M/s. Tata Engineering and Locomotive Company Limited vs The State of Bihar and Others

Shambhu Prasad Singh, J.—The petitioner which is a public limited company in this writ application under Articles 226 and 227 of the Constitution of India, as originally filed, prayed for quashing of Annexure 2, a notice, from the Certificate Officer, Dhalbhum, Jamshedpur (respondent No. 3) demanding from the General Manages of the petitioner a sum of Rs. 580021.20 P. as arrears of road tax for dumpers and tippers, and also for a declaration that Section 6 of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 (hereinafter referred to as ''the Act'') was ultra vires if it authorises imposition or levy of road tax for the transportation of vehicles such as built-up chassis, dumpers, tippers etc. A further prayer was made for a writ in the nature of mandamus commanding respondent No. 2, the District Transport Officer, Jamshedpur, Bihar to register the vehicles of the petitioner mentioned in paragraph 1 of the petition, such as commercial vehicles, earth removing machines, industrial shunters, particularly built-up chassis, dumpers, tippers and coal carriers without payment of any road tax leviable u/s 6 of the Act. It appears that after the writ application was admitted, respondent No. 1, the State of Bihar, by Ordinance No. 84 of 1976 amended Section 6 and 8 of the Act providing for payment of tax annually by every owner and person having possession or control of the motor vehicle. The petitioner company challenged the vires of that Ordinance by an amendment petition which was filed on 28th of July, 1976. This amendment petition was allowed by order dated 6th of August, 1976. That Ordinance lapsed by efflux of time and respondent No. 1 went on replacing it by Ordinances of similar nature the last one being Ordinance No. 230 of 1977 (hereinafter referred to us the Ordinance) as stated in the petition filed on behalf of the petitioner on 28th of February, 1978. By this petition which purports to be one u/s 151 read with Order 6, Rule 17 of the Code of Civil Procedure, the petitioner company has again prayed for amendment of the writ application challenging the vires of Sections 3(b), 3(c) and 5 thereof by which Sections 6 and 8 of the Act have been amended. By order dated 4th of April, 1978, the Bench before which this petition was put up directed that it would be considered at the time of hearing of the writ petition itself and it would be open to the respondents to file any affidavit in reply to the amendment petition if they so liked. Another petition u/s 151 of the CPC was also filed on behalf of the petitioner which was put up for orders on 30th of June, 1978, but learned counsel for the petitioner, Mr. Chunni Lal, stated that he did not press that petition and it was accordingly dismissed for non-prosecution. Mr. Lal Narain Sinha who has appeared for the petitioner company has advanced only two arguments, viz (i) that the amendments introduced by Sections 3(b), 3(c) and 5 of the Ordinance to Sections 6 and 8 of the Act are ultra vires as they were not within the legislative competence of the State Legislature; and (ii) that the dumpers, tippers etc. in respect of which demand for tax has been made are not covered by the schedule of the Act and hence the demand is illegal. Learned Advocate-General appearing for the respondents has taken a preliminary objection as to the maintainability of the writ application itself. According to him, as these objections could be raised before the Certificate Offices u/s 9 of the Bihar and Orissa Public Demands Recovery Act, this Court cannot go into the questions in view of the provisions of Article 226 of the Constitution as it stands amended by 42nd Amendment of the Constitution. Mr. Lal Narain Sinha conceded that the question whether the vehicles in respect of which tax was demanded were covered by the schedule of the Act or not was a question which could be raised before the Certificate Officer and did not press his second argument except that he wanted a direction from the Court that the Certificate Officer should go into this question. Mr. Sinha also did not challenge the vires of the original Sections 6 and 8 of the Act. Hence, the only point which is to be decided in this writ application is whether the amendments introduced by Sections 3(b), 3(c) and 5 of the Ordinance are within the legislative competence of the State Legislature. In the circumstances, it is not necessary to state in detail the respective cases of the parties as made out in the writ petition, counter affidavit and reply to counter-affidavit.

The relevant portion of Section 6 of the original Act were as follows:--

Imposition of tax (1) As from the first day of January, 1931, and after that date there shall be paid on every motor vehicle a tax at the rate specified in the Schedule to this Act.

(2) The tax shall be paid annually by the person who keeps a motor vehicle for use.

