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PETITIONER: NATIONAL TRANSPORT COMPANY

       Vs.

RESPONDENT: STATE OF BIHAR

DATE OF JUDGMENT25/03/1976

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. KHANNA, HANS RAJ

CITATION:  1976 AIR 1074            1976 SCR  (3) 897  1976 SCC  (3) 363

ACT:      Bihar Taxation  on Passengers  and  Goods  (Carried  by Public Service Motor Vehicles) Act, 1961, s. 2(d)-Owner, who is-’In-charge’ of a vehicle, scope of

HEADNOTE:      Under  s.  3(1)  and  (2)  of  the  Bihar  Taxation  on Passengers and  Goods  (Carried  by  Public  Services  Motor Vehicles) Act,  1961, every  owner shall  pay to  the  State Government a  tax on  all passengers  and goods carried by a public motor  vehicle. Under s. 2(d), ’owner’ means not only the  owner  of  the  specified  type  of  vehicle  but  also includes, inter  alia, "any  person for  the time  being in- charge of such vehicle". Under s. 4(1) every owner liable to pay tax  shall apply  for registration, and under s. 6 every owner shall  furnish the prescribed return to the prescribed authority. Section  18 provides for penalties for failure to apply for registration or to submit the return.      The assessee  was the  sole transporting company of the cement of a manufacturing company. Since it did not have its own fleet of trucks, it used to engage trucks for use in its transport work.  It was  providing petrol  and oil  for  the running of  the trucks  in the  transport work  although the prices paid  by the  assessee were  later on adjusted in the hiring charges.  The assessee  was obtaining the receipts of delivery of  the goods  to the  various stockists indicating the quantities  of  cement  received  through  a  particular vehicle. On delivery to the appellant of the buyers’ receipt by the  truck owner or his representative, the bills of hire charges of the truck owner were paid by the appellant as per the agreement between the appellant and the truck owner. The assessee was  maintaining a  complete record  of the  trucks used by it for the transport work, of the charges realisable and realised from me stockists on account of freight payable by them,  and of  the charges  actually paid  to  the  truck owners. The  assessee was not registered under s. 4. After a surprise check, the total taxable amount of the assessee was determined and  the tax  and a  penalty were  imposed on the assessee. The  assessee’s appeal,  revision to the tribunal, and reference  to the  High Court,  were all decided against the assessee.      Dismissing the appeal to this Court,

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^      HELD: The appellant was in-charge of the trucks for the purpose  of   its  business  during  the  entire  course  of transportation of the cement from the factory to the various stockists and,  as such, came within the definition of owner under s. 2(d). [904 D-E]      (1) Whether  a  certain  person  is  in-charge  of  the vehicle for  the time  being depends on the particular facts of each  case. Being  in-charge’  of  the  vehicle,  in  the context of  the provisions  of the  Act, does  not relate to mere physical  charge or  control in the process of movement of the  vehicle from  one place to another but ’to charge or control’ for  fulfilment of  the legal  obligation under the Act for  payment of  taxes for  the  carriage  of  goods  or passengers. The  words "for the time being in-charge of such vehicle" have  to be  comprehended in  the  context  of  the provisions of  the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the  goods carried  by the vehicle. In a given case, the person, who  is for  the time  being in-charge of the loaded truck and  who or  on whose behalf some one like a driver or conductor received  the freight  or fare.  is also  a  owner within the  meaning of  the definition  in s. 2(d).[903 C-D; 904 C-D]      (2) On the facts of the present case the appellant took full responsibility  for the  carriage of the goods from the factory  to  various  destinations.  The  freight  had  been realised by the appellant from the stockists and the truck 898 owner received only ’hire charges.’ There is nothing to show nor is  there any  averment  by  the  appellant  that  those charges included  the taxes  under the Act. The matter might have been  different if  the truck owners had been given the tax collections in addition to the hire charges. Further the absence of any provision for tax payment by the truck owners in the agreement militates against the contention that it is only the truck owners that are liable. [902 B-C, G-903 B]      (3) The  case of Jagir Singh v. State of Bihar [1976] 2 SCR 809 was an application under Art. 32 of the Constitution and was  concerned with booking agents and forwarding agents who were  sought to  be made  liable under  the Act  at  the instance the  truck owners but the truck owners were held to be liable.  Unlike that case, the liability to pay taxes was entirely upon  the appellants  in the  present case  as  the truck owners  were entitled  only to hire charges. [903 F-G; 904 A]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1462 of 1971.      Appeal by  special leave  from the  Judgment and  Order dated 16th  April 1971  of the  Patna High Court in Tax Case No. 76/68.      A. K. Sen, S. T. Desai, Somen Bose, D. N. Mukherjee and K. N. Jain, for the appellant.      V. S. Desai and B. P. Singh for the Respondent.      The Judgment of the Court was delivered by      GOSWAMI, J.  This appeal  by special  leave is directed against the  judgment of the Patna High Court in a reference under section 21B(1) of the Bihar Taxation on Passengers and Goods (Carried  by Public  Service Motor Vehicles) Act, 1961 (briefly the Act) as amended.      The facts  as appearing  from  the  statement  of  case

