IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 37653 of 2004(G)
1. POSTMASTER GENERAL,
... Petitioner
2. THE SENIOR MANAGER,
3. THE SUPERINTENDENT OF POST OFFICES,
4. THE SUPERINTENDENT OF POST OFFICES,
5. THE SENIOR SUPERINTENDENT OF
Vs
1. STATE OF KERALA,
... Respondent
2. TRANSPORT COMMISSIONER,
3. REGIONAL TRANSPORT OFFICER,
4. THE JOINT REGIONAL TRANSPORT OFFICER,
5. REGIONAL TRANSPORT OFFICER,
6. REGIONAL TRANSPORT OFFICER,
For Petitioner :SRI.S.KRISHNAMOORTHY, CGC
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :24/06/2009
O R D E R
P.R.RAMACHANDRA MENON J.
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WP(C) No.37653/2004 & WP(C)15432/2006
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DATED THIS THE 24th DAY OF JUNE 2009
JUDGEMENT
Whether the vehicles owned,possessed and used by the
Postal Department are liable to pay the tax leviable under
Section 3 of the Kerala Motor Vehicles (Taxation) Act 1976,
is the moot point in both these Writ Petitions.
2. For the purpose of proper adjudication, sequence of
events or the factual controversy is not a matter to be
looked into, as the contention is mainly based on the legal
prepositions referring to Article 285 of the Constitution of
India, whereby it has been specifically provided that the
property of the Union shall, save in so far as the Parliament
may by law otherwise provide, be exempt from all taxes
imposed by a State or by any authority within a State.
3. Placing reliance on the constitutional mandate, the
learned Counsel for the petitioner submits that, since there
is total exemption from all taxes’, the vehicles belonging to
‘
WP(C) No.37653/2004 & WP(C)15432/2006
2
the Postal Department, being a property of the Union, are
not liable to suffer any tax liability imposed by the State
under S.3 of the Kerala Motor Vehicles Taxation Act 1976.
Reference is also made to the reciprocal provision as it
appears under the Article 289 of the Constitution of India,
whereby a similar exemption from the taxation by the Union
is provided in respect of the property and income of the
State as well. Viewed in such circumstances, the learned
Counsel submits, that the course and proceedings pursued
by the respondents imposing tax under the Act for the
vehicles being used by the Postal Department is not correct
or sustainable under any circumstance. The learned
Counsel for the petitioner also placed reliance on the
decision rendered by the High Court of Punjab and
Hariyana reported in A.I.R 1990 (Punjab & Hariyana)
183 to contend that the event of taxation will not be
attracted to the case in hand.
WP(C) No.37653/2004 & WP(C)15432/2006
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4. The learned Govt.pleader, in response to the
contentions taken by the petitioner, submits that the
reliance placed on Article 285 of the Constitution is
thoroughly wrong and misconceived. It is pointed out that
the source of power is very much available in view of ‘entry
No.57’ of the 2nd list under the 7th Schedule of the
Constitution of India; which undisputedly is a ‘State subject’
and as such, no challenge can be raised against the
charging provision. It is also pointed out that, as per the
law declared by the Apex Court reported in [2004] 136
STC 641 SC, it has been clearly held that the protection
under Article 285(1) is available only in respect of “direct
taxes” and that, it is having absolutely no application with
regard to the “indirect taxes” as in the instant case.
5. In the Sea Customs Act case (AIR 1963 SC 1760), a ‘9-
Judges’ Bench of the Apex Court opined , by a majority,
that article 285 envisaged immunity from ‘direct taxes’ and
WP(C) No.37653/2004 & WP(C)15432/2006
4
not from ‘indirect taxes’ such as sales tax. The decision in
Sea Customs Act case [1964] 3 SCR 787 was considered by
another ‘9-Judges Bench’ in the case of New Delhi
Municipal Committee v. State of Punjab (1997) 7 SCC 339,
and was affirmed. Both the above verdicts were considered
and relied on in 136 STC 641.
From the above judgments, it is clear that Union is not
exempted from the levy of ‘indirect tax’ under Article 285 of
the Constitution.
6. It is brought to the notice of this Court, that the stand
being taken by the departmental authorities as clearly
reflected in Ext.p4 demand notice is that the petitioners, if
aggrieved, had to approach the Government/State,for
obtaining ‘exemption’ as provided under Section 22 of the
Kerala Motor Vehicles (Taxation) Act.
7. The learned Standing Counsel appearing for the
petitioners submits that the ‘entry 57’ of ‘list 2’ of the 7th
WP(C) No.37653/2004 & WP(C)15432/2006
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schedule is only a general provision, which is applicable to
all vehicles. In the instant case, the vehicles belonging to
the Postal Department being a property owned by the
Union, it clearly comes within the sphere of Article 285(1)
and hence that the stand taken by the respondents is not
correct and is liable to be interfered with. It is further
added that the tax imposed/levied under S.3 of the Kerala
Motor Vehicles Act 1976 is actually on the vehicles ie. on
the property of the Union and hence it is having all the
colour and characteristics of a ‘direct tax’ .
