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CASE NO.: Appeal (civil)  4631 of 2000

PETITIONER: M/s Natwar Parikh & Co. Ltd.             

RESPONDENT: State of Karnataka & Others              

DATE OF JUDGMENT: 01/09/2005

BENCH: S.N. VARIAVA,S.H. KAPADIA & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

KAPADIA, J.         The short question which arises for determination in this  civil appeal, by special leave, is whether the taxation authority  under the Karnataka Motor Vehicles Taxation Act, 1957 was  right in taxing the "tractor-trailer" as a separate and distinct  vehicle, different from a tractor and denying exemption sought  by the appellant under section 16 of the said 1957 Act on the  ground that the tractor-trailer was a distinct category of "goods  carriage" requiring permit under section 66 of the Motor  Vehicles Act, 1988.  

       The brief facts which are relevant to be noticed as under:

       The appellant are transporters of heavy equipments using  mechanized carriage depending upon the items to be  transported.  During the period 8.12.1989 to 31.3.1990, they  were engaged by Central Power Research Institute of India  (CPRI) to transport for them six units of transformers from  Madras Port to its site at Bangalore.  The goods were to be  lifted from Madras Port and transported to CPRI at Bangalore  by vehicular transport mode through the States of Tamilnadu,  Andhra Pradesh and Karnataka.  In the matter of transportation  of over-dimensional cargo, the appellant made use of a drawing  vehicle, called by the appellant as a tractor to push/pull the  trailers loaded with the abovementioned equipments.

       Between 8.12.1989 and 11.1.1990, three units of the  tractor-trailer carrying transformers entered the State of  Karnataka via Tamilnadu and Andhra Pradesh.  

       On 18.1.1990, on account of the entry of three units of  tractor-trailer, the taxation authority issued four demand notices  calling upon the appellant to pay a sum of Rs.5.69 lacs as tax  under section 3(2) read with item 10 of part B of the schedule to  the said 1957 Act on the ground that the said three units were  transport vehicles, which required permits under section 66 of  the Motor Vehicles Act, 1988 and that the appellant was liable  to pay the said tax on the weight(s) of the three units.   

       Being aggrieved by the confirmation of the demand dated  7.2.1990, the appellant moved the Deputy Commissioner of  Transport, in appeal.

       By his order dated 30.6.1990, the Deputy Commissioner  of Transport held that although the tractor and the trailer were

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separate independent motor vehicles, separately registrable, the  tractor-trailer as a unit was a different category of "goods  carriage" requiring permit under section 66 of the Motor  Vehicles Act, 1988, which was not obtained and, therefore, the  appellant was not entitled to the benefit of exemption under  section 16 of the Taxation Act, 1957.  

       Being aggrieved by the said order dated 30.6.1990, the  appellant herein moved the Karnataka High Court by way of  writ petition no.17851 of 1990.  In the writ petition, the  appellant pleaded that its tractors and trailers were registered in  the State of Maharashtra as non-transport vehicles and transport  vehicles respectively; that they had obtained national permits  for their trailers under section 88(12) of the M.V. Act, 1988  which enabled them to ply trailers in the State of Karnataka;  that tractors and trailers, though motor vehicles, were separately  defined under section 2(44) and under section 2(46) of the M.V.  Act, 1988; that under section 46 of the M.V. Act, a certificate of  registration was issued in respect of such vehicles which was  effective for the whole of the country (including State of  Karnataka) and that if the contention of the department is  upheld that the tractor-trailer is a distinct and separate vehicle,  distinct from the tractor, it would undermine and violate section  46 of the M.V. Act; that the registration of a vehicle in one  State shall be effective and in force throughout India.

