Madras High Court
Central Warehousing Corporation vs The Commissioner on 5 January, 2023
2023/MHC/71
W.P.No.28255 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.01.2023
CORAM:
THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR
W.P.No.28255 of 2022
and W.M.P.Nos.27550, 27551 & 27554 of 2022
Central Warehousing Corporation
(A Government of India Undertaking)
Represented by Warehouse Manager,
Central Warehouse, Chromepet,
Chitlapakkam, Chennai - 64. .. Petitioner
Vs.
1. The Commissioner,
Tambaram Municipal Corporation,
Muthuranga Mudali Street,
Tambaram West, Chennai - 45.
2. M.Bharathidasan .. Respondents
Prayer : Writ Petition has been filed under Article 226 of the Constitution of
India seeking a Writ of Certiorarified Mandamus calling for the records and
quash the entire proceedings of the 1st respondent in
Na.Ka.No.165/2015/A1, dated 20.09.2022 including the notification in
Na.Ka.No.165/2015/A1 dated 14.07.2022 in relation to awarding the
tender/auction for toll collection for lorry entry at Central Warehouse,
Chitlapakkam, Chennai - 64 as being null and void and consequently
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W.P.No.28255 of 2022
forbearing the respondents from collecting any fee/toll charges for lorry
entering the Central Warehouse, Chitlapakkam, Chennai - 64.
For Petitioner : Mr.D.Baskar
For Respondent 1 : Mr.P.Srinivas
For Respondent 2 : No appearance
-----
ORDER
This writ petition has been filed challenging proceedings of the first
respondent in Na.Ka.No.165/2015/A1, dated 20.09.2022 including the
Notification in Na.Ka.No.165/2015/A1 dated 14.07.2022 in relation to
awarding the tender/auction for toll collection for lorry entry at Central
Warehouse, Chitlapakkam, Chennai - 64 and consequently to forbear the
respondents from collecting any fee/toll charges for the lorries entering the
Central Warehouse, Chitlapakkam, Chennai - 64.
2. The contention of the writ petitioner is that the first respondent
Corporation has awarded tender/auction for toll collection for lorry/mini
trucks entry at Central Warehouse, Chitlapakkam based on the resolution
passed in the General Council meeting held on 11.07.2022 and a notification
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W.P.No.28255 of 2022
to that effect has been issued on 14.07.2022.
3. It is the contention of the petitioner that the first respondent has no
right to collect toll from the vehicles entering into the petitioner's premises.
The petitioner further contended that imposing such entry tax to the vehicles
entering into the petitioner's premises is unjust and unreasonable. Hence
challenging the above, the present writ petition has been filed.
4. The first respondent has filed counter. In the counter it is
contended by the first respondent that the petitioner has no locus standi to
file the writ petition as the petitioner is not a person aggrieved by the levy of
toll to the vehicles that are entering into the petitioner's premises. The
payment of the levy is by the owners of the vehicles and not by the petitioner.
Further, due to the collection of the toll, no prejudice is caused to the
petitioner.
5. It is further contended by the first respondent that collection of toll
has been done for the past more than 30 years and the records of the
Chitlapakkam Town Panchayat shows toll collection as early as from the
year 1989. Resolution No.26 shows that licence to collect the fees for the
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W.P.No.28255 of 2022
vehicles coming to the petitioner's premises has been auctioned. The
petitioner's premises is in use as a storage facility for the various traders and
the movement of heavy vehicles into the area is due to the operations of the
petitioner's facility. Despite the facility spread over several acres it is used by
hundreds of traders and businesses to store their goods.
6. According to the first respondent, every day several heavy trucks of
20 tons and higher arrive at the petitioner's facility for moving the goods and
also smaller vehicles to remove the goods are also arriving. Due to this the
Chitlapakkam first main road that leads to the petitioner's premises and the
connected roads namely the Nehru Street, Chitlapakkam 2nd main road,
Hasthinapuram main road have to be frequently repaired and rebuilt.
7. Further according to the first respondent the frequency at which
the particular roads have to be relaid and repaired is more than 10 times
compared to other streets in the locality. In the last repair works, a sum of
Rs.15 lakhs has been allocated for the Nehru Street and Rs.14 lakhs for the
Hasthinapuram Main Road alone. The only reason for the heavy traffic on
these streets is the presence of the petitioner's premises and the operations of
the businesses in the same. Therefore, the present levy has no effect on the
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W.P.No.28255 of 2022
petitioner and only the vehicle users are aggrieved by the same and as such
there is no discrimination with regard to the levy of toll. Only due to the fact
that extraordinary traffic is caused due to the operations of the petitioner's
premises, the levy which is a compensatory levy is being done by the first
respondent. Therefore, there is no illegality in the same and hence oppose
the writ petition.
