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Judgment
Lok Pal Singh, J
Since, the controversy involved in the above noted petitions are identical, therefore, they are being decided together by this common judgment and
order for the sake of brevity and convenience.
The writ petition No.1445 (M/S) of 2019 shall be the leading case.
The relief claimed by the petitioners in both the writ petitions is reproduced as under:-
“a) To declare sub-section (4) of Section 4 as well as clause 5(b) of Section 4 of the Uttaranchal Motor Vehicles Taxation Reforms Act,
2003 as unconstitutional, illegal, void and without jurisdiction and also the Notification No.06/ix-1/106/2012/2019 dated 02.01.2019 issued
by respondent no.1 as well as earlier Notification No.1011/106/ix-1/2012 dated 29th November, 2012.
aa) To declare the rate of tax as fixed vide Notification No. 06/ix-1/106/2012/2019 dated 02.01.2019 to be exorbitant, illegal and punitive.
ab) To declare clause 5(b) Section 4 of the Uttaranchal Motor Vehicles Taxation Reforms Act, 2003 as illegal, void and without jurisdiction
and further be declared that the State has no right to charge the Tax before it has accrued.â€
The petitioners herein are dealers engaged in sale and purchase of two wheelers, Light Motor Vehicles and Heavy Motor Vehicles. They have
been granted the Form of Trade Certificate Form No.17 under Rule 35(1) by the Tax/Registration Officer, Regional Transport Office, Dehradun,
District Dehradun. The State of Uttarakhand has enacted an Act known as the “Uttaranchal Motor Vehicles Taxation Reforms Act, 2003â€
(hereinafter referred as the “Act 2003â€). Section 4(1) of the Act 2003 provides that no motor vehicle shall be used in any public place in
Uttaranchal (now Uttarakhand) unless a one-time tax at the rate applicable in respect of such motor vehicle, as specified in Part ‘B’ of the First
Schedule has been paid. Section 4(2) of the Act 2003 provides that no transport vehicle shall be used in any pubic place in Uttaranchal (now
Uttarakhand) unless a tax at the rate applicable to such motor vehicle, as specified in Part ‘D’ of the First Schedule has been paid. Section 4(3)
of the Act 2003 provides that where any motor vehicle other that a transport vehicle, in respect whereof on-time tax has been paid, is operated as a
transport vehicle, the tax payable under this Act on such transport vehicle shall be payable. Section 4(4) of the Act 2003 (un-amended) provides that
the State Government may, by notification, increase by not more than fifty percent, the rates of tax, specified in Part ‘B’, Part ‘C’ or Part
‘D’ of the First Schedule.
Respondent no.1 had issued a Notification No. 1011/106/ix-1/2012 dated 29th November, 2012, whereby, a tax has been imposed on the vehicles
under the possession of the dealers under Section 4(4) of the Act 2003. The rate so imposed was Rs. 50/- for two wheelers & light motor vehicles
and Rs.100/- for medium and heavy motor vehicles. By amending Act No. 8 of 2013, which came into force on 01.12.2012, the original sub section (4)
of section 4 has been omitted and in its place following sub section (4) of section 4 has been substituted:-
“Save as otherwise provided by or under this Act a Tax at such rate as may be notified by the State Government shall be levied on the
motor vehicles kept in possession of dealer for purpose of sale.â€
Further, as per Clause V(b) in sub-section (4) of Section 4, the tax is to be paid in advance or on or before 15 day of January each year. The
explanation given in the Notification dated 29.11.2012 is that assessment and payment of tax shall be on the basis of number of vehicles sold in the last
calendar year. Thereafter, respondent no.1 superseding the prior Notification issued further Notification no. 06/ix-1/106/2012/2019 dated 02.01.2019,
whereby, the respondent no.1 has increased the annual rate of tax in respect of the vehicles under the possession of the dealers in the following
manner:
a) Two wheelers Rs.100/- per vehicle
b) Light Motor Vehicle Rs.200/- per vehicle
c) Medium and Heavy Vehicles Rs.300/- per vehicle.
Feeling aggrieved by notification no. 06/ix-1/106/2012/2019 dated 02.01.2019, petitioners are before the Court.
Learned Senior Counsel appearing for the petitioners urged that the rate of possession tax for two wheelers and light motor vehicles has been
enhanced 100 per cent i.e. from Rs. 50/- per vehicle to Rs. 100/-per vehicle and for medium and heavy vehicles, the rate of possession tax has been
enhanced 300 per cent i.e. from Rs. 100/- per vehicle to Rs. 300/- per vehicle, wherefor, the rate of possession tax as earlier was provided Rs. 50/-
for two wheelers and light motor vehicle and Rs.100/- for medium and heavy motor vehicles. For the two wheelers and light motor vehicles, the
possession tax has been enhanced from Rs.100/- to Rs. 200/-, whereas for the medium and heavy vehicles, the tax has been enhanced to Rs. 300/-
per vehicle.
