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CASE NO.: Appeal (civil)  5618 of 2000 Appeal (civil)  5172 of 2001

PETITIONER: M.P.A.I.T. Permit Owners Assn. & Anr.                            

RESPONDENT: State of Madhya Pradesh                                  

DATE OF JUDGMENT: 28/11/2003

BENCH: S. RAJENDRA BABU & G.P.MATHUR.

JUDGMENT: J U D G M E N T

RAJENDRA BABU, J. :                  A batch of writ petitions was filed before the High Court of Madhya  Pradesh challenging the constitutional validity of  Sections 16(6), (7) & (8), 20-A  and 20-B of the Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991  [hereinafter referred to as ’the Act’], inserted by the Madhya Pradesh Motoryan  Karadhan [Sanshodhan] Adhiniyam, 1999 [hereinafter referred to as ’the  Amendment Act’], published in the official Gazette on 8.12.1999 received the  assent of the Governor on 30.11.1999.   

The Petitioners before the High Court contended that Sections 16(6), (7) &  (8), 20-A, 20-B and 20-C of the Act are repugnant to the Motor Vehicles Act,  1988 [hereinafter referred to as ’the MV Act’] enacted by Parliament in exercise  of its powers under Entry 35, List III of the Seventh Schedule to the Constitution,  which has been in force since 1st July 1989; that the amendments introduced by  Act 27 of 1999, by which the impugned provisions are introduced in the Act, deal  with the subject-matter covered by Section 66 read with Section 192-A of the MV  Act; that the impugned provisions provide for confiscation of the vehicle thereby  enhancing the penalty provided by the MV Act which sets out only certain  amounts of fine and thus repugnancy arises; that there are provisions in the Act  for recovery of tax and, therefore, the provision for confiscation of the vehicle is  uncalled for.

On behalf of the State, it is contended that the Act and the amendments  made thereto are within its competence as they fall under Entries 56 and 57, List  II of the Seventh Schedule to the Constitution and is within the legislative  competence and the MV Act does not set out any principle of taxation subject to  which the enactments made Entry 56, List II of the Seventh Schedule to the  Constitution can operate. A contention had been raised on behalf of the State  that the Act had obtained the assent of the President and the subsequent  amendment is only supplemental in nature and, therefore, does not require any  further assent of the President.  However, this contention is not pursued before  us.   

The High Court held that the impugned provisions are not repugnant to the  provisions of the MV Act and the two enactments are not enacted in the same  field and, therefore, they operate in totally different fields and stated that holding  of a permit is a cognate matter and there is no encroachment made on the MV  Act by the Act including the Amendment Act; that plying of a motor vehicle must  be only with a permit and such a permit can be obtained only on payment of  requisite tax and, therefore, "having a valid permit for the purpose, is the sine qua  non of incident of tax under the Karadhan Adhiniyam, 1991; that holding of a  permit is pith and substance of the incident of taxation under the M.P. Motoryan  Karadhan Adhiniyam; that if a person is plying without permit he is essentially  avoiding the taxation which is the pith of the permit; that permit is intrinsically  connected with the taxation; that applying the test of pith and substance, the

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Amendment Act is within the ken of Entry 57 List II, Seventh Schedule; that it is  not rendered invalid even assuming it incidentally touches upon matters reserved  for federal legislature; that the power of forfeiture being an incidental power to  taxation there is no conflict in the provisions of Section 192-A of the MV Act and  Section 16(6) of the Act; that under Section 16(6) of the Act, confiscation will be  by the taxation authority whereas a criminal prosecution of a person is initiated  under the MV Act and Section 192-A is an alternate to confiscation proceeding;  that there are adequate safeguards with regard to the confiscation procedure;  that the power of confiscation can co-exist with the power to prosecute the  offender and the provisions in the Act do not conflict with each other and on that  basis dismissed the writ petitions.  Hence these appeals by special leave.

