PETITIONER:
STATE OF MAHARASHTRA & ORS. ETC.
Vs.
RESPONDENT:
MADHUKAR BALKRISHNA BADIYA & ORS. ETC.
DATE OF JUDGMENT17/08/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
SHARMA, L.M. (J)
CITATION:
1988 AIR 2062 1988 SCR Supl. (2) 482
1988 SCC (4) 290 JT 1988 (3) 381
1988 SCALE (2)376
ACT:
Bombay Motor Vehicles Tax Act, 1958 (as amended by
Maharashtra Act XIV of 1987, Maharashtra Act XXXIII of 1987
and Maharashtra Act lX of 1988)-Challenging validity of
amended provisions of-Whether levy of one-time tax on motor
cycles or tricycles in the State was beyond the legislative
competence of State Legislature and beyond Entry 57 of List
II of Seventh Schedule.
HEADNOTE:
These Civil appeals and special leave petitions centred
round one point, namely, the validity of the Bombay Motor
Vehicles Tax Act, 1958 as amended by Section 3 of the
Maharashtra Act XIV of 1987 and Section 6 of the said Act as
amended by Maharashtra Act XXXIII of 1987 and the
Maharashtra Act IX of 1988.
Section 3 of the said Act XIV of 1987 added sub-section
(IC) to provide for the levy of one-time tax at 15 times the
annual rate on all motor cycles in the State. The said
provisions further provided that in the case of motor cycles
owned by a company or other commercial organisation, the
one-time tax was to be levied at thrice the rate.
Section 6 of the said Act XIV of 1987 added sub-section
(6) to section 9, enabling a registered owner of a motor
cycle or tricycle to obtain refund of `Lone_time tax" under
certain conditions.
Petitions were filed in the High Court by the
respondents in the appeals and petitioners in the special
leave petitions, challenging the amended provisions of the
principal Act. The High Court held that (i) the levy of the
one-time tax was beyond the legislative competence of the
State Legislature and also beyond Entry 57 of List II of the
Seventh Schedule, and (ii) the provision for imposition of
levy at thrice the rates on the vehicles owned by a firm or
company, were neither discriminatory nor arbitrary. The
High Court struck down Act XIV of 1987. The appeals by leave
were filed by the State and the special leave petitions were
fixed by the petitioners in this Court against the decision
of the High Court. In the meanwhile, the Maharashtra
Legislature enacted Maharashtra Act XXXIII of 1987, which
deleted Section 3(4) of the principal Act as amended by the
PG NO 482
PG NO 483
Maharashtra Act XIV of 1987, whereby the existing provisions
of refund for temporary non-user were made inapplicable in
cases of motor cycles and tricycles, restricting the right
of refund to Section 9(6) in the contingencies mentioned
therein. It also introduced sub-section (7) to section 9
conferring the right of refund in respect of motor cycles
and tricycles in accordance with the rates specified in the
Fifth Schedule. But the said schedule did not prescribe a
separate rate of refund for the company-owned vehicles.
Therefore, the refund in respect of the company-owned
vehicles was the 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 IX of 1988, whereby the only
relevant change for the present purpose was that the rate of
refund was enhanced to three times in respect of the
company-owned vehicles.
Before this Court, the appellant-State submitted that
the amendments enacted by the Maharashtra Acts XXXllI of
1987 and IX of 1988 had brought the principal Act as amended
by the Maharashtra Act XIV of 1987 within the constitutional
requirements of making one-time tax's regulatory and
compensatory tax and that it was not necessary 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.
The respondents in the appeals and the petitioners in
the special leave petitions urged that as even after the
amendment no refund was available in respect of a vehicle
which had been registered for more than 13 years? the effect
of that was that no refund al all was available in respect.
of the tax paid for a vehicle for the 14th and 15th
years.The impugned levy of tax ceased to be compensatory or
regulatory and was void under Entry 57 of List II and was
violative of Article 301 of the Constitution.
