Supreme Court of India
THE STATE OF HIMACHAL PRADESH AND OTHERSversusGOEL BUS SERVICE KULLU ETC. ETC.
- Citation
- 2023 INSC 27
- Decided
- 13 January 2023
- Disposal
- Appeal(s) allowed
- Bench
- SANJAY KISHAN KAUL
Holding
Section 3A(3) of the Himachal Pradesh Motor Vehicles Taxation Act, 1972 is a valid regulatory and compensatory tax, not a penalty, and is within the State’s legislative competence with no repugnancy to central law.
Summary
The Himachal Pradesh government imposed a special road tax under s.3A(3) of the Himachal Pradesh Motor Vehicles Taxation Act, 1972 on transport vehicles operating without a valid permit. The High Court struck down this provision, holding it to be a penalty and ultra‑vires the State’s legislative competence under List II entries 56 and 57. On appeal, the Supreme Court examined whether the tax was manifestly unjust, regulatory or compensatory in nature, and whether it conflicted with the Motor Vehicles Act, 1988. The Court held that the tax is a regulatory/compensatory measure aimed at maintaining roads and deterring permit violations, not a penalty, and that the State has authority to levy such taxes under Entries 56, 57 of List II and Entry 35 of List III. No repugnancy with the central legislation was found, and the State may levy lump‑sum taxes. Consequently, the Court set aside the High Court’s decision, upheld the validity of s.3A(3), and dismissed the writ petitions.
Issues considered
- Whether s.3A(3) of the Himachal Pradesh Motor Vehicles Taxation Act, 1972 constitutes a penalty rather than a tax and is ultra‑vires the State Legislature.
- Whether the provision is manifestly unjust or unconstitutional.
- Whether the tax is regulatory or compensatory in nature.
- Whether the provision repugns any central law, particularly the Motor Vehicles Act, 1988.
Legislation cited
Subjects
taxationspecial road taxregulatory taxcompensatory taxpenaltyconstitutional validityState ListList IIList IIIrepugnancylump‑sum taxmotor vehiclespermit violation
Judgment
[2023] 5 S.C.R. 879 879
THE STATE OF HIMACHAL PRADESH AND OTHERS A
v.
GOEL BUS SERVICE KULLU ETC. ETC.
(Civil Appeal No(S). 5534-5594 of 2011)
JANUARY 13, 2023 B
[SANJAY KISHAN KAUL, ABHAY S. OKA AND
VIKRAM NATH, JJ.]
Motor Vehicles – Himachal Pradesh Motor Vehicles Taxation
Act 1972 – s.3A(3) [introduced vide Amending Act of 1999] – Validity
of – Special road tax provided under sub-section (3) of s.3A – If C
manifestly unjust / glaringly unconstitutional – Regulatory or
compensatory in nature – Repugnancy, if any, with Central
enactment – Levy of lumpsum tax – Validity – Whether imposition of
additional special road tax levied on transport vehicle used without
a valid permit is not a tax but a penalty and is ultra vires the legislative D
powers of the State Legislature under Entries 56 and 57 of List II
(the State List) of the Seventh Schedule to the Constitution – Held:
Tax imposed u/s.3A(3) is regulatory in character and is not a penalty
– Imposition of such additional special road tax was only to keep a
check or a discipline on the transport vehicle operators to use their
vehicles in accordance with the statutory provisions – Also, s.3A(3) E
of the 1972 Act is within the legislative competence of the State
Legislature, and lumpsum tax could be levied – The State Legislatures
had the power to levy taxes not only under Entries 56 and 57 of List
II but also to lay down the principles under Entry 35 of List III –
Therefore, no repugnancy of any kind could be alleged or pleaded F
or proved in the absence of there being any central law laying down
principles of levy of tax – Further, nothing on record to indict the
offending provision as being manifestly unjust or glaringly
unconstitutional – Constitution of India – Arts. 246 and 254; Seventh
Schedule, List II, Entries 56 and 57 and List III, Entry 35.
G
Motor Vehicles – Himachal Pradesh Motor Vehicles Taxation
Act 1972 – s.3A(3) [introduced vide Amending Act of 1999] – Validity
of – Special road tax provided under sub-section (3) of s.3A – Held:
The additional special road tax chargeable u/s.3A(3) would be in
addition to any sentence or fine imposed u/s.192A of the Motor
Vehicles Act, 1988 – The provisions under s.192A are in no way H
879
880 SUPREME COURT REPORTS [2023] 5 S.C.R.
A violated or conflicted by imposing an additional special tax for
violation of use of vehicles without permit – Motor Vehicles Act,
1988 – s.192A.
Tax / Taxation – Fiscal statutes – Scope of interference –
Held: The Courts must show judicial restraint to interfere with tax
B legislation unless it is shown and proved that such taxing statute is
manifestly unjust or glaringly unconstitutional – Taxing statutes
cannot be placed or tested or viewed on the same principles as
laws affecting civil rights such as freedom of speech, religion, etc.
– The test of taxing statutes would be viewed on more stringent tests
and the law makers should be given greater latitude – Testing the
C provisions of the offending section with regard to the settled
principles of interpretation of taxing statutes, it is to be ascertained
on the following three aspects: (1) Whether it is manifestly unjust
or glaringly unconstitutional; (2)Whether it is regulatory or
compensatory in nature; and (3) Whether there is any repugnancy
D with the provisions in the Central enactment.
The State of Himachal Pradesh, exercising the powers
drawn from Entries 56 and 57 of List II of the Seventh Schedule
enacted the Himachal Pradesh Motor Vehicles Taxation Act 1972.
Section 3 of the 1972 Act provided for levy and collection of taxes
E on all motor vehicles which were to be used or kept for use in
the State of Himachal Pradesh. By the Amending Act of 1999,
Section 3A was introduced which carries a heading: Levy of
Special Road Tax. This special road tax was in addition to the tax
levied under Section 3. The special road tax was also levied and
charged on all transport vehicles used or kept for use in Himachal
F Pradesh specified in column 2 of Schedule 3 and the rate of tax
was to be not exceeding the rates specified in column 3 of Schedule
3 of the Act. The High Court declared sub-section (3) of Section
3A as ultra vires opining that the tax imposed by Section 3A(3)
was in the nature of penalty and for which the State Legislature
G had no power to make laws. According to the High Court it was
penalty because a further special road tax was leviable where a
transport vehicle was plied without any valid permit or in any
manner not authorized by the permit to be plied. The High Court
opined that imposition of such an additional special road tax for a
default or a wrong committed with respect to a transport vehicle
H would amount to a penalty and not a tax.
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 881
KULLU ETC. ETC.
Allowing the appeals, the Court A
HELD : 1.
A: SCOPE OF INTERFERENCE IN FISCAL STATUTES:
1. It is by now well settled that any tax legislation may not
be easily interfered with. The Courts must show judicial restraint B
to interfere with tax legislation unless it is shown and proved
that such taxing statute is manifestly unjust or glaringly
unconstitutional. Taxing statutes cannot be placed or tested or
viewed on the same principles as laws affecting civil rights such
as freedom of speech, religion, etc. The test of taxing statutes
would be viewed on more stringent tests and the law makers C
should be given greater latitude. [Para 25][904-H; 905-A]
SPECIAL ROAD TAX IS REGULATORY OR
COMPENSATORY IN NATURE
2.1. The appellant State being a hilly State, the roads and D
bridges are its lifeline. The State has to allocate sizeable part of
its budget for the construction, development, repair, upkeep and
maintenance of roads and bridges. It was with this object in the
background that the offending provisions were brought in by way
of amendments in 1999 and 2001 which are described as special
road tax. This Court in a number of cases dealing with similar E
provisions has upheld the same. It has withheld that tax charged
for non-fulfilment of any obligation would also be compensatory
and regulatory in nature. Distinction was carved out between a
penalty imposed for breach of statutory duty and penalty imposed
being a subject matter of a complaint that would require F
adjudication. The view expressed consistently is that it would be
compensatory or regulatory where it is imposed for breach of a
statutory duty. [Para 31][906-F-H; 907-A]
2.2. From the very object and reasons of the Amending Act
1999, it is apparent that the special road tax was introduced as a
G
compensatory measure. What is to be seen is whether the tax
imposed will have identifiable object and a nexus between the
subject and the object of the levy. The power has been given to
the States to make its own legislations by imposing tax on motor
vehicles as also the goods being transported in order to
H
882 SUPREME COURT REPORTS [2023] 5 S.C.R.
A compensate itself for the services, benefits and facilities provided
by it. [Paras 34, 35][908-E, H; 909-A]
2.3. The argument by the amicus is that the offending
provision contained in Section 3A(3) being repugnant to the
central legislation, will have to give way and cannot be sustained.
B His submission is that the power to impose penalty is given in
Section 192A of the Motor Vehicles Act, 1988. According to him,
Entry 57 of List II being subject to the provisions of Entry 35 of
List III under which the 1988 Act has been enacted, Section 192A
provides for penalty being imposed on vehicles being used
without permit or in contravention of the provisions of sub-
C section (1) of Section 66 (providing for necessity for permits).
