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PETITIONER: TATA ENGINEERING & LOCOMOTIVE CO. LTD.

       Vs.

RESPONDENT: THE SALES TAX OFFICER & REGIONAL TRANSPORTOFFICER, POONA AND

DATE OF JUDGMENT22/11/1978

BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA BHAGWATI, P.N. SARKARIA, RANJIT SINGH

CITATION:  1979 AIR  343            1979 SCR  (2) 357  1979 SCC  (1) 208

ACT:      Bombay Motor  Vehicles. (Taxation  on Passengers)  Act, 1958, Section  2(1), (7)  and 3  read with  Preamble-Whether transport service  registered as  a ’private service vehicle providing exclusively transport service to employees  of the company a  public service   vehicle, so as to be exigible to passenger tax under the Bombay Act, 1958.

HEADNOTE:      The appellants  are  a  Company  registered  under  the Companies Act,  1913 and  provide  transport  facilities  to their employees  at a  nominal  rate  from  certain  pick-up places  to  their  factories  at  Pimpri  and  Chinchvad  in district  Pune  (Maharashtra)  in  their  transport  vehicle registered as  "private service  vehicle" within the meaning of the  Bombay Motor  Vehicles Rules  1959. The  Bombay High Court held  that  the  transport  vehicle  provided  to  the employees by  the company  would be a public service vehicle and therefore,  the respondents  sought to  levy  a  tax  on passengers under  the charging section 3 of the Bombay Motor Vehicles Taxation  on Passengers)  Act, 1958. A challenge to the said  levy having  been rejected  by the Commissioner of Pune the appellant obtained special leave of this Court.      Allowing the appeals, the Court ^      HELD: 1.  The preamble  to the  Bombay  Motor  Vehicles (Taxation on  Passengers) Act, 1958 clearly reveals that the dominant object  of the  Act was  to impose  tax on  certain classes of  public service  vehicles. In  other  words,  the Preamble indicates  that vehicles  which could not be termed as public  service vehicles  fell beyond  the ambit  of  the taxing provisions of the Act. [359 G-H]      2. Though  the Act  and Rules  made thereunder  do  not define the  term "public service vehicle", it is clear that, from the Preamble of the Act that the tax can be levied only on passengers  who are  carried by a stage carriage which is of‘ the nature of Public Service Vehicle. [361A-B]      3. Section  3 of  the Act  which authorises the levy of tax on  all passengers  carried by  road in  state carriages contains two  essential ingredients  (1) that  the transport concerned must  carry passengers  by road, and (2) that each

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passengers must  be carried  in stage  carriages, that is to say, as  defined in Section 2(7) of the Act, passengers must be carried  for hire  or reward at separate fares paid by or for individual  passengers, either  for the whole journey or for stages of the journey. [360F-G]      4. A  combined reading  of section  7 (1) which defines ’passenger’ and  section 2(7) which defines ’stage carriage. Of the  Act clearly indicates that the tax would be leviable only if  the passengers  are carried  on  a  public  service vehicle. [361A] 358      5. The  word ’Public’  has got a well known connotation and means  a carriage  to which any member of the public can have free  access of payment of the usual charges. It cannot by any  process of  reasoning or  stretch of  imagination be deemed to  include employees  of a  private company  who are given facilities not as members of the public but as holding a status  namely, the  employees of  that company. Thus, qua public the  employees from  a separate  class and  cannot be said to be public as contemplated by rule 2(i). [361-C]      6. In the present case:      (a) The  transport service  which was  registered as  a private service  vehicle falls  squarely within the ambit of the definition  of ’private  vehicle service  in the  Bombay Motor Vehicles Rules, 1959. [361E]      (b) The  transport provided  to the  employees  of  the company was  reserved for  them only  and no other member of the public  even if  he wanted  to pay full charges could be carried  on   the  said  vehicle.  In  these  circumstances, therefore, it  cannot be  said that  the  transport  vehicle provided to  the employees  by the  appellants  could  be  a public service  vehicle in  any sense  of the  term. Such  a transport vehicle, being not a public service vehicle within the meaning  of the  provisions of the Bombay Motor Vehicles Act, the  view taken  by the  Bombay High  Court is  clearly erroneous. [361F-G, 362B]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 204-226 of 1978.      Appeals by  Special Leave  from the  order dated 29-11- 1977 of  the Commissioner,  Pune Division, Pune in Passenger Tax Appeals  Nos. POI-1/56  AR-12, 24, 27, 32, 42, SO and 17 other appeals.      F. S.  Nariman Ravinder  Narain and  K. J. John for the Appellant.      V. S.  Desai M.  C. Bhandare  (In CA  209/78) and M. N. Shroff for the Respondents.      Ravinder Narain  and K.  J. John  for the  Interveners- Sandvik Asia  Ltd. S.  K. F.  Cooper Engineering Ltd. Bharat Forge Ltd. and Bajaj Auto Ltd.      The Judgment of the Court was delivered by       FAZAL  ALI, J.  These appeals  by  special  leave  arc directed against  an order of the Commissioner of Pune dated 29-11-1977 dismissing  the  appeals  and  holding  that  the challenge to  the tax  sought to  be realised by the Revenue was not  tenable and  the appellants  were liable to pay the tax as also the penalty.      The appellants  are  a  company  registered  under  the Companies Act,  1913 and  have their factories at Pimpri and Chinchvad  in   the  District  of  Pune  (Maharashtra).  The appellants  employ   as  many  as  7.000  workmen  in  those factories. In order to provide transport