Disposing of the appeals and dismissing the special
leave petitions the Court.
HELD: The tax imposed on the 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 roads. In such a case. the levy would be Section
of the said Act XIV of 1987 added sub-section (IC) to
provide for the levy of one-time tax at 15 times the annual
rate on all motor cycles in the State. The said provisions
further provided that in the case of motor cycles owned by a
company or other commercial organisation, the one-time tax
was to be levied at thrice the rate.
The fact that the act, as at present, did not provide
for refund in the 14th and 15th years, did no make the law
outside the competence of the State Legislature. he concept
PG NO 484
of "regulatory and compensatory" tax does no imply
mathematical precision of quid pro quo. [489E]
After the amendment, the Act came with in the
constitutional requirements of making he one-time tax a
regulatory and compensatory tax. It was true that the Act
has no provided for refund in the 14h and 15h years but
that does no make he law out sides the competence of the
State Legislature. It is no mathematical precision that is
necessary nor can it be. there is in the provisions as
amended, as amended, a discernible and an identifiable
object behind the levy and a nexus between the subject and
the object of the levy, [491E-F]
Two principles have to be emphasised, firstly, that the
tax must be regulatory and compenstaory and secondly, there
must be no discrimination. 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 considerable wide
discretion and latitude in the matter of classification for
taxation purpose is permissible. The life of Motor cycles
and tricycles normally exceeds 25 years. Non-refund for
certain period is no conclusive of the matter. Even if
mathematical provision is no possible, it cannot be said
that it is wholly unmathematical. The collection of ax for a
period of 15 ears at one point of time is a convenient
method enabling the owner o use he vehicle for more than 25
years without having to pay the tax periodically and pay the
enhanced tax at may be levied during the 25 years of life
of the vehicle. Regulatory and compensatory tax can be
levied to the extent e State is required to pay for
rendering the services. [491G;492A-C]
The Act, as at present, is not violative of Article 145
of the Constitution. The fact that the company-owned
vehicles are taxed that three times the rate payable by
individuals, does not make the legislation violatvie of
Article 14. Histrocially, the company-owned vehicles are
always been taxed at a rate higher that the individually-
owned vehicles. he legislature has he power to distribute
tax burden in a flexible manner and the Court would no
interfere with the same. It could not be said that there was
differentiation without any basis and as such there was
discrimination. [492E-H]
In view of the principles applicable to the taxation
laws and various other factors, the Maharashtra Act as
amended from time to time does not suffer from any vice of
being not regulatory or compensatory taxation nor from the
vice of being violative of Article 14 of the Constitution,
and the challenge to the provisions of the Act as amended
PG NO 485
after the judgment of the High Court could not be
maintained. [494G-;495A]
After the amendments afore-mentioned the Act does no
suffer from the vice mentioned in the judgment of the High
Court . The appeals were allowed thus, and the challenge
made in the special leave petitions was dismissed. [495]
The taxes would be realised in accordance with the Act
and the necessary adjustments would be made accordingly.
[495C]
Bolani Ors. Ltd. v. State of Orissa. [1975] 2 SCR 138;
G.K. Krishnan v. The State of Tamil Nadu & Anr., [1975] 2
S.C.R. 715; Malwa Bus Service (P) Ld. v. State of Punjab
and Ors., [1983] 2 S.C.R. 1009;' International ouris
Corporation v. State of Haryana & Ors., [1981] 2 S.C.R. 364;
Income tax Officer, shillong & Anr. v. N. Takim Roy Rymbai,
etc., [1976] 2 SCR 413; Mrs. Meenakshi & Ors. v., State of
Karnataka & Ors., AIR 1983 SC 1283; Anant Mills Co. Ltd. v.
State of Gujarat and Ors., [1975] 3 S>.C.R. 220; Khandige
Sham Bhat & Ors. v. The Agricultural Income tax Officer,
[1963] 3 SCR 809 and State of Karnataka v. K. Gopalakrishna
Shenoy and Another, A.I.R. 1987 S.C. 1911, refered to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1631-33
of 1987 etc.