According to him once the central Act contains a penal provision
for such a violation of imprisonment as also fine, the State could
not have imposed a tax for the same violation. This submission
can be sustained only if any repugnancy or any conflict can be
D established between the State law and the Central law. The
provisions under Section 192A are in no way violated or conflicted
by imposing an additional special tax for violation of use of vehicles
without permit. It can be said to be in addition to the penalty
provided in Section 192A of the 1988 Act. This Court, in the
case of Sukhpal Singh Bal has already upheld that such imposition
E of tax for violation of statutory provisions, is to be treated as a
regulatory measure and only to work as a deterrent of the vehicle
owners’ violating the law. Such a tax would be regulatory in nature
and would only check violations of the statutory provisions. In
the case of Sharma Transport Rep. by D.P. Sharma, a similar issue
F was considered and this Court was of the view that under Entry
35 of List III the permission is to lay down the principles on
which the tax may be levied whereas the State had a right to levy
such tax. [Para 38][911-H; 912-A-F]
3.1. Section 3 of the Himachal Pradesh Motor Vehicles
G Taxation Act 1972 provided for levy of taxes on all motor vehicles
kept or used in the State of Himachal Pradesh as per the
schedules appended to the said Act. Insertion of Section 3A
provided for levy of special road tax. The special road tax as
provided under sub-sections (1), (2) and (4) of Section 3A have
been upheld by the High Court. It is only the levy of special road
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 883
KULLU ETC. ETC.
tax under sub-section (3) which has been struck down. Testing A
the provisions of the offending section with regard to the settled
principles of interpretation of taxing statutes, it is to be ascertained
on the following three aspects: (1) Whether it is manifestly unjust
or glaringly unconstitutional; (2) Whether it is regulatory or
compensatory in nature; and (3) Whether there is any repugnancy
with the provisions in the Central enactment. [Para 41[914-A-C] B
Manifestly unjust or glaringly unconstitutional:
3.2. The Legislatures of the State have not only the power
to make laws on the taxation to be imposed on motor vehicles as
also the passengers and goods being transported by motor C
vehicles but also the power to lay down principles on which taxes
on vehicles are to be levied. In the absence of any principles
having been laid down by the Parliament, no fault could be found
in the law enacted by Legislature of the State of Himachal Pradesh.
The offending provision is regulatory in nature and therefore
within the competence of the Legislature of State of Himachal D
Pradesh. There is nothing on record to indict the offending
provision as being manifestly unjust or glaringly unconstitutional.
[Para 42][914-D-F]
Regulatory or Compensatory:
3.3. The objects and reasons for bringing in the 1999 E
Amendment was clearly compensatory in nature. The object was
to augment funds and finance for construction, maintenance,
repair and upkeep of the roads in the State of Himachal Pradesh
which has a totally hilly terrain. The offending section only
provided that if any vehicle used without a valid permit or in any F
manner not authorised by the permit, further special road tax
would be levied, charged and paid to the state government in
addition to the tax payable under sub-section (1) at such rates as
may be specified by the state government by notification.
However, the restriction was that the same would not exceed
the rates specified in column 3 of Schedule 3 of the Act. [Para G
43][914-G-H; 915-A]
3.4. Imposition of such additional special road tax was only
to keep a check or a discipline on the transport vehicle operators
to use their vehicles in accordance with the statutory provisions.
This could work as a deterrent for the transport operators to not H
884 SUPREME COURT REPORTS [2023] 5 S.C.R.
A commit any breach and to follow the mandate of the law. Such
additional special road tax could be termed as regulatory in nature
so as to regulate other statutory provisions being implemented
and strictly followed. This Court in the case of Sukhpal Singh Bal
relating to challenge to Section 10(3) of the U.P. Motor Vehicles
Taxation Act, 1997 where a similar provision was incorporated
B
and even though termed as penalty, was held to be regulatory
and compensatory in nature. The High Court had struck down
the said provision but this Court held that such penalty imposed
under Section 10(3) to protect public revenue and as a deterrent
for tax evasion. In view of the above, it cannot be said that levy of
C such an additional special road tax would be said to be manifestly
unjust or glaringly unconstitutional. It was, in effect, to ensure
payment of the chargeable taxes and use of the vehicles as per
the terms of the permit. [Paras 44, 45][915-B-D]
Repugnancy, if any, with Central enactment:
D 3.5. Entry 35 of List III conferred the power on the
Parliament as also the State Legislatures to make laws relating
to mechanically propelled vehicles of all kinds and also to lay
down the principles on which taxes on such vehicles are to be
levied. The central enactment i.e. the law made by the Parliament
E has not laid down any principles for levy of taxes. The State
Legislatures had the power to levy taxes not only under Entries
56 and 57 of List II but also to lay down the principles under
Entry 35 of List III. Therefore, no repugnancy of any kind could
be alleged or pleaded or proved in the absence of there being
any central law laying down principles of levy of tax. In view of
F the above, no repugnancy or conflict of the State enactment with
the central enactment could be sustained. [Para 46][915-E-G]
3.6. The argument with respect to the 1988 Act containing
Section 192A wherein violation of Section 66(1) would constitute
a criminal offence punishable with sentence and also fine, as such
G the offending section being repugnant to the said provision, cannot
be sustained. Under Section 192A a punishment of imprisonment
along with fine is provided whereas under the offending section,
an additional special road tax is being charged for such a violation
of using vehicle without permit or in contravention of the terms
H of the permit. The offending section was incorporated with a view
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 885
KULLU ETC. ETC.
to augment more revenue in order to construct and maintain the A
roads of the state which uses a large chunk of its finances being
a state having a completely hilly terrain. The additional special
road tax chargeable under Section 3A(3) would be in addition to
any sentence or fine imposed under Section 192A. Punishment
for offence is with an object to create deterrence and curtailing
such offences as it creates a fear in the mind of offender likely to B
commit the offence. The same is the object of the additional
special road tax to make it work as a deterrent from the transport
operators in plying vehicles without permit and in contravention
of the terms of the permit. As such there is no repugnancy or
any conflict caused by the offending provision with the central C
enactment. [Para 47[915-H; 916-A-D]
3.7. The validity of Section 3A(3) has been wrongly held to
be ultra vires by the High Court. The tax imposed under Section
3A(3) is regulatory in character and is not a penalty. [Para 48][916-
E] D
Lumpsum taxation:
3.8. The High Court had also quashed the notifications
issued by the State for levy of the taxes under Section 3A(3)
holding that lumpsum taxes could not be levied on general
assessment and it had to be levied as per actual default. Levy of E
lumpsum tax has been upheld by a three Judge Bench of this
Court in the case of M. Krishnappan. There is no reason to take
a different view. [Para 49][916-F]
3.9. Section 3A(3) of the 1972 Act is within the legislative
competence of the State Legislature, and lumpsum tax could be F
levied. [Para 50][916-H]
R.K. Garg etc. v. Union of India and others (1981) 4
SCC 675 : [1982] 1 SCR 947; Bhavesh D. Parish and
others v. Union of India and another (2000) 5 SCC
471 : [2000] 1 Suppl. SCR 291; Indian Oil Corporation G
Limited v. State of Bihar and another (2018) 1 SCC
242 : [2017] 13 SCR 477; State of Uttar Pradesh and
Ors. v. Sukhpal Singh Bal (2005) 7 SCC 615 : [2005] 2
Suppl. SCR 1135; B.A. Jayaram and Ors. v. Union of
India (UOI) and Ors. (1984) 1 SCC 168 : [1983] 3
SCR 624; Bolani Ores Ltd. v. State of Orissa (1974) 2 H
886 SUPREME COURT REPORTS [2023] 5 S.C.R.
A SCC 777 : [1975] 2 SCR 138; Sharma Transport Rep.
by D.P. Sharma v. Government of Andhra Pradesh and
Ors. (2002) 2 SCC 188 : [2001] 5 Suppl. SCR 390 and
State of Tamil Nadu v. M. Krishnappan and Anr. (2005)
4 SCC 53 : [2005] 2 SCR 1112 – relied on.
B State of Rajasthan v. Khalsa Travels (1998) 9 SCC 676;
Commr. Of Agricultural Income Tax v. Netley ‘B’ Estate
(2015) 11 SCC 462 : [2015] 3 SCR 630; Ashok Leyland
Ltd. v. State of T.N. (2004) 3 SCC 1 : [2004] 1 SCR
306; Ranjit Singh v. Taxation Officer, Rampur and etc
2002 SCC Online All 75; State of Himachal Pradesh
C and Ors. v. Yash Pal Garg (Dead) by LRs and Ors. (2003)
9 SCC 92 : [2003] 3 SCR 1056; State of Maharashtra
and Ors. v. Madhukar Balkrishna Badiya and Ors.
(1988) 4 SCC 290: [1988] 2 Suppl. SCR 482; Rajeev
Suri v. Delhi Development Authority and Ors. 2021 SCC
D Online SC 7; Janhit Manch and Anr. v. The State of
Maharashtra and Ors. (2019) 2 SCC 505: [2018] 14
SCR 860; State of West Bengal v. Kesoram Industries
Ltd. & Others (2004) 10 SCC 201 : [2004] 1 SCR 564;
M.P. AIR Permit Owners Association and Another v. State
of Madhya Pradesh (2004) 1 SCC 320 : [2003] 6 Suppl.
E SCR 331 and Hardev Motor Transport v. State of M.P.
and Others (2006) 8 SCC 613 : [2006] 7 Suppl. SCR
766 – referred to.
Aas Mohammad v. State of Rajasthan 2020 2 RLW 1567
(Raj) – referred to.
F
Morey vs. Doud 354 US 457 – referred to.
Case Law Reference
(1998) 9 SCC 676 referred to Para 2
[1982] 1 SCR 947 relied on Para 8
G
[2000] 1 Suppl. SCR 291 relied on Para 8
[2017] 13 SCR 477 relied on Para 8
[2005] 2 SCR 1112 relied on Para 8
H [2015] 3 SCR 630 referred to Para 8
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 887
KULLU ETC. ETC.
