State Legislature. The State preferred applications for leave to appeal against the impugned judgment and the special leave having been granted, are the subject-matter of Civil Appeals Nos. 1631-33/87. The petitioners also filed special leave applications which are the subject-matter of Special Leave Petitions Nos. 11673-75/87 which have been heard along with these appeals. While the State's appeal against the High Court's judgment was pending before this Court, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987. It deleted S. 3(4) of the principal Act, as amended by Maharashtra Act XIV of 1987. That provision made the existing provisions of refund for temporary non-user inapplicable in cases of motor cycles and tricycles, restricting the right of refund to S. 9(6) in contingencies mentioned above. It also introduced sub-sec. (7) to S. 9 conferring right of refund in respect of motor cycles and tricycles in accordance with the rates specified in the Fifth Schedule and prescribed the rates of refund in the Fifth Schedule. But the said Schedule did not prescribe a separate rate of refund for company-owned vehicles. Therefore, the refund in respect of company-owned vehicles, would be same as that payable to individual-owned vehicles, even though the tax paid on former class of vehicles was three times. Soon thereafter the Maharashtra Legislature enacted Act 9 of 1868. The only relevant change for the present purpose was that the rate of refund was enhanced to three times in respect of company-owned vehicles. Before the contentions 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 Art. 301 of the Constitution and would not be protected by Art. 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 : (AIR 1975 SC 17 at p. 28) this Court observed that Entry 57 of List 11 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, notwithstanding that these are registred under the Act, these cannot be taxed. More or less, the same view was echoed in G.K. Krishnan v. State of Tamil Nadu, (1975) 2 SCR 715: (AIR 1975 SC 583).
(3.) SEE also Malwa Bus Service (P) Ltd. v. State of Punjab, (1983) 2 SCR 1009 : (AIR 1983 SC 634). On behalf of the appellant-State, the learned Advocate-General submitted that the amendments enacted by the Maharashtra Act No. 33 of 1987 and No. 9 of 1988, have brought the principal Act as amended by the Maharashtra Act No. XIV of 1987 within the constitutional requirements of making 'one time tax' a regulatory and compensatory tax. It was submitted by him that this development had made it unnecessary for this court to decide if the Act, as it stood when it was challenged before the High Court, was beyond the legislative competence of the State Legislature. It was further, emphasised that the fact that the act at present, does not provide for refund in the 14th and 15th years, does not make the law outside the competence of the State Legislature. It was urged that the concept of "regulatory and compensatory tax" does not imply mathematical precision. In this context one may refer to the observations of this Court in International Tourist Corpn. v. State of Haryana, (1981) 2 SCR 364 : (AIR 1981 SC 774) where at page 374 (of SCR) : Justice Chinnappa Reddy. speaking for this court observed as follows :- "But to say that the nature of a tax is of a compensatory and regulatory nature is not to say that the measure of the tax should be proportionate to the expenditure incurred on the regulation provided and the services rendered. If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee. While in the case of a fee it may be possible to precisely identify and measure the benefits received from the Government and levy the fee according to the benefits received and the expenditure incurred, in the case of a regulatory and compensatory tax it would ordinarily be well nigh impossible to identify and measure, with any exactitude, the benefits received and the expenditure incurred and levy the tax according to the benefits received and the expenditure incurred. What is necessary to uphold a regulatory and compensatory tax is the existence of a specific, indentifiable object behind the levy and a nexus between the subject and the object of the levy." ;