8. The learned counsel appearing for the petitioner mainly contended
that a perusal of the agenda for the Council meeting it can be clearly seen
that the meeting has been convened only to fix the toll for the vehicles
entering into Chitlapakkam Corporation Area, whereas, the licence has been
granted only for collection of toll from lorries entering into the petitioner's
premises. Therefore, it is his contention that it is only discriminatory in
nature. Collecting toll from the vehicles entering the petitioner's premises
alone is discriminatory in nature and the same cannot be allowed and in fact
it has caused serious prejudice to the petitioner.
9. The learned counsel further submitted that if really the toll has
been compensatory in nature they ought to have collected the same from all
the vehicles entering into a particular road, but the order of the first
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W.P.No.28255 of 2022
respondent is for collecting toll from the vehicles entering into the petitioner's
premises is nothing but discriminatory and the same cannot be sustained in
the eye of law.
10. Whereas, the learned counsel appearing for the first respondent
submitted that collection of toll has been going on for the past more than 30
years. He also brought to the notice of this Court the resolutions passed in
the year 1989 and 1990 by the then Municipality in this regard. According
to him, only in order to collect the cost for repairing the road due to heavy
traffic flow in the area, licence has been provided and therefore there is no
discrimination adopted. Further according to the learned counsel the
collection of toll is from all the vehicles entering into those two roads and
therefore submitted that the petitioner is not an aggrieved party and he
cannot maintain the writ petition.
11. I have heard the learned counsel on either side and also perused
the entire materials.
12. The first respondent issued the tender for collection of toll from
the lorries entering into the petitioner's warehouse. Before the resolution by
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W.P.No.28255 of 2022
the Corporation, a meeting was convened and the agenda for the meeting
indicated that to levy toll for the lorries entering into the entire Chitlapakkam
area, whereas the licence was provided to collect toll only from the lorries
entering into the petitioner's premises. It is relevant to note that for the other
areas no toll whatsoever is collected. When in the meeting the minutes has
been recorded to levy toll for the entire Chitlapakkam area, tender was
issued inviting bids for collecting toll from the lorries entering into the
petitioner's premises is nothing but a clear discrimination.
13. Though it is stated by the learned counsel appearing for the first
respondent that the petitioner not being an aggrieved party cannot maintain
the writ petition. It is to be noted that the petitioner is a Central
Warehousing Corporation, a Government of India Undertaking. Several
trucks and other vehicles will naturally enter into the petitioner's premises. If
the restriction is put only to the lorries entering into the petitioner's premises,
it will in fact discourage the traders to stock their goods in the petitioner's
warehouse due to the toll collection. Therefore, this Court is of the view that
the petitioner is certainly an aggrieved person and can maintain the writ
petition.
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W.P.No.28255 of 2022
14. Though, it is stated in the counter that levy of toll is
compensatory in nature and only for the purpose of repairing the roads the
tender has been invited. In the counter itself it is stated that they have spent
around 29 lakhs for repairing two roads viz., Nehru Street and
Hasthinapuram main road alone. Therefore, the levy is a compensatory levy
only for compensating the above aspects and the toll has been levied only to
the vehicles entering into the petitioner's premises. Since the first respondent
has to upkeep the roads by incurring lot of expenses.
15. It is relevant to note that the essence of compensatory tax is that
the services rendered or facilities provided should be more or less
commensurate with the tax levied and tax should not be patently more than
what was required to provide such facilities and the tax imposed for
augmenting general revenue of the State cannot be construed as
compensatory.
16. A Division Bench of this Court in ITC Limited Vs. State of
Tamil Nadu reported in (2007) 2 CTC 577 has held that tax levied under the
Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001 is not
compensatory tax within the meaning of Articles 301 and 304 of the
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W.P.No.28255 of 2022
Constitution and also held that it cannot be said that maintaining of roads,
providing bridges, etc., is compensatory in nature so as to meet the outlay
incurred for some special advantage to trade, commerce and intercourse and
it is also held that there is no connection or nexus with the collection of entry
tax and its utilisation for the benefit of traders/manufacturers from whom
such tax is collected and that consequently the levy of entry tax is
unauthorised and violative of Article 301 of the Constitution. The same view
has been taken by a Division Bench of Kerala High Court in Thressiamma
L.Chirayil Vs. State of Kerala reported in (2007) 7 VST 293 (Ker).
17. In State of Karnataka Vs. Hansa Corporation reported in AIR
1981 SC 462 the Hon'ble Apex Court has held as follows:
"The State did not attempt in the High
Court to sustain the validity of the impugned tax
law on the submission that it was compensatory in
character. No attempt was made to establish that
the dealers in Scheduled goods in a local area
would be availing of municipal services and
municipal services can be efficiently rendered if
the municipality charged with a duty to render
services has enough and adequate funds and that
the impugned tax was a measure for compensating
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W.P.No.28255 of 2022
the municipalities for the loss of revenue or for
augmenting its finances. As such a stand was not
taken, it is not necessary for us to examine whether
the tax is compensatory in character."