       Sri K.K.Venugopal, learned Senior Advocate appearing on behalf of the  appellants, contended that the Act is a law relating to levy of tax on motor  vehicles relatable to Entry 57, List II of the Seventh Schedule to the Constitution.    He submitted that Parliament has enacted MV Act in exercise of powers under  Entry 35, List III of the Seventh Schedule to the Constitution, which specifically  covers motor vehicles and in terms of Article 254 of the Constitution prevails over  any State law covering the same field; that levy of tax on motor vehicles is within  the exclusive domain of the State Legislature and similarly regulatory provisions  under the MV Act fall under Entry 35, List III of the Seventh Schedule to the  Constitution and the Union has already enacted a law in that regard.  He  submitted that a careful reading of Section 16(6) of the Act would indicate that  the cause or the incident which attracts confiscation is violation of the provisions  of Sections 66 and 192-A of the MV Act and not for the purpose of the taxation.   Alternatively, he submitted that if for any reason it is to be held that it is also for  the purpose of recovery of taxes, he contended that an examination of the  scheme of the provisions of the Act and Rules framed thereunder are vague  leading to such arbitrariness as to vitiate the provisions in terms of Article 14 of  the Constitution.  He submitted that while a provision has been made for the  purpose of seizure of a motor vehicle for non-payment of tax and such vehicle,  as provided under the Act and the Rules framed thereunder, has to be released  the moment the tax is paid and even if in respect of such vehicle a mere report is  filed in terms of Section 16(6) of the Act, the vehicle is liable to be confiscated  thereby the object of the Act to recover the tax is not fulfilled but on the other  hand, it results only in imposing further penalty upon the owner or the driver of  the vehicle and in turn results in enhancing the penalty provided under the MV  Act, which clearly would result in repugnancy in the provisions thereof.  In this  regard, he adverted to the decisions of this Court in Ch.Tika Ramji & Ors.  etc.vs. The State of Uttar Pradesh & Ors., 1956 SCR 393, M. Karunanidhi vs.  Union of India & Anr., 1979 (3) SCC 431, and T. Barai vs. Henry Ah Hoe &  Anr., 1983 (1) SCC 177.  He further submitted that even otherwise in respect of  a motor vehicle where tax has not been paid on prosecution a fine of maximum  of Rs.300/- is provided and there are provisions under the Act by which the tax  can be levied and collected with penal interest.  If that is so, he submitted, the  motor vehicles worth several lakhs of rupees cannot be confiscated for non- payment of tax, may be running in a few thousands of rupees.  He contended  that such an action is wholly disproportionate exercise of power and calls for  interference.

       Sri K. Parasaran, learned Senior Advocate appearing for the owners of the  motor vehicles, who had entered into a hire purchase agreement, submitted that  in the first place confiscation is really directed against the ownership of the motor  vehicles and the owner had, in no way, committed any breach of the Act or the  Rules as the primary liability to pay the taxes is that of the hire purchaser and  thus the provisions cannot be applied to such owners.  He further submitted that  even if confiscation is to be ordered for non-payment of tax by hire purchaser,  what can be confiscated is only the extent of the interest of the hire purchaser  and not beyond that.  He further contended that the onwership of the appellants  does not get affected by the reason of confiscation.   

The learned Advocate General for the State of Madhya Pradesh,  contended that the Act in question is aimed at curbing the user of the motor  vehicles not covered by a permit or using the permit in violation of its condition

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subject to the exceptions available under Section 16(6) of the Act and under the  Act, tax has to be paid in advance by such user and, therefore, plying of a vehicle  having a contract carriage permit as a stage carriage amounts to plying without a  permit within the meaning of Explanation VII of the Schedule I to the Act and in  this context, drew our attention to not only Explanation VII of the Schedule I to  the Act but also to the definition of contract carriage as defined under Section  2(7) of the MV Act; that the two categories of motor vehicles, namely, contract  carriages and the stage carriages have different rates of taxation; that unless  such tax has been paid no permit will be available; that operation of a vehicle  without a permit obviously means that tax due to the State has not been paid  under the Act.  He, therefore, submitted that the provisions under the Act are  valid and fall within the competence of the State legislature and he fully  supported the view taken by the High Court that there is absolutely no  repugnancy between the MV Act and the Act inasmuch as they operate in two  different fields \026 one is a regulatory measure while the other is the taxation  measure.  He, therefore, submitted that we should dismiss these appeals.

For purposes of convenience, we set out the relevant provisions of the Act  hereunder:

"16.    Power of entry, seizure and detention of Motor Vehicle in  case of non-payment of tax.

(1)     xxx     xxx     xxx (2)     xxx     xxx     xxx (3)     xxx     xxx     xxx (4)     xxx     xxx     xxx (5)     xxx     xxx     xxx (6)     Subject to the provisions of sub-section (8), where, the taxation  authority upon receipt of report about the seizure of the vehicle under  sub-section (3) is satisfied that the owner has committed offence under  Section 66 read with Section 192-A of the Motor Vehicles Act, 1988 of  plying vehicle without permit and he may by order in writing and for  reasons to be recorded confiscate the vehicle seized under said sub- section.  A copy of order of confiscation shall be forwarded without any  undue delay to the Transport Commissioner.