Section 8(1) deed as follows:--

Every person who keeps a motor vehicle for use shall fill up and sign a declaration in the prescribed form stating the prescribed particulars and shall deliver the declaration as filled up and signed to the taxing officer and shall pay to the taxing officer the tax which he appears by such declaration to be liable to pay in respect of such vehicle.

Section 3(b) of the Ordinance provides that the words ''the tax shall be paid annually by the registered owner or person having possession or control of the motor vehicle" shall be substituted and shall be deemed always to have been substituted for the words "the tax shall be paid annually by the person who keeps a motor vehicle for use" in Section 6(2) of the Act Section 3(c) of the Ordinance adds a former proviso to Sub-section (2) of Section 6, as follows:--

Provided further that in the case of a motor vehicle temporarily registered u/s 25 of the Motor Vehicles Act, 1939, only 1/12th of the tax payable for the year shall be payable in respect of such vehicle so registered. In case of renewal of temporary registration under proviso to Section 25 of the above-mentioned Act; tax at the rate of 1/12th payable for the year shall be payable for on each renewal of the temporary registration.

The said section of the Ordinance further provided that the said proviso shall be deemed always to have been added. Section 5 of the Ordinance lays down that the words "every registered owner or person having possession or control of a motor vehicle" shall be substituted and shall be deemed always to have been substituted for the words "every person who keeps a motor vehicle for use" in Sub-section (1) of Section 8.

It is not in dispute that respondent No. 1 has promulgated the Ordinance purporting to be within the legislative competence of the Governor under Entry 57 of List II of the Seventh Schedule to the Constitution which reads as follows:--

Taxes on vehicle, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of Entry 35 of List III.

The scope of this Entry had to be examined by the Supreme Court in (1) Bolani Ores Ltd., . While holding that dumpers and rockers were motor vehicles and, therefore, had to be registered under the Motor Vehicles Act and driven only by persons holding a valid licence. Reddy, J., speaking for the Court further held that they; though registered under that Act, were not taxable under the Taxation Act as long as they were working solely within the premises of the respective owners, The learned Judge did not go into the question of the constitutional validity of the amendment introduced by the State of Orissa in the Act as, according to him; that question was mere academic after the findings recorded by him as aforesaid. However, with reference to Entry 57 of Mst. II of the Seventh Schedule, he observed:--

We have already stated what these purposes are and having regard to them the registration of a motor vehicle does not automatically make it liable for taxation under the Taxation Act. 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 Article 301 of the Constitution depends upon the regulatory and compensatory nature of the taxes. It is not the purpose of the Taxation Act to levy taxes on vehicles which do not use the roads or la any way form part of the flow of traffic on the roads which is required to be regulated. The regulations under the Motor Vehicles Act for registration and prohibition of certain categories of vehicles being driven by persons who have no driving licence, even though those vehicles are not plying on the roads, are designed to ensure the safety of passengers and goods etc. etc. and for the purpose it is enacted to keep control and check on the vehicles. Legislative power under Entry 35 of List III (Concurrent List) does not bar such a provision. But Entry 57 of List II is subject to the limitations referred to above, namely that the power of taxation thereunder cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads, viz. public road. If the vehicles do not use the roads, notwithstanding that they are registered under the Act; they cannot be taxed.

After this decision of the Supreme Court it is not possible to hold that under Entry 57 of list II of the Seventh Schedule the State Legislature can tax even such moto vehicles which do not use public roads.

Relying on the above quoted observations of the Supreme Court in the said judgment Mr. Lal Narain Sinha has contended that obviously by the amendments introduced by Sections 3(b), 3(c) and 5 of the Ordinance to Sections 6 and 8 of the Act the respondent No. 1 intends to impose tax even on vehicles which are not used on public roads. Therefore, according to him, these amendments are ultra vires being beyond the scope of Entry 57 of List II of the Seventh Schedule to the Constitution and, therefore; outside the legislative competence of the State Legislature. As pointed out by the Supreme Court in Bolani Ores''s case; the power of taxation under Entry 57 List II cannot exceed the compensatory nature which must have some nexus with the vehicles used on roads, viz. public roads. Such a restriction was not embodied even in the language of Sections 6 and 8 of the Act as they originally were. The clause "persons who keep a motor vehicle for use" could be given an interpretation that the motor vehicle was liable to taxation even if it was kept for use on a private road. A limited meaning, therefore, had to be given even to the language of Sections 6 and 8 of the Act as they originally stood. It is well established rub of interpretation of statutes that the legislature must always be presumed not to have exceeded its jurisdiction and the contrary has to be proved. Learned Advocate General referred to the various decisions of the Supreme Court in support of this contention, but the proposition is so well settled that I do not consider it necessary to refer to those decisions. It is equally settled rule of interpretation that if any law made by the legislature can be held ultra vires by giving a limited meaning to it, it should be given such a meaning and should not be declared ultra vires.