8. It is very much relevant to note that the very scheme of
the statute ie. Kerala Motor Vehicles Taxation Act is never
to tax the vehicle as such, but is only to impose the tax for
the ‘user’ of the road in the State. This being the position, it
cannot be said that the tax is actually imposed on the
vehicle, so as to make it a direct tax, to attract Article 285.
In short, the legal position that the benefit of Article 285(1)
WP(C) No.37653/2004 & WP(C)15432/2006
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can be availed of only with respect to ‘direct tax’ stands
settled and is no more open to challenge.
9. It is to be noted that the stand of the respondents, right
from the beginning, was never that the vehicles belonging
to the petitioner can’t be given the benefit of exemption
under any circumstances and on other hand, it was being
let known that the remedy was only to approach the
Government/State claiming exemption as pointed out in
Exhibit P4; the power being actually vested with the
Government under S.22 of the above Act which is extracted
below:
S.22 of the K.M.V. Act deals with exemption from or
reduction of tax.
“The Government may, if they are satisfied that it
is necessary in the public interest so to do , by
notification in the gazette make an exemption or
reduction in the rate or other modification either
prospective or retrospective, in regard to the tax
WP(C) No.37653/2004 & WP(C)15432/2006
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payable under this Act or under the Kerala Motor
Vehicles Taxation Act,1963 (24 of 1963) or the Kerala
Motor Vehicles (Taxation of Passengers & Goods) Act
1963 (25 of 1963):
(i) by any person or class of person;or
(ii) in respect of any motor vehicles or class of motor
vehicles;
(iii) in respect of any motor vehicles or class of motor
vehicles using a specified route subject to such terms and
conditions as they may deem fit”.
This being the position, it is for the petitioners to approach
the 1st respondent/Government of Kerala by filing
appropriate representation, claiming exemption under S.22
of the Act and it is for the first respondent to look into the
same and to pass appropriate orders thereon, particularly
taking note of the reciprocal provisions in this regard.
10. In the above circumstances the petitioners are
permitted to file appropriate representation before the 1st
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respondent/State within one month and on such an event,
the 1st respondent is directed to consider the same as
aforesaid and pass appropriate orders after giving an
opportunity of being heard to the petitioners within 2
months thereafter. Since there was an interim order in
both the cases, the same will continue, till final orders are
passed by the 1st respondent as above. The Writ Petitions
are disposed of accordingly.
P.R.RAMACHANDRA MENON, JUDGE
pkk
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9
APPENDIX
PETITIONER’S EXHIBITS: (W.P (C) NO. 37653/2004 G)
EXT.P1: COPY OF THE COMMUNICATION OF DEPARTMENT OF POSTS DATED 13.10.1989
EXT.P2: COPY OF THE RELEVANT PORTION OF THE AUDIT REPORT FOR THE YEAR
MARCH 2002
EXT.P3: COPY OF THE LETTER DATED 12.12.2003 ISSUED BY THE 2ND PETITIONER.
EXT.P4: COPY OF THE LETTER DATED 8.1.2004 ISSUED BY THE R.T.O, ERNAKULAM.
EXT.P5: COPY OF THE LETTER DATED 28.11.2003 ISSUED BY THE 3RD PETITIONER.
EXT.P6: COPY OF THE LETTER DATED 12.11.2004 ISSUED BY THE R.T.O
EXT.P7: COPY OF THE LETTER DATED 26.7.2003 ISSUED BY THE R.T.O,ALAPPUZHA.
EXT.P8: COPY OF THE CHECK REPORT DATED 13.10.2004 ISSUED BY THE M.V.I,
ALAPPUZHA.
EXT.P9: COPY OF THE JUDGMENT IN CIVIL APPEAL NO. 6532/2002 DATED 21.10.04 OF
THE HON’BLE SUPREME COURT.
EXT.P10: COPY OF THE LETTER DATED 11.8.2008 ISSUED BY THE 2ND RESPONDENT.
RESPONDENT'S EXHIBITS: NIL.
// TRUE COPY//
SD/-
P.A. TO JUDGE.
WP(C) No.37653/2004 & WP(C)15432/2006
10
APPENDIX
PETITIONERS’S EXHIBITS: (W.P(C) NO. 15432/2006 K:
EXT. P1: COPY OF THE CIRCULAR DATED 13.10.1989.
EXT.P2: COPY OF THE RELEVANT PORTION OF THE REPORT OF THE
COMPTROLLER & AUDITOR GENERAL OF INDIA FOR THE
YEAR ENDING MARCH 2002.
EXT.P3: COPY OF THE ORDER DATED 7.1.2005 IN W.P(C) NO. 37653/04 OF THIS
HON’BLE COURT.
EXT.P4: COPY OF THE LETTER DATED 27.3.2006 GIVEN TO THE 3RD RESPONDENT
EXT.P5: COPY OF THE JUDGMENT IN CIVIL APPEAL NO. 6532/2002 OF THE HON’BLE
SUPREME COURT OF INDIA DATED 21.1.2004.
RESPONDENT'S EXHIBITS: NIL.
// TRUE COPY//
SD/-
P.A. TO JUDGE.