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359 facilities to  their employees to come to the factories from their respective  villages the appellants provided transport which would  pick up passengers from Pune or Khed or Vadgaon or Alandi  or places  enroute to  TELCO Factory at Pimpri or Chinchvad and back. For this journey a nominal charge of Rs. 10 per  month  was  realised  by  the  appellants  from  the employees. Similarly,  for the transport facilities provided to the employees from Pimpri Railway Crossing and onwards to TELCO factory,  they were  charged at the rate of Rs. 5  per month. A  charge of  Rs. 2  per month  was  levied  for  the transport of  employees  from  Chinchvad  Village  to  TELCo factory at  Pimpri and  back. the appellants further averred that these amounts were realised by the appellants only from a particular  category of  employees  and  no  charges  were levied in  respect  of  those  employees  who  were  in  the supervisory grades.  In the  course of the arguments, it was pointed out that when the company was prepared to grant free transport facilities  to the  supervisory staff there was no reason why  the same amenities should not be extended to the other employees  and Mr.  Nariman, learned  counsel for  the appellants frankly conceded  that in future no charges would be realised  from the  employees and  they would he provided free transport  as in  the case  of supervisory staff. It is manifest that if the appellants had not levied any charge at all for  the transport  facilities granted  to the employees they would  not be  exigible to  passenger tax. Mr. Nariman, however, argued  that even  if a  nominal charge is realised from the  employees that   would  not make  the transport  a public service vehicle carrying passenger;, so as to attract the provisions of section 3 which is the charging section of the Act.  In our  opinion, the  contention  of  the  learned counsel is well founded and must prevail.      The Bombay Motor Vehicles (Taxation on Passengers) Act, 1958  hereinafter   called  the   Act  is  a  statute  which authorises the  levy of  passenger tax.  This Act  has  been amended several  times right  from the  year 1960  to  1975. Before analysing  the relevant provisions of the Act, it may be necessary  to extract  the Preamble to the Act which runs thus:-           ..Whereas it  is expedient lo provide for the levy      of a  tax  on passengers, carried in certain classes of      public service.  vehicles in the State of Bombay. It is      hereby enacted  in the  Ninth Year  of the  Republic of      India as follows."      A perusal  of the  Preamble clearly  reveals  that  the dominant object  of the  Act was  to impose  tax on  certain classes of  public service  vehicles. In  other  words,  the Preamble indicates  that vehicles  which could not be termed as public  service vehicles  fell beyond  the ambit  of  the taxing provisions of the Act. 360      Section 2(7) of the Act defines ’stage carriage’ thus:-           "’stage carriage’  means a  motor vehicle carrying      or adapted to carry more than six persons excluding the      driver, which carries passengers for hire or reward, at      separate fares  paid by  or for  individual passengers,      either for  the   whole journey  or for  stages of  the      journey, and  includes such a carriage or other omnibus      when used  as a contract carriage within the meaning of      the Motor Vehicles Act, 1939".      Section 3 which is the charging section runs thus:-           "3. (1)  There shall  be levied  and paid  to  the      State Government  a tax  on all  passengers carried  by      road in stage carriages at such rate to be filed by the

