Judgment:
ORDER
Tirath Singh Thakur, J.
1. Constitutional validity of Karnataka Motor Vehicles Taxation Amendment Act, 2000 has been assailed in these writ petitions insofar as the same has abolished the distinction between motor taxi cabs and motor cabs and brought both types of vehicles under one head for the levy of motor vehicle tax. The challenge to the amendment proceeds primarily on the ground that motor cabs are vehicles distinctly different from motor taxi cabs, which distinction had been recognised by the Legislature by providing a lesser rate of tax for motor taxi cabs in comparison to motor cabs. Item 4(1) of the Karnataka Motor Vehicles Taxation Act, 1957 as the same stood before the impugned amendment reads as under:
4. Motor vehicles other than those mentioned in Items 5, 6, 7, 8 and 9 plying for hire and used for transport ofpassengers.--
(1) Vehicles permitted to carry (excluding driver).--
(a)
Notmore than three passengers (auto-rickshaw cab)
55.00
(b)
Notmore than five passengers (motor taxi cab)
60.00
(c)
Notmore than five passengers (motor cab) for every
passenger
60.00
(d)
Notmore than six passengers (motor cabs) for every
passenger
250.00
(e)
Morethan six passengers but not more than twelve
passengers(maxi cabs) for every passsenger
250.00'
2. It is evident from the above that a distinction was made between motor taxi cabs, which are seen on the roads as black and yellow metered taxies on the one hand and motor cabs on the other. In the case of motor cabs, the rate of tax was higher than that for motor taxi cabs. This distinction has been done away with by Section 5 of the Amending Act, the relevant portion whereof reads thus:
5. Amendment of Schedule.--In the Schedule to the principal Act.--
(A) in Part 'A'.--
(1) in Item 4, in Sub-item (1), for Clauses (b) and (c), the following clause shall be substituted, namely--
(b) not more than five (motor cab), for every passenger. 100.00'.
3. Learned Counsel for the petitioners made a two-fold submission in support of the petitions. It was contended that the amendment extracted above was violative of the equality clause contained in Article 14 of the Constitution inasmuch as the same treats unequals as equals in the matters of levy of tax. Black and yellow metered taxies were, according the learned Counsel, a class by themselves and distinctly different from other moto cabs. While the former were being used by the less affluent, the latter were patronised by bigger establishments and used by the wealthier sections of the society. Inasmuch as, the distinction earlier recognised between the two categories has been abolished, the amendment fell foul of Article 14 and was, therefore, liable to be struck down. Alternatively, it was argued that the levy of a higher rate of tax on black and yellow metered taxies was violative of the fundamental rights guaranteed to the petitioners under Article 19(l)(g) of the Constitution. The impact of the levy was, according to the learned Counsel, such as would force the petitioners to wind up their business depriving them of the only source of their livelihood.
4. Before dealing with the merits of the contentions advanced at the Bar, it is necessary to briefly refer to the approach that the Courts are expected to adopt in such matters. Fiscal legislations are not outside the p -view of Part III of the Constitution and yet the burden of proving that the legislation is ultra vires lies on the petitioner. This burden is heavier still when a taxing statute is under attack. What is more important is that the burden is not discharged by proving a possible 'inequality' but hostile 'unequal' treatment. The following passage from Thomas Cooley's 'Treatise on Constitutional Limitations' has met the approval of this Court in B.P. Automobiles and Ors. v. State of Karnataka and Anr. 1983 (2) Kar.LJ 105--
It has been said by an eminent jurist, that when Courts are called upon to pronounce the invalidity of an Act of legislation, passed with all the forms and ceremonies requisite to give it the force of law, they will approach the question with great caution, examine it in every possible aspect, and ponder upon it as long as deliberation and patient attention can throw any new light upon the subject and never declare a statute, void, unless the nullity and invalidity of the Act are placed, in their judgment beyond reasonable doubt. A reasonable doubt must be solved in favour of the legislative action, and the Act be sustained.