[2004] 1 SCR 306 referred to Para 8 A
[2003] 3 SCR 1056 referred to Para 8
[2005] 2 Suppl. SCR 1135 relied on Para 8
[1983] 3 SCR 624 relied on Para 8
B
[1975] 2 SCR 138 relied on Para 8
[2001] 5 Suppl. SCR 390 relied on Para 8
[1988] 2 Suppl. SCR 482 referred to Para 8
[2018] 14 SCR 860 referred to Para 8 C
[2004] 1 SCR 564 referred to Para 9
[2003] 6 Suppl. SCR 331 referred to Para 9
[2006] 7 Suppl. SCR 766 referred to Para 9
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.5534- D
5594 of 2011.
From the Judgment and Order dated 06.07.2007 of the High Court
of Himachal Pradesh at Shimla in C.W.P. Nos.32, 135, 196, 197, 198,
199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 215, 216, 217, 218,
219, 235, 240, 241, 242, 243, 244, 245, 246, 247, 249, 25, 250, 253, 254, E
255, 256, 268, 269, 270, 272, 273, 274, 275, 290, 291, 292, 318, 33, 34, 35,
355, 56, 57, 619, 789, 91, 92, 93, 954 of 2000 and C.W.P. No.93 of 2001.
Buddy A. Ranganadhan, Amicus Curiae
Abhinav Mukerji, Mrs. Bihu Sharma, Ms. Pratishtha Vij, Akshay F
C. Shrivastava, Advs. for the Appellants.
Siddharth Bhatnagar, Sr. Adv., Ms. Pracheta Kar, Aditya Sidhra,
Nadeem Afroz, Advs. for the Respondents.
The Judgment of the Court was delivered by
G
VIKRAM NATH, J.
1. The above set of appeals were referred to larger Bench of
three Judges in terms of the order dated 05.03.2020 which reads as
follows:
H
888 SUPREME COURT REPORTS [2023] 5 S.C.R.
A “Considering the fact that the issue raised in these appeals
was referred to a larger Bench of three Judges in terms of
order dated 27.02.1998 in Civil Appeal No. 10457/1995
and other connected cases [reported in (1998) 9 SCC 676]
but which appeals later on repealed by Rajasthan Act, 1951,
which is on similar lines with the provision involved in the present
B
appeals.
Hence, we deem it appropriate to refer these appeals to a
larger Bench of t hree Judges for an author itative
pronouncement on the questions involved.
C Registry is directed to place the matters before Hon’ble the
Chief Justice of India for constituting the appropriate Bench
for hearing these appeal(s).”
2. The above referred order dated 27.02.1998 passed in Civil
Appeal No. 10457 of 1995 and connected matters reported in State
D of Rajasthan Vs. Khalsa Travels, (1998) 9 SCC 676 is reproduced
below:
“1. These appeals filed by the State of Rajasthan raise questions
relating to the constitutional validity of Section 4-B(3) of the
Rajasthan Motor Vehicles Taxation Act, 1951 (hereinafter
E referred to as “the Act”) and Rule 4-CC of the Rajasthan Motor
Vehicles Taxation Rules, 1951 (hereinafter referred to as “the
Rules”) which make provision of levy of special road tax on a
transport vehicle which is used without a valid permit or in any
manner not authorized by the permit. By the impugned
judgments the High Court has held that Section 4-B(3) is ultra
F vires the rule- making powers conferred on the State
Government under the Act.
2. According to the High Court the imposition, though described
as a tax, is, in substance, a fine for an alleged offence of plying
the vehicle without a valid permit or in contravention of the
G conditions of permit and such a penalty cannot be treated as a
part of regulatory or compensatory tax. On that view, The High
Court has declared that Section 4-B(3) of the Act is ultra vires
the powers conferred on the State Legislature under Entry 56
of List II of the Seventh Schedule to the Constitution of India.
The question that falls for consideration in these appeals
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 889
KULLU ETC. ETC. [VIKRAM NATH, J.]
is whether the imposition under Section 4-B(3) is not a A
tax but a penalty and is ultra vires the legislative powers
of the State Legislature under Entry 56 and Entry 57 of
List II.
3. Having regard to the importance of the question, we consider
it appropriate that these matters are considered by a Bench of B
three Judges. The matter may, therefore, be placed before the
Hon’ble Chief Justice for necessary directions.”
A careful perusal of the above orders confines the question
for consideration to be whether the imposition of additional special
road tax levied on transport vehicle used without a valid permit is not C
a tax but a penalty and is ultra vires the legislative powers of the
State Legislature under Entries 56 and 57 of List II (the State List)
of the Seventh Schedule to the Constitution.
3. Civil Appeal No.10457 of 1995 was dismissed vide order
dated 15.04.1998 for the reason that similar provisions enacted in D
the State of Rajasthan were repealed by the Rajasthan Finance Act,
1977 and, as such, the question raised was held to be no longer a live
issue. The said appeals along with connected appeals were
accordingly dismissed, however, the question was left open. The said
order dated 15.04.1998 is reproduced hereunder: -
E
“These appeals involve the question regarding the validity of
Section 4 (B) (3) of the Rajasthan Motor Vehicles Act, 1951
and Rule 4 CC of the Rajasthan Motor Vehicles Taxation Rules.
While the matters were pending in this Court the State
legislature has enacted Rajasthan Finance Act, 1977 whereby
Section 4 (B) (3) has been repealed and since Rule 4 CC was F
made to give effect to the provisions contained in Section 4
(B) (3) the said rule also has ceased to apply. In view of the
aforesaid amendment that has been made by the Rajasthan
Finance Act, 1977 the question raised by the appellant in these
appeals is no longer a live issue and, therefore, it is not G
necessary to go into the same. The appeals are accordingly
dismissed and the question is left open. No order as to costs.”
FACTS:
4. The respondent and several other similarly situate public
transport operators challenged the validity of Section 3-A, Section 3- H
890 SUPREME COURT REPORTS [2023] 5 S.C.R.
A C, Section 4-A, Section 5-A along with Schedule-III under Section
3-A introduced vide the Himachal Pradesh Motor Vehicles Taxation
(Amendment) Act, 1999 1 to be held ultra vires the Constitution of
India and further the notifications dated 18.12.1999, 23.12.1999,
31.12.1999, 06.01.2000, 12.02.2000 and 01.04.2000 be quashed and
set aside. The relief as claimed in one of the petitions bearing C.W.P.
B
No.32 of 2000 (Goel Bus Service Vs. State of Himachal Pradesh
and others) is reproduced below:
“(i) That the impugned Annexure-PA, PB, PC, PD, PE, dated
18th December, 1999, 23rd December, 1999, 6 th January, 2000,
12.2.2000 and 31 st December, 1999 may kindly be quashed
C and set aside;
(ii) That Section 3-A, 3-C, 4-A, 5-A along with Schedule-III
under Section 3-A may be struck down being ultra vires the
Constitution of India.
D (iii) Any other relied as may be deemed just and proper keeping
in view the facts and circumstances of the case may also be
granted in favour of the petitioner.”
5. The above provisions, validity of which was sought to be
declared as ultra vires, were introduced vide HPMVT(A) Act 1999
E as also vide HPMVT(A) Act 2001. Consequent to insertion of the
said provisions, State of Himachal Pradesh issued several notifications
referred to above, which were also assailed in a large number of writ
petitions. The High Court, vide impugned judgment dated 06.07.2007,
upheld the validity of all the Sections except Section 3A (3) under
challenge as not offending either Part III or any other provision of
F the Constitution of India. With respect to Section 3-A (3) it was held
that in substance it imposes a penalty and as such could not be treated
as regulatory or compensatory tax and was, therefore, beyond the
legislative competence of the State Legislature. It, further quashed
the two notifications dated 06.01.2000 and 01.04.2000 being not in
G consonance with the scheme of the Constitution. It also struck down
the decision dated 01.01.2000 based upon negotiations held on
31.12.1999 relating to special Toll Tax, as they were held to be against
statutory provisions of the Act. The operative portion of the impugned
judgment reads as follows:
1
H In short “HPMVT(A) Act 1999”
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 891
KULLU ETC. ETC. [VIKRAM NATH, J.]
“On account of the above reasoning and the findings, we are A
of the view that Sections 3-A (1), (2), (4) and Section 3-C do
not offend either the fundamental rights or any other provision
of the Constitution of India, therefore, these are held not ultra
vires of the Constitution. Since Section 3-A (3) in substance
imposes a fine as held above, therefore, such a nature of
B
penalty can neither be treated as regulatory nor compensatory
tax and is out of the legislature competence of the State and
the subordinate legislation, that is the notifications dated
6.01.2000 and 1.04.2000 are based upon lump sum charges of
the levy thus are not in consonance with the scheme of the
Constitution, therefore, these are held to be ultra vires. Further, C
the decision dated 1.1.2000 based upon negotiations held on
31.12.1999 relating to SRT is against the statutory provisions
of the Act as stated above. Therefore, it is struck down being
contrary to law.
All the petitions are disposed of in the aforesaid terms. No D
orders as to costs.
All the Misc. applications in the writ petitions are also disposed
of.”
6. The State of Himachal Pradesh is in appeal against the
aforesaid judgment of the High Court. E
7. We have heard Sri Abhinav Mukerji, learned counsel for the
appellant-State of Himachal Pradesh and Sri Siddharth Bhatnagar,
learned Senior Counsel appointed as Amicus Curiae to assist the
Court on behalf of the respondent-operators.
F
SUMMARY OF SUBMISSIONS:
8. Submissions advanced on behalf of appellants are
summarized as under:
• The constitutional Courts must restrain from interfering
in the matters of economic/tax legislation until and unless G
the offending provision is manifestly unjust or glaringly
unconstitutional.
• Laws relating to economic activities should be viewed
with greater latitude and more play should be given to
H
892 SUPREME COURT REPORTS [2023] 5 S.C.R.
A the Government in comparison to other laws relating to
civil rights.