The Ordinances by respondent No. 1 were promulgated after the defection of the Supreme Court in Bolani Ores''s case and it has to be presumed that the makers of the Ordinances were aware of the limitation on their power of taxation under Entry 57 of List II as held by the Supreme Court in Bolani Ores''s case. Therefore, the expression ''vehicle'' or ''motor vehicle� wherever used in the amendments introduced by the Ordinance shall have to be given a limited meaning as motor vehicles using the roads, viz. public roads. If such an interpretation is given to the Amendment it cannot be held that the State Legislature has exceeded its power of taxation as given in Entry 57 of List II of Seventh Schedule to the Constitution and the amendments are ultra vires. I accordingly hold that the amendments introduced to Sections 6 and 8 of the Act by Sections 3(b), 3(c) and 5 of the Ordinance need not be declared ultra vires as prayed For by the petitioner company but they should be ''given a limited meaning as-stated above in the light of the observations made by the Supreme Court in Bolani Ores''s case. The Certificate Officer will now examine the liability of the petitioner company to pay tax after examining the objections already raised or to be raised u/s 9 of the Bihar and Orissa Public Demands Recovery Act in the light of the observations made above and dispose of the certificate case in accordance with law.

In deference to arguments advanced by Mr. Lal Narain Sinha, before closing the judgment, I would like to refer to certain observations of the Supreme Court la two judgments on which also reliance was placed by Mr. Sinha. In (2) The State of Punjab and Another Vs. Khan Chand, , in paragraph 12 of the majority judgment, Khanna, J. observed that it was as much the duty of the courts to declare the provision of an enactment to be unconstitutional if it contravenes any article of the Constitution as it is theirs to uphold its validity in case it is found to suffer from no such infirmity. He deprecated hesitation of refusal on the part of the courts to declare provisions of an enactment unconstitutional even though they infringe the Constitution because of any notion of judicial humility. In that case the East Punjab Movable Property (Requisitioning) Act (15 of 1947) was held to be violative of Articles 14 and 19 of the Constitution. The facts of that case were quite different. In the instant case, I am not refusing to declare the amendments introduced by the Ordinance ultra vires on account of any hesitation or refusal on my past because of any notion of judicial humility, but because of the well-established rule of law that where it is possible to hold a law intra vires by giving a limited meaning to it; a Court should do that and need not declare the law ultra vires.

The other observations of the Supreme Court on which Mr. Lal Narain Sinha placed strong reliance were made in the case of (3) the The Commissioner of Sales Tax, U.P., Lucknow Vs. Parson Tools and Plants, Kanpur, . In that case, Sarkaria, J. speaking for the Court observed. "If the Legislature wilfully omits to incorporate something of an analogous law in a subsequent statute, or even if these is a cause omissus in a statute, the language of which is otherwise plain and unambiguous, the Court is not competent to supply the omission by engrafting on k or introducing in it, under the guise of interpretation by analogy or implication something what is to be a general principle of justice and equity�. The learned Judge quoted with approval & passage from the Judgment of Tekchand. J. in (4) Prem Nath L. Ganesh Dass Vs. Prem Nath L. Ram Nath and Others, . "To do so would be entrenching upon the preserves of legislature" and then added "the primary function of a Court of law being jus dicere and not jus dare�

I have already referred to the language of Entry 57 of List II of the Seventh Schedule to the Constitution. There is nothing in the language of the Entry directly suggesting that taxation under that Entry of vehicles can be made only when they are used on public roads. Rather, the language suggests that vehicles become liable to be taxed if they are suitable for use on roads (the expression road need not necessarily mean public road). Still keeping in view the language of Article 301 of the Constitution, in Bolani Ores''s case the Supreme Court laid down that taxation under Entry 57 of List II cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads, viz., public roads and that if the vehicles do not use the road, notwithstanding that they are registered under the Motor Vehicles Act they cannot be taxed. If there could be no objection to incorporating this limitation in Entry 57 of List II to the Seventh Schedule by the Supreme Court, in my opinion, there could be no objection to incorporating the limitation as proposed by me earlier in the language of the amendments introduced by the Ordinance so that they may not have to be declared ultra vires. Even in Bolani Ores''s case, the Supreme Court merely held that certain vehicles were not liable to taxation en the facts and circumstances of that case. It refused to go into the question of the constitutional validity of the Act. As already pointed out, limited meaning has to be given even to Sections 6 and 8 of the original Act for holding them to be constitutional and Mr. Sterna has not challenged the constitutional validity of those sections of the Act as they stood before the amendment by the Ordinance.

