JUDGMENT
P.S. Patankar, J.
1. The petitioners by this petition filed under Article 226 of the Constitution of India are challenging the provisions of the Maharashtra Tax Laws (Levy, Amendment and Repeal) Laws 1989 (for short, the Laws of 1989) and the Notification issued by the State Government dated 1-4-1989. By the Laws of 1989 various enactments came to be amended. They included the Bombay Motor Vehicles Act, 1958 and the Bombay Motor Vehicles Tax (Taxation of Passengers) Act, 1958. The Notification dated 1-4-1989 came to be issued in exercise of the powers conferred by Sub-section (1) of Section 3 of the Bombay Motor Vehicles Tax Act, 1958. In this petition, we are concerned with the taxation for the petitioners’ vehicles for the period 1-4-1989 to 31-8-1991.
2. Petitioner No. 1 is a Company incorporated under the Companies Act, 1913. It owns a fleet of 52 buses which are utilised for the purpose of transport of Company employees as a welfare measure. The buses are Non A/C and can carry more than 12 passengers. The petitioners are not recovering any charges from them. The buses are not meant for commercial purpose and no fare is recovered.
3. For appreciating the contentions, we shall first give connected provisions of law.
4. The Bombay Motor Vehicles Tax Act, 1958 came to be introduced to consolidate and amend the law relating to taxation of motor vehicles in the State and for providing certain other matters. It defines motor vehicle as contained in the Motor Vehicles Act, 1939 (Now replaced by the Motor Vehicles Act, 1988). As per Section 3 thereof, which is a charging section, tax is to be levied on all motor vehicles used or kept for use in the State at the rates fixed by the State Government by Notification published in the official gazette, but they shall not exceed the maximum rates specified in the First Schedule. The Motor Vehicles Act, 1939 classifies the motor vehicles as Stage carriage i.e. (1) carrying passengers from one stage to another which is done by public undertakings like the B.E.S.T. or the State Transport; and (2) Contract carriage i.e. carrying passengers from one point to another without facility to disembark in between.
Section 2(3) defines “Contract carriage” as a motor vehicle which carries a passenger or passengers for hire or reward under a Contract. Section 2(29) defines “Stage carriage” as a motor vehicle carrying or adapted to carry more than 6 persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey and includes such a carriage or other omnibus when used as a contract carriage within the meaning of the Motor Vehicles Act, 1939. Section 2(25) defines “Public Service Vehicle” to mean a motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes motor cab, contract carriage and stage carriage.
5. The Motor Vehicles Act, 1988 repealed the Motor Vehicles Act, 1939. Section 2(7) thereof defines “Contract carriage”. It is the same as contained in the Act of 1939. Section 2(4) defines “Stage carriage” and the definition is the same as in the Act of 1939. Section 2(35) defines “Public Service Vehicle”. The definition is more or less the same as in the Act of 1939. However, Section 2(33) defines “Private service vehicle” to mean a motor vehicle constructed or adapted to carry more than 6 passengers, excluding the driver and ordinarily used by or on behalf of the owner of such vehicle for the purpose of carrying passengers for, or in connection with his trade or business other than for hire or reward, but does, not exclude a motor vehicle used for public purposes. This definition came to be added for the first time.
6. The Bombay Vehicles Act (Taxation of passenger), 1958 came to be introduced for levying tax of passengers carried by road in certain classes of motor vehicles such as public service vehicles and private service vehicles in the State. Section 2(6A) thereof defines “private service vehicle” to mean as an omnibus constructed or adapted to carry more than 9 passengers and ordinarily used by or on behalf of the operator for the purpose of carrying employees or other persons for or in connection with his trade or business on payment of fares. Section 2(7) defines “stage carriage.” Stage carriage is defined to mean motor vehicle carrying or adapted to carry more than 6 persons for hire or reward either for the whole journey or for the stage of journey and includes such carriage or other omnibus when used as a contract carriage within the meaning of the Motor Vehicles Act, 1939 and also includes any private service vehicle. Section 3 thereof is a charging Section. Under Section 3(1) tax is to be levied on all passengers carried by road in stage carriages at such rate to be fixed by the State Government by notification in the official gazette and it was not to exceed twenty percent of the amount of fare payable to the operator of the stage carriage. It is, thus, clear that passenger tax and motor vehicles tax were recovered separately under the two enactments i.e. Bombay Motor Vehicles (Taxation of Passengers) Act, 1958 and the Bombay Motor Vehicles Tax Act, 1958.