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annexing the  various orders  of the authorities may briefly be stated:      The appellant,  M/s. National  Transport Company,  is a transport undertaking  without its  transport. The appellant (hereinafter to  be described  as the assessee) was the sole transporter by  road  of  the  cement  manufactured  by  the Associated Cement  Company at  Sindri (briefly  the company) from Sindri  to different  stockists at  various  places  in Bihar and  West Bengal.  In  order  to  have  some  sort  of uniformity in  price at  different places  the manufacturing company used  to fix  the transport  charges according  to a schedule. The  assessee’s contract  with  the  manufacturing company commenced  some time  on October 12, 1963. Since the assessee did  not have  its own  fleet of trucks, it used to engage thirty-six  trucks covered  by public carrier permits belonging  to   various  persons   at  different  times  for transporting the  cement. The  assessee was  not  registered under section  4 of the Act. On September 3, 1966, there was a surprise  inspection of  the office  of the  assessee  and certain books  of accounts  containing accounts of transport charges realised  by the assessee for transporting of cement from the  Sindri factory  to the stockists in Bihar and West Bengal were seized. The assessee also produced some books of accounts during the hearing before the Officer. The assessee maintained  his  accounts  ledger-wise  in  respect  of  the transport charges  realised and  realisable  from  different stockists of  Bihar and  West Bengal for transport of cement by it  from the  Sindri factory to their godowns. There were two ledgers.  One was party-wise showing charges realised or realisable from  the stockists  and other truck-wise showing hire charges 899 paid to various trucks. The assessee also produced a list of trucks showing  the names  of the  truck owners  with  their respective places  of residence.  Out of  thirty-six trucks, twenty-four were  registered in  Bihar and  twelve  in  West Bengal. Agreements  with the truck owners were also produced by the assessee. The Bills from the petrol supplying company which were  paid by the assessee were also filed showing the total amount  and the  truck-wise amount.  The ledger party- wise showed  rates charged  from the  stockists. The  ledger truck-wise  showed  hire  charges  and  also  deductions  on account of  petrol, diesel and other lubricants and also for loss in the way as per agreement.      On the basis of the statement furnished by the assessee as corroborated  by the  books of  accounts maintained by it the Assessing  Officer determined  the total  taxable amount and imposed  a tax  of  Rs.  1,41,618.37  by  his  order  of November 1,  1966. A  penalty of Rs. 5000/- was also imposed under section 7(5) of the Act.      The  assessee   appealed  to   the  Additional   Deputy Commissioner of Commercial Taxes without success. Thereafter the assessee preferred an application in revision before the Commercial Taxes  Tribunal, Bihar,  which also  met with the same fate.      The  Tribunal,  however,  on  the  application  of  the assessee under  section  218(1)  of  the  Act  referred  the following question of law to the High Court:           "Whether in  the facts  and circumstances  of  the      case the  Tribunal has rightly held the applicant to be      the ’owner’  of the  vehicles  within  the  meaning  of      section 2(d)  of the  Act and whether the imposition of      tax and levy of penalty was legal and justified".      The High Court noted the facts found by the Tribunal as follows:

