Holding

The Madhya Pradesh Motor Vehicles Tax Act, 1991, as amended, contains sufficient provisions for assessment and refund of tax, and is constitutionally valid; refund is available only upon written intimation of non‑use, which the appellants failed to provide.

Summary

The appellants, bus operators holding All‑India Tourist permits, challenged the constitutional validity of the Madhya Pradesh Motor Vehicles Tax Act, 1991, alleging that it lacked a mechanism to assess tax liability and grant refunds for vehicles not used in the state. The High Court had dismissed the writ petitions, holding that the Act was within the State’s legislative competence. The Supreme Court examined Sections 3, 8 and 14 of the Act and the corresponding Rules, finding that the Act expressly provides for assessment of tax and refund upon written intimation of non‑use. The Court clarified that a vehicle is deemed ‘used or kept for use’ in the State unless a declaration of non‑use is made, and that the refund provisions apply equally to vehicles operating under All‑India Tourist permits. Since the appellants had not given any such intimation, they were not entitled to a refund, and the Act was held constitutionally valid. Consequently, the appeals were dismissed with costs and the interim orders vacated.

Issues considered

Whether the Madhya Pradesh Motor Vehicles Tax Act, 1991 provides adequate provisions for assessment and refund of tax for vehicles not used in the State, particularly those holding All‑India Tourist permits.
Whether the absence of a written intimation of non‑use defeats the claim for tax refund under the Act.
Whether the Act is constitutionally valid under Entry 57 of List II of the Seventh Schedule.

Legislation cited

Constitution of Indias. Article 32, s. Entry 57 of List II

Subjects

Motor vehicle taxAssessmentRefundNon‑use declarationAll‑India Tourist permitConstitutional validityState taxation powerVehicle registration

Judgment

MAHAKOSHAL TOURIST, NAPIER TOWN AND ORS. A
v.
STATE OF MADHYA PRADESH AND ORS.

SEPTEMBER 3, 2002

[SYED SHAH MOHAMMED QUADRI AND RUMA PAL, JJ.] B

Madhya Pradesh Moto1J1an Karadhan Adhiniyam, 1991: ss. 3, 8 and
14-Motor Vehicles Tax -Rejimd of tax for the period a vehicle not used-
Motor operators holding All-India Tourists permits-Their writ petitions C
challenging constitutional validity ofthe Act on the ground that for ascertaining
tax liability and refunding the tax, there is no provision in the Act-Dismissed
by High Court-Held, a reading ofss. 3, 8 and 14 of the Act shows that there
are adequate provisions in the Act and the Rules framed thereunder for
ascertaining the liability, assessment and refund of tax leviable under the
Act-These provisions equally apply to opemtors holding All-India Tourist D
permits.

Jabalpur Bus Operators Association and Ors. v. Union of India and
Ors., (1993) M.P.L.J. 992, upheld
E
Ss. 3 and 14-Held, the expression 'used' or 'kept for use' occurring in
s. 3 means either actual use of the vehicle or keeping the vehicle available for
use in the State-While plying outside the State in connection with a contract,
a vehicle will, nonetheless, be within the import of 'kept for use' in the State
-Non-use of a vehicle in the State is by itself not enough-Fact of non use has
to be declared Co the conc(!rned authority to avoid tax liability-The motor F
operators herein had not given any written intimation of non-use of vehicle as
to avail the benefit of s. 14 read with Rules I 2 to 14-Motoryan Karadhan
Rules, 1998-Rules I 2 to 14.

Travancore Tea Estates Co. Ltd. and Ors. v. State of Kera/a and Ors., G
[1990] 3 sec 619, relied on

Boiani Ores Limited v. State of Orissa, [1974[ 2 SCC 777, referred to

1• CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5560 of 2002.
H
' 93
94 SUPREME COURT REPORTS [2002) SUPP. 2 S.C.R.

A From the Judgment and Order dated 9.12.1994 of the High Comt of
Madhya Pradesh in MP.3565 of 1992.
WITH
Civil Appeal Nos. 5561, 5562-70 of 2002. W.P.(C) No. 281/1994,
B C.A.No. 2176/1993 and SLP (C) No. 6483/1995. Civil Appeal Nos. 5560,
5561 and 5562-5570 of 2002.

M.L. Lahoty, P.K. Sharma, A.P. Dhamija, Sushi! Kumar Jain, Ms.
Pratibha Jain and Pramod Swarup (NIP) S.K. Mehta (N/P) for the Appellant.

C Sakesh Kumar and S.K. Agnihotri, Exparte for the Respondent.

The following Order of the Court was delivered:

Leave is granted.

D This batch of appeals arises from the common judgment and order of
the High Court of Madhya Pradesh (Jabalpur Bench) passed on February 9,
1994 in various writ petitions filed by bus operators holding All-India Tourist
permits.