Learned Senior Counsel for the petitioners would submit that the State has no right to impose possession tax as has been done by the Amending
Act No. 8 of 2013. It is contended that there is no justification for enhancement of possession tax to such an extent. It is further contended that the
tax should not be enhanced for more than 50% of the existing tax but, in the case in hand; the possession tax, as levied by respondent no. 1 is more
than 50%. Since, the State has no jurisdiction to impose and collect the possession tax; the provisions of the said Act are liable to be declared
unconstitutional. It is contended that as per Article 246 of the Constitution of India, the State Government is not competent to impose the possession
tax.
Learned Senior Counsel for the petitioners further urged that the imposition of possession tax is illegal, void and without jurisdiction on the following
grounds:-
“a) That the respondent no.1 has no jurisdiction to impose possession tax on the possession of the vehicles by the dealers, under any
provision of law and the same is unconstitutional as well.
b) That the imposition of possession tax in advance as per the sale of the last year is most illegal and unreasonable.
c) That the act of respondent no.1 is void ab initio from the very date of imposition.
d) That imposition of possession tax when the vehicle is possessed is the private property of the dealer, is not warranted under any Act of
India, nor such tax can legally be imposed and the provision of Sub-Section (4) of Section 4 is void being without jurisdiction and against
the spirit of Constitution and similarly the Notification dated 01.01.2019 is also illegal, void and illogical.
e) That imposition of possession tax when the vehicle is possessed as the private property of the dealer, is not warranted under any Act of
India, nor such tax can legally be imposed, it is illogical as well as unfair and unreasonable trade restriction forced upon the dealers.
f) That the Constitution of India does not give any power to State Government to impose tax upon the unsold private property under the
possession of an individual or a firm or a Company.
g) That assessment & profit of tax in advance by 15th of January every year on the basis of last year sale is illegal and illogical. No tax can
be raised in advance on probabilities that too even before possession of the vehicle when even the number is not known.â€
It is averred that earlier Notification was issued on 29.11.2012, the petitioners did not challenge the imposition of possession tax at that point of
time for the sole reason that the respondents shall consider the grievance of the petitioners. But, respondent no. 1, subsequent thereto, issued a fresh
Notification dated 02.01.2019, and increased the possession tax in arbitrary and illegal manner, therefore, the petitioners are constrained to file the
present writ petitions.
For ready reference, the impugned Notifications dated 29.11.2012 is extracted hereunder:-
“In pursuance of the provisions of Clause (3) of Article 348 of the Constitution of India, the Governor is pleased to order the publication of the
following English translation of notification no. 1018/106/ix-1/2012 dated 29 November 2012 for general information.
Government of Uttarakhand
Transport Section-1
No. 1018/106/ix-1/2012
Dehradun : Dated 29 November, 2012
Notification
In exercise of the powers conferred by sub section (4) of Section 4 of the Uttarakhand Motor Vehicles Taxation Reforms Act, 2003 (Uttarakhand
Act No.12 of 2003), the Governor is pleased to fix the rate of tax of the motor vehicles as specified in column (3) of the table below in respect of
motor vehicles kept in possession of dealers of sale specified in corresponding entry in column (2) thereof-
Table
Rate of tax on vehicles under the possession of dealers under sub-section (4) of Section 4-
Sl.No. Description of vehicles Annual rate of tax on
every vehicle (in
rupees)
1 2 3
Two wheeler and light motor vehicle 50
Medium and heavy motor vehicle 100
Explanation- Assessment and payment of tax shall be on the basis of number of vehicles sold last calendar year. Where there is a difference
between the number of vehicles sold last year, then the number of vehicles in possession of dealer during the current calendar year, then the
difference of tax paid and access or the tax due as the case may be, shall be adjusted or paid in next calendar year, where depositing the tax.
By order
(Dr. Umakant Panwar)
Sachivâ€
Further, Notification dated 02.01.2019 is extracted hereunder:
“In pursuance of the provisions of Clause (3) of Article 348 of the Constitution of India, the Governor is pleased to order the publication of the
following English translation of notification no. 06 dated 02, January, 2019 for general information.
Government of Uttarakhand
Transport Section-1
No. 06/ix-1/106/2012/2019
Dehradun : Dated 02 January, 2019
Notification
In exercise of the powers conferred by sub section (4) of Section 4 of the Uttarakhand Motor Vehicles Taxation Reforms Act, 2003 (Uttarakhand
Act No.12 of 2003), and in supersession of notification no.1018/ix-1/106/2012 dated 29.11.2012, the Governor is pleased to fix the rate of tax of the
motor vehicles as specified in column (3) of the table below in respect of motor vehicles of specified category kept in possession of dealers for the
purpose of sale in front of column (2) thereof-
Table
Rate of tax on vehicles under the possession of dealers under sub-section (4) of Section 4
Sl.No. Description of vehicles Annual rate of tax on
every vehicle (in
rupees)
S.No. Â Â Â Â Â Â Â Â Â Kind of Vehicle Rate Rs.