(7)     No order of confiscating any vehicle shall be made under sub- section (6) unless the Taxation Authority:-

(a)     sends an intimation in the form prescribed about initiation of  proceedings for confiscation of vehicle to the Magistrate having  jurisdiction to try the offence on account of which the seizure has been  made; (b)     issues a notice in writing to the person from whom the vehicle is  seized and to the registered owner; (c)     affords an opportunity to the persons referred to in clause (b) of  making a representation within such reasonable time as may be specified  in the notice against the proposed confiscation; and  (d)     gives to the officer effecting the seizure and the persons to whom  notice has been issued under clause (b), a hearing on due date to be  fixed for such purpose.

(8)     No order of confiscation under sub-section (6) of any vehicle shall  be made if any person referred to in clause (b) of sub-section (7) proves  to the satisfaction of the Taxation Authority that such vehicle was used  under valid documents required under the Act.

20-A    Appeal against order of confiscation- (1)       Any person aggrieved  by an order of confiscation may, within thirty days of the order or if fact of  such order has not been communicated to him, within thirty days of the  date of knowledge of such order, prefer an appeal in writing accompanied  by such fee and payable in such form as may be prescribed, and by  certified copy or order of confiscation to the Appellate Authority.

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Explanation \026 The time requisite for obtaining certified copy of order of  confiscation shall be excluded while computing period of thirty days  referred to in the sub-section.

(2)     The appellate Authority shall send intimation in writing of lodging  of appeal to the Taxation Authority. (3)     The appellate Authority may pass such order of interim nature for  custody, or disposal, if necessary of the confiscated vehicle as may  appear to be just in the circumstances of the case. (4)     On the date fixed for hearing of the appeal or on such date to  which the hearing may be adjourned, the appellate Authority shall peruse  the record and hear the parties to the appeal if present in person, or  through a legal practitioner and shall thereafter proceed to pass an order  of confirmation, reversal or modification of the order of confiscation. (5)     The appellate Authority may also pass such orders of  consequential nature, as it may deem necessary. (6)     Copy of final order or of order consequential nature, shall be sent  to the Taxation Authority for compliance.

20-B    Revision before Court of Session against order of Appellate  Authority- (1)  If the owner of a vehicle aggrieved by final order or by  order of consequential nature passed by the Appellate Authority in  respect of confiscated vehicle, he may within thirty days or the order  sought to be impugned, submit a petition for revision to the Court of  Session only on a point of law within the Session division where the  headquarters of the Appellate Authority are situate.

Explanation :-  In computing the period of thirty days under this sub- section, the time requisite for obtaining certified copy of order of Appellate  Authority shall be excluded.

(2)     the court of Session may confirm, reverse or modify any final  order or an order of consequential nature passed by the Appellate  Authority.

(3)     copies of the order passed in revision shall be sent to the  Appellate Authority and to the Taxation Authority for compliance or for  taking such further action as may be directed by such Court.

(4)     For entertaining, hearing and deciding a revision under this  Section, the Court of Session shall, as for as may be, exercise the same  powers and follow the same procedure as prescribed for hearing and  deciding a revision under the Code of Criminal Procedure,1973 (No. 2 of  1974)."

 Section 192-A of the MV Act provides that if a motor vehicle is driven in  contravention of Section 66(1), that is, if a vehicle is driven or caused to be  driven as a transport vehicle without permit, or in contravention of any or in  contravention of any condition thereof relating to the route on which or the area in  which or the purpose for which the vehicle may be used, the user is punishable  with fine for the first offence and imprisonment for the subsequent offence but  this section does not provide for confiscation of the vehicle.  Section 16(6) of the  Act provides that subject to the provisions of sub-section (8), where upon receipt  of report about the seizure of the vehicle under sub-section (3), the taxation  authority is satisfied that the owner has committed offence under Section 66 read  with Section 192-A of the MV Act of plying vehicle without permit and he may by  order in writing and for reasons to be recorded confiscate the vehicle seized  under the said provision.   Under Section 16(3) of the Act, a vehicle seized for  non-payment of tax or other dues is liable to be returned on showing that tax has  been paid.    Thus if tax with regard to the seized vehicle is paid that vehicle has  got to be released.  So far as the link that is sought to be established with  taxation procedures, snaps the moment tax is paid and vehicle is released.   In  such an event also motor vehicle can be confiscated on a report that such  vehicle had been seized.  The cause or basis for confiscation of motor vehicle is

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driving such vehicle contrary to Section 66 of the MV Act read with Section 192-A  of the MV Act and a report of seizure under Section 16(3) of the Act.   