• Reliance was placed upon the following judgments in
support of the above submissions:
“(i) R.K. Garg etc. vs. Union of India & Others
B reported in (1981) 4 SCC 675 (Para 7, 8, 16 &
2018).
(ii) Bhavesh D. Parish & Others vs. Union of India
& Another reported in (2000) 5 SCC 471 Para 26)).
C (iii) Indian Oil Corporation vs. State of Bihar
reported in (2018) 1 SCC 242 (Para 25-28).”
• Lump sum tax coul d be levied as it would be
compensatory in nature.
• The wisdom of the State legislature should be read in
D the broadest possible terms and merely because the levy
is payable in lump sum or on one time basis would not
make it invalid or unconstitutional. Such levy could be
for administrative reasons and the manner & mode of
collection, cannot be the conclusive test to decide the
nature of levy.
E
• Quashing of the notifications dated 06.01.2000 and
01.04.2000 were also bad in law as imposition of lump
sum tax is by now well recognized by the Courts.
• Reliance was placed upon the following judgments, in
F support of the above submissions:
(i) State of T.N. vs. M. Krishnappan and Anr.
(2005) 4 SCC 53 (Para 18-23).
(ii) Commr. Of Agricultural Income Tax vs. Netley
‘B’ Estate (2015) 11 SCC 462 (Para 20-22).
G
(iii) Ashok Leyland Ltd. vs. State of T.N. (2004) 3
SCC 1 (Para 65 to 71).
(iv) Aas Mohammad vs. State of Rajasthan (2020
2 RLW 1567 (Raj) (Para 22 to 26).
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 893
KULLU ETC. ETC. [VIKRAM NATH, J.]
• The tax imposed under Section 3(A)3 of the 1972 Act is A
regulatory and compensatory in nature. The appellant-
State being a hilly State with difficult terrains, in order to
maintain roads and bridges which are the life-line of hilly
terrains, a sizeable part of the budget is spent on the
constructi on, development, r epair, upkeep and
B
maintenance of roads and bridges.
• Reference was made to the counter affidavit filed by
the State before the High Court and also referred to in
the impugned j udgment, enumerating special
circumstances for imposition and upholding of a
compensatory or a regulatory tax as valid. In this C
connection, reliance has been placed upon the following
judgments:
(i) Ranjit Singh vs. Taxation Officer, Rampur and
etc (2002 SCC Online All 75 (Para 14,15, 22 and
23) D
(ii) In State of Himachal Pradesh and Ors. Vs.
Yash Pal Garg (Dead) by LRs and Ors. (2003) 9
SCC 92 (Para 11-13,20 and 23)
(iii) State of Uttar Pradesh and Ors. vs. Sukhpal
Singh Bal (2005) 7 SCC 615 (Para 11 to 19). E
(iv) B.A. Jayaram and Ors. vs. Union of India
(UOI) and Ors. (1984) 1 SCC 168 (Para 9-11).
(v) Bolani Ores Ltd. vs. State of Orissa (1974) 2
SCC 777 (Para 15 & 29)
F
(vi) Sharma Transport Rep. by D.P. Sharma vs.
Government of Andhra Pradesh and Ors. (2002)
2 SCC 188 (Para, 1,8 and 11)).
(vii) State of Maharashtra and Ors. vs. Madhukar
Balkrishna Badiya and Ors. (1988) 4 SCC 290
G
(Para 6 & 10).
(viii) Rajeev Suri vs. Delhi Development Authority
and Ors. (2021 SCC Online SC 7 (Para 220 to
226).
H
894 SUPREME COURT REPORTS [2023] 5 S.C.R.
A (ix) Janhit Manch and Anr. vs. The State of
Maharashtra and Ors. (2019) 2 SCC 505 (Para
13).
• The High Court, though upheld the power of the State
legislature to enact provisions for levy of special road
B tax under Sections 3-A(1)(2)(4), but at the same time
erred in holding the provisions under Section 3-A(3) to
be ultra vires being unconstitutional.
• The appeals be allowed, the judgment of the High Court
impugned be set aside and the writ petitions be dismissed.
C 9. On the other hand, Shri Siddharth Bhatnagar, learned Amicus
Curiae made the following submissions:
• The offences and penalties in respect of using vehicles
without permit is covered under Chapter XIII of the
Motor Vehicles Act, 1988 and in particular Section 192-
D A thereof.
• The Motor Vehicles Act, 1988 2 being a Central Act is
relatable to Entry 35 of List III of the Seventh Schedule
to the Constitution.
• The penalty for use of vehicle without permit is already
E
provided in Section 192-A of the 1988 Act. The 1988
Act provides a complete mechanism in respect of laws
relating to motor vehicles including its violations,
consequences and penalties thereon. The said provision
specifically deals with the act of a transport vehicle being
F used without a permit.
• The Himachal Pradesh Motor Vehicle Taxation Act
relates to Entry 57 of the List II of the Seventh Schedule
of the Constitution. It is subject to two limitations (i) that
the vehicle be suitable for use on roads and (ii) any law
G made under this entry would be subject to any law made
under Entry 35 of list III.
• Any enactment by the State which encroaches on or
overlaps with the provisions of the 1988 Act would be
invalid to that extent.
2
H the 1988 Act
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 895
KULLU ETC. ETC. [VIKRAM NATH, J.]
• Reliance is placed upon the judgment of the Supreme A
Court in Stat e of West Bengal Vs. Kesoram
Industries Ltd. & Others, (2004) 10 SCC 201.
• The tax sought to be levied under Section 3A (3) is in
the nature of penalty which cannot be done in view of
the provisions contained in the 1988 Act. Reliance was B
placed upon the following two decisions of the Supreme
Court:
(i) M.P. AIR Permit Owners Association and
Another Vs. State of Madhya Pradesh, (2004) 1
SCC 320, C
(ii) Hardev Motor Transport Vs. State of M.P. and
Others, (2006) 8 SCC 613.
• The impugned judgment does not suffer from any
infirmity in holding that the special tax sought to be levied
under Section 3A (3) is a penalty. The appeals are, thus, D
liable to be dismissed.
Relevant Constitutional & Legal provisions:
10. Before proceeding to deal with the submissions advanced,
a brief reference to statutory and constitutional provisions may be
E
noted.
11. Article 246 of the Constitution lays down the subject matters
of the laws to be made by the Parliament and by the Legislatures of
States. According to it, three lists of the Seventh Schedule would be
determining the subjects over which the Parliament may have
F
exclusive power to make laws (List I also referred to as the Union
List), subjects over which the State would have exclusive power to
make laws (List II also referred to as the State List) and also the
subjects where the Parliament as also the Legislature of States would
have power to make laws covered by List III (referred to as the
Concurrent List). Additional power is given to the Parliament under G
sub- Article 4 to make laws with respect to any matter for any part
of the territory of India not included in a State even though such
matter is enumerated in the State List. Article 246 is reproduced
hereunder:
H
896 SUPREME COURT REPORTS [2023] 5 S.C.R.
A “(1) Notwithstanding anything in clauses (2) and (3), Parliament
has exclusive power to make laws with respect to any of the
matters enumerated in List I in the Seventh Schedule (in this
Constitution referred to as the “Union List”).
(2) Notwithstanding anything in clause (3), Parliament, and,
B subject to clause (1), the Legislature of any State also, have
power to make laws with respect to any of the matters
enumerated in List III in the Seventh Schedule (in this
Constitution referred to as the “Concurrent List”).
(3) Subject to clauses (1) and (2), the Legislature of any State
C has exclusive power to make laws for such State or any part
thereof with respect to any of the matters enumerated in List
II in the Seventh Schedule (in this Constitution referred to as
the “State List”).
(4) Parliament has power to make laws with respect to any
D matter for any part of the territory of India not included in a
State notwithstanding that such matter is a matter enumerated
in the State List.”
12. Article 254 of the Constitution of India provides for the
effect in case of inconsistency between laws made by the Parliament
E and the laws made by the Legislature of States. The same is
reproduced hereunder:
“(1) If any provision of a law made by the Legislature of a
State is repugnant to any provision of a law made by Parliament
which Parliament is competent to enact, or to any provision of
an existing law with respect to one of the matters enumerated
F
in the Concurrent List, then, subject to the provisions of clause
( 2 ), the law made by Parliament, whether passed before or
after the law made by the Legislature of such State, or, as the
case may be, the existing law, shall prevail and the law made
by the Legislature of the State shall, to the extent of the
G repugnancy, be void
(2) Where a law made by the Legislature of a State with respect
to one of the matters enumerated in the concurrent List contains
any provision repugnant to the provisions of an earlier law made
by Parliament or an existing law with respect to that matter,
H then, the law so made by the Legislature of such State shall, if
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 897
KULLU ETC. ETC. [VIKRAM NATH, J.]
it has been reserved for the consideration of the President and A
has received his assent, prevail in that State: Provided that
nothing in this clause shall prevent Parliament from enacting
at any time any law with respect to the same matter including
a law adding to, amending, varying or repealing the law so
made by the Legislature of the State.”
B
13. As already noted above, the Seventh Schedule flowing out
from Article 246 has three lists, which gives power to the Parliament
and the State Legislatures to make laws on the subjects enumerated
therein. It would be relevant to mention that List I (the Union List)
does not cover any subject relating to motor vehicles or taxation relating
to it. List II (the State List) has two entries viz. 56 and 57 which C
refer to subjects relating to taxes on goods and passengers and taxes
on vehicles. Both the above entries of List II are reproduced below:
“56. Taxes on goods and passengers carried by road or on
inland waterways.
57. Taxes on vehicles, whether mechanically propelled or not, D
suitable for use on roads, including tramcars subject to the
provisions of entry 35 of List III.”
The above subjects fall within the domain of Legislature of the
State to make laws.