7. The Maharashtra Tax Laws (Levy, Amendment and Repeal) Act, 1989 came to be introduced. Various enactments pertaining to tax came to be amended. Chapter II thereof deals with Bombay Motor Vehicles Tax Act, 1958 and Chapter III deals with Bombay Motor Vehicles (Taxation of Passengers) Act, 1958. They came to be amended with the object to avoid the problems created by evasion of passenger tax and for administrative convenience. It was for rationalising and simplifying the taxation system in respect of contract carriages and private service vehicles on the basis of passengers carrying capacity.
8. In Section 3 of the Bombay Motor Vehicles Tax Act, 1958, sub-clause iv(a) inter alia came to be substituted in place of sub-clause (iv). Clause 3 thereof dealt with contract carriage and provided for maximum amount of tax that can be charged. Clause (IV-A) provides for “private service vehicle” and for maximum amount that can be charged as tax for those vehicles. The title of The Bombay Motor Vehicles (Taxation of Passengers) Act, 1958 came to be changed to “An Act to provide for levy of tax on passengers carried by road in stage carriages in the State”. Clause (7) of Section 2 of the Motor Vehicles (Taxation of Passengers) Act came to be amended. The effect thereof was to exclude ‘private service vehicles’. Thus, ‘private service vehicles’ and ‘contract carriages’ are not to fall within the purview of the Bombay Motor Vehicles (Taxation of Passengers) Act, 1958. Only the stage carriages fell under the same which are of public undertakings such as B.E.S.T. or the State Transport. Thus, there would be a single levy only under the Bombay Motor Vehicles Tax Act in case of contract carriages and private service vehicles. They are no longer taxable under the Bombay Motor Vehicles (Taxation of Passengers) Act, 1958. Therefore, higher rate than earlier was provided.
9. Notification dated 1-4-1989 came to be issued exercising power under Section 3(1) of the Bombay Motor Vehicles Act, 1958. It provided for chargeable tax on the private service vehicle and contract carriage vehicles. There is no dispute that those rates fixed are enhanced from time to time. The net effect of the amendment is that the petitioners are required to pay much higher amount towards motor vehicles tax. There are many similarly situated Companies which are also required to pay higher amount towards motor vehicles tax.
10. The Bus Owners Association filed Writ Petition No. 1240 of 1989 challenging the levy of tax under the Bombay Motor Vehicles Tax Act 1958. The Division Bench of this Court passed an order directing the petitioners to make a representation to the Government for reduction of taxes. The Government considered the said representation and reduced the tax by issuing a Government Resolution dated 29-6-1989. The tax came to be reduced with effect from 1-4-1989 and the reduction was about 20%. Thereafter, the said Writ Petition was withdrawn. The Division Bench of this Court in the present matter gave similar direction to the petitioners to make a representation to the Government on 14-1-2000. Accordingly, the representation was made, but it came to be turned down by the Principal Secretary (Transport) by Order dated 4-4-2000 holding that the rate of tax in the case of private service vehicles is always lower than the contract carriage. The vehicles of the Bombay Bus Owners Association fall in the category of contract carriages, while that of the petitioners fall in the category of private service vehicles.