From the judgment and order dated 10.7.1987 of the
Bombay High Court in W.P. Nos. 941, 986 and 1012 of 1987.
A.S. Bobde. Adv. General. S. K. Dholakia and A.S, Bhasme
for he Appellants.
Soli J. Sorabjee, R.N. Sachhar, Mrs. Aruna Mathur, J.
Wad, K.J. John and A.K. Sanghi for the Respondents.
The judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. 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 Section 3 of the Maharashtra Act, XIV of 1987 as
well as Section 6 of the said Act as amended by Maharashtra
Act XXXlll of 1987 as well as the Maharashtra Act IX of
1988.
PG NO 486
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 Section 3 of the
Maharashtra Act No. XIV of 1987, sub-section (IC) 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-section (6) to Section 9 of the principal Act. The new
sub-section (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 Third 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 which according to the petitioners in the S.t.P.
Nos. 1 1673-75/87, 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 provisions 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 XlV 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-
33/877. 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 Section 3(4) of the principal Act, as
PG NO 487
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 Section 9(6) in
contingencies mentioned above. It also introduced sub-
section (7) to Section 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 1988 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 Act. 301 of the Constitution and would not be
protected by Act. 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 this Court observed that Entry
57 of List II 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, notwith-standing that these are registered under the
Act, these cannot be taxed. More or less the same view was
echoed in G. K. Krishnan v. The State of Tamil Nadu & Anr.,
[1975 ] 2 SCR 715.
See also Malwa Bus Service (P) Ltd. v. State of Punjab &
Ors.,[1983] 2 SCR 1009.
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
PG NO 488
further emphasised that the fact that the Act at present,
does not provide for refund in the 14th & v 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 &
Ors., [1981] 2 SCR 364, where at page 374 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
high 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. identifiable object behind the levy and a nexus
between he subject and he object of he levy.”
Earlier this principal had been sated in Income tax
officer Shillong & Anr.v. N. Takim Roy Rymbai etc.,[1976] 3
SAC 413, where this Court observed though taxation law
could not claim immunity from the equality clause i n
Article 14 of the Constitution, it must be remembered that
in view of the intrinsic complexity of fiscal adjustments of
diverse element, he State has a considerably wide discretion
in the matter of classification of taxation purposes. the
fact that the tax falls more heavily on some in the same
category, is by itself no ground to render the law invalid.
Similar are he observations of this Court in Mrs. Meenakshi
& Ors. v. State of Karnataka & Ors., AIR 1983 Sc 1283; Anant
Mills Co Ltd. v. State of Gujarat & Ors.,[1975] 3 SC 220 and
Khhandige Sham Bhat & Ors. V. The Agricultural Income ax
Office, [1963] 3 SCR 809.
PG NO 489
In the instant case, the impugned legislation had been
subsequently amended to provide for the refund of a
proportionate part of the one-time tax in the event of the
vehicle not being used for a period of quarter or more than
a quarter of a year as mentioned before. This was provided
by substituting a new sub-section (7) to section 9 of the
Act and also substituting new Fifth Schedule.
Even after the amendment, however, no refund is
available in respect of a vehicle which has been registered
for more than 13 years. The effect of the same is that no
refund at all is available in respect of the tax paid for a
vehicle for the 14th and 15th years, it was urged on behalf
of the respondents in the appeals and the petitioners in the
S.L.Ps. It was submitted on their behalf that so far as
four-wheelers are concerned, Section 9(1) of the act
provided for refund of the proportionate amount of tax for
every completed calendar month for which the vehicle has not
been used. It was urged on behalf of the respondents in the
appeals and the petitioners in the S.L.Ps. that there is no
justification what so ever for the non-grant of the refund
of the proportionate amount of tax paid in respect of a two
wheeler or three wheeler, which is not used in its 14th
and/or 15th year. On this score, it was urged on their
behalf that the impugned levy of tax ceases to be
compensatory or regulatory and as such is void under Entry
57 of List II and thus violative of Article 301 of the
Constitution.