14. Under List III (the Concurrent List), Entry 35 spells out E
the subject as mechanically propelled vehicles and also the principles
on which taxes on such vehicles can be levied. Under this entry both
the Parliament and the Legislatures of State could frame laws. The
said Entry 35 of List III is reproduced hereunder:
“35. Mechanically propelled vehicles including the principles F
on which taxes on such vehicles are to be levied.”
15. The first enactment relating to motor vehicles in India was
the Indian Motor Vehicles Act, 1914. It was replaced by the second
enactment which came in 1939 as Motor Vehicles Act, 1939. After
the coming of the Constitution in 1950, a new Motor Vehicles Act
was enacted by the Parliament in 1988, the Motor Vehicles Act, 1988. G
The Parliament enacted the 1988 Act drawing its source from Entry
35 of the List III (the Concurrent List). The subject covered by the
above entry is mechanically propelled vehicles including the principles
on which taxes on such vehicles are to be levied. The Parliament as
also the Legislature of States were thus competent to make laws H
898 SUPREME COURT REPORTS [2023] 5 S.C.R.
A regarding the mechanically propelled vehicles including the principles
on which taxes could be levied on such vehicles. Thus, the Concurrent
List, insofar as taxes concerned, is limited to the principles on which
taxes are to be levied. But the power to frame laws relating to
imposition of tax exclusively vests with the State Legislatures under
Entries 56 and 57 of List II. Entry 56 covers the subject of laying
B
down law on imposition of taxes on goods and passengers being
carried by road or on inland waterways. Whereas Entry 57 covers
laws related to taxation on vehicles, whether mechanically propelled
or not however such vehicles being suitable for use on roads. The
laws so framed would remain subject to the provisions of entry 35 of
C List III.
16. Chapter V of the 1988 Act deals with Control of Transport
Vehicles. Section 66 makes it mandatory for owners of motor vehicles
to use such vehicles as a transport vehicle whether actually carrying
passengers or goods only with a valid permit granted as provided
D therein. Section 66 reads as follows:
“66. Necessity for permits.—(1) No owner of a motor vehicle
shall use or permit the use of the vehicle as a transport vehicle
in any public place whether or not such vehicle is actually
carrying any passengers or goods save in accordance with the
E conditions of a permit granted or countersigned by a Regional
or State Transport Authority or any prescribed authority
authorising him the use of the vehicle in that place in the manner
in which the vehicle is being used: Provided that a stage carriage
permit shall, subject to any conditions that may be specified in
the permit, authorise the use of the vehicle as a contract
F carriage: Provided further that a stage carriage permit may,
subject to any conditions that may be specified in the permit,
authorise the use of the vehicle as a goods carriage either when
carrying passengers or not: Provided also that a goods carriage
permit shall, subject to any conditions that may be specified in
G the permit, authorise the use of the vehicle for the carriage of
goods for or in connection with a trade or business carried on
by him.
(2) The holder of a goods carriage permit may use the vehicle,
for the drawing of any trailer or semi-trailer not owned by him,
subject to such conditions as may be prescribed: 1[Provided
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 899
KULLU ETC. ETC. [VIKRAM NATH, J.]
that the holder of a permit of any articulated vehicle may use A
the prime-mover of that articulated vehicle for any other semi-
trailor.]”
17. Chapter XIII of the 1988 Act lays down the provisions for
Offences, Penalties and Procedure. Section 192A introduced in 1994
provides that any motor vehicle being driven in contravention of the B
provisions of sub-section (1) of Section 66 or in contravention of any
condition of permit relating to the road on which or the area in which
or the purpose for which the vehicle may be used would be a
punishable offence which will result into imprisonment for a term
which may extend to six months and fine of Rs.10,000/- for the first
offence and for subsequent offences the imprisonment could extend C
to one year but would not be less than six months or with fine of
Rs.10,000/- or with both.
18. Sub-section (2) thereof provides for an exception where a
motor vehicle may be used in an emergency for carrying persons
suffering from sickness or injury or for supply of food or materials or D
medical supplies to relieve distress. Other offences and penalties
prescribed under Chapter XIII are not relevant for the present
controversy, as such the same are not being referred to. Section
192A reads as follows:
“(1) Whoever drives a motor vehicle or causes or allows a E
motor vehicle to be used in contravention of the provisions of
sub-section (1) of section 66 or in contravention of any condition
of a permit relating to the route on which or the area in which
or the purpose for which the vehicle may be used, shall be
punishable for the first offence with a fine which may extend F
to five thousand rupees but shall not be less than two thousand
rupees and for any subsequent offence with imprisonment
which may extend to one year but shall not be less than three
months or with fine which may extend to ten thousand rupees
but shall not be less than five thousand rupees or with both:
Provided that the court may for reasons to be recorded, impose G
a lesser punishment.
(2) Nothing in this section shall apply to the use of a motor
vehicle in an emergency for the conveyance of persons
suffering from sickness or injury or for the transport of materials
for repair or for the transport of food or materials to relieve H
900 SUPREME COURT REPORTS [2023] 5 S.C.R.
A distress or of medical supplies for a like purpose: Provided
that the person using the vehicle reports about the same to the
Regional Transport Authority within seven days from the date
of such use.
(3) The court to which an appeal lies from any conviction in
B respect of an offence of the nature specified in sub-section
(1), may set aside or vary any order made by the court below,
notwithstanding that no appeal lies against the conviction in
connection with which such order was made.]”
19. The State of Himachal Pradesh, exercising the powers
drawn from Entries 56 and 57 of List II of the Seventh Schedule
C enacted the Himachal Pradesh Motor Vehicles Taxation Act 1972 3.
In the said Act various amendments were brought from time to time.
Vide Amending Act No.15 of 1999, Sections 3A, 3B and 3C were
incorporated. The object and reasons as spelled out for bringing out
the Amending Act of 1999 was mainly to augment finances/funds for
D development, construction and maintenance of roads and bridges
being a vital part of expanding and developing trading facilities in the
State. It also mentioned that Himachal Pradesh being a hilly State,
substantial amount of its budget was spent on construction,
maintenance and development of roads and bridges. Objects and
reasons as reflected in the Bill No. 10 of 1999, is reproduced here
E under:
“Developed roads and bridges constitute arteries of a healthy
economy. Himachal Pradesh being a hill State, the importance
of roads, their construction and maintenance can hardly be
over emphasized as a vital trading facility. Each year, the
F government has to incur considerable part of its budget on
construction, maintenance and development of roads and
bridges in the State. Since it is essential to finance these
activities, it is considered necessary to levy road tax on transport
vehicles used or kept for use on public roads in Himachal
Pradesh.”
G
20. In the original Act of 19724, Section 3 provided for levy
and collection of taxes on all motor vehicles which were to be used
or kept for use in the State of Himachal Pradesh. Section 3 reads as
follows:
3
HPMVT Act 1972
H 4
HPMVT Act 1972
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 901
KULLU ETC. ETC. [VIKRAM NATH, J.]
“SECTION-3** LEVY OF TAX. A
*(1) Subject to the other provisions of this Act, on and from
the commencement of the Himachal Pradesh Motor Vehicles
Taxation (Amendment) Act, 2004, there shall be levied, charged
and paid to the State Government, a tax on all motor vehicles
specified in column (2) of Schedule-I, used or kept for use in B
Himachal Pradesh, at the rate as may be specified by the State
Government, by notification, but not exceeding the rates
specified in column (3) of Schedule-I..
**(2) On and from the commencement of the Himachal
Pradesh Motor Vehicles Taxation (Amendment) Act,2004, there C
shall be levied, charged and paid to the State Government, a
tax on motor cycles/scooters or personal vehicles, used or kept
for use in Himachal Pradesh, for a period of fifteen years from
the date of issue of certificate of registration under sub- section
(3) of section 41 of the Motor Vehicles Act, 1988, (59 of 1988)
at the rates as may be specified by the State Government, by D
notification, on the basis of the price of such motor cycle/scooter
or personal vehicle, subject to the maximum of ten percent of
the price thereof.
**(3) Notwithstanding anything contained in sub- sections (1),
on and from the commencement of the Himachal Pradesh E
Motor Vehicles Taxation (Amendment) Act, 2004, there shall
be levied, charged and paid to the State Government, a tax on
motor cabs or maxi cabs which are allowed to be converted as
personal motor vehicles, and on second hand personal motor *
Substituted vide H.P. Motor Vehicles Taxation (Amendment) F
Act, 2004. * Substituted vide H.P. Motor Vehicles Taxation
(Amendment) Act, 1999. 6 vehicles which are to be registered
in the State of Himachal Pradesh for the first time, used or
kept for use in Himachal Pradesh, at the rates as may be
specified by the State Government, by notification, subject to
the maximum of ten percent of the price of such motor vehicles G
to be determined by the taxation authority after deducting eight
percent depreciation per annum from the original price of the
motor vehicle provided that:- (a) in the case of motor vehicles
having original price upto two lacs fifty thousand rupees, the
floor price shall not be less than fifty thousand rupees, or (b) in H
902 SUPREME COURT REPORTS [2023] 5 S.C.R.
A the case of motor vehicles having original price more than two
lacs fifty thousand rupees but not exceeding five lacs fifty
thousand rupees, the floor price shall not be less than one lac
rupees, or (c) in the case of motor vehicles having original
price more than five lacs fifty thousand rupees but not
exceeding ten lacs rupees, the floor price shall not be less than
B
two lacs rupees, or (d) in the case of motor vehicles having
original price more than ten lacs rupees, the floor price shall
not be less than four lac rupees, or (e) in the case of two
wheelers, the floor price shall not be less than five thousand
rupees.”