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         (a)  The  assessee   was  the   sole  transporting                company of  the cement  of the  manufacturing                company,           (b)  it had  engaged certain trucks for use in his                (sic) transport work,           (c)  it was  providing  petrol  and  oil  for  the                running of  the trucks in the transport work,                although the prices paid by the assessee were                later on adjusted in the hiring charges,           (d)  it was obtaining receipts for delivery of the                goods to the stockists,           (e)  it was  maintaining a  complete record of the                trucks used by it for the transport work,           (f)  it was  keeping  a  complete  record  of  the                charges  realisable  and  realised  from  the                stockists on  account of  freight payable  by                them,           (g)  it was  keeping  a  complete  record  of  the                charges actually  paid to  the real owners of                the trucks, and 900           (h)  the receipts given by the stockists indicated                that they  had received  from  the  assessee,                certain quantities  of cement by a particular                vehicle". From the  above eight  factors  the  Tribunal  came  to  the conclusion that the assessee was in-charge of the trucks for the time  being within  the meaning  of section  2(d) of the Act.  The  High  Court  agreed  with  the  Tribunal  in  the following words:-           "In any  case, even  if the  conclusion  that  the      assessee was  in-charge of  the trucks,  for  the  time      being, be  a conclusion in law, I do not think that any      error in  law has  been committed  by the  Tribunal, in      arriving at  its  conclusion  against  the  contentions      raised on  behalf of  the assessee. Relevant facts have      been found  and a  relevant finding  has been  given on      them, before saddling the assessee with liability". The High  Court thereupon  upheld  the  Tribunal’s  decision against the assessee.      The only question that is canvassed by Mr. A. K. Sen on behalf of  the appellant is that, on the various facts found by the  Tribunal, it  has erred  in law  in holding that the assessee is an ’owner’ within the meaning of section 2(d) of the  Act.   We  may,  therefore,  immediately  turn  to  the definition of owner as given under section 2(d)           2(d) " ’owner’ means the owner of a public service      motor vehicle  in respect  of which  a permit  has been      granted by  a Regional  or  State  Transport  Authority      under the  provisions of  the Motor  Vehicles Act. 1939      (IV of  1939) and includes the holder of a permit under      the said  Act in  respect of  a  public  service  motor      vehicle or  any person  for the time being in charge of      such vehicle  or responsible  for the management of the      place of business of such owner". It is  clear that  the  above  definition  is  an  inclusive definition. Owner  means not only the owner of the specified type of  vehicle but  also includes  the  permit  holder  in respect of  such a  vehicle as  also any person for the time being in  charge of  such vehicle  or any person responsible for the  management of  the place of business of such owner. The definition has fairly widened the meaning of "owner".      We are  only concerned in this appeal with one category included in  the definition,  namely, that  an  owner  is  a person for  the time  being in  charge of  a public  service

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motor vehicle.  There is  no  dispute  that  the  trucks  in question are  public service  motor vehicles.  We  are  only required to consider whether the assessee is a ’person’ "for the time being in-charge of such vehicle".      As the  preamble shows  the Act  is to  provide for the levy of  tax on  passengers  and  goods  carried  by  public service motor  vehicles. The  taxing  event  is,  thus,  the carriage of  goods and  passengers by  public service  motor vehicles.      By section  2(a) ’business’  means the  business of the owner for the purpose of this Act. 901 Section 3 in the charging section and may be read:      3(1) "On and  from the date on which this Act is deemed           to have  come into  force under sub-section (3) of           section 1,  there shall  be levied and paid to the           State Government a tax on all passengers and goods           carried by  a public  service motor  vehicle; such           tax shall be levied and paid at the rate of twelve           and a  half per  centum of  the fares and freights           payable to the owner of such vehicle;           *              *              *              *      (2)  Every owner  shall, in  the manner  prescribed  in           section 9, pay to the State Government, the amount           of tax due under this section.      (3)  Every passenger  carried by a public service motor           vehicle and  every person  whose goods are carried           by such  vehicle shall  be liable  to pay  to  the           owner the amount of tax payable under this section           and every  owner shall  recover such tax from such           passenger or person, as the case may be."           *              *              *              *      Under section  4(1) every owner liable to pay tax shall apply for  his registration  within such  period and in such manner as  may  be  prescribed.  Under  sub-section  (2)  of section 4,  if the  application is  in order, the prescribed authority shall  grant a  certificate of registration in the prescribed form.      Under section  6  every  owner  shall  furnish  to  the prescribed authority  such returns,  within such  period, as may be  prescribed. There  is a provision under this section for imposition  of penalty  on failure  to submit  a  return without any reasonable cause.      Section 18  is the  penal section  for various offences under the Act including failure to apply for registration or to submit return or for contravention of any other provision of the  Act of the Rules and the offender is punishable with fine which may extend to Rs. 1000/-, and when the offence is a continuing  one, with  a daily  fine not  exceeding  fifty rupees during the period of the continuance of the offence.      By section  3(h) of  the Act,  a ’public  service motor vehicle’ means  any motor vehicle used or adopted to be used for the  carriage of passengers and goods for hire or reward and includes  a motor  cab, a  stage  carriage,  a  contract carriage or a public carrier.      For the  purpose of  tax under the Act not every public service motor vehicle but only such a vehicle carrying goods and passengers  is exigible to tax for the carriage of those goods and  passengers under  the Act.  The tax  again  is  a percentage of  the fares or freights realised. The fares and freights have  to be  realised as  a fact.  Such  a  vehicle carrying goods  and passengers  driven by  employees of  the owner of the 902 vehicle would  ordinarily be  in-charge of  that owner or of