In our opinion the fact that the Act, as 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. The concept of “regulatory and compensatory”
tax does not imply mathematical precision of quid pro quo.
This aspect was emphasised in International Tourist
Corporation etc. etc. v. State of Haryana & Ors., (supra) as
noted before.
It was further submitted on behalf of the owners of two
wheelers that the impugned one-time levy of Rs.975 has been
worked out at Rs.65 per two wheeler per annum for 15 years
and is sought to be recovered from the two wheeler owner as
a one-time down payment at the time the two-wheeler is
purchased by him. On behalf of the respondents/petitioners
it was contended that having regard to the extent of road
user by a two wheeler, in comparison with the road user by a
four wheeler, the Legislature considered that. a tax of
Rs.65 per two wheeler per annum would be a reasonable and
adequate compensatory levy. While the maximum annual rate of
tax was fixed at Rs. 200 per annum for motor cars weighing
not more than 750 kg and Rs.36O per annum for motor cars
PG NO 490
weighing between 750 kg to 1500 kg it may be noted that the
tax on four wheelers has not been increased. But as far as
two wheelers are concerned the one-time tax for the period
of 15 years is exactly 15 times the amount of tax of Rs.65
per year. It is clear from these factors, it was submitted
by the owners of the two wheelers, that the Legislature
continues to consider the tax of Rs.65 per two wheeler per
year to be an adequate compensatory tax. However, by
recovering the tax for the future period of 15 years in
advance as a one time levy, the taxing authorities are in
fact recovering not Rs.65 per two wheeler per year but in
reality about Rs.356.79 per two wheeler per year. The
respondents/petitioners sought to explain the position by
submitting that if the two wheeler owner has an amount of
Rs.975 with him at the time of purchase of the vehicle, and
is not compelled to make one-time payment, then he would
initially pay only Rs.65 as the tax for the first year. That
would leave a balance amount of Rs.9.10 which could be
invested by him at an interest yield of 15% per annum. It
was urged that the rate of interest that is recoverable as
well as paid under the Income Tax Act is 15% per annum. The
said amount of Rs.910 would yield an interest of Rs. 136.50
in the first year. Out of that amount of Rs. 136.50 an
amount of Rs.65 would be paid by the two wheeler owner as
tax at the beginning of the second year. Consequently, an
amount of Rs.71.50 would be available from out of the said
interest earning of Rs. 136.50, which also could be invested
at a yield of 15% per annum. Consequently, the amount of
interest that would be earned by the vehicle owner in the
second year would come to Rs. 147. 23, out of which only
Rs.65 would have to be paid as tax in the beginning of the
third year, leaving a balance of Rs.82.23 available for
further investment. It was submitted that by compelling the
vehicle owner to make the one-time down payment of Rs.975
at the time of the purchase of the vehicle, the owner is in
reality being deprived of a total amount of Rs.4376. 19 over
the said period of 15 years. If this amount is divided by
15, the resultant figure will be Rs.291.79. The effective
tax burden has thus in fact been multiplied by about 5 times
only as a result of the one-time levy, it was urged. It was
submitted that the said one-time levy was unreasonable,
discriminatory and not regulatory or compensatory. The fact
that a tax on motor vehicles must be compensatory and
regulatory in order to be valid, was emphasised in the
decision of this Court in Stare of Karnataka v. K.