Two wheeler and Light Motor Vehicle 50
Medium and Heavy Motor Vehicle 100
“19. We may point out that before the High Court, the appellants had challenged the virus of section 6 on the ground that the State
Legislature lacks competence to make a provision of this nature. It was pointed out that section 6 levies the tax on a manufacture or a
dealer of motor vehicles merely on ‘possession’ thereof by such a manufacture or a dealer. It was argued that the Bihar Act was
enacted by the State Legislature under Entry 57 of List II (State List) of the VIIth Schedule to the Constitution of India, which entry does not
empower the State Legislature to impose the tax on vehicle merely on possession. This entry reads as under:-
“Taxes on vehicle, whether mechanically propelled or not, suitable for use on roads, including tram cars subject to the provisions of
entry 35 of List III.â€
The High Court, however, rejected this connection with the reason that under this entry, taxes on vehicles which are suitable for use on
roads can be imposed and it was undisputed case of the parties that the vehicles manufactured by appellants are suitable for used on roads.
Therefore, the provision which stipulates the manufacture or a dealer of a motor vehicle, in respect of the motor vehicle in his possession in
the course of business as such a manufacturer or dealer shall pay tax, is within the legislature competence of Entry 57. This contention has
been raised before us as well. However, we do not agree with the appellants as the reasoning given by the High Court is the correct
analysis of Entry 57 of List II of VIIth Schedule to the Constitution.
Insofar as argument predicted on the amendment in the Motor Vehicles Act (the Central Act), 1988 is concerned, we again find that the
High Court has rightly concluded that this amendment would have no relevance to the provisions contained in the Bihar Act. Whether the
definition of a dealer includes manufacturer or not would be immaterial inasmuch as under Section 6 of the Bihar Act, the Legislature has
made provision to tax both the dealer as well as the manufacturer. We agree with the following observations of the High Court in this
behalf:
...It goes without saying also that 1994 Act has been enacted under and in terms of Entry 57 (supra) by the State Legislature; whereas
1988 Act has been enacted by the Union Parliament under and in terms of Entry 35 of the Concurrent List. Also, whereas the preamble to
1988 Acts states that the Act has been enacted to consolidate and amend the law relating to Motor Vehicles, the Preamble to 1994 Act states
that this Act has been made with a view to regulate the imposition and levy of tax on Motor Vehicles in the State of Bihar (as it was at the
relevant time). Both the Act, therefore, deal with two different fields of legislation and the areas of their operation are also different, having
been enacted by two different classes of Legislatures, one in terms of the power exercisable and vested under clause (2) and the other in
terms of the power vested and exercisable under clause (3) of Article 246 of the Constitution. Therefore, at the risk of repetition, we have no
hesitation in saying that any change or alteration in one Act cannot be said to have any effect upon the other.
We also agree with the respondents that the tax was in respect of motor vehicles in possession of the manufacturer in the course of his
business as a manufacturer, or in possession of the dealer in the course of his business as a dealer under the authorization of trade
certificate granted under the Central Motor Vehicle Rules, 1989. The manufacturer comes in the possession of the motor vehicle after the
vehicle is manufactured and is suitable for use on roads. The dealer in the course of his business of getting the Motor Vehicle from the
manufacturer and selling it to a customer comes in the possession of the Motor Vehicle on the basis of a trade certificate granted under the
Central Motor Vehicle Rules, 1989. Neither earlier nor now there is any obligations in a manufacturer to obtain a trade certificate under
the 1989 Rules for carrying on the business of a manufacturer.â€
Having considered the submissions of learned counsel for the parties and in view of the proposition of law laid down by the Hon’ble Apex
Court in the judgment (supra), this Court is of the view that the respondents are competent to enact the Act 2003 and amending Act No. 8 of 2013. In
so far as, the Notifications dated 29.11.2012 and 02.01.2019 are concerned, the rate of possession tax and its subsequent enhancement for two
wheelers & light motor vehicles, as also in respect of medium and heavy motor vehicles are Rs. 100/- and Rs.300/- respectively, which does not seem
to be unreasonable and arbitrary. The enactment of the Act 2003, levying possession tax and its subsequent enhancement is purely well within the
legislative competence of the State Government.
Having considered the facts and circumstances of the case, this Court is of the considered view that the petitioners have failed to make out a case
for judicial review. Thus both the writ petitions are devoid of merit and are liable to be dismissed.
Consequently, both the writ petitions are hereby dismissed. Interim orders granted earlier in both the writ petitions also stand vacated.
However, there will no order as to costs.