11. The learned Counsel for the petitioners submitted that excessive or crippling burden is cast upon the petitioner No. 1 by the amending Bombay Motor Vehicles Act, 1958 and it is confiscatory in nature or likely to destroy the business of the petitioners. It cannot be said to be compensatory and regulatory in nature as contemplated by Entry 56 or 57 of List II of Schedule VII to the Constitution of India and violative of Article 301 of the Constitution. The order passed by the Principal Secretary (Taxation), State of Maharashtra dated 6-4-2000 pursuant to the interim order passed by this Court on 14-1-2000 is violative of their fundamental right guaranteed under Article 14 of the Constitution of India as in the case of contract carriage vehicles tax came to be reduced nearly by 20% by the Government, but no such relief is given to the petitioners in respect of the petitioners’ vehicles i.e. private service vehicles. He further submitted that the said Order dated 6-6-2000 is totally unreasonable in nature and attracts the principle of Wednusbury as no reasonable consideration was bestowed in the case of the petitioners vehicles.
12. Per contra, the learned counsel for the respondent submitted that it is clear from the affidavit-in-reply that the tax levied is compensatory and regulatory in nature. Under Section II of the Bombay Motor Vehicles Act, 1958, State Road Fund is created and the amount of tax realised is credited to it. It is meant for improvement, maintenance or construction of new roads. Therefore, it cannot be said to be violative of Article 301 of the Constitution of India. Though there is increase in the taxation, but it is within the maximum permissible and it has been done in the case of all other similarly placed vehicles. It fully falls within the parameter of Entry 57 of List II of the Seventh Schedule to the Constitution. Merely because the Principal Secretary (Transport) considered the case of contract carriage vehicles and recommended reduction in taxes in that category of vehicles and declined to reduce it in the case of the petitioners i.e. private service vehicles, it cannot be said that there is violation of Article 14 of the Constitution. The two types of vehicles are different. It is further submitted that the Principal Secretary has given a very cogent reason in declining to reduce the taxes in the case of petitioners i.e. the tax is already lower.
13. By filing Affidavit-in-Reply dated 16-10-2001 it has been pointed out that there are 3 kinds of passenger carriages i.e. stage carriage, contract carriage and private carriage. The passenger tax and motor vehicles tax are recoverable separately under the Bombay Motor Vehicles Tax Act, 1958 and the Bombay Vehicles (Taxation of Passengers) Act, 1958. By the amendment of 1989, it was intended to impose one levy at a single point of time (monthly, quarterly or yearly) and at a fixed rate. From the purview of the Bombay Motor Vehicles Act, 1958 stage carriages came to be excluded which are owned by public sector undertakings. In their case, the Bombay Motor Vehicles (Taxation of Passengers) Act, 1958 became applicable. Section 3 of the amendment Act of 1989 provided for maximum rates. By Notification dated 1st April, 1989 the chargeable rates were prescribed. It was pointed out that there are many Companies which are having such private service vehicles meant for their employees and running the same as a welfare measure, but they have not approached this Court. It was denied that the increase in tax would have crippling effect or that the business of the petitioners shall be destroyed. It has been pointed out that the taxes recovered under the present amendment are to be credited to the State Road Fund as provided by Section 11 of the Motor Vehicles Act, 1958. The said tax falls within the scope of Entry 57 of List II of the Seventh Schedule. It pointed out that private service vehicle are essentially for business purposes of the employer though there may not be an element of hire or reward. The allegation of discrimination came to be denied. By filing further affidavit dated 25th February 2002, it is in detail pointed out how under Section 11 of the Bombay Motor Vehicles Tax Act, 1958, it has been provided that the tax collected should first be credited to the Consolidated Fund and 65% of the proceeds of the tax after deducting expenses of collection thereto shall be transferred to the State Road Fund. The amount so credited is to be expended in the prescribed manner solely on the construction, improvement and maintenance of new and existing roads and bridges, including the roads vesting in the local authority. A chart is given in respect of the amount credited to the State Road Fund and actual expenditure incurred by the State for the construction of roads.