The State of Madhya Pradesh passed the Madhya Pradesh Motoryan
E Karadhan Adhiniyam, 1991 [for short, 'Act 25 of 1991 ']under Entry 57 of
List-II of the Seventh Schedule to the Constitution. The said Act was
subsequently amended by Act 26 of 1991. Act 25 of 1991, thus amended,
was challenged before the High Court of Madhya Pradesh, inter alia, on the
ground of lack of legislative competence. The High Court repelled the
F contention and dismissed the writ petition (Misc. Petition No. 39 of 1992) on ·
!st October, 1992. Subsequently, Act 25 of 1991 was again amended by Act
10 of 1993, which was also questioned but it was upheld by the High Cou1t
in Jabalpur Bus Operators Association and Ors. v. Union of India and Ors.,
(Misc. Petition No. 1646of1993), reported in 1993 M.P.L.J. 992. The scope
G of challenge in this batch of writ petitions is with regard to the absence of
a machinery for assessment of tax for the vehicles plying on the basis of All-
India Tourist Permit in the State of Madhya Pradesh and denying them refund
of tax for the period they were not used or kept for use in the State of
Madhya Pradesh.

H Mr. M.L. Lahoty, learned counsel appearing for the appellants in the
MAHAKOSHAL TOURIST v. STATE 95
civil appeal (arising out ofS.L.P. (C) No. 4771of1994), has contended that A
though the Act was upheld by the High Court. it was observed that the State
should provide procedure for assessment of tax liability, already created. by
way of filing return, assessment and payment for tax. What the learned counsel
submits is that for the purpose of ascertaining the tax liability and refunding
the tax. there is no provision in Act 25 of 1991 and the Madhya Pradesh B
Motoryan Karadhan Rules, 1991 (for short, .. the M.P. Rules") as such the
provisions of the Act have to be declared as unconstitutional.

We are afraid, we cannot accede to the contention of the learned counsel.
On a plain reading of the provisions of Act 25 of 1991, it is evident that
Section 3 is the charging section. assessment procedure is laid down in Section C
8 of the Act for assessment and as a consequence of assessment where the
operator is found entitled to refund, Section 14 provides for refund of the tax.
These provisions equally apply to the operators holding All-ln.(jia Tourist
pennits. Section 14, insofar as it is relevant for our purpose, reads as follows:

'' 14. Refund of tax,--(1) Where D
(i) the tax for any motor vehicle has been paid for any month.
quarter. half year or year and the motor vehicle has not been
used during the whole of that month, quarter, half year or year
or a continuous part thereof not being Jess than one month and
written intimation of such non-use has been given in the prescribed E
form to the Taxation Authority in the manner prescribed prior to
the commencement of the period of such non-use; or
(ii) the vehicle has been so altered as to entitle the owner to the
refund of a portion of the already paid,
a refund of the tax sha II be payable at such rates and subject to such F
conditions as may be prescribed."

From a perusal for the provisions. extracted above, it is clear that (I)
where tax has been paid for any month, quarter. half year or a year and any
motor vehicle (which includes a vehicle plying on the basis of All-India G
Tourist permit) has not been used during the whole of the Month. qua11er.
half year or year or a continuous part thereot~ not being less than one month,
and written intimation of such non-use has bt'!en given in the prescribed frirm
to the Taxation Authority in the manner prescribed prior to the commencement
of the period of non-use: or (2) the vehicle has been so altered as to entitle
the owner to the refund of a prn1ion of tax already paid. a refund of tax shall J-1
96 SUPREME COURT REPORTS [2002] SUPP. 2 S.C.R.

A have to be made.
The proviso inserted by Act 16 of 1991 provides relief even in case of.
non-use of vehicle for a part of the month as well.

Admittedly, in these ca.ses, none of the member of the appellant
B Association had given any written intimation of non-use of the vehicle for
any part of the period, be it less than a month, a. month, a quarter, half a year
or a year. The charge on the motor vehicle levied under Section 3 of the M.P.
Act is on every motor vehicle used of kept for 'use in the State' at the rate
specified in the Schedule. The vehicles in question fall in clause (f) of the
C Schedule. The expression 'used' or 'kept for use'. means, either the actual use
of the vehicle on the roads of the State of Ma.dhya Pradesh or keeping the
vehicle (which is in condition and capable of being used) available for use
in the S~ate, if so. desired. While plying outside the State in connection with
a contract, a vehicle will, nonetheless, be within .the import of 'kept for use'
in the State. It is immaterial for the purpose of Section 3 of Act 25 of 1991,
D whether a vehicle is actually being used or is kept for use in the State.
. .
lfis no doubt true that in Boiani Ores limitedv. State ofOrissa, (1974]
2 SCC 777, three-Judge Bench of this Court observed,

