Karnataka High Court

M/S Sahara Travels vs The State Of Karnataka And Ors on 11 January, 2022

Bench: R.Nataraj

                            1


             IN THE HIGH COURT OF KARNATAKA
                    KALABURAGI BENCH

         DATED THIS THE 11TH DAY OF JANUARY, 2022

                         BEFORE

            THE HON'BLE MR.JUSTICE R. NATARAJ

       WRIT PETITION NO.86466 OF 2012 (T-MVT)
                          C/W
       WRIT PETITION NO.87232 OF 2012 (T-MVT)


BETWEEN:
M/S SAHARA TRAVELS
THROUGH ITS PROPRIETOR
SMT. KANEEZ FATIMA
AGE: 42 YEARS,
OCC: BUSINESS AND HOUSEHOLD
R/O H.NO.11-1-293, AGAPURA
HYDERABAD-500001.
                                              ...PETITIONER
                                                (COMMON)
(BY SRI. AMEET KUMAR DESHPANDE, ADVOCATE)

AND:

1.     THE STATE OF KARNATAKA
       THROUGH HOME AND TRANSPORT DEPARTMENT
       PRINCIPAL SECRETARY,
       VIDHANA SOUDHA,
       BENGALURU-560001.

2.     DY. TRANSPORT COMMISSIONER
       SEDAM ROAD,
       GULBARGA-585102.
                           2


3.   THE ASST. REGIONAL TRANSPORT OFFICER
     HUMNABAD CHECK POST,
     HUMNABAD DIST. BIDAR-585401.
4.   THE POLICE SUB-INSPECTOR
     HUMNABAD CHECK POST,
     HUMNABAD DIST. BIDAR-585401.
                                       ...RESPONDENTS
                                           (COMMON)

(BY SRI. MALLIKARJUN SAHUKAR, HIGH COURT GOVERNMENT
PLEADER)

IN W.P.NO.86466/2012:

      THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
THE ORDERS PASSED BY THE RESPONDENT NO.2 DATED
11.10.2012 IN THE INTEREST OF JUSTICE. THE CERTIFIED
COPY    OF  WHICH   IS  AT   ANNEXURE-D    IN   APPEAL
NO.2/TXN/GBA/2012-13.

IN W.P.NO.87232/2012:

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
DECLARE THAT THE SEIZURE OF VEHICLES NO.AP-13/X-4666
AND AP-13/X-6999 AS ILLEGAL AND WITHOUT ANY AUTHORITY
OF LAW AND ETC.

     THESE PETITIONS HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 05.10.2021 AND COMING ON FOR
PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE
FOLLOWING:
                              3


                          ORDER

The petitioner, the owner of a stage carriage, has

filed this writ petition to quash the Order dated 11.10.2012

passed by the respondent No.2 in Appeal

No.02/TXN/GBA/2012-13.

2. The petitioner claims that it is running a

contract carriage in terms of a permit granted by the

Government of Andhra Pradesh under Section 88(9) of the

Motor Vehicles Act, 1988 (henceforth referred as 'MV Act)

read with Rules 82 to 85 of the Central Motor Vehicles

Rules, 1989 (henceforth referred as 'CMV Rules'). The

permit was valid in the States of Andhra Pradesh,

Karnataka, Maharashtra and Madhya Pradesh and was in

force upto 06.08.2013. The petitioner claims that it was

tendering tax to the Government of Karnataka as per

Section 3(1) of the Karnataka Motor Vehicles Taxation Act,

1957 (henceforth referred to as 'the Act of 1957') and was

operating the stage carriage regularly for 10 to 15 years

prior to the filing of this writ petition. It is claimed that on

21.08.2012 when the contract carriage was passing

through Humnabad Check Post in Karnataka towards

Mumbai, the respondent No.3 along with the police seized

the vehicle bearing Reg.No.AP-29/TA-6222. The

respondent No.3 issued an endorsement dated 21.08.2012

directing the petitioner to pay motor vehicles tax as

provided under Section 3(2) of the Act of 1957. The

petitioner challenged the endorsement before the

respondent No.2 in Appeal No.2/2012, which was

dismissed in terms of the order dated 11.10.2012. Being

aggrieved by the said order, the present petition is filed.