Gopalakrishna Shenoy and another, A.I.R. 1487 S.C. 1911
where at page 1915 of the report, it was observed that tax
on motor vehicles is a compensatory tax levied for the use
of the roads and it is not a tax on ownership or possession
of motor vehicles. It was emphasised on behalf of the owners
of the vehicles that the impugned legislation is based on
PG NO 491
the assumption that two wheelers and three wheelers have an
approximate life of 15 years. It is on that basis and
footing that the rates of tax have been fixed. It was
contended that the life of two wheelers and three wheelers
is as much as 25 to 30 years and therefore, the recovery of
the one time tax for the period of 15 years actually
constitutes the conferment of a benefit on the owners of two
wheelers and three wheelers. In this connection, on the
other hand it is of importance to note that the Department
of Heavy Industry, Ministry of Industry, Government of
India, had commissioned a report from an eminent firm of
Chartered Accountants on Long Term Demand Projections for
Automotive Vehicles (including two wheelers and three
wheelers). The said report concludes, after an exhaustive
analysis of statistical data including the data provided by
vehicle manufacturers and also studies made in the past,
that the average life of scooters is 10 years, that of motor
cycles c) years and that of mopeds 5 years. But what was
emphasised was that one-time levy of tax compelled owners of
two wheelers to incur a further expenditure of about 70% of
the cost of the vehicles purchased by them at the time they
acquire the vehicle and that imposes heavy additional
liabilities. It was, therefore, submitted that it was
neither compensatory nor regulatory and further more, it was
discriminatory.
It was further submitted that section 3(IC)(c) exempts
public trusts and recognised institutions. That was bad.
In our opinion, after the amendment the mischief
mentioned in the judgment and order of the High Court of
Bombay has been remedied. On an examination of the various
provisions of the Act as amended, we have come to the
conclusion that after the amendment the Act comes within the
constitutional requirement of making the one-time tax a
regulatory and compensatory tax. It is true as was
emphasised that the Act has not provided for refund in the
14the and 15th years but does not make the law outside the
competence of the State Legislature. It is not mathematical
precision that is necessary nor can it be. There is in the
provisions as amended, a discernible and an identifiable
object behind the levy and a nexus between the subject and
the object of the levy.
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
PG NO 492
for taxation purpose is permissible. See the observations of
this Court in Income Tax Officer, Shillong and Anr. etc. v.
N. Takim Roy Rymbai etc. etc., (supra). Also see the
observation in Mrs. Meenakshi and others v. State of
Karnataka, (supra); Anant Mills Co. Ltd. v. State of Gujarat
& Ors., (supra) and Khandige Sham Bhat and Ors. v. The
Agricultural Income-tax Officer, (supra). The evidence on
record shows that the life of motor cycles and tricycles
normally exceeds 25 years. The so-called non-refund for
certain period is not conclusive of the matter. Even if
mathematical precision is not possible, we cannot say that
it is wholly unmathematical. The collection of tax for a
period of 15 years at one point of time is a convenient
method enabling the owner to use the vehicle for more than
25 years, without having to visit the office to pay the
tax periodically, and pay enhanced tax that may be levied
during the 25 years of life of the vehicle. 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 cost 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 tricycles is 56 to 58
percent of all vehicles. Thus, even insubstantial increase
in their rates cannot be said to be not a “regulatory or
compensatory” tax measure.
The Act, as at present, is not violative of Article 14
of the Constitution. The fact that company-owned vehicles
are taxed at three times the rate payable by individuals,
does not make the legislation violative of Article 14.
Historically, the company-owned vehicles have always been
taxed at a rate higher than the individually-owned vehicles.
As appears from the records produced. the motor cycles and
tricycles constituting 56 to 58 per cent of all types of
vehicles contribute only 6.4 per cent of the total revenue
earned through the tax imposed by the Act. It is well-
settled that the Legislature has the power to distribute tax
burden in a flexible manner and the Court would not
interfere with the same. This principle has been reiterated
in G.K. Krishnan etc. etc. v. The State of Tamil Nadu &
Anr. etc., (supra) where this Court observed that in the
context of commercial regulation, Article 14 is offended
only if the classification rests on grounds wholly
irrelevant to the achievement of the objective and this
lenient standard is further weighted in the State’s favour
by the fact that a statutory discrimination will not be set
aside if a state of facts may reasonably be conceived by the
PG NO 493
Court to justify it. Tax laws have to respond closely to
local needs and Court’s familiarity with these needs is
likely to be limited. Therefore, the Court must be aware of
its own remoteness and lack of familiarity with the local
problems. Classification is dependent upon peculiar needs
and specific difficulties of the community. The needs and
the difficulties of a community are constituted out of facts
and information beyond the easy ken of the Court.