The ambit of Sections 6 and 8 of the Act, as they originally were, has definitely been enlarged by the amendments introduced by the ordinance. Under those sections; as they originally were, only a person who kept a motor vehicle for use was liable to pay tax for the vehicle. A manufacturer of the vehicle, perhaps, could not be made liable to pay tax for the vehicle under those two sections of the Act as they originally were. After the amendment, all those who own a vehicle or those who have possession or control thereof have been made liable to pay tax of the vehicle. It can very well be argued that a manufacturer though he may not be keeping a vehicle for use has got possession or control thereof and may be liable to pay tax for the vehicle under the amended provision. Of course, either under Sections 6 and 8 of the Act, as they originally were, or under them, as they stand after amendment, no vehicle is liable to taxation unless it uses the roads, viz. public roads. In my opinion, therefore, the observations of the Supreme Court is the aforesaid two cases relied on by Mr. Lal Narain Sinha are act of such a nature as to stand in the way of the view I have taken on the question of vires of the amendments introduced to Sections 6 and 8 of the Act by Section 3(b), 3(c) and 5 of the Ordinance.

In the result, the writ application falls and is dismissed, but, in the circumstances of the case, without costs.

I agree but in deference to learned counsel who argued this case, I wish to make certain observations.

B.S. Sinha, J.

In attacking the validity of Sections 6(1)(2) and 8(1) of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 (hereinafter referred to as the Act) as amended by the Ordinance, Mr. Lal Narain Sinha laid great emphasis on the deletion of the words "for use''''. It has been urged that the deliberate omission of the words "for use" makes the intention of the legislature clear which is that even vehicles which are not to be used can be taxed. As "keeping for use" goes away "the only test for imposition of the tax is ownership, possession or control. To elaborate this argument it was said that under the amended provisions even vehicles which are kept for display in show room or are sold on hire and purchase system or are dismantled after manufacture for certain reasons would be liable to taxation. While it was conceded that the test of validity of such taxing statutes is to be determined by reference to the subject matter of tax and not by reference to the assessee still "a registered owner" who will have no rational nexus will be made the collecting agency. In this context it would be useful to refer to the decision in (5) Rai Ramkrishna and Others Vs. The State of Bihar, where at page 1674 it was pointed out that the incidence of tax should not be confused with the machinery adopted by the statute to recover the said tax."

De-hors of Entry 57 of List 2 of the 7th schedule appended to the Constitution, the submission of learned counsel is very plausible but for reasons given in the judgment of my learned brother it is abundantly clear that the amended provisions have got to be read with Entry 57 of List 2 of the Constitution particularly as explained by the Supreme Court in the case of M/s Bolani Ores Ltd. In such a situation the decision in the case of (2) The State of Punjab and Another Vs. Khan Chand, is not helpful to Mr. Lal Narain Sinha. In that case the question that fell for consideration was the powers conferred on the State Government or the officers authorised by it to requisition any movable property. By going through Section 2 as well as all the provisions of that Act it was held that the drastic and unusual features of the Act, pointed out in the judgment, highlight the fact that the Act confers arbitrary powers for requisioning of movable property and no guide lines whatsoever have been prescribed for the exercise of such power. The total absence of such guide lines would result in arbitrariness and the power to discriminate were writ large on the face of the said provisions of the Act and was hence violative of Article 14 of the Constitution. It was, further, pointed out in that case that even the purpose for requisitioning had not been laid down in the Act, as it is for example in the Land Acquisition Act, 1894 which provide for acquisition for a public purpose or the Requisition and Acquisition of immovable Property Act, 1952 which also provides for the requisitioning of immovable property for a public purpose. In the case before us my learned brother, in his judgment, has already said that in interpreting the amended provisions there could be no objection to incorporate in the limitations as engrafted in Entry 57 of List 2 of the Constitution.