       By judgment and order dated 27.3.1998, the learned  single judge held that the tractor by itself was not a "transport  vehicle" but if it was used for carrying goods or passengers then  it became a "goods carriage" as defined under section 2(14) and  consequently, a transport vehicle under section 2(47) of the  M.V. Act;  that the trailer by itself was inert and had to be  pulled by some motor vehicle; that if the tractor is used for  carrying goods with the aid of a trailer, it will constitute a  "goods carriage" under section 2(14) and consequently, a  transport vehicle under section 2(47) of the M.V. Act liable for  permit under section 66 of that Act.  In the circumstances, the  learned single judge dismissed the writ petition.

       Aggrieved by the decision of the learned single judge, the  appellant carried the matter in appeal to the division bench of  the Karnataka High Court by way of writ appeal no.2324 of  1998.

       By impugned judgment dated 23.9.1999, the division  bench of the High Court held that in the present case, the  appellant had obtained national permit for the trailers but did  not obtain permits for the tractor-trailer combination under  section 66 of the M.V. Act; that, under section 66, permits were  required to be obtained for such combinations as they came  under the definition of "goods carriage" under section 2(14) and  consequently, under definition of "transport vehicle" under  section 2(46) of the M.V. Act; that any vehicle though not  constructed or adapted to carry goods became a "goods  carriage" when it was used for carrying the goods and,  therefore, the tractor-trailer combination would attract section  66 of the M.V. Act, requiring the appellant to obtain permits for  their combination(s) and since the appellant failed to obtain  such permits, the appellant became liable to pay tax under  section 3 of the Taxation Act, 1957, notwithstanding  registration of tractors and trailers, as separate units, in the State  of Maharashtra.  For the above reasons, the High Court  dismissed the writ appeal filed by the appellant.  Hence, this  civil appeal.

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       Mr. Chitale, learned counsel for the appellant submitted  that the tractors of the appellant are registered in Maharashtra as  "non-transport vehicle" whereas the trailers are registered in  Maharashtra as "transport-vehicles"; that the trailers have been  given national permits under section 88(12) of the M.V. Act,  which enables them to ply as "transport vehicles" in the State of  Karnataka; that the word "tractor" is defined in section 2(44) of  the said 1988 Act, whereas the word "trailer" is defined in  section 2(46) of the said 1988 Act; that a certificate of  registration issued under section 46 of the 1988 Act was  effective throughout India and if the contention of the taxation  authority in the present case is upheld, it shall undermine the  guarantee given under section 46 of the said 1988 Act to the  effect that registration of a vehicle in one State shall be  effective and in force throughout India.   Learned counsel  submitted that in a zonal meeting of transport commissioners of  Maharashtra and Karnataka had agreed to treat the tractor as a  non-transport vehicle and, therefore, it was not open to the  taxation authority to say that the tractor-trailer was a transport  vehicle.  Learned counsel submitted that a tractor is used to pull  a trailer or several trailers together on one occasion and it can  also be used to pull another set on combination of trailers on  other occasion and, therefore, the tractor-trailer combination is  not a fixed or a permanent combination.  Learned counsel  submitted that the tractors are of towing type and they differ  from "articulative vehicles" inasmuch the trailers are attached  by tow bars and are not superimposed on the tractor and  accordingly no part of the load of the trailers is carried by the  tractor.  It was further submitted on behalf of the appellant that  the tax authorities have sought to tax the tractor-trailer  combination under item 10 of part-B of the schedule to the  Taxation Act, 1957.  According to the learned counsel, item 10  imposes a tax on motor vehicles used for haulage and does not  tax a tractor-trailer combination; that item 10 of Part B does not  tax a combination of tractor-trailer per se but only taxes a  tractor alone which is in the non-transport category and that if a  tractor was a transport vehicle, it would be taxable under item 3  of Part B of the schedule to the Taxation Act.  Learned counsel  further submitted that section 3 of the Taxation Act is the  charging section which levies tax on all motor vehicles suitable  for use on the road; that in the present case, since the motor  vehicle was used for a period not exceeding 30 days, the tax  became leviable under section 3(2), but for the exemption  granted to non-transport vehicle and the reciprocal agreement  not to tax transport vehicles.  In this connection, learned  counsel has placed reliance on the notification issued by the  State of Karnataka on 12.10.1959 under section 16 of the 1957  Act.  Learned counsel submitted that the tractors are registered  in the State of Maharahstra as non-transport vehicles because  they cannot carry goods on it and because its purpose is only to  draw and haul another goods carriage such as a "trailer".  On  the other hand, according to the learned counsel, the trailers are  registered in the State of Maharashtra as transport vehicles  because they carry goods on it; that tractors and trailers are  separately registered as motor vehicles;  that once the State of  Maharashtra has recognized tractors as coming under non- transport category vide registration certificates issued by it, it  was not open to the tax authorities in the State of Karnataka to  go behind the registration certificates issued by the State of  Maharashtra which conclusively established that tractors were  non-transport vehicles entitled to exemption under the above  notification dated 12.10.1959; that the effect of treating the  tractor as transport vehicle while interpreting exemption  notification amounts to reopening of the registration made  under the said 1988 Act, which was not permissible in law and