It appears that in the instant case, the State
Government has specifically averred that the company-owned
vehicles travel more and use roads more often. No evidence
have been produced to the contrary. In view of the well-
settled principles, we cannot say that there was without
any basis and as such there was discrimination.
It further appears that the Government of lndia has
liberalised the licensing policy and granted large number of
industrial licences for the manufacture of two wheelers. In
Maharashtra itself following is the new registration of two
wheelers during the last four and five year:
" 1983-84 - 1,13,949
1984-85 - 1,24,877
1985-86 - 1,66,124
1986-87 - 2,01,904"
In 1986-87 per working day on an average 929 new two
wheeler have been registered. There was tremendous strain on
Motor Vehicles Department due to increase in the number of
two wheeler. The following statistics and figures indicate
the position that one time tax on two wheelers have
beneficient effect:
“As on 1.4.1987 there were 10,93,170 two wheelers in
Maharashtra and total number of vehicles was 1841 lakhs.
In 1985-86 the total revenue by way of Motor Vehicles
Tax was Rs.98 crores out of which only Rs. 6 to 7 crores was
from two wheelers.
That means 58% vehicles (3 wheelers) used to give only
6.4% Motor Tax for which 22,000 man days were required to be
spent.
All the two wheeler owners were required to come to
R.T.O. for payment of tax every year.
PG NO 494
Almost 70 to 75% Motor Vehicle Tax arrear cases were of
2 wheelers.
Because of new system of one time tax if the owner pays
it, he is not required to pay the tax again during the life
time of the 2 wheeler.
Any further increase in one time tax rate will not be
applicable to the 2 wheelers which have already paid the one
time tax.
Statistics show that the 2 wheelers are being used for
more than 25 years.
The rate of increase of 2 wheelers because of easy
availability and affordability is almost 25%. The total
number of two wheelers projections in the State will be as
follows:
By the end of 1986-87 -10.94 lakh
1987-88 -13.33 lakh
1988-89 -16.20 lakh
1989-90 -19.69 lakh
1990-91 -23.77 lakh
1991-92 -28.73 lakh
Existing vehicles will have to pay one time tax in
sliding scale rate. Older the vehicles, less will be the tax.
This tax system is already in existence in Karnataka
since 1.4.1986 and also in Gujarat, Rajasthan.
This new system will definitely give relief to the two
wheeler owners as they will not be required to come to R.T.
Office for annual payment.”
Having regard to these factors and having regard to the
principles applicable to taxation laws, we are of the
opinion that the Maharashtra Act as amended from time to
time and mentioned hereinbefore, does not suffer from any
vice of being not regulatory or compensatory taxation nor
from the vice of being violative of Article 14 of the
Constitution.
In that view of the matter, the challenge to the
provisions of the Act as amended after the judgment of the
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Bombay High Court cannot be maintained.
In that view of the matter, Civil Appeals Nos. 1631-1633
of 1987 are disposed of by saying that after the amendments
noted here in before the Act does not suffer from the vice
mentioned in the judgment of the High Court of Bombay. The
appeals are, therefore, allowed and disposed of accordingly.
In that view of the matter the challenge made in the
special leave petitions Nos. 11673-75 of t987 is dismissed.
In the facts and circumstances of the case, there will be no
orders as to costs. Interim orders, if any, are vacated. The
taxes will be realised in accordance with the Act and
necessary adjustments will be made accordingly.
S.L.