M.G. Brothers vs The Regional Transport Officer

M.N. Rao, J.—The petitioner is the owner of an omnibus bearing registration No. APQ-9347 in respect of which he obtained a pacca contract carriage permit which entitled him to ply the vehicle as contract carriage anywhere in the district of Kurnool. For the quarter ending 30-9-88 the requisite amount of tax Rs. 13,000/- was paid by him. On 29-9-1988 when the vehicle was plying between Kurnool and Adoni, it was checked at a point between Emmiganur and Adoni by the Motor Vehicles Inspector (Flying squad), Kurnool. In regard to that check a V.C.R. - Vehicle check report, was made on the same day, it contains the following alleged irregularities:

(1) The vehicle was carrying 13 individual passengers from whom individual fares at Rs. 12/- per head were collected; (2) Driving licence was not produced; and (3) The vehicle was plying at a speed of 90 k.m. p.h.

A show cause notice was issued based on the above check report calling upon the petitioner to show cause why the vehicle should not be subjected to tax treating it as an express stage carriage. The allegations contained in the show cause notice are: (1)13 passengers were travelling each individually paying a fare of Rs. 12/- and (2) the vehicle was plying, without permit, as an express stage carriage. In his explanation the petitioner denied both the allegations and stated that the vehicle was under a contract to one Mallik Travels who collected individual fares from the 13 passengers and all of them were travelling as one party from Kumool to Adoni. He also specifically pleaded that the passengers were not picked up or set down at any point between Kurnool and Adoni. A further plea taken by him was that the individual fare collected from each of the passengers was at the rate of ordinary bus fare while the express bus fare per head was Rs. 14-50. Rejecting the above explanation the Regional Transport Officer, Kurnool, by his demand notice dt.24-3-1989 in RC No. 15869-A3-88, imposed a tax of Rs. 22,724/- treating the vehicle as express stage carriage for the quarter ending 30-9-88 and called upon the petitioner to pay an amount of Rs. 9,724/-, being the difference of tax between contract carriage and express stage carriage, within ten days from the date of receipt of the notice. Challenging the legality of the above demand notice the present writ petition was filed.

Sri E.P.K. Sikhamani, the learned counsel for the petitioner, contends that the vehicle in question was not plied at the relevant time as a stage carriage, much less as an express stage carriage. It was under a contract to one Mallik Travels, Kurnool who was carrying a party of 13 passengers from Kurnool to Adoni direct, and the list of passengers and the contract between the petitioner and Mallik Travels was available at the relevant time when the vehicle was subjected to check without alleging that any of the conditions of the permit were violated, straightway the respondent has levied the tax treating the vehicle as express stage carriage and therefore the demand notice is liable to be set aside.

Controverting the submissions made by the learned counsel for the petitioner, the learned Government Pleader says that as the check report clearly mentions that the passengers paid individual fares and as the driver of the vehicle signed the check report and the matter was compounded, it is not open to the petitioner now to raise the plea that none of the conditions of the permit were violated by him. He also says that the petitioner failed to produce the list of the passengers travelling in the vehicle.

Before considering the contentions advanced by the learned counsel for the petitioner, it is necessary to notice the relevant statutory provisions. By Clause (3) of Section 2 of the Motor Vehicles Act, 1939, contract carriage'' is defined as "motor vehicle which carries a passenger or passengers for hire or reward under a contract express or implied for the use of the vehicle as a whole at or for a fixed or agreed rate of sum-(i) on a time basis whether or not with reference to any route or distance, or (ii) from one point to another, and in either case without stopping to pick up or set down along the line of route passengers not included in the contract; and includes a motor cab notwithstanding that the passengers may pay separate fares." (The same definition is incorporated in Section 2(7) of the Motor Vehicles Act, 1988). Rule 2(c) of the Andhra Pradesh Motor Vehicles Rules, 1964, defines "express stage carriage" as follows:-

"(i) a carriage plying on city and town routes "non-stop" or ''with limited halts'' as may be prescribed by the transport authorities; or

(ii) a carriage playing non-stop on mofussil routes of short distance as may be prescribed by the transport authority; or

(iii) a carriage plying on mofussil routes with limited halts, as may be prescribed by the transport authority,

Rule 2(b) of the Andhra Pradesh Motor Vehicles Rules, 1989, incorporates the same definition. Rule 212(1) contains the guidelines as to the classification of routes and the relevant portion reads thus:

"(a) short routes which cover a distance of not more than 64 kms."