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that the taxation authority under the Taxation Act cannot usurp  the authority vested in the registering authority under section 41  of the M.V. Act, 1988.  Learned counsel submitted that it was  not open to the taxation authority to create a new category of  motor vehicles requiring registration which function is that of  the registering authority under the M.V. Act, 1988; that once  the taxation authority was satisfied that the tractor was  registered in the State of Maharashtra in the non-transport  category then the same ought to have been accepted by the  taxation authority under section 16 of the 1957 Act.

       Learned counsel next urged that the tractors are of two  types.  The first type of tractor is designed and constructed by  the manufacturer for exclusive use of towing, pulling or  hauling.  These are classifieds as non-transport vehicles by the  Central Government vide notification dated 19.6.1992.  These  types of tractors are not required to take permits under section  66 of the 1988 Act as they are not transport vehicles.  The  second type of tractors are called prime movers.  They are  designed and constructed to carry part of the load of the trailer.   They are articulative vehicles.  They require permit and fitness  certificates applicable to transport vehicles.  Learned counsel  submits that if the argument of the department in the present  case is accepted, the distinction between "articulative vehicle"  and a "tractor" of the first type which is designed only to  pull/haul would be obliterated.  Learned counsel further  submitted that the Central Government has issued notification  dated 19.6.1992 under section 41(4) of the 1988 Act by which it  has classified motor vehicles into transport and non-transport  vehicles; and that under the said notification, trailers have been  classified as transport vehicles whereas tractors have been  classifieds as non-transport vehicles.  Learned counsel  submitted that the said notification is binding on the taxation  authority and, therefore, the taxation authority was not entitled  to embark upon the classification of motor vehicles in the  process of interpreting exemption notification under the  Taxation Act.  The learned counsel, therefore, submitted that  the taxation authority under the Taxation Act was not entitled to  create a new category of vehicle and insist on compliance of  section 66 of the M.V. Act while denying exemption to the  appellant.

       At the outset, we may point out that we are concerned  with the period 1989-90 in this matter.

       To appreciate the above arguments, we have to consider  the Schemes of the Taxation Act, 1957 and the M.V. Act, 1988.

       The Taxation Act has been enacted to consolidate and  amend the law relating to the levy of tax on motor vehicles in  the State of Karnataka.  Under section 2(b) "taxation authority"  is defined to mean such officer as may be pointed out by the  State Government to exercise the powers and functions of the  Taxation Authority under the Act.  Under section 2(j), it is  provided that the words and expressions used but not defined in  the Taxation Act shall have the meaning assigned to them in the  M.V. Act, 1988.  Section 3 is in Chapter II, which deals with  levy of tax.  It is a charging section.  It states that a tax shall be  levied at the rates specified in part A of the schedule to the Act.   It is a levy on all motor vehicles suitable for use on roads.   Under the second proviso, it is laid down that Tractors and  Trailers owned by the agriculturists or exclusively used for  agricultural operations shall be liable to pay tax at the rates  specified in part A2 of the schedule.  Section 3(2) begins with a  non-obstante clause.  It states that notwithstanding anything