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the permit holder wherever it may ply. The physical presence of the  owner or  the proprietor  or of the permit holder in the running  vehicle is not essential. Even if the driver or the conductor  realises the  freight it is done on behalf of the owner  of the  vehicle or  of the  permit holder and the former is  accountable to  the latter. Suppose the conductor misappropriates the  collection  en  route,  that  will  not absolve the  permit holder  from liability  to pay  the  tax actually realised  for the  carriage of  the  goods  or  the passengers.      In view  of the  terms of the agreement, on which great reliance has been placed by Mr Sen, it can be safely assumed that the appellant took full responsibility for the carriage of  the   goods  from   the  Sindri   factory   to   various destinations. This is manifest even in absence of production by the  appellant of  agreements, if any, between it and the company or  the stockists. Cement bags will not be loaded on any and  every vehicle  that reports at the factory but only on those  vehicles whose registration numbers must have been communicated to the company or which were taken there by the appellant’s representative who has to be present at the time of loading the trucks with cement as will appear from clause (1) of  the agreement.  Clause (1)  reads  "Cement  will  be loaded into  your lorry at the Sindri Works through us". The Sindri factory,  therefore, entrusted  the carriage of their cement  bags  to  the  appellant  for  delivery  to  various stockists who  again in  turn, at destinations, gave buyer’s receipts as  per clause  (3) of  the agreement.  Clause  (3) States:           "You  will   obtain  proper   receipts  for   such      deliveries from  the consignees  on the challans handed      over to  you and bring back all the documents including      the challan  duly signed  by the consignees leaving one      copy of the challan with the consignees". On delivery  to the  appellant of the buyer’s receipt by the truck  owner   or  his  representative."the  bills  of  hire charges" of  the truck  owner  are  paid  with  three  weeks thereafter at the rates "as per our schedule" agreed between the appellant  and the  truck owners".  Clause (12)  of  the agreement says:           "Your bills  of hire  charges as  per our schedule      will be  prepared every  fortnight  and  will  be  paid      within 3 weeks thereafter."      The  truck  owners,  in  this  case,  received  as  per agreement, only  "hire charges" and there is nothing to show nor is  there any  averment  by  the  appellant  that  those charges included  taxes under  the Act  although freight had been  admittedly   realised  by   the  appellant   from  the stockists.      In the  above background  of facts  and  circumstances, there is  no escape  from the  conclusion that the appellant was  in  charge  of  the  trucks  for  the  purpose  of  the ’business’ of  the appellant  during the  entire  course  of transportation of the cement bags from the Sindri factory to the various  stockists and  as such  comes within  the third clause of the definition under section 3(d) of the Act. 903      The fact  that under  the terms  of the  agreement some incidental  arrangement   involving   contingent   financial implications in  respect of  carriage of  the goods had been entered upon  does not  entitle the appellant to be relieved of the  "charge" of  the loaded truck for the purpose of tax under the  Act for  the carriage  of the  goods. The  matter would have been different if the truck owners had been given the tax  collections in  addition to  the hire  charges, but

