http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: STATE OF KARNATAKA & ORS

       Vs.

RESPONDENT: N.MADAPPA & ORS. ETC

DATE OF JUDGMENT:       02/05/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

CITATION:  JT 1996 (5)   453        1996 SCALE  (4)644

ACT:

HEADNOTE:

JUDGMENT:                   THE 2ND DAY OF MAY,1996 Present:                Hon’ble Mr.Justice K.Ramaswamy                Hon’ble Mr.Justice G.B.Pattanaik M.Veerappa, Adv. for the appellants. Mrs.Kiran Suri, Adv. for the Respondents.                          O R D E R The following Order of the Court was delivered: State of Karnataka & Ors. V. N. Madappa & Ors. etc                             WITH                CIVIL APPEAL NO. 8851  OF 1996           (Arising out of SLP (C) No.3618 of l996      Delay coodoned.      Leave granted.      We have heard learned counsel on both sides.      These  appeals  by  special  leave  arise  against  the judgments dated  18.10.1990 and  18.2.1991 of  the  Division Bench of  the High  Court of  Karnataka made  in  W.P.  Nos. 14029- 036/89  and 159/91.  The appellant  had introduced by the Karnataka  Motor Vehicles Taxation (Amendment) Act 14 of 1989, sub-section (4) of Section 3 which reads as under :      "Amendment  of  Section  3:-  After      subsection (3)  of Section 3 of the      Karnataka Motor  Vehicles  Taxation      Act,  1957  (Karnataka  Act  35  of      1957) (hereinafter  referred to  as      the principal  Act), the  following      shall be inserted, namely:      (4)    Notwithstanding     anything      contained in  sub-section  (1)  and      (2), a  special additional  tax  at      the rates  specified in  Part-D  of      the Schedule  shall  be  levied  on      motor vehicles  suitable for use on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

    roads carrying  passengers or goods      in excess of the permitted capacity      of the vehicles.      (5) Insertion of new part ’D’ after      Part    ’C’    and    before    the      Explanation, the following shall be      inserted, namely:-      ---------------------------------------------------      Item  Class of Vehicle        Special additonal tax      No.                           for each occasion on                                    which such excess is                                    carried.      ---------------------------------------------------                                         Rs. ps.      1. Passenger vehicles carrying         passengers in excess of the         permitted capacity, for         every such excess passenger.    20 - 00       xx       xx       xx       xx       xx       xx      ---------------------------------------------------      (6)   In    the   Explanation,   in      paragraph  (3)   after  the   words      ’Corporation’, the words ’Or a Bank      or  a   Board  or   a  Co-operative      Society or  such other  institution      as may  be notified  by  the  State      Government in this behalf’ shall be      inserted.      8. Power  to remove difficulty - If      any  difficulty  arises  in  giving      effect to  the  provisions  of  the      Principal Act,  as amended  by this      Act, the  State Government  may, by      Notification   in    the   official      gazette make such provisions as may      appear to  it to  be  necessary  or      expedient  for  removing  the  said      difficulty.            Provided that  no such  order      shall be made after the expiry of a      period of  two years  from the date      of commencement of this Act."      The respondents  have challenged  the validity  of  the above provisions.  The Division  Bench had  held  the  State Government is  devoid of  power to  levy tax at the enhanced rate on  the passengers.  It followed the ratio laid down by this Court in Automobile Transport (Rajasthan) Ltd. etc. vs. State of  Rajasthan &  Ors. [AIR 1962 SC 1406] and held that there is  no competence  of the  State Legislature  to enact sub-section (4)  except to  enforce Section  60 of the Motor Vehicles Act  (4 of  1939) which is equivalent to Section 86 of the 1988 Act to levy tax on extra passengers and goods.      The  question,   therefore,  is:   whether  the   State Legislature is  competent to enact law to levy tax on excess passengers carried by the holder of a permit under the Motor Vehicles Act?  On an  earlier occasion,  when the  State had amended Section  8 and  armed itself   with  power  to  levy additional tax,  it came to be  challenged. Ultimately, this Court in  M. Narasimhaiah  VS. Dy.Commissioner for Transport (1987) Supp.  SCC 452]  held that having regard to the power to levy  the tax  on the  capacity of the vehicle determined under Entry  4 of  the Schedule A read with Section 8 of the Act  and   the  rates   prescribed  thereunder   the   State Legislature has no power to impose additional tax on  excess passengers. While  considering that  question this  Court in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

para 10 held thus:      "10. There is another difficulty in      applying Section  8 to  stray cases      of overloading.  Additional tax  is      payable    for  the  period  during      which the vehicle is proposed to be      used  for   a  purpose  which  will      attract a  higher rate of tax.  The      rate of  tax is  fixed  taking  one      quarter, i.e.,  3 months  as a unit      of  time   for  taxation.   Is   it      reasonably possible  to   determine      the higher rate of tax payable, if,      say, on  two  days  in  a  quarter,      there has  been overloading of  the      vehicle for a few hours or minutes?      The  problem   of  computation   of      additional   tax becomes  difficult      in such cases."      It is  true that  under Entry  57 of  List II  of   the Seventh Schedule to the Constitution, the State  Legislature has  power   to  tax  on  vehicles,  whether    mechanically propelled or  not, suitable for use on  roads subject to the provisions of Entry 35 of List  III. There is no law made by the Parliament  occupying   the field under Entry 35 of List III. Therefore,  the State Legislature has power under Entry 57 to make law levying tax on vehicles.      It is  seen that  under Schedule A read with Section 8, the State Legislature has already levied tax on the basis of the capacity  of the passengers carried in the motor vehicle as per  the permit  issued thereunder. Having had that power the question emerges: whether the State Legislature can levy tax on  excess passengers  on each  of the occasion when the enforcing  officers   found  the   vehicle  to   have   been overloaded? The  concept of  tax on  vehicle is  not  for  a single day  or an  hour when the passengers were found to be in excess  of the  limit prescribed  under the  permit.  The power to  levy the  tax is  on the  basis of the user of the vehicle  for   the  quarter   under  the  Act.  Under  those circumstances, the  power to levy tax under the amended sub- section (4)  of Section  3 read  with Schedule  D on  excess passengers obviously on each occasion of overloading appears to be unsustainable. Under those circumstances, the power to levy tax  at the  enhanced rate  on the excess passengers on finding the  vehicle to  be  overloaded  in  excess  of  the prescribed limit,  appers to  be  not  consistent  with  the scheme under  Section  8  of  the  Act.Therefore,though  for different reasons,we hold that the amendment is not valid in law.       The appeals are accordingly dismissed. No costs.