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contained in section 3(1), taxes at the rates specified in part B  of the schedule shall be levied on motor vehicles suitable for  use on roads, which are in the State for periods shorter than a  quarter, but not exceeding thirty days.  In section 3(3), it is inter  alia laid down that in the case of motor vehicles in respect of  which reciprocal agreement relating to taxation is entered into  between the Government of Karnataka and any other State  Government, the levy of tax shall, notwithstanding anything  contained in the Act, be in accordance with the terms and  conditions of such reciprocal agreement.  Section 4 deals with  payments of tax.  It inter alia  provides that the tax levied under  section 3 shall be paid in advance by the registered owner or  person having possession or control of the motor vehicle, for a  quarter, half-year or full year at his choice.  It shall be paid in  advance within fifteen days from the commencement of such  quarter, half-year or year as the case may be.  Under section 6,  every registered owner of a motor vehicle liable to tax under the  Act is required to sign a declaration in the prescribed form,  giving the prescribed particulars to the taxation authority and  shall pay to such authority the tax in respect of such vehicle.   Under section 6(2), when a motor vehicle liable to tax under the  Act is altered, the registered owner or person in possession of  such vehicle shall be liable to pay additional tax under section  8.  The owner is also required to fill up and sign addition  declaration in the prescribed form showing the nature of  alteration made and containing the prescribed particulars.   Section 7 deals with refund of tax.  Section 8 deals with  payment of additional tax.

       On examination of the provisions of the Taxation Act, we  find that the principle underlying therein is, that, it is the use of  the motor vehicle on the given occasion which determines the  category of the motor vehicle, whether it is adapted for that  purpose or not.

       Under section 3, levy of tax is on all motor vehicles  suitable for use on the roads.  Therefore, under the proviso,  tractors and trailers used in the farms are excluded as they are  not used on the roads.  The expression "suitable for use on  roads" finds place in section 3(1) as well as in entry 57 list II of  the seventh schedule to the Constitution.  Therefore, tramways,  railways and farm machinery though mechanically propelled  are excluded as they are not suitable for use on roads.   Moreover, section 3 of the Taxation Act and its explanation  have to be construed on their own force.  The combined effect  of sections 3, 4, 6, 7 and 8 of the Taxation Act is that the State  is empowered to levy tax on all motor vehicles which are  designed and manufactured for use on the roads.  

       In the case of State of Mysore v. Syed Ibrahim reported  in AIR 1967 SC 1424, the owner of a motor vehicle carried  eight passengers in his car and collected Rs.5/- from each of  them.  He was charge-sheeted under section 42(1) of the M.V.  Act, 1939 (section 66 of the MV Act, 1988) for having used the  car as a "transport vehicle" without the permit required under  section 42(1).  The State contended before this Court that  though the motor vehicle was registered as a motor-car, if it was  used for a purpose mentioned in section 42(1), namely, carrying  passengers for hire, the motor vehicle on that occasion must be  said to have been used as a transport vehicle and if so used  without a permit, there would be a breach of section 42(1).  [Underlining supplied by us].  Accepting this contention, this  Court held that the levy of tax under section 3 on motor  vehicles depended upon the use of the vehicle to which the  vehicle was put; that the tax was leviable on the basis of the

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actual or intended use; that it is the use of the motor vehicle on  the given occasion, which decided the category of the motor  vehicle, whether it is adapted for that purpose or not.   Therefore, even if a motor vehicle was occasionally used as  "goods carriage", it must be regarded when so used as a "goods  carriage" and, therefore, a "transport vehicle" and if it was so  used in breach of section 42(1), the owner or the person who  uses it would be liable to punished under section 42(1) of the  M.V. Act, 1939, which, as stated above, requires every owner  of a motor vehicle to obtain a permit.   