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    State Government  from time  to time  by order  in  the      official Gazette as would yield an amount not exceeding      twenty per  cent  of  the  inclusive  amount  of  fares      payable to the operator of a stage carriage.           (2) After  calculating the  total  amount  of  tax      payable under  sub-section (1)  out of the total amount      received by an operator during each month on account of      inclusive fares  in respect  of the  stage carriage  or      stage carriages  held by   him  the total amount of the      tax shall  wherever necessary  be rounded  off  to  the      nearest naya  paisa, fractions of half a naya paisa and      over being  counted as  one and  less than  half  being      disregarded". Thus section  3 authorises the levy of tax on all passengers carriages by  road in stage carriages. This section contains two essential  ingredients: (1) that the transport concerned must carry  passengers by road, and (2) that such passengers must be  carried in  stage carriages.  that is  to  say,  as defined in  section 2(7)  of the  Act,  passengers  must  be carried for  hire or reward at separate fares paid by or for individual passengers,  either for  the whole journey or for stages of the  journey.      Rule 2(i)  of the  Bombay  Motor  Vehicle  Rules,  1940 framed under  the Bombay  Motor Vehicles  Act, 1939  defines ’passenger’ thus:-           " ’passenger’  for the  purposes of  the rules  in      Chapter IV   means  any person  travelling in  a public      service vehicle  other than the driver or the conductor      or an employee of the permit holder while on duty". 361      A combined reading, therefore, of rule 2(i) and section 2(7) of  the Act  clearly indicates  that the  tax would  be leviable only  if the  passengers are  carried on  a  public service vehicle.  It is  true that  the term ’public service vehicle’ has  not been  defined either  by the Act or by the Rules, but  that however  does not  create  any  difficulty, because having  regard to  the Preamble of the Act we are of the opinion  that the  tax can  be levied only on passengers who are  carried by  a stage carriage which is of the nature of a  public service  vehicle. The  word ’public’  has got a well known  connotation and  means a  carriage to  which any member of  the public can have free access on payment of the usual charges.  It cannot  by any  process of  reasoning  or stretch of  imagination be  deemed to include employees of a private company  who are  given facilities not as members of the public  but as  holding a  special status,  namely,  the employees of  that company.  Thus, qua  public the employees form a  separate class  and cannot  be said  to be public as contemplated by rule 2(i).      On the other hand, the Bombay Motor Vehicles Rules 1959 define ’private service vehicles’ as follows:           "Private  Service   Vehicle’  means   any  omnibus      constructed or  adapted to carry more than nine persons      excluding the  driver and  ordinarily  used  by  or  on      behalf of  the owner of such vehicle for the purpose of      carrying persons for or in connection with his trade or      business, or  otherwise than  for hire  or reward;  but      does not include a motor vehicle used solely for Police      purposes".      The transport  service in  the present  case which  was registered as  private service vehicle falls squarely within the ambit  of the  aforesaid  definition  Moreover,  in  the instant case, it is not disputed that the transport provided to the  employees of  the company was reserved for them only and no  other member  of the public even if he wanted to pay

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full charges  could be carried on the said vehicle. In these circumstances,  therefore,   it  cannot  be  said  that  the transport  vehicle   provided  to   the  employees   by  the appellants could be a public service vehicle in any sense of the term.  Mr. Nariman  drew our  attention to  a number  of rules and  forms in  order  to  illustrate  his  point  that private service vehicle was beyond the ambit of the charging section. In  view of  what we  have already  said, it is not necessary for us to go into such meticulous details, because the legal  position appears  to be  clear enough. As counsel for the  appellants has already undertaken not to charge any amount  from   the   employees   for   providing   transport facilities, the  point has now become more or less academic. The Commissioner  appears to  have dismissed  the appeals of the appellants 5-978 SCI/78 362 as he  felt bound  by the  judgment of the Bombay High Court which had  held that  the transport  vehicle provided to the employees by  the company would be a public service vehicle. In view  of our finding that such a transport vehicle is not a  public   service  vehicle   within  the  meaning  of  the provisions of  the Bombay Motor Vehicles Act, the view taken by the  Bombay High  Court is  clearly erroneous and must be overruled.      For these  reasons, therefore,  the appeals are allowed and the  order of  the Commissioner  imposing the tax is set aside. The appellants would he entitled to one set of costs. S.R.                                        Appeals allowed. 363