"If the vehicles do not use the roads, notwithstanding that they are
E registered under the Act they cannot be taxed"

but the Court elucidated the principle thus:

"This very concept is embodied in the provisions of Section 7 of the
Taxation Act as also the. relevant sections in the Taxation Acts of
other States, namely, that where a motor vehicle is not using the
F
roads and it is declared that it will not use the roads for any quarter
or quarters of a year or for any particular year or years, no tax is
leviable thereon and if any tax has been paid for any qua11er during
which it is not proposed to use the motor vehicle on the road, the tax
for that quarter is refundable.''
G
11 is, therefore, clear that non-use of a vehicle in the State is by itself not
enough; the fact of non-use has to be declared to the concerned authority to
avoid tax liability. The principle u~derlying taxing the vehicle in the absence
of such a declaration and relieving it from the burden of tax only when a
declaration of non-use is given. has been explained by this Court in Trara11core
H Tl!a £.\·fa/C'S Co. ltd. and Ors. V. Stair! of Ke!rala and Ors .. r1980] 3 sec 619.
MAHAKOSHAL TOURIST 1·. STATE 97

It is laid down therein A
'"If the \1·ords ·used or kept for use in the State' are construed as used
or kept for use on the public roads of the State. the Act would be in
conformity with the powers conferred on the State legislatui·e under
Entry 57 of List II. If the vehicles are suitable for use on public roads
they are liable to be taxed. In order to levy a tax on vehicles used or B
kept for use on public roads of the State and at the same time to avoid
evasion of tax the legislature has prescribed the procedure."

It was further pointed that the registered owner or any person having
possession of or control of a motor vehicle for which a certificate of registration
is current shall for the purpose of this Act be deemed to use or keep such C
vehicles for use in the State, except during any period for which the Regional
transport Authority has certified in the prescribed manner that the motor
vehicle has not been used or kept for use. The presumption is that a motor
vehicle for which a certificate registration is .current shall be deemed to be
used or kept for use in the State. This is to ensure and safeguard the revenue D
of the State by relieving it from the burden of proving that the v'ehicle was
used or kept for use on the public road of the State. At the same time, the
interest of the bonafide owner is also safeguarded by enabling him to claim
or obtain a ce11ificate of non-use from the prescribed authority and, in that
case, the owner is required to give intimation of non-use. We are in respectful
agreement with these observations. E
It may be mentioned that to give effect to the provisions for refund of
tax. Rules 12 to 14 of the M.P. Rules lay down the requirements and the
procedure for that purpose in the event of non-user of the vehicle.

It is not necessary to. dilate on this aspect as, admittedly, the members F
of the appellant Association have not given any such intimation so as to avail
any benefit of Section 14 of Act 25 of 1991 read with the above said Rules.
Therefore, we cannot but repel the contention of the learned counsel that the
Act did not provide for the refund of tax for the period for which the vehicle
plying on All-India Tourist permits is not actually used in the State, so the G
provision has to be declared as unconstitutional. Having regard to the scope
of the charge under Section 3 of Act 25 of 1991, once it is found that such
vehicles are kept for use within the meaning of the said expression, explained
above. the tax liability cannot be avoided.

From the above discussion. it follows that there are adequate provisions H
98 SUPREME COURT REPORTS [2002] SUPP. 2 S.C.R.

A in Act 25 of 1991. as amended, and the Rules framed thereunder for
asce11aining the liability. assessment and refund of tax leviable under the said
Act. The vehicles plied by the members of the appellant Association. which
are registered in the State of Madhya Pradesh, are within the net of charge
under Section 3. They do not qualify for refund of tax merely because while
B plying in other States in connection with a contract with tourists. the vehicle
cannot be said to be used or kept for use in the State. However, they will be
entitled to refund of tax only on fulfilment of requirements of Section 14 of
Act 25 of 1991 and the Rules made thereunder, referred to above.

For these reasons, we find no merit in these appeals and they are,
C accordingly, dismisseJ with costs.
Interim orders passed by ·this cou11 in these cases shall stand vacated.

Writ Petition (C) No. 281 of 1994:

On the contention raised, we are not satisfied that any fundamental
D right of the petitioners is infringed to maintain this petition under Article 32
of the Constitution. However, in view of the order passed,in the Civil Appeal
Nos. 5560, 5561 and 5562-5570 of 2002 (arising out of S.L.P. (C) Nos.
4771II994, 503411994 and 451611995), this writ petition is dismissed.

E Civil Appeal No. 2176/1993 and S.L.P. (C) No. 6483/1995:
None appears for the appellants/petitioners.

The civil appeal and the special leave petition are dismissed.

F R.P. Appeals/Petition dismissed.