       In the case of State of Karnataka v. K. Gopalakrishna  Shenoy & Anr.  reported in AIR 1987 SC 1911, this Court held  that section 3(1) of the Taxation Act confers a right upon the  State to levy a tax on all motor vehicles which are designed for  use on the roads, at the rates prescribed, without reference to  the road worthy conditions of the vehicle or otherwise.  In the  said judgment, it has been further held that the explanation to  section 3(1) contains a deeming provision and its effect is that  so long as the certificate of registration of a motor vehicle is  current, it must be deemed to be a vehicle suitable for use on  the roads, which expression finds place in entry 57 of list II of  the seventh schedule to the Constitution.  It has been further  held that the consequence of the said explanation to section 3(1)  is that the owner is obliged to pay the tax in advance as long as  the certificate of registration is current, irrespective of the  condition of the vehicle for use on the roads and irrespective of  the fact whether the vehicle has a certificate of fitness under the  Motor Vehicles Act.  In the said judgment, it has been laid  down that section 3(1) of the Taxation Act and its explanation  have to be construed on their own force and not with reference  to section 38 of the M.V. Act, 1939 (section 56 of the MV Act,  1988) which dealt with certificate of fitness read with section  22 of the M.V. Act, 1939 (section 39 of the MV Act, 1988)   which dealt with the certificate of registration.  Therefore, one  has to read sections 3 and 4 of the Taxation Act on their own  force and not with reference to the provisions of the M.V. Act  dealing with registration of motor vehicles and issuance of  fitness certificate.  

       On reading the aforestated judgment, it is clear that the  categorization of motor vehicle for taxation under the 1957 Act  will depend upon the use of the motor vehicle on the given  occasion, whether it is adapted for that purpose or not.   Therefore, in our view, the categorization of tractor-trailer by  the taxation authority has been rightly made based on the use of  the motor vehicle on the given occasion and, therefore, there is  no merit in the argument advanced on behalf of the appellant  that the taxation authority cannot go behind the certificate of  registration issued by the authorities in the State of  Maharashtra.  In this connection, we may further point out that  a tractor-trailer consists of a tractor which contains a cab or a  driver’s seat and a compartment with a sleeping berth, the  engine and the hood carried on two axles or four axles, as the  case may be.  The trailer is a separate box car attached to the  tractor by what is called as the fifth wheel.  This meaning is  given in the technical dictionary.  The point to be noted here is  that the Motor Vehicles Act, 1988 replaced the 1939 Act in  order to rationalize certain definitions with the additions of new  definitions of new types of vehicles.  Under section 61 of the  1988 Act, which comes within Chapter IV dealing with  registration of motor vehicles, registration of trailers is made  compulsory.  Under section 61(2), the registration mark  assigned to a trailer is required to be displaced on the side of the  drawing vehicle.  In the present case, we are not concerned with

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tractors in the conventional sense.  Even the legislature has used  the word "drawing vehicle" in place of tractors.  Under section  61(3), it is provided that no person shall drive a motor vehicle  to which a trailer is attached unless the registration mark of the  motor vehicle is displayed on the trailer.  Similarly, under  section 66 in Chapter V which refers to control of transport  vehicles, no owner of a motor vehicle can use the vehicle as a  transport vehicle carrying passengers or goods without a permit.   Under section 66(2), the holder of a goods carriage permit may  use the vehicle for drawing any trailer.  Therefore, under the  M.V. Act, 1988, the Parliament has kept in mind the existence  of a vehicle classifiable as "tractor-trailer".   