In 1988-1989 the amount credited to State Road Fund was Rs. 1,270.252 (in thousands) and the expenditure is Rs. 20,220.75 (in lakhs). Every year thereafter, the collection of tax increased, but the expenditure increased more rapidly. For 2000-2001, the tax credited to State Road Fund was Rs. 4,761.250 (in thousands) and the expenditure was Rs. 1,05,459.69 (in lakhs). The expenditure incurred by the State for the purpose of repairs of the roads and construction of new roads and the grant of the local bodies for repairs of the roads would show that the expenditure far exceeded even the total collection of amounts under different Motor Vehicles Tax Statutes. In short, the picture shown is as under :–
"Year
Total income received under different Motor Vehicles Tax Statutes
Expenditure on road repairs, constructions and maintenance
1989-90
1,913,718,000
2,022,075,000
1990-91
2,047.510.000
2,455,079,000
1991-92
2,335,480,000
3,627,878,000
1992-93
2,359,899,000
4,418,634,000
1999-2000
7,129,214,000
8,954,053,000
2000-2001
7,895,577,000
10,545,969,000"
Therefore, it was submitted that there is no invalidity or illegality whatsoever.
14. The learned counsel for the petitioners submitted that the amendment brought out to the Bombay Motor Vehicles Tax Act, 1958 by the Maharashtra Tax Laws (Levy, Amendment and Repeal) Act, 1989 has crippling effect and may destroy its business. It is, therefore, violative of Article 301 of the Constitution of India. He also submitted that the imposition of such tax cannot be said to be compensatory and regulatory in nature. It is in fact tax on income and hence, it does not fall within the four corners of Entry 56 or 57 of List II of the Seventh Schedule and the State had no power to impose it. We may point out that the petitioners have made only averments that the tax would have crippling effect on it or may destroy its business. This has been denied on behalf of the respondents. The petitioners have not shown anything about the financial position or inability to pay. Further, this concerns only for the period 1-4-1989 to 31-8-1991. In addition, the tax imposed by Notification dated 1-4-1989 is much lower than the maximum permissible can be imposed. The other Companies similarly placed have not complained. Therefore, we do not accept this submission and it is not possible to accept that it is in violation of Article 301 of the Constitution of India.
15. Then the question is whether the said tax is compensatory and regulatory in nature or not. Entry 56 and 57 of List II of Seventh Schedule of the Constitution read as under :–
“56. Tax on goods and passengers carried by road or on inland waterways.
57. Tax on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List in.”
16. We feel that even the Judgment cited by the learned Counsel for the petitioners of the Apex Court speaks against him. He relied upon the Judgment , State of Maharashtra and Ors. v. Madhukar Balkrishna Badiya and Ors. In the said case, the Bombay Motor Vehicles Tax Act, 1958 came to be amended by Act 33 of 1987 and 9 of 1988. One-time tax came to be levied on motor-cycles and tri-cycles. Further, the Company’s own vehicles came to be taxed 3 times the rate payable by individuals. This was challenged on the ground that imposition of the said tax cannot be said to be regulatory and compensatory and it is discriminatory in nature and hence, violative of Article 14 of the Constitution of India. The Apex Court negatived the contentions. It was held that the concept of regulatory and compensatory tax does not imply mathematical precision or quid pro quo. It was observed :–
“14. In this matter two principles have to be emphasised, firstly that the tax must be regulatory and compensatory and secondly, there must be no discrimination. About discrimination it is well to remember that a taxation law cannot claim immunity from the equality clause in Article 14 of the Constitution. But in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerably wide discretion and latitude in the matter of classification for taxation purpose is permissible.
Regulatory and compensatory tax can be levied to the extent the State is required to pay for rendering the services. According to the State, the evidence on record shows that the costs of services is twice the total amount recovered from all types of vehicles. The balance of expenditure is met by the State from the general revenues. Even from this half collection, the motor cycles and tricycles contribute only 6.4 per cent. The percentage of motor cycles and tricyles is 56 to 58 per cent of all vehicles. Thus, even in substantial increase in their rates cannot be said to be not a “regulatory or compensatory” tax measure.”