C 21. By the Amending Act of 1999, Section 3A was introduced
which carries a heading: Levy of Special Road Tax. This special
road tax was in addition to the tax levied under Section 3. The special
road tax was also levied and charged on all transport vehicles used
or kept for use in Himachal Pradesh specified in column 2 of Schedule
D 3 and the rate of tax was to be not exceeding the rates specified in
column 3 of Schedule 3 of the Act. Section 3A is reproduced
hereunder:
“3-A. Levy of special road tax.-
(1) In addition to the tax levied under section 3, on and from
E the commencement of the Himachal Pradesh Motor Vehicles
Taxation (Amendment) Act, 1999, there shall be levied, charged
and paid to the State Government, a special road tax on all
transport vehicles specified in column (2) of Schedule-III, used
or kept for use, in Himachal Pradesh, and, at such rates as
F may be specified by the State Government, by notification, but
not exceeding the rates specified in column (3) of Schedule-
III of this Act.
2 [(2) The rates of special road tax, as may be specified under
subsection (1), in respect of stage carriages shall be applicable
G to and charged on the entire distance covered as per time table
fixed by the Regional Transport Authority and shall be payable
monthly by such date as may be notified by the State
Government from time to time.]
(3) Where a transport vehicle is plied without a valid permit or
in any manner not authorised by the permit to be plied, there
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 903
KULLU ETC. ETC. [VIKRAM NATH, J.]
shall be levied, charged and paid to the State Government further A
special road tax in addition to the tax payable under sub-section
(1), on such vehicles at the rates as may be specified by the
State Government, by notification, but not exceeding the rates
specified in column (3) of Schedule-III of this Act.
(4) Where a transport vehicle is registered in a State other B
than the State of Himachal Pradesh, enters and is used on any
public road, or kept for use, in the State of Himachal Pradesh,
the special road tax shall become chargeable, on such entry in
the prescribed manner.
Explanation.- For the purpose of special road tax levied under C
this Act, transport vehicles shall include non-transport vehicles
when used as transport vehicles by the owner. “
22. Challenge before the High Court was also to the validity of
a few other provisions. However, the High Court upheld the validity
of all other provisions and it only declared sub-section (3) of Section D
3A as ultra vires. What is, thus, required to be decided in this
reference is whether the High Court was right in declaring Section
3A(3) as ultra vires.
23. The High Court was of the opinion that the tax imposed by
Section 3A(3) was in the nature of penalty and for which the State E
Legislature had no power to make laws. According to the High Court
it was penalty because a further special road tax was leviable where
a transport vehicle was plied without any valid permit or in any manner
not authorized by the permit to be plied. The High Court opined that
imposition of such an additional special road tax for a default or a
wrong committed with respect to a transport vehicle would amount F
to a penalty and not a tax. The finding recorded by the High Court
is reproduced hereunder:
“Further, the powers of State Legislature under the entry
aforesaid being subject to Entry 35 of List III, if there is an
existing law made by the Parliament laying down the principles G
on which taxes on mechanically propelled vehicles should be
levied, then any State Legislation enacted under this entry must
conform to these principles as laid down in the existing laws or
the earlier law made by the Parliament. If the provisions of
the State Laws are repugnant to those principles, the Law made
H
904 SUPREME COURT REPORTS [2023] 5 S.C.R.
A by the State Legislature must fail to the extent of repugnancy,
unless reserved for the consideration of and assented to by the
President. The tax under this entry is leviable by the State
Legislature or all vehicles suitable for use on roads, which are
kept in the State, but such tax must have some nexus with the
vehicles using the public roads of the State because it is
B
compensatory in nature, even though registered under the Motor
Vehicles Act. Contra the State Legislature is not competent to
levy, under the present entry, an impost which is not in substance
a regulatory or compensatory tax for the transport of the vehicle
along the road, but a fine , for example using a vehicle without
C a valid permit or for issuing it in a manner not authorized by
the permit, is beyond the competence of the State Legislature,
thus ultra vires. (Please See AIR 1992, Rajasthan 181 DB).
Further on the perusal of Section 3-A (3), it transpires that the
tax specified therein is in substance a fine for the alleged
offence of plying a vehicle without a valid permit or in any
D
manner not authorized by the permit to be plied. Such a penalty
cannot be treated as a part of regulatory or compensatory tax
and is out of the legislature competence of the State. The
nature of penalty without providing any mechanism for
show cause, adjudication or the appellate authority by
E not providing any such mechanism, also offends the
principle of natural justice. Therefore, it is held ultra
vires the powers conferred in the State Legislature under
Entry 56 to 57 of List-II. For this, we put our reliance on
AIR 1992 Rajasthan 181 (DB).” (Emphasis added)
F 24. The High Court had also quashed the notifications dated
06.01.2000, 01.04.2000 as also the decision dated 01.01.2000 being
contrary to statutory provisions. Quashing of the notifications would
be dealt with at a later stage after first dealing with the issue relating
to declaration of Section 3A(3) as ultra vires.
ANALYSIS:
G
A: Scope of Interference in Fiscal Statutes:
25. It is by now well settled that any tax legislation may not be
easily interfered with. The Courts must show judicial restraint to
interfere with tax legislation unless it is shown and proved that such
taxing statute is manifestly unjust or glaringly unconstitutional. Taxing
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 905
KULLU ETC. ETC. [VIKRAM NATH, J.]
statutes cannot be placed or tested or viewed on the same principles A
as laws affecting civil rights such as freedom of speech, religion,
etc. The test of taxing statutes would be viewed on more stringent
tests and the law makers should be given greater latitude. It would
be useful to refer to a couple of judgments on the above proposition.
26. In the case of R.K. Garg etc. vs. Union of India and B
others, (1981) 4 SCC 675, the Constitution Bench was judging the
constitutionality of economic legislation wherein challenge was to
the validity of the provisions of Special Bearer Bonds (Immunities
and Exemption Act, 1981) on the grounds of discrimination and
violation of Article 14. P.N. Bhagwati J., speaking for himself, Chief
Justice Chandrachud, A.C. Gupta, S. Murtaza Fazal Ali and C
A.N. Sen, J.J., observed in paragraph 7 regarding the presumption
in favour of constitutionality of the statute and that the burden is on
the person who attacks it, to establish that there has been clear
transgression of the constitutional principles. In paragraph 8, it was
laid down that laws relating to economic activities should be viewed D
with greater latitude than laws touching civil rights such as freedom
of speech, religion, etc. The views of Justice Frankfurter in the
case of Morey vs. Doud, 354 US 457 was relied upon. The same
is reproduced hereunder:
“In the utilities, tax and economic regulation cases, there are E
good reasons for judicial self-restraint if not judicial deference
to legislative judgment. The legislature after all has the
affirmative responsibility. The courts have only the power to
destroy, not to reconstruct. When these are added to the
complexity of economic regulation, the uncertainty, the liability
to error, the bewildering conflict of the experts, and the number F
of times the judges have been overruled by events - self-
limitation can be seen to be the path to judicial wisdom and
institutional prestige and stability.”
27. In case of Bhavesh D. Parish and others vs. Union of
India and another, (2000) 5 SCC 471, the challenge was to the G
validity of section 9 of Reserve Bank of India Act as amended by the
Amendment Act 1997 on the ground that it was violative of Article
14 and Article 19(1)(g) of the Constitution. This Court dismissed the
challenge to the said provision in paragraph 26 of the report. It
observed that matters of economic policy should be best left to the
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906 SUPREME COURT REPORTS [2023] 5 S.C.R.
A wisdom of the legislature. Further, it went on to state that in the
context of a changed economic scenario the expertise of the people
dealing with the subject should not be lightly interfered with. It was
also observed that while dealing with economic legislation, this court
would interfere only in those few cases where the view reflected in
the legislation is not possible to be taken at all.
B
28. In the case of Indian Oil Corporation Limited vs. State
of Bihar and another, (2018) 1 SCC 242, provisions of the Bihar
Tax on Entry of Goods into Local Areas for Consumption, Use or
Sale therein Act 1993, was under challenge. Justice Nariman
speaking for the Bench observed in paragraph 25 that when it comes
C to taxing statute, the law laid down by this Court is clear that it can
be said to be breach only when there is perversity or gross disparity
resulting in clear and hostile discrimination without any rational
justification for the same.
SPECIAL ROAD TAX IS REGULATORY OR
D COMPENSATORY IN NATURE
29. The arguments raised before the High Court by the
respondent Transport operators (original writ petitioners before the
High Court) was that the fine imposed by Section 3(A)(3) was in the
nature of a penalty and the State Legislature had no power to impose
E a penalty. The High Court had accepted the said contention and
accordingly struck down the said provision.
30. The object and reasons for offending enactment is already
reproduced in the earlier part of this judgment. At the cost of repetition,
it is stated that the appellant State being a hilly State, the roads and
F bridges are its lifeline. The State has to allocate sizeable part of its
budget for the construction, development, repair, upkeep and
maintenance of roads and bridges. It was with this object in the
background that the offending provisions were brought in by way of
amendments in 1999 and 2001 which are described as special road
tax.
G
31. This Court in a number of cases dealing with similar
provisions has upheld the same. It has withheld that tax charged for
non-fulfilment of any obligation would also be compensatory and
regulatory in nature. Distinction was carved out between a penalty
imposed for breach of statutory duty and penalty imposed being a
H subject matter of a complaint that would require adjudication. The
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 907
KULLU ETC. ETC. [VIKRAM NATH, J.]
view expressed consistently is that it would be compensatory or A
regulatory where it is imposed for breach of a statutory duty.