3. Learned counsel for the petitioner submitted

that a reading of Section 3(2) of the Act of 1957, indicated

that motor vehicle tax under the said provision could be

imposed upon a vehicle, which is brought for use in

Karnataka for a period of more than 7 days but not

exceeding 30 days. He claimed that the stage carriage

belonging to the petitioner only passes through Karnataka

every day and moves to either Mumbai or Bengaluru.

Therefore, he contended that the vehicle is only on transit

in Karnataka but it is not brought for use in Karnataka.

He, therefore, submitted that the impugned endorsement

is thoroughly illegal and the petitioner was bound to be

charged under Section 3(1) of the Act of 1957 at the rate

specified in Part-A of schedule. He also contended that the

respondent No.3 has accepted the tax under Section 3(1)

of the Act of 1957 for several years. Therefore, it was not

justified to demand tax under Section 3(2) of the Act of

1957. He further contended that the vehicle in question

was covered by an All India Tourist permit granted by the

State Transport Authority, Hyderabad under Section 88(9)

of the MV Act and Rules 82 to 85 of the CMV Rules. He

submitted that when the vehicle enters the border check

post of the State, the tax is paid voluntarily under Section

3(1) of the Act of 1957, which indicates that the vehicle

would be operated in the State for more than 30 days. He

submitted that this practice of collecting tax under Section

3(1) of the Act of 1957 was approved by this Court in

MRS.V.SOUDHAKUMARI vs. R.T.O. & TAXATION

AUTHORITY reported in ILR 1985 (1) KAR 615. He

further submitted that the motor vehicle tax was collected

by the respondent No.3, as provided under Section 3(1) of

the Act of 1957 at the rate of Rs.2,750/- per seat per

quarter. By virtue of the impugned endorsement, the

respondent No.3 demanded tax at the rate of Rs.64,935/-

for 30 days i.e., Rs.1,600/- + 11% surcharge,

consequently, the tax payable per quarter was

Rs.1,94,705/-. Therefore, it is contended that the

respondent No.3 was demanding a sum of Rs.75,758/- per

quarter and for a year, the total tax would be

Rs.3,00,032/-, which is illegal.

4. He next contended that, respondent No.2

having once held that the vehicle in question had no record

of illegal operation and no report was made by the

respondent No.3 and the vehicle was operated with a

regular permit, could not have held that the vehicle is

liable to pay tax under Section 3(2) of the Act of 1957.

5. Per contra, the learned Additional Government

Advocate submitted that the vehicle belonging to the

petitioner enters the State of Karnataka and therefore, it

was used on the roads in the State of Karnataka. Hence,

she contended that the vehicle is liable to be taxed under

Section 3(2) of the Act of 1957.

6. I have considered the submissions of the

learned counsel for the parties.

7. The facts that are not in dispute are that the

contract carriage in question was registered as an "All

India Tourist Omni Bus" and carried a national permit to

operate in the States of Andhra Pradesh, Karnataka,

Maharashtra, Tamil Nadu and Madhya Pradesh. The owner

of the contract carriage was not a resident of Karnataka,

but was a resident of erstwhile Andhra Pradesh. The

vehicle in question carried a tourist permit for the term

04.06.2012 to 01.06.2013. It is also not in dispute that as

on 04.11.2012 when the vehicle was seized it had a short

term taxation card issued by the respondents that was in

force up to 01.06.2013.