It is further held that Company own vehicles are taxed at 3 times the rate payable by individuals does not make the provision violative of Article 14. It was found that historically the Company’s own vehicles have always been taxed at the rate higher than the individually owned vehicles. In the said case, it was specifically alleged that the Company’s own vehicles travel more and use road more often. The petitioners have produced no evidence contrary to it. Hence, it was held that it cannot be said that there was differeniiation without any basis and, therefore, there was no discrimination. In our opinion, this clearly supports the case that is made out by the respondent.
17. We have already pointed out that the respondents have stated that under Section 11 of the Bombay Motor Vehicles Tax Act, 1958, it is inter alia provided that the tax is first credited to the Consolidated Fund and 65% of the proceeds of tax after deducting the expenses for collection are transferred to the State Road Fund. The State Road Fund is used for construction, improvement and maintenance of new and existing roads, including the roads vested in the local authority. Comparative charts of the total income received and put in the Consolidated Fund are given from 1989-1990 to 2000-2001. We have already reproduced it above. In 1989-1990 the total income is Rs. 1,913,718,000 (in thousands) i.e. Rs. 19137.18 (in lacs). It gradually increased and for 2000-2001 it came to Rs. 7,895,577.000 (in thousands) i.e. Rs. 78955.77 (in lakhs). Out of the said amount, the amount credited to State Road Fund was as under:–
For 1989-1990-Rs. 1136213 (in thousands) i.e. Rs. 11362.13 (in lakhs)
For 2000-2001: Rs. 4761250 (in thousands) i.e. Rs. 47612.50 (in lakhs).
As against the above, the expenditure was as under:–
For 1989-1990 – Rs. 20220.75 (in lakhs)
For 2000-2001 – Rs. 105459.69 (in lakhs)
Thus, the expenditure far exceeded what was the amount totally collected and the amount credited to the State Road Fund. The balance of the expenditure was incurred by the Government from the State’s General Fund.
18. The learned Counsel for the respondents relied upon the Judgment of the Apex Court reported in AIR 1967 SC 1575, State of Assam and Ors. v. Labanya Probha Devi. In the said case it was held that the State has filed a detailed affidavit and the figures showed the expenditure incurred on new roads and maintenance of old roads exceeded the income from the motor vehicle. The figures showed that the State was charging from the users of motor vehicles something in the neighbourhood of 11% and 12% respectively for the concerned years of the costs it has incurred in maintenance and making the roads. In the said circumstances, it was held that the Assam Motor Vehicles Taxation (Amendment) Acts (15 of 1963 and 12 of 1966) were regulatory and compensatory taxes for facilitating trade, commerce and intercourse. It was, therefore, held that it was not hit by Article 301 of the Constitution.
He next relied upon the observations from the Judgment of the Apex Court in , Bolani Ores Limited v. State of Orissa. In the said case, question arose whether Dumpers, Rockers and Tractors are motor vehicles and taxable under the Bihar and Orissa Motor Vehicles Taxation Act, 1930. It was held that they could be taxed. It was observed
–“29…..
The Taxation Act is a regulatory measure imposing compensatory taxes for the purpose of raising revenue to meet the expenditure for making roads, maintaining them and for facilitating the movement and regulation of traffic. The validity of the taxing power under Entry 57, List II of the Seventh Schedule read with Art. 301 of the Constitution depends upon the regulatory and compensatory nature of the taxes.”
He then relied upon the Judgment of the Apex Court , International Tourist Corporation etc. etc. v. State of Haryana and Ors. The question before the Apex Court was whether Section 3(3) of the Haryana Passengers and Goods Taxation Act, 1952 interferes with the freedom of Inter-State Trade, commerce and intercourse and, therefore, violative of Article 301 of the Constitution of India. The contention raised on behalf of the petitioners came to be negatived holding it to be compensatory and regulatory in nature.
19. The facts as pointed out above clearly go to show that the tax levied is compensatory and regulatory measure and it cannot be faulted either on the ground that it is violative of Article 301 of the Constitution of India.