32. In the case of the State of U.P and others vs. Sukhpal
Singh Bal, (2005) 7 SCC 615, Justice Kapadia speaking for the
Bench held that section 10(3) of U.P. Motor Vehicles Taxation Act,
1997, which provided for charging of such tax or additional tax along B
with penalty where transport vehicles were found plying in Uttar
Pradesh without payment of tax or additional tax under the said Act
to be valid as being regulatory and compensatory.
33. The High Court had struck down the said provision. This
Court allowed the appeal of the State. After referring to the judgments C
in the case of Bhavesh D. Parish and R.K. Garg, this Court went
on to hold that section 10(3) was enacted to protect public revenue
and as a deterrent for tax evasion. Deterrence was the main theme
and object behind the imposition of penalty under Section 10(3) as
such would be regulatory in nature. Paragraphs 15 and 16 of the
report in the case of Sukhpal Singh Bal (supra) are reproduced D
below:
“15. In the light of the above judgments as applicable to the
provisions of the said 1997 Act, we are of the view that the
High Court had erred in striking down section 10(3) as ultra
vires articles 14 and 19(1)(g) of the Constitution. “Penalty” is E
a slippery word and it has to be understood in the context in
which it is used in a given statute. A penalty may be the subject-
matter of a breach of statutory duty or it may be the subject-
matter of a complaint. In ordinary parlance, the proceedings
may cover penalties for avoidance of civil liabilities which do F
not constitute offences against the State. This distinction is
responsible for any enactment intended to protect public
revenue. Thus, all penalties do not flow from an offence as is
commonly understood but all offences lead to a penalty.
Whereas the former is a penalty which flows from a disregard
of statutory provisions, the latter is entailed where there is mens G
rea and is made the subject-matter of adjudication. In our view,
penalty under section 10(3) of the Act is compensatory. It is
levied for breach of a statutory duty for non-payment of tax
under the Act. Section 10(3) is enacted to protect public
revenue. It is enacted as a deterrent for tax evasion. If the
H
908 SUPREME COURT REPORTS [2023] 5 S.C.R.
A statutory dues of the State are paid, there is no question of
imposition of heavy penalty. Everything which is incidental to
the main purpose of a power is contained within the power
itself. The power to impose penalty is for the purpose of
vindicating the main power which is conferred by the statute
in question. Deterrence is the main theme of object behind
B
that imposition of penalty under section 10(3).
16. In the case of State of Tamil Nadu v. M Krishnappan &
Another reported in (2005) 4 SCC 53, this Court has held that
entry 57 of list II of the seventh schedule to the Constitution
provides a field to the State legislature to impose tax in respect
C of every aspect of a vehicle. The State has to find funds for
making new roads and for maintenance of existing roads. The
Motor Vehicles Act is regulatory and compensatory in nature
in the sense that it is imposed to meet the increasing costs of
maintenance and upkeep and to that extent it is not plenary. In
D the said judgment, it has been held that imposition of higher
burden of tax on vehicles based on intelligible reasoning and
differentia will not make the impugned levy discriminatory,
arbitrary or unreasonable so as to violate article 14 of the
Constitution. “
34. From the very object and reasons of the Amending Act
E 1999, it is apparent that the special road tax was introduced as a
compensatory measure. The object and reasons as spelled out in the
original bill at the cost of repetition is reproduced below:
“Developed roads and bridges constitute arteries of a healthy
economy. Himachal Pradesh being a hill State, the importance
F of roads, their construction and maintenance can hardly be
over emphasised as a vital trading facility. Each year, the
government has to incur considerable part of its budget on
construction, maintenance and development of roads and
bridges in the State. Since it is essential to finance these
activities, it is considered necessary to levy road tax on transport
G
vehicles used or kept for use on public roads in Himachal
Pradesh.”
35. What is to be seen is whether the tax imposed will have
identifiable object and a nexus between the subject and the object of
the levy. The power has been given to the States to make its own
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 909
KULLU ETC. ETC. [VIKRAM NATH, J.]
legislations by imposing tax on motor vehicles as also the goods being A
transported in order to compensate itself for the services, benefits
and facilities provided by it.
36. This Court in B.A. Jayaram and Ors. vs. Union of India
(UOI) and Ors. (supra) laid down the proposition that to uphold a
tax claim to be compensatory tax, there must be existence of a specific B
identifiable object behind the levy. It further laid down that the levy
must have a nexus between the subject and the object of levying. In
the said case the challenge was to a notification issued by the State
of Karnataka dated 31 May, 1981 withdrawing the exemption granted
under Section 63(7) of the 1939 Act. The said exemption was granted
to promote tourist traffic on an inter-state basis. This Court, after C
considering the object behind the compensatory and regulatory levy,
held that such tax fell outside Article 301 of the Constitution of India
and withdrawal of the exemption granted would neither be
discriminatory nor arbitrary and, accordingly, upheld the withdrawal.
In this context, it would be useful to reproduce paragraphs 9 and 10: D
“9. By virtue of the power given to them by Entries 56 and 57
of List Il each one of the States has the right to make its own
legislation to compensate it for the services, benefit and facilities
provided by it for motor vehicles operating within the territory
of the State. Taxes resulting from such legislative activity are E
by their very nativity and nature, cast (sic caste) and character,
regulatory and compensatory and, are therefore, not within the
vista of Article 301. unless, as we said, the tax is a mere pretext
designed to injure the freedom of inter-State trade, commerce
and intercourse. The nexus between the levy and the service
is so patent in the case of such taxes that we need say no F
more about it. The Karnataka Motor Vehicles Taxation Act
and the Motor Vehicles Taxation Acts of other States are
without doubt regulatory and compensatory legislations outside
the range of Article 301 of the Constitution.
10. It is true that the object of enacting Section 63(7) by the G
Parliament was to promote all-India and inter- State tourist
traffic.
But taxes on vehicles... suitable for use on roads is a State
legislative subject and it is for the State Legislature to impose
H
910 SUPREME COURT REPORTS [2023] 5 S.C.R.
A a levy and to exempt from the levy. True again, Entry 57 of the
State List is subject to Entry 35 of the Concurrent List and, as
explained by us at the outset, it is therefore open to the
Parliament to lay down the principles on which taxes may be
levied on mechanically propelled vehicles. But the Parliament
while enacting Section 63(7) of the Motor Vehicles Act
B
refrained from indicating any such principles, either expressly
or by necessary implication. The State’s power to tax and to
exempt was left uninhibited. It may be that a State legislation,
plenary or subordinate, which exempts “non-home- State tourist
vehicles” from tax would be advancing the object of Section
C 63(7) of the Motor Vehicles Act and accelerating inter-State
trade, commerce and intercourse. But merely by Parliament
legislating Section 63(7), the State Legislatures are not obliged
to fall in line and to so arrange their tax laws as to advance the
object of Section 63(7), be it ever so desirable. The State is
obliged neither to grant an exemption nor to perpetuate an
D
exemption once granted. There is no question of impairing the
freedom under Article 301 by refusing to exempt or by
withdrawing an exemption. Not to pat on the back is not to
stab in the back. True, straw by straw, the burden of taxation
on tourist vehicles increases as each State adds its bit of straw,
E but, then, each State is concerned with its coffers and has the
right to tax vehicles using its roads; and, the contribution which
a tourist carriage is required to make to its treasury is no more
than what other contract carriages are required to make. We
are firmly of the view that there is no impairment of the freedom
under Article 301. The special submission on behalf of the
F
‘Karnataka Operators’ that the withdrawal by the Karnataka
Government of the exemption granted to ‘outsiders has resulted
in the ‘Karnataka Operators’ having to pay tax in every State
in the country and, therefore, the withdrawal has impaired the
freedom under Article 301 is but the same general submission,
G seen through glasses of a different tint. It does not even have
the merit that the withdrawal of the Karnataka exemption
affects them directly. The submission is rejected.”
37. Similarly, in the case of Bolani Ores Ltd. vs. State of
Orissa (supra), a question arose with regard to the taxes imposed
H under Entry 57 of List II being in the nature of regulatory and
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 911
KULLU ETC. ETC. [VIKRAM NATH, J.]
compensatory measures. The appellants in the said case were A
companies engaged in mining operations and were seeking a
declaration that rockers, dumpers and tractors were not taxable under
the Bihar and Orissa Motor Vehicles Taxation Act 1930 as they were
not motor vehicles defined under the Act. The contention of the
appellants was that the tractors, dumpers and rockers were not using
B
any roads but were only plied within the premises of the mining area
which was privately owned by the companies, and would not be liable
to any tax so long as they are within the premises. However, if they
use the roads, then the tax component will be applicable. In para 29
of the report, this Court again explained the nature of the State
Legislation relating to taxation on motor vehicles as being regulatory C
measure and compensatory in nature to raise revenue. Relevant
extract is reproduced hereunder:
“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 D
facilitating the movement and regulation of traffic. The validity
of the taxing power under Entry 57 List I 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 in any way form part of flow of E
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 F
of passengers and goods etc. etc. and for that 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 Il is subject to the
limitations referred to above, namely, that the power of taxation
thereunder cannot exceed the compensatory nature which must G
have some nexus with the vehicles using the roads viz. public
roads.”
38. The argument by Mr.Bhatnagar, learned amicus that the
offending provision contained in Section 3A(3) being repugnant to
H
912 SUPREME COURT REPORTS [2023] 5 S.C.R.
A the central legislation, will have to give way and cannot be sustained.