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absence of any provision for tax payment by the truck owners in the  agreement militates  against the  contention that in this case the truck owners are liable for the payment of tax under the Act for the carriage of the cement bags.      The owner of the truck under a public carrier permit or a public  carrier permit  holder is  undoubtedly an  ’owner’ under section  2(d) of  the Act.  But in  a given  case, the person who  is for  the time  being in-charge  of the loaded truck and  who or  on whose  behalf some  one   received the freight or  fare is  also an ’owner’ within the third clause of the definition under section 2(d) of the Act.      The significant  words "for the time being in charge of such vehicle"  have to be comprehended in the context of the provisions of  the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the  goods carried  by the vehicle. The meaning given to the words  "in-charge of vehicle" in connection with traffic cases in  criminal prosecution,  as has  been referred to by Mr. Sen  citing two  English cases,  is of  no avail  to the appellant in this case.      Mr. Sen  forcefully submits  that the  present case  is squarely covered  by a decision of this Court in Jagir Singh & Ors.  etc. v.  State of  Bihar and Anr.(1) This was a case where the  same Act  with some  identical  Acts  from  other States came up for consideration. It is submitted by Mr. Sen that the  truck owners  lost in  that decision  and in  this appeal also,  therefore, they cannot escape from their legal liability by shifting it to the appellant.      We must bear in mind that those applications were under article 32  of the  Constitution while  the  present  matter comes to  us out  of  a  reference  in  the  fifth  tier  of litigation after  the matter  had been  gone into  in  great detail taking  note of  various facets of the rival pleas by the respective  authorities and lastly by the High Court. In Jagir Singh’s  case (supra)  this Court was concerned merely with Booking Agents and Forwarding Agents who were sought to be made  liable under  the Act at the instance of the permit holders of the public service vehicles who did not own their liability for  payment of  tax under  the  Act.  This  Court observed in that case as follows:-           "If the  permit holder lets out the vehicle to any      person on  hire it  is a matter of internal arrangement      between the  owner who  is the  permit holder  and  the      person who  is allowed by the permit holder to hire the      vehicle to  collect tax in order to enable the owner to      discharge the  liability. If  the owner  does not  make      adequate provision  in that  behalf  the  owner  cannot      escape liability  by pleading  that the  hirer  of  the      vehicle is  liable to  pay tax  and the  owner  is  not      liable". 904      From the terms of the agreement in the present case, it is clear  that the  liability to pay taxes was entirely upon the appellant as the owners of the trucks were only entitled to "hire charges".      Legal liability  for payment  of tax  under the  Act is well known  to the appellant carrying on transport business. The appellant  has taken  charge of  the  vehicles  for  the purpose of  the collection  of tax  for the  carriage of the goods. The appellant has actually collected the freight from the stockists  on delivery of cement bags. The appellant has only paid  to the truck owners "the hire charges" as per its own schedule  of rates  without any  mention of  tax.  These facts clearly  distinguish the present case from what apears to have  been pleaded  in  the  writ  application  in  Jagir

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Singh’s case  (supra) and  he decision  is of  no aid to the appellant.      Being "in  charge" of the vehicle in the context of the provisions of  the Act  does not  relate  to  mere  physical charge or  control in the process of movement of the vehicle from one  place to  another but  to charge  or  control  for fulfilment of the legal obligation under the Act for payment of taxes  for the carriage of goods or passengers. Whether a certain person  is in  charge of  the vehicle  for the  time being depends  always on  the particular  facts of each case and the  answer cannot  be put  in  the  straitjacket  of  a formula. On  the facts of the present case we are clearly of opinion that  the appellant  comes within the meaning of the third clause  of the  definition under  section 2(d)  of the Act.      We should  observe that  once the tax is realised for a particular  transaction   from  one  category  of  owner  as defined, no  further tax  can  be  collected  for  the  same carriage from  any other person even though that person also may come within the definition of "owner" under the Act.      The Tribunal  was, therefore,  justified in holding the appellant as  "owner" for  the purpose  of the Act. The High Court was  right in  not interfering  with the conclusion of the Tribunal  and in  answering  the  question  against  the assessee.      In the  result the  appeal is  dismissed but we make no order as to costs. V.P.S.                                     Appeal dismissed. 905