20. The learned Counsel for the petitioners submitted that the Order passed by the Principal Secretary dated 6-4-2000 is violative of the provisions of Article 14 of the Constitution of India as in the case of vehicles of the Bombay Bus Owners Association the tax came to be reduced nearly by 20% for the concerned period, but no such relief came to be granted to the petitioners. It is first to be noted that the motor vehicles of the Bombay Bus Owners Association falls in the category of contract carriage and that of the petitioners as private service vehicles. They are of different nature and, therefore, they are categorised separately. This is clear from the definitions. There is nothing wrong in imposing different tax burden on those types of vehicles. In fact, this has been historically done. Merely because in the case of Bombay Bus Owners Association the tax came to be reduced cannot give any right to the petitioners to claim a similar relief. It was for the State to decide what item is to be taxed, how the tax is to be levied and how to be collected. There is wide latitude with the State in imposing the tax. Admittedly, the tax actually imposed is much lower than the maximum permissible. In view of this, we reject this contention.
21. The learned counsel for the petitioners then submitted that the Order passed by the Principal Secretary (Transport) dated 6-4-2000 is totally unwarranted and falls within the Wednusbury principle. In support of his submission, he relied upon the Judgment of the Apex Court reported in AIR 2000 SC 3689, Om Kumar and Ors. v. Union of India. In that context, it was held —
“24. We agree that the question of the quantum of punishment in disciplinary matters is primarily for the Disciplinary Authority and the jurisdiction of the High Courts under Article 226 of the Constitution or of the Administrative Tribunals is limited and is confined to the applicability of one or other of the well known principles known as Wednesbury principles. (See Associated Provincial Picture Houses v. Wednesbury Corporation (1948) 1 KB 223. This Court had occasion to lay down the narrow scope of the jurisdiction in several cases. The applicability of the principle of proportionality in Administrative Law was considered exhaustively in Union of India v. Ganayutham , where the primary role of the Administrator and the secondary role of the Courts in matters not involving fundamental freedoms, was explained.”
It was finally held that if the Court is satisfied that Wednusbury principle is attracted, it has to remit the matter to the Administrator for fresh decision as to the quantum of punishment and only in rare cases where there is a long delay in holding disciplinary proceedings and pending in the Court, the Court may review the quantum of punishment. This is clearly in the case of disciplinary proceedings. It is difficult to digest how this is applicable in the present case. We find that the Principal Secretary (Transport) in his Order has pointed out that the motor vehicles of Bombay Bus Owners Association were of contract carriage and that of the petitioners – private service vehicles. They are entirely different. The rates of taxes for private service vehicles are always lower than the rate of tax applicable for contract carriage right from 1989 to 1999. For private service vehicles of the petitioners, the tax payable for motor vehicles involved is as under :–
“For Non-A.C. maximum rate – Rs. 1000/- annually :
Payable in 1989 - Rs. 300/- Payablein 1991 -Rs. 400/- Payable in 1999 - Rs. 500/- and Payable in 2001 - Rs. 9000/-.
For contract carriage (Non A/c other than private service vehicles), the maximum rate for above 12 passengers is Rs. 2000/- annually. Actually, in 1989 for the buses above 12 passengers it was Rs. 660/-. This was continued from 1-4-1989 to 31-8-1991. But it was reduced to Rs. 535/- per annum because of the order. In 1991, the tax payable was Rs. 750/; in 1997 the tax payable was Rs. 800/- and in 2001 it is payable at Rs. 1000/-. Therefore, it is very clear that the motor vehicle tax payable by the private service vehicles was much lower than what was payable by the owners of contract carriage vehicles. Therefore, if some reduction is given for the period from 1-4-1989 to 31-8-1991 in that case and it was refused to the petitioners on the ground that it was paying lesser amount of tax, it cannot be said by any stretch of imagination that such a principle of Wednusbury is attracted. Hence, we reject this contention.
22. We find no substance in this petition. Rule discharged with costs.