       Lastly, it can be pointed out that the M.V. Act, 1988 is an  Act to consolidate and amend the law relating to the motor  vehicles.  It deals with various topics like registration of motor  vehicles, licensing of drivers of motor vehicles, control of  transport vehicles etc.  However, the taxation is not the subject  matter of the M.V. Act, 1988.  Taxation is governed by the  Taxation Act, which falls under entry 57 list II of the seventh  schedule to the Constitution.  Taxation is governed by a  separate Code which in the present case happens to be the  Karnataka Motor Vehicles Taxation Act, 1957 and as held by  this Court in the case of  K. Gopalakrishna Shenoy (supra), the  provisions of sections 3 and 4 of the Taxation Act have to be  construed on their own force and not with reference to the  provisions of registration or fitness certificate under the M.V.  Act, 1988.

       The question still remains as to whether the taxation  authority was right in categorizing tractor-trailer as a separate  assessable entity and whether that authority was right in calling  upon the appellant to obtain permit under section 66 of the  M.V. Act, 1988.

       In order to answer this issue, we have to examine briefly  section 2, which is the definition section in the M.V. Act, 1988.   In that connection, we reproduce herein below the following: 2.          Definitions.- In this Act, unless the context  otherwise requires,\026

(14)    "goods carriage" means any motor vehicle  constructed or adapted for use solely for the  carriage of goods, or any motor vehicle not  so constructed or adapted when used for the  carriage of goods;

(28)    "motor vehicle" or "vehicle" means any  mechanically propelled vehicle adapted for  use upon roads whether the power of  propulsion is transmitted thereto from  an  external or internal source and includes a  chassis to which a body has not been  attached and a trailer; but does not include a  vehicle running upon fixed rails or a  vehicle of a special type adapted for use  only in a factory or in any other enclosed  premises or a vehicle having less than four  wheels fitted with engine capacity of not  exceeding twenty-five cubic centimetres;

(44)    "tractor" means a motor vehicle which is  not itself constructed to carry any load  (other than equipment used for the purpose  of propulsion); but excludes a road-roller;

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(46)    "trailer" means any vehicle, other than a  semi-trailer and a side-car, drawn or  intended to be drawn by a motor vehicle;

(47)    "transport vehicle" means a public service  vehicle, a goods carriage, an educational  institution bus or a private service vehicle."

       Section 2(28) is a comprehensive definition of the words  "motor vehicle".   Although, a "trailer" is separately defined  under section 2(46) to mean any vehicle drawn or intended to  be drawn by motor vehicle, it is still included into the definition  of the words "motor vehicle" under section 2(28).  Similarly,  the word "tractor" is defined in section 2(44) to mean a motor  vehicle which is not itself constructed to carry any load.   Therefore, the words "motor vehicle" have been defined in the  comprehensive sense by the legislature.  Therefore, we have to  read the words "motor vehicle" in the broadest possible sense  keeping in mind that the Act has been enacted in order to keep  control over motor vehicles, transport vehicles etc.  A combined  reading of the aforestated definitions under section 2,  reproduced hereinabove, shows that the definition of "motor  vehicle" includes any mechanically propelled vehicle apt for  use upon roads irrespective of the source of power and it  includes a trailer.  Therefore, even though a trailer is drawn by a  motor vehicle, it by itself being a motor vehicle, the tractor- trailer would constitute a "goods carriage" under section 2(14)  and consequently, a "transport vehicle" under section 2(47).   The test to be applied in such a case is whether the vehicle is  proposed to be used for transporting goods from one place to  another.  When a vehicle is so altered or prepared that it  becomes apt for use for transporting goods, it can be stated that  it is adapted for the carriage of goods.  Applying the above test,  we are of the view that the tractor-trailer in the present case  falls under section 2(14) as a "goods carriage" and  consequently, it falls under the definition of "transport vehicle"  under section 2(47) of the M.V. Act, 1988.

       In the present matter, we were concerned with taxing of  tractor-trailer unit and not with the question as to whether such  a vehicle would fall under item 3 or 10 of part B of the schedule  to the Taxation Act.  Hence, we are not required to go into that  question.

       Accordingly, we find no infirmity in the impugned  judgment and consequently, we dismiss this civil appeal with  no order as to costs.