(b) medium routes which cover a distance of over 64 kms. but not exceeding 160 kms;

(c) long routes which cover a distance of more than 160 kms."

The first question that has to be considered whether the vehicle at the time when it was subjected to check was found plying as a contract carriage or as a stage carriage? By virtue of the contract carriage permit held by the petitioner, the vehicle could ply during the relevant quarter any where in the district of Kurnool. In the explanation submitted in reply to the show cause notice the specific plea taken by the petitioner was that Mallik Travels of Kurnool hired the vehicle by paying Rs. 155/- for carrying 13 persons from Kurnool to Adoni and that the said Mallik Travels in turn collected its fare of Rs. 12/- from each of the passengers who are bound for the same destination in a group: This explanation was not considered by the respondent. There was no allegation in the check report that the vehicle as a whole was not engaged by the contractor nor was it alleged that the petitioner, instead of the contractor, collected separate fares individually from the passengers. There was no allegation that there was no contract between the petitioner and the Mallik Travels. It was not suggested that the destination of any of the passengers was other than Adoni. It was not even alleged that the list of passengers was not produced. The checking Officer has not enquired the passengers as to their destinations or the person to whom they paid the fares.

The explanation of the petitioner fully accords with the definition of the ''contract carriage'' u/s 2(3) of the A.P. Motor Vehicles Act, 1939. There is no finding that at the time when the vehicle was checked it had lost the character of a contract carriage. The first step in the enquiry at the time when the vehicle was subjected to check, should have been whether the vehicle was plying as a contract carriage and only when it was found that by virtue of any of the violations noticed it ceased to be a contract carriage the authority should look to the other provisions of the Act for the purpose of determining the tax liability of the owner either alls a stage carriage or as an express stage carriage. Mere payment of individual fares is not conclusive. A Full Bench of this court in V. Govindarajulu and Vs. The Regional Transport Officer, Anantapur and Others, , while adverting to this legal position, held:

"The essential condition is that a single party or person should be exercising full control for the use of the vehicle. In other words, was there a single contract in respect of the vehicle as a whole? If there is no single contract in respect of the vehicle and if no person or leader of the party could exercise full control of the vehicle and several passengers have separately contracted for the use of the vehicle and pay individual fares, such a transport vehicle cannot fall within the definition of contract carriage. But if there is a prior contract for the use of the vehicle as a whole with the owner, the mere fact that individual fares were collected by the leader of the party from the passengers does not make the vehicle a stage carriage. Though a contract carriage and a stage carriage are public service-vehicles as defined u/s 2(25) of the Act, it is in the nature of the use that the distinction between the two types of transport vehicle is drawn."

When the allegation of collection of individual fares from the passengers for purpose of fastening liability as an express stage carriage fails, the other aspect that has to be examined is whether collection of fares at a rate higher than the ordinary fare from each of the passengers would convert a contract carriage into a stage carriage? Our answer is in the negative. As already noticed, the definition of ''contract carriage'' u/s 2(3) of the Motor Vehicles Act, 1939, entitles the operator to collect fares at a fixed or agreed rate. Those fares need not be same or different from the ordinary fares collected by stage carriages. Depending upon the exigencies of the situation the owner of a contract carriage may enter into an agreement relating to hire charges or reward and there is no provision in the Act or the Rules prescribing any ceiling in this regard. The respondent has misdirected himself in law as to the liability of the petitioner to pay tax as an express stage carriage. The basis for fastening liability on the petitioner have no foundation either in fact or in law and therefore, we have no hesitation to set aside the same. For these reasons the writ petition is allowed. The impugned order is set aside. At the time of admission, as interlocutory order was passed by this court on 2-5-89 granting interim stay of collection of the tax demanded by the impugned order on condition of the petitioner paying tax on the basis of ordinary stage carriage. It is stated by the petitioner that the interim order has been complied with. As the writ petition is allowed we direct that the amount if any paid by the petitioner pursuant to the order of this court dt. 2-5-89 shall be refunded to him within four weeks from the date of receipt of a copy of this order. There shall be no order as to costs. Advocate''s fee Rs. 350/-