His submission is that the power to impose penalty is given in Section
192 A of the 1988 Act. According to him, Entry 57 of List II being
subject to the provisions of Entry 35 of List III under which the 1988
Act has been enacted, Section 192A provides for penalty being
imposed on vehicles being used without permit or in contravention of
B
the provisions of sub-section (1) of Section 66 (providing for necessity
for permits). According to him once the central Act contains a penal
provision for such a violation of imprisonment as also fine, the State
could not have imposed a tax for the same violation. This submission
of Shri Bhatnagar can be sustained only if any repugnancy or any
C conflict can be established between the State law and the Central
law. The provisions under Section 192A are in no way violated or
conflicted by imposing an additional special tax for violation of use of
vehicles without permit. It can be said to be in addition to the penalty
provided in Section 192A of the 1988 Act. This Court, in the case of
Sukhpal SinghBal (supra) has already upheld that such imposition
D
of tax for violation of statutory provisions, is to be treated as a
regulatory measure and only to work as a deterrent of the vehicle
owners’ violating the law. Such a tax would be regulatory in nature
and would only check violations of the statutory provisions. In the
case of Sharma Transport Rep. by D.P. Sharma vs. Government
E of Andhra Pradesh and Ors. (supra), a similar issue was considered
and this Court was of the view that under Entry 35 of List III the
permission is to lay down the principles on which the tax may be
levied whereas the State had a right to levy such tax. Paras 8 and 11
of the said report dealing with the aforesaid aspect are reproduced
hereunder:
F
“8. This is not a case where the theory of occupied field can
be made applicable. The Taxation Act essentially deals with
fares charged from passengers and freight collected from them.
On the contrary, the Act deals with levy on vehicles. They are
conceptually different. Whatever has been stated above in the
G background of Article 73 is equally applicable to Articles 256
and 257 of the Constitution. Article 256 provides that the
executive power of every State shall be so exercised as to
ensure compliance with the laws made by Parliament and any
existing laws which apply in that State and the executive power
H of the Union shall extend to the giving of such directions to a
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 913
KULLU ETC. ETC. [VIKRAM NATH, J.]
State as may appear to the Government of India to be A
necessary for that purpose.
This article has application only when any law has been made
by Parliament and the executive power of the State is made
subservient to it by requiring it to ensure compliance with such
laws. B
Where it appears to the Government of India that it is so
necessary to do, directions can be issued. Article 257 provides
that the executive power of every State shall be so exercised
as not to impede or prejudice the exercise of the executive
power of the Union. Where the Government of India feels it
so necessary to do so, it can issue a direction. At the cost of C
repetition it may be noted that there is no law specifying the
principles of taxation on the subject-matter of controversy so
as to bring in application of either Article 256 or Article 257 of
the Constitution.
11. Power to levy taxes on vehicles, whether mechanically D
propelled or not vests solely in the State Legislature, though it
may be open to Parliament to lay down the principles on which
the taxes may be levied on mechanically propelled vehicles in
the background of Entry 35 of List III. To put it differently,
Parliament may lay down the guidelines for the levy of taxes
E
on such vehicles, but the right to levy such taxes vests solely in
the State Legislature. No principles admittedly have been
formulated by Parliament. In that sense, the Government of
India’s communication dated 30-8-1993 does not in any sense
violate the power of the State Legislature or its delegate to
levy or exempt taxes from time to time.” F
39. Mr. Mukerji, learned counsel for the appellants, has referred
to a number of judgments of this Court relating to levy of tax being
compensatory and regulatory in nature. The same are not being
discussed in detail to unnecessary burden the judgment. However, a
reference has already been made to the said judgments quoted earlier. G
40. In the above backdrop of the legal position, the validity of
Section 3A(3) of the 1972 Act introduced vide Amending Act of 1999
is being discussed hereunder.
H
914 SUPREME COURT REPORTS [2023] 5 S.C.R.
A 41. Section 3 of the 1972 Act provided for levy of taxes on all
motor vehicles kept or used in the State of Himachal Pradesh as per
the schedules appended to the said Act. Insertion of Section 3A
provided for levy of special road tax. The special road tax as provided
under sub-sections (1), (2) and (4) of Section 3A have been upheld
by the High Court. It is only the levy of special road tax under sub-
B
section (3) which has been struck down. Testing the provisions of
the offending section with regard to the settled principles of
interpretation of taxing statutes, it is to be ascertained on the following
three aspects:
(1) Whether it is manifestly unjust or glaringly unconstitutional;
C
(2) Whether it is regulatory or compensatory in nature; and
(3) Whether there is any repugnancy with the provisions in the
Central enactment.
D Manifestly unjust or glaringly unconstitutional:
42. The Legislatures of the State have not only the power to
make laws on the taxation to be imposed on motor vehicles as also
the passengers and goods being transported by motor vehicles but
also the power to lay down principles on which taxes on vehicles are
E to be levied. In the absence of any principles having been laid down
by the Parliament, no fault could be found in the law enacted by
Legislature of the State of Himachal Pradesh.
The offending provision is regulatory in nature and therefore
within the competence of the Legislature of State of Himachal
F Pradesh. There is nothing on record to indict the offending provision
as being manifestly unjust or glaringly unconstitutional.
Regulatory or Compensatory:
43. The objects and reasons for bringing in the 1999
Amendment was clearly compensatory in nature. The object was to
G augment funds and finance for construction, maintenance, repair and
upkeep of the roads in the State of Himachal Pradesh which has a
totally hilly terrain. The offending section only provided that if any
vehicle used without a valid permit or in any manner not authorised
by the permit, further special road tax would be levied, charged and
paid to the state government in addition to the tax payable under sub-
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 915
KULLU ETC. ETC. [VIKRAM NATH, J.]
section (1) at such rates as may be specified by the state government A
by notification. However, the restriction was that the same would
not exceed the rates specified in column 3 of Schedule 3 of the Act.
44. Imposition of such additional special road tax was only to
keep a check or a discipline on the transport vehicle operators to use
their vehicles in accordance with the statutory provisions. This could B
work as a deterrent for the transport operators to not commit any
breach and to follow the mandate of the law. Such additional special
road tax could be termed as regulatory in nature so as to regulate
other statutory provisions being implemented and strictly followed.
45. This Court in the case of Sukhpal Singh Bal (supra) C
relating to challenge to Section 10(3) of the U.P. Motor Vehicles
Taxation Act, 1997 where a similar provision was incorporated and
even though termed as penalty, was held to be regulatory and
compensatory in nature. The High Court had struck down the said
provision but this Court held that such penalty imposed under Section
10(3) to protect public revenue and as a deterrent for tax evasion. In D
view of the above, it cannot be said that levy of such an additional
special road tax would be said to be manifestly unjust or glaringly
unconstitutional. It was, in effect, to ensure payment of the chargeable
taxes and use of the vehicles as per the terms of the permit.
Repugnancy, if any, with Central enactment: E
46. Entry 35 of List II conferred the power on the Parliament
as also the State Legislatures to make laws relating to mechanically
propelled vehicles of all kinds and also to lay down the principles on
which taxes on such vehicles are to be levied. The central enactment
i.e. the law made by the Parliament has not laid down any principles F
for levy of taxes. The State Legislatures had the power to levy taxes
not only under Entries 56 and 57 of List II but also to lay down the
principles under Entry 35 of List III. Therefore, no repugnancy of
any kind could be alleged or pleaded or proved in the absence of
there being any central law laying down principles of levy of tax. In G
view of the above, no repugnancy or conflict of the State enactment
with the central enactment could be sustained.
47. The next argument of the learned amicus with respect to
the 1988 Act containing Section 192A wherein violation of Section
66(1) would constitute a criminal offence punishable with sentence
H
916 SUPREME COURT REPORTS [2023] 5 S.C.R.
A and also fine, as such the offending section being repugnant to the
said provision, cannot be sustained. Under Section 192A a punishment
of imprisonment along with fine is provided whereas under the
offending section, an additional special road tax is being charged for
such a violation of using vehicle without permit or in contravention of
the terms of the permit. The offending section was incorporated with
B
a view to augment more revenue in order to construct and maintain
the roads of the state which uses a large chunk of its finances being
a state having a completely hilly terrain. The additional special road
tax chargeable under Section 3A(3) would be in addition to any
sentence or fine imposed under Section 192A. Punishment for offence
C is with an object to create deterrence and curtailing such offences
as it creates a fear in the mind of offender likely to commit the
offence. The same is the object of the additional special road tax to
make it work as a deterrent from the transport operators in plying
vehicles without permit and in contravention of the terms of the permit.
As such there is no repugnancy or any conflict caused by the offending
D
provision with the central enactment.
48. For all the reasons recorded above, the validity of Section
3A(3), in our opinion, has been wrongly held to be ultra vires by the
High Court. The tax imposed under Section 3A(3) is regulatory in
character and is not a penalty.
E
Lumpsum taxation:
49. The High Court had also quashed the notifications issued
by the State for levy of the taxes under Section 3A(3) holding that
lumpsum taxes could not be levied on general assessment and it had
F to be levied as per actual default. Levy of lumpsum tax has been
upheld by a three Judge Bench of this Court in the case of State of
Tamil Nadu vs. M. Krishnappan and Anr. reported in (2005) 4
SCC 53. We find no reason to take a different view. It may also be
noted that the learned Amicus Curiae has also not advanced any
arguments on this point.
G
50. In view of the above, it would not be a futile exercise to
send the matters back to the regular Bench as we have held that said
Section 3A(3) of the 1972 Act being within the legislative competence
of the State Legislature, and lumpsum tax could be levied. Nothing
further remains to be examined by the regular Bench in these appeals.
H
THE STATE OF HIMACHAL PRADESH v. GOEL BUS SERVICE 917
KULLU ETC. ETC. [VIKRAM NATH, J.]
51. We, accordingly, allow the appeals, set aside the impugned A
judgment and order of the High Court and further dismiss the writ
petitions.
52. There shall be no order as to costs.
53. Pending application(s), if any, are disposed of.
B
Bibhuti Bhushan Bose Appeals allowed.
(Assisted by : Parth Goswami, LCRA)
C
D
E
F
G
H
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