8. Section 3 of the Karnataka Motor vehicle

Taxation Act, 1957 which dealt with tax on motor vehicles,

as it stood prior to the amendment Act of 1976, read as

follows :

" Levy of tax.-(1) A tax at the rates specified in Part A of the Schedule shall be levied on all motor vehicles suitable for use on roads, kept in the State of Mysore:

Provided that in the case of motor vehicles kept by a dealer in or manufacturer of, such vehicles for the purposes of trade, the tax shall only be levied and paid by such dealer or manufacturer on vehicles permitted to be used on roads in the manner prescribed by rules made under the Motor Vehicles Act, 1939.

Explanation.- A motor vehicle of which the certificate of registration is current shall, for the purposes of this Act, be deemed to be a vehicle suitable for use on roads.

(2) Notwithstanding anything contained in sub-section (1), taxes at the rates specified in Part B of the Schedule shall be levied on motor vehicles belonging to or in the possession or control of persons, not ordinarily residing in the State of Mysore and kept in the State of Mysore by such persons for periods shorter than a quarter, but not exceeding thirty days:

**** (3) In the case of motor vehicles in respect of which any reciprocal arrangement relating to taxation has been entered into between the Government of Mysore and any other State Government, the levy of tax shall, notwithstanding anything contained in this Act, be in accordance with the terms and conditions of such reciprocal arrangement:

Provided that the tax leviable under any such arrangement shall not exceed the tax leviable under the Schedule:

Provided further that the terms and conditions of every such reciprocal arrangement shall be published in the Official Gazette, and a copy thereof shall be laid before the State Legislative Assembly.

9. Therefore, a conjoint reading of Section 3(1)

and 3(2) of the Act of 1957 as it stood prior to the

amendment Act of 1976 makes it clear that while Section

3(1) dealt with vehicles registered in State of Karnataka,

Section 3(2) dealt with vehicles which are brought for use

on roads in the State of Karnataka for periods shorter than

a quarter, but not exceeding 30 days.

10. The Hon'ble Supreme Court in STATE OF

MYSORE vs. T.V.S. IYENGAR & SONS PVT. LTD.,

[1980(1) KLJ SN 30 while considering the applicability

of Section 3(2) of the Act of 1957 in respect of a vehicle

transiting through the erstwhile State of Mysore held

"vehicle in transit through the State of Mysore or even

making a necessary halt for a short interval during transit

cannot be said to be a vehicle kept for use on roads in the

State of Mysore. The word "kept" has not been defined in

that sense. It must therefore be interpreted in its ordinary

popular sense consistent with the context. The ordinary

dictionary meaning of the word "kept in" is "to retain", "to

maintain" or "cause to stay or remain in a place" or "to

detain" or "to stay or continue in a specified condition

position" etc. In association with the use of vehicles,

therefore, the word "kept" has an element of

stationariness. It is something different from a mere state

of transit or a course of journey to the State. It is

something more than mere stoppage or halt for rest, food

or refreshment etc., in the course of transit through the

State of Karnataka. The Hon'ble Apex Court therefore held

that such a vehicle in transit cannot be taxed under

Section 3(2) of the Act of 1957.

11. The Apex Court in the case of STATE OF

MYSORE vs. T.V.S. IYENGAR & SONS PVT. LTD.,

[1980(1) KLJ SN 30] held "a motor vehicle passing

through the territory of the State on its way to its

destination in another State is not a motor vehicle "kept"

in the State within Section 3(1) of the Taxation Act.

12. The legislature in its wisdom, thus thought it fit

to amend Section 3 of the Act of 1957 so as to do away

with the classification of vehicles registered in the State

and vehicles registered outside the State that come into

the State for short spells.

13. As on 21.08.2012, when the vehicle in

question was seized, the extant provision relating to

imposition of tax on motor vehicles was found in Section 3

of the Act of 1957 which read as follows:

"3. Levy of tax.- (1) A tax at the rates specified in Part A of the Schedule shall be levied on all motor vehicles suitable for use on roads.

Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(Not applicable to this case)

Explanation - A motor vehicle of which the certificate of registration is current shall, for the purposes of this Act, be deemed to be a vehicle suitable for use on roads.