18. It is also submitted by the learned counsel appearing for the first
respondent that levy has been fixed in view of the power conferred under
Section 249 of the Coimbatore City Municipal Corporation Act which also
applies to the respondent Corporation. The said Section 249 reads as follows:
"Section 249. Power of the Corporation to
recover expenses caused by extraordinary traffic
— When by a certificate of an Officer of the
Public Works department of the Government of a
rank not below that of an Executive Engineer it
appears to the Commissioner that having regard
to the average expense of repairing roads in the
neighbourhood, extraordinary expenses have been
incurred by the Corporation in repairing a street
by reason of the damage caused by excessive
weight passing along the street or extraordinary
traffic thereon, or by any process of loading,
unloading or depositing excessive weights thereon
the Commissioner may recover in the civil Court,
from any person by or in consequence of whose
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W.P.No.28255 of 2022
order such damage has been caused, the amount
of such expenses as may be proved to the
satisfaction of such Court to have been incurred
by the Corporation by reason of the damage
arising from such weight or traffic as aforesaid:
Provided that any person from whom
expenses are or may be recoverable under this
section may enter into an agreement with the
Corporation for the payment to it of a composition
in respect of such weight or traffic and thereupon
the persons so paying shall not be subject to any
proceedings under this section."
19. On perusal of the above Section, this Court is of the view that the
above Section gives right to recover the expenses caused by extraordinary
traffic in the Civil Court by proving the same. Except that, it does not permit
to levy tax. Admittedly, there is no material whatsoever available on record
so as to substantiate the submission of the first respondent to show that only
because of the lorries entering into the petitioner's warehouse the roads
suffered damages and to meet out that expenses recovery has to be made.
20. In Jindal Stainless Ltd. Vs. State of Haryana reported in (2006)
7 SCC 241 the Hon'ble Apex Court has held that the compensatory tax is a
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W.P.No.28255 of 2022
charge for offering trade facilities and they are based on the principle of
equivalence and relying upon the Hansa Corporation case (cited supra) has
held in paragraph 11 as follows:
"11.....We are of the opinion that
maintaining of roads, providing bridges, etc.,
cannot be said to be compensatory in nature so as
to constitute special advantage to trade, commerce
and intercourse. Even otherwise, a welfare State is
bestowed with the responsibilities of providing
good roads and bridges for the benefit of the tax-
paying citizens and hence to contend that the
impugned levy is being raised only for the said
purpose is not justified. Maintenance of roads,
bridges, etc., are generally met from the general
funds or revenue. Whether goods are transported
into the State or outside State or abroad, the State
has got a duty to provide facilities like roads,
bridges, etc., which are being enjoyed not only by
the persons who bring the goods notified for levy of
entry tax, but also by others. The roads, bridges
expenditure test, which was applied in Automobile
Transport case AIR 1962 SC 1406 in respect of the
vehicle tax cannot be made applicable to the
impugned enactment which sought to levy the entry
tax on the entry of motor vehicles into the local
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W.P.No.28255 of 2022
areas of the State. As to what could satisfy such a
test in the context of an entry tax could be gathered
from para 28 in the case of State of Karnataka v.
Hansa Corporation, which is extracted below:
'The State did not attempt in
the High Court to sustain the validity
of the impugned tax law on the
submission that it was compensatory
in character. No attempt was made
to establish that the dealers in
Scheduled goods in a local area
would be availing of municipal
services and municipal services can
be efficiently rendered if the
municipality charged with a duty to
render services has enough and
adequate funds and that the
impugned tax was a measure for
compensating the municipalities for
the loss of revenue or for
augmenting its finances. As such a
stand was not taken, it is not
necessary for us to examine whether
the tax is compensatory in
character'."
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W.P.No.28255 of 2022
21. Considering the above judgments, as in the auction notice the
amount has been fixed as Rs.30,000/- and the same would not commensurate
to the expected expenses as alleged in the counter. Such view of the matter,
this Court is of the view that the action of the first respondent Corporation to
collect toll only from the lorries entering the petitioner's premises is nothing
but discriminatory and cannot be said to be compensatory in nature.
22. Such view of the matter, the impugned order of the first
respondent is set aside and the writ petition is allowed. Consequently, the
connected miscellaneous petitions are closed. No costs.
05.01.2023
Index : Yes
Neutral Citation : Yes
kk
To
The Commissioner,
Tambaram Municipal Corporation,
Muthuranga Mudali Street,
Tambaram West, Chennai - 45.
https://www.mhc.tn.gov.in/judis
W.P.No.28255 of 2022
N.SATHISH KUMAR, J.
kk
W.P.No.28255 of 2022
and W.M.P.Nos.27550,
27551 & 27554 of 2022
05.01.2023
https://www.mhc.tn.gov.in/judis
