The Kerala High Court dismissed a slew of petitions moved by private bus operators seeking an extension of the tax exemption granted to them owing to the Covid-19 pandemic in 2020-2021 as 'pure policy matter.'
The single-judge bench of Justice Bechu Kurian Thomas observed that the policy was adopted for the pandemic period problems and there is no right to seek the same for other period throgh courts.
"The pestilence in the form of Covid-19 has created situations and consequences that are unprecedented."
The Court stated that measures during Covid were introduced as part of national and statewide lockdowns affected the movement of people and goods.
"Public transportation had to be curtailed and regulated to prevent the spread of the virus. While the Government-run/supported, public transportation could withstand, to a large measure, the perils of the pandemic, the privately run public transportation system could not bear the economic brunt of the circumstances. The present batch of writ petitions brings to the fore, the woes of a certain category of owners of motor vehicles which cater to public transportation."
The petitioner alleged that the lockdown, which caused disruption of all businesses, had a catastrophic impact on stage carriage operators, and the same ought to have been reckoned while considering the question of exemption from tax due under the Kerala Motor Vehicles Taxation Act, 1976.
It was further contended that despite the happening of force majeure conditions and despite the Supreme Court’s direction to extend maximum economic benefits to all sectors, the Government ignored the stage carriage operators. Faced with such a dilemma, petitioners submitted representations requesting exemption from payment of tax. However, Government failed to heed their requests and the benefit of tax exemption was declined.
The respondents stated that the ‘use of a vehicle’ is not the only criteria for imposing a tax on motor vehicles and that the incidence of tax under the Act falls even on a vehicle that is ‘kept ready for use’ and in case the owner of the vehicle does not intend to use the same, he is at liberty to file a G-Form with the concerned authority and seek exemption from payment of tax. It was averred that the provision for levy of tax was carefully drafted, and if there was no intention to use the road, statutory benefits could have been claimed by intimating the authority concerned in the prescribed form.
Whether this Court should direct the Government to grant exemption to the petitioners from the motor vehicle tax payable on stage carriages/contract carriages, due to the restrictions and regulations brought in on account of Covid-19 pandemic?
Deciding on the above question, the Court at the outset noted that though unprecedented situations warrant extraordinary actions, in the matter of taxation, certain fundamental canons of tax jurisprudence come to the forefront, which cannot be ignored.
There is no equity in tax, and the court must go strictly by the letter of law, while interpreting a taxing statute, the Court remarked.
The Court analysed Kerala Motor Vehicles Taxation Act, 1976 and noted that by virtue of reference to Section 3 of the Act, petitioners cannot claim any benefit for non-payment of tax merely on the ground of restrictions and regulations imposed due to Covid-19 pandemic.
Since exemption from payment of tax was granted for reasonable periods, it cannot be said that despite the restrictions and regulations brought in due to Covid-19 pandemic, the Government had not considered the plight of the stage carriage operators and contract carriage operators, it stated.
"When the Government had extended absolute exemption from payment of tax for a period of 12 months out of a period of 15 months, with a partial exemption for the remaining 3 months, petitioners cannot be heard to contend that their pleadings had fallen on deaf ears."
The argument that several restrictions imposed are all matters which are alien to the incidence of tax under the Act and are not legally tenable.
Conclusively, the Court ruled that grant of exemption from tax, whether limited or wholly, is a matter to be decided based on a policy.
"Failure to extend tax exemption to the full satisfaction of the petitioners is not an issue that is justiciable in the absence of any legal or constitutional right to demand exemption. Even if circumstances existed similar to those for the period during which exemption was granted, that will not confer a right to obtain an exemption from tax for other periods. No semblance of arbitrariness or unreasonableness is reflected in the manner of grant or denial of tax exemption."
Doctrine of legitimate expectation cannot apply contrary to statute
The Court noted that the contention of the petitioners on this basis is also not legally tenable. The principle of legitimate expectation, which evolved as an equitable doctrine, cannot apply contrary to the statute, there cannot be any legitimate expectation against the terms of the statute, it said.
"The doctrine of legitimate expectation is a part of the principle of non - arbitrariness, which is a necessary attendant of the rule of law. The said doctrine is a weapon in the armoury of the Constitutional courts to prevent arbitrariness in governmental action. The applicability of the doctrine of legitimate expectation arises in certain specified circumstances. The doctrine does not apply wherever or whenever the citizens expect a thing to be done. The doctrine applies when (i) there is an express promise given by the public authority, (ii) due to the existence of a regular practice, the claimants expect the said practice to continue, and (iii) the expectation must be genuine and reasonable, not fanciful."
The doctrine will have no application when a practice is varied or a change is brought in on the basis of a change in policy or in public interest or altered by legislation or rule. Further, in the absence of any specific promise made to the claimant or the existence of a right, the doctrine cannot be resorted to, the Court added.
Doctrine of Legitimate Expectation not Doctrine of Expectation
The doctrine of legitimate expectation cannot be misconstrued as a doctrine of anticipation or even as a doctrine of expectation. Every anticipation of a claimant or his expectation cannot transform into an assertible expectation. The word ‘expectation’ in the doctrine is qualified by the word ‘legitimate’ which infuses significant difference and meaning to the doctrine, the Court noted.
The Court remarked that when a question on the applicability of the doctrine of legitimate expectation arises, it is to be determined not according to the claimant's perception, but, in the larger public interest, wherein, other more important considerations may outweigh, what would otherwise have been the legitimate expectation of the claimant.
The Court mentioned to observe that a bona fide decision of a public authority reached in the manner mentioned above, would satisfy the requirement of non - arbitrariness and withstand judicial scrutiny.
"When the provisions of the taxing statute mandate that tax is liable to be paid when a vehicle is kept ready for use in a State, there cannot be any legitimate expectation on the part of the stage carriage owners that even though the vehicle is kept ready for use, they are not liable to pay tax. Further, the concept of legitimate expectation cannot be extended or stretched to assume that as and when a restriction is brought in, the Government should immediately order tax exemption. The grant of tax exemption for one quarter or more than one quarter of a year, cannot also give rise to a legitimate expectation that for every quarter of the year or for periods beyond that, the exemption will be extended. The expectation that tax exemption will be accorded for periods beyond what has been granted is not an assertible expectation. Such an expectation is not legitimate. Law cannot accord its imprimatur to such expectations under the cover of the doctrine of legitimate expectation."
Case Title: VAKIYATH KOYA vs THE STATE OF KERALA
Case Details: WP(C) NO. 2881 OF 2022
Coram: Justice Bechu Kurian Thomas
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