(2) Notwithstanding anything contained in sub- section (1), or Section 4, taxes at the rates specified in Part B of the schedule shall be levied on motor vehicles suitable for use on roads, which are in the State for periods shorter than a quarter, but not exceeding thirty days.

(3) In the case of motor vehicles in respect of which any reciprocal arrangement relating to taxation has been entered into between the Government of Karnataka and any other State Government, the levy of tax shall, notwithstanding anything contained in this Act, be in accordance with the terms and conditions of such reciprocal arrangement:

Provided that the tax leviable under any such arrangement shall not exceed the tax leviable under the Schedule:

Provided further that the terms and conditions of every such reciprocal arrangement shall be published

in the Official Gazette, and a copy thereof shall be laid before the State Legislative Assembly.

(4) x x x x x

5)Notwithstanding anything contained in sub- sections (1) to (4), a tax at the rate specified in Part 'E' of the schedule shall be levied on all motor vehicles including chassis, requiring temporary registration.

14. Thus, it is evident that Section 3 was amended

so as to do away with the words "kept in the State of

Karnataka" found in Section 3 (1) and "belonging to or in

the possession or control of persons not ordinarily residing

in the State of Karnataka and kept in the State of

Karnataka by such persons" found in Section 3(2) of the

Act.

15. The resultant position is that all vehicles that

use the roads in Karnataka shall be taxed at rates

mentioned in Part -A and those vehicles which are in the

State for periods shorter than a quarter but not exceeding

30 days are taxed at such rates as specified in Part-B.

16. A Co-ordinate Bench of this Court in

SMT.C.NIRMALA KAMATH AND OTHERS VS THE

COMMISSIONER FOR TRANSPORT IN KARNATAKA,

BANGALORE AND OTHERS [1997 (43) KLJ 392B]

while considering the connotation of the words "periods

shorter than a quarter, but not exceeding thirty days"

found in Section 3 (2) held that the expression is not quite

intelligible as the period of 30 days cannot be longer than

a quarter.

17. The contract carriage in question was granted

a tourist permit by the Transport Authority in Hyderabad

under Rule 83(2) and 87(2) of the CMV Rules. Sub-Rule

2A of Rule 83 of CMV Rules reads as follows :

"2A. The authority which grants the authorisation shall inform the State Transport Authorities concerned the registration number of the motor vehicle, the name and address of the permit holder and the period for which the said authorisation is valid:

Provided that where the permit holder undertakes to pay the tax direct to the concerned State Transport Authority at the time of entry in his jurisdiction, the authorisation shall expressly state that it has been issued subject to payment of taxes to the concerned State Transport Authority."

18. Section 88(9) of the Motor Vehicles Act, 1988

deals with grant of permits and is extracted below:

"Notwithstanding anything contained in sub- section (1) but subject to any rules that may be made by the Central Government under sub-section (14), any State Transport Authority may, for the purpose of promoting tourism, grant permits in respect of tourist vehicles valid for the whole of India, or in such contiguous States not being less than three in number including the State in which the permit is issued as may be specified in such permit in accordance with the choice indicated in the application and the provisions of Sections 73, 74, 80, 81, 82, 83, 84, 85, 86, clause (d) of sub-section (1) of Section 87 and Section 89 shall, as far as may be, apply in relation to such permits."

19. In respect of contract carriages with permits

granted under Motor Vehicles (All India Permit for Tourist-

Transport Operators) Rules, 1993, the rate of tax as

provided under item 6.a of Part A is as follows :

Item No. Class of vehicles Quarterly tax for vehicles fitted with pneumatic tyres *6 **[(a)] Motor vehicles (luxury buses) plying for hire or reward, constructed or adapted to carry more than 12 passengers (excluding driver

and conductor or attendant) and complying with Rule 128 of Central Motor Vehicles Rules, 1989 or Motor Vehicles with 2750-00*** permits granted under the Motor Vehicles (All India Permit for Tourist-

                     Transport
                     Operators)     Rules,
                     1993, plying for
                     hire    or    reward
                     permitted to carry
                     more than twelve
                     passengers
                     (excluding     driver
                     and conductor or
                     attendant),       for
                     every passenger.