Sub-section (3) of Section 16 states that the taxation authority or any other  officer authorised by the State Government in this behalf may if it or he has  reason to believe that a motor vehicle has been or is being used without payment  of tax, penalty or interest due, seize and detain such motor vehicle and for this  purpose take or cause to be taken any step as may be considered proper for the  temporary safe custody of such motor vehicle and for the realisation of tax due.   Sub-section (3) is only intended as a step for recovery of the tax, penalty or  interest due and the vehicle is detained until such time as such tax or other  liabilities are realised.  The mere fact that such vehicle is seized for that purpose  by itself will not result in confiscation of the vehicle.  For confiscation of the  vehicle the factor that weighs with the authority as provided under Section 16(6)  of the Act is that the owner of the vehicle should have committed an offence  under Section 66 read with Section 192-A of the MV Act for which provision has  been made in the MV Act itself and that provision clearly sets out the nature and  degree of punishment but does not include confiscation.     

It is clear that confiscation would arise only in the event if an offence is  committed under Section 66 read with Section 192-A of the MV Act and,  therefore, such provision could not have been enacted without the assent of the  President as the same directly impinges upon Article 254 of the Constitution.   Under Article 254 of the Constitution, the law made by Parliament will prevail in  respect of subjects covered under List III of the Seventh Schedule to the  Constitution.  An exception is carved out in clause (2) of Article 254 of the  Constitution whereby the law made by the State Legislature will prevail if the  Presidential assent is received.  But before this clause can be invoked there must  be a repugnancy between the State Act and an earlier Act made by Parliament.  In effect, the scheme is that Article 254(2) gives power to the State Legislature to  enact a law with the assent of the President, on any subject covered under List III  of the Seventh Schedule to the Constitution, even though the Central Act may be  inconsistent operating in that State relating to that subject.

       The short question, therefore, for consideration arises is whether there is  any conflict or repugnancy between the State Law and the Union Law.   

In  T. Barai   vs.  Henry Ah Hoe’s case (supra) this Court has held : "\005A State law would be repugnant to the Union law when there is direct  conflict between the two laws. Such repugnancy may also arise where  both laws operate in the same field and the two cannot possibly stand  together, for example, where both prescribe punishment for the same  offence but the punishment differs in degree or kind or in the procedure  prescribed\005"  

In the case on hand the prescription of punishment is for the same offence  arising under Section 66 read with Section 192-A of the MV Act and further  punishment is prescribed under the State MV Taxation Act for forfeiture of the  vehicle. Thus,  there is clear conflict between the two enactments. Therefore,  we  hold that the provision of Section 16(6) of the Act and the consequential  provisions thereto are repugnant to Section 66 read with Section 192-A of the MV  Act and hence, invalid as the State law has not complied with requirements  under Article 254(2) of the Constitution of obtaining assent of the President to the  State law. Analogy is sought to be drawn by placing reliance on S. Satyapal Reddy  & Ors.   vs..Government of A.P. & Ors., 1994 (4) SCC 391,  and Dr. Preeti  Srivastava & Anr.   vs.  State of M.P. & Ors., 1999 (7) SCC 120, wherein  prescription of higher qualification in the context of admission in colleges or  appointment to posts was considered.   Analogy is neither apt nor sound in law.    The qualification prescribed by one authority is binding on the other authority. If  higher qualifications are prescribed by the other authority who has to make  selections for admission in colleges or appointment to posts what it does is to  enhance the quality of qualification prescribed without adversely affecting the  same and adds further the intent and purpose of prescription of the qualification

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by the other authority and, therefore, is not in conflict with one another.   However, in the case of imposition of punishments for offences, one legislature  provides a lenient punishment and other a more stringent punishment or  burden  will necessarily interfere with the exercise of powers of legislature. When the offences arising upon the Union Law and the State Law  respectively are substantially identical, but additional penalties are imposed for  the contravention by the provision of the State Law it would be inconsistent with  the law of the Union and, therefore, invalid.  In the instant case, apart from what  is available under Section 192-A of the MV Act, there are additional penalties  arising under Section 16(6) of the Act.

This discussion is enough to dispose of this case and we do not propose  to deal with other contentions raised by the learned counsel of the appellants and  are left open.

These appeals are thus allowed quashing Section 16(6) and the  consequential provisions of Sections 16(7), 16(8), 20-A and 20-B of the Act and  the order of the High Court stands set aside.