                     (b) x x x x x


* as amended by Act No.7 of 2001
** as amended by Act No.12 of 2005
***as amended by Act 7 of 2010

20. In respect of contract carriages coming from

outside into the State, the rate of tax as provided under

item 5 and 6 of Part-B is as follows :

Item Class of vehicles For period For period No. not exceeding exceeding 7 7 days days at a but not time exceeding 31 days Rs. Rs.

5*     Motor           vehicles
       (contract     carriages
       including         motor
       vehicles covered with
       permits issued under
       Section 88(8) of the
       Motor Vehicles Act,
       1988) plying for hire
       or      reward      and
       constructed or adopted 300.00           400.00
       to carry more than 12
       passengers (excluding
       driver              and
       conductor/attendant)
       and complying with
       Rule 151(2) of the
       Karnataka         Motor
       Vehicles Rules, 1989
       for every passenger]
6***   Motor           vehicles
       (contract     carriages
       including         motor
       vehicles covered with
       permits issued under
       Section 88(8) of the
       Motor Vehicles Act,
       1988) plying for hire
       or reward, constructed
       or adopted to carry 600.00              1,500.00
       more       than      12
       passengers (excluding
       driver              and
       conductor/attendant)
       other than those liable



            to be taxed under item
            5 for every passenger.

21. Therefore, except the entry 6.a of Part A there is

no tax entry dealing with a vehicle that is granted a special

permit under Section 88(9) of the Motor Vehicles Act,

1988. No doubt entry 5 and 6 deals with the rate of tax on

all contract carriages including those that are granted

permits under Section 88(8) of the Motor Vehicles Act,

1988 but does not cover a contract carriage which is

granted a special permit under Section 88(9). If a vehicle

is granted a tourist permit for the purposes of promoting

tourism, then such vehicle is deemed to be in the State of

Karnataka as it has a right to enter the State of Karnataka,

subject to payment of motor vehicle tax, just like any

other vehicle registered in the State of Karnataka or

regularly using the roads in Karnataka.

22. It was precisely for this reason that under Rule

10 of the Karnataka Motor Vehicles Taxation Rules, 1957

(henceforth referred as 'Rules of 1957') the contract

carriage in question was granted a short term taxation

card, as the contract carriage in question was using the

roads in Karnataka.

23. Rule 10 of Rules of 1957 deals with issuance of

Short term Taxation card and reads as follows:

"10. Short term Taxation card- (1) Any person who intends to bring a motor vehicle liable to tax temporarily into the State, by using the road, shall apply to any Taxation Authority and obtain a taxation card, for the required period.

(2) The taxation card issued under sub-rule (1) shall be in Form 11. The short term taxation card in Form 11 shall be printed and bounded in books of ten each and numbered serially from 1, indicating the period of 7 days or 30 days, as the case may be, in bold letters. Every short term taxation card shall be in triplicate, the first copy shall be marked as "original" which shall be carried in the vehicle; the second copy shall be marked as "duplicate" which shall be forwarded to the Transport Commissioner, Karnataka and the third copy shall be marked as "triplicate" which shall be retained by the Taxation Authority.

(3) Any person who, having brought a motor vehicle into the State, intends to keep it therein, shall immediately after the expiry of the period for which tax is paid in respect of that vehicle, deliver or cause to be delivered to a Taxation Authority a declaration in Form 12.

(4) The Taxation Authority shall, on receipt of the said declaration, collect the amount of tax due on the vehicle and issue a short term taxation card.

(5) For purposes of these short term licenses the day will count from 6.00 a.m. to 6.00 a.m. on the next day. Irrespective of the time at which the short term taxation card is issued in a day, the period will be counted as one day at 6.00 a.m. on the next day.

(6) No refund is allowed on short term taxation card on any account."

24. Nonetheless, the respondents have treated the

contract carriage in question as a vehicle "suitable for use

on roads which are in the State for periods shorter than a

quarter but not exceeding 30 days" as specified under

Section 3(2) of the Act of 1957. In the case on hand, the

contract carriage in question criss-crosses or transits

through or throughout the State of Karnataka in view of

the All India permit granted to it and therefore, does not

qualify to be exigible for motor vehicle tax under Section

3(2) of the Act of 1957. If the interpretation of the

respondents is accepted, then every time the vehicle in

question enters after exiting the State of Karnataka, it

would be liable to pay tax at the rates specified in Part B of

the Schedule, which is neither intelligible nor rational.

25. The Division Bench of this Court

MRS.V.SOUDHAKUMARI (supra) held as follows :

"20. Section 3(2) of the Act governs a case of user of a vehicle for a period not exceeding 30 days and not to a case of continuous user of a vehicle as in the present case. Section 3(2) applies to a case of temporary or sporadic user of a vehicle of outside State and not to a case of continuous user of such vehicle in the State of Karnataka. When a vehicle is continuously used in the State as found by the RTO, then that vehicle is exigible to pay taxes only under Section 3(1) of the Act. We see no merit in this contention of Sri Achar also and reject the same."

26. A Co-Ordinate Bench of this Court in N. RAMU vs.

STATE OF KARNATAKA AND OTHERS [2005 (3) KLJ

92] while considering a case of a tourist vehicle registered

in Andhra Pradesh and entering Karnataka held as follows:

"Be that as it may, the question is if the vehicles in question are not one which are of the nature of the three exceptions referred to above, Rule 128 of the Rules enjoins such vehicles to conform to the requirement mentioned in the Rule. The petitioner's vehicles admittedly not coming under the said three exceptions, are, therefore, required to conform

to the specifications mentioned in the Rule, in which event, they are vehicles which are covered under Entry 5(a)(ii) of Part 'A' of the Schedule to the Act. The question is not so much as to whether the petitioner has fully conformed to the requirements of the Rule. The question is as to whether the vehicles of the petitioner are required to conform to the requirements of the Rule 128 of the Central Rules. So long as such requirement is insisted under Rule 128, the vehicle is one which is covered under Entry 5(a)(ii) of Part 'A' of the Schedule to the Act. There is no escape from payment of tax by the petitioners in respect of the vehicles in question, as contemplated under the Karnataka Act."

27. Therefore, if the vehicle in question is suitable

for use in Karnataka, having regard to the fact that the

vehicle is granted an All India Tourist Permit, it was liable

to be taxed at such rate as is specified under item 5a of

Part A.

28. A somewhat similar situation arose when

Explanation II to Section 3(1) of the Act of 1957 was

introduced by Act of 18/2014 which reads as follows :

"Explanation 2. - In respect of motor vehicles registered outside the State of Karnataka and which are in the State for a period exceeding thirty days, notwithstanding anything contained in the provisions of the Motor Vehicles Act, 1988 (Central Act 59 of 1988), and in any order or direction contained in any judgment or order of any Court, tax shall be levied as specified in Parts A1, A2, A4, A5, A6, A7 and A8 as the case may be."

29. This was struck down by this Court in

W.P.No.594/2015 and other connected writ petition on the

ground that it violated Article 19 of the Constitution of

India. This Order was upheld by the Division Bench of this

Court in W.A.No.850/2016. The net effect is that even in

respect of private vehicles which are in the State for a

period exceeding 30 days, they cannot be taxed under the

Act of 1957, if such motor vehicle has already paid tax in

any other State.

30. In that view of the matter, W.P.No.86466/2012

is allowed and the order passed by the respondent

imposing motor vehicle tax on the vehicle bearing Reg.