5. I may also at this stage refer to the decision of the Supreme Court in P.M. Ashwathanarayana Setty and Ors. v. State of Karnataka and Ors. : AIR1989SC100 , where Their Lordships have while examining the scope of challenge to fiscal statutes on the ground of equality under Article 14 conceded the widest latitude to the Legislature and made the following pertinent observevations:
The problem is, indeed, a complex one not free from its own peculiar difficulties. Though other legislative measures dealing with economic regulation are not outside Article 14, it is well recognised that the State enjoys the widest latitude where measures of economic regulation are concerned. These measures for fiscal and economic regulation involve an evaluation of diverse and quite often conflicting economic criteria and adjustment and balancing of various conflicting, social and economic values and interests. It is for the State to decide what economic and social policy it should pursue and what discriminations advance those social and economic policies. In view of the inherent complexity of these fiscal adjustments, Courts give a larger discretion to the Legislature in the matter of its preferences of economic and social policies and effectuate the chosen system in all possible and reasonable ways. If two or more methods of adjustments of an economic measure are available, the legislative preference in favour of one of them cannot be questioned on the ground of lack of legislative wisdom or that the method adopted is not the Best or that there were better ways of adjusting the competing interests and claims. The Legislature possesses the greatest freedom in such areas...
The Legislature has to reckon with practical difficulties of adjustments of conflicting interests. It has to bring to bear a pragmatic approach to the resolution of these conflicts and evolve a fiscal policy it thinks it best suited to the felt needs. The complexity of economic matters and the pragmatic solutions to be found for them defy and go beyond conceptual mental models. Social and economic problems of a policy do not accord with preconceived stereotypes so as to be amenable to pre-determined solutions.
6. Reference may also be made to the following oft quoted passage from the majority decisions in San Antonio Independent School District v. Rodriguez (1973) 411 US 1:
No scheme of taxation, whether the tax is imposed on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact. In such a complex arena in which no perfect alternatives exist, the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection clause.
7. In Kerala Hotel and Restaurant Association and Ors. v. State of Kerala and Ors. : [1990]1SCR516 , the Supreme Court after review of the case-law on the subject, declared that the scope of classification permitted in taxation is greater. The Court held that it must be left to the legislative wisdom to choose to yardstick for classification in the background of the fiscal policy of the State to promote equality and that the mere fact that a tax falls more heavily on some in the same category is not by itself a ground to render the law invalid.
8. To the same effect is the decision of the Supreme Court in Federation of Hotel and Restaurant Association of India and Ors. v. Union of India and Ors. , where Their Lordships held that the State has in exercise of its governmental power, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things. It also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of 'palpable arbitrariness' applied in the context of the felt needs of the times and societal exigencies informed by experience. The Court observed:
The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A Legislature does not, as an old saying goes, has to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory. The Legislature can exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes.
9. The question whether the impugned amendment brings about any invidious discrimination between the black and yellow metered taxies referred to as motor taxi cabs in Item 4(1 )(b) of Schedule A and motor cabs referred to in Item 4(l)(c) of the said Schedule may now be examined. It is true that the motor taxi cabs and motor cabs were treated differently before the impugned amendment brought them together under a common head for levy of tax. The question however is whether any such reclassification would per se offend Article 14. My answer is in the negative. The reasons are not far to seek. It is open to the Legislature to sub-classify goods and/or persons brought within the tax net, but the mere fact that such a further classification is not made is no reason why the broader classification can be considered discriminatory. Stated differently, it is for the Legislature to provide for a micro classification if that expression can be appropriately used or rest content with the broader classification. So also a further or sub-classification may if made be abolished depending upon whether the Legislature considers it proper to do so. That is what the amending Act has done. The Legislature has under the amending enactment brought motor taxi cabs and motor cabs carrying upto five passengers each under the same entry for levy of tax. The abolition of the sub-classification now means that the motor cabs whether metered or otherwise with a capacity of five passengers each are treated as falling in one category for purpose of tax. The major features of such a classification obviously are that both the categories of vehicles are motor cabs and both the categories are licensed to carry five passengers each. Those two broad features sufficiently identify the two categories of vehicles as belonging to one class for purposes of levy of tax.
The argument that black and yellow metered taxies are becoming extinct because of introduction of newer models and more fuel efficient vehicles or that the metered taxies are being used by poorer sections of the society only, does not in my opinion make any material differences insofar as the levy of tax on such vehicles is concerned. It may be true that the black and yellow metered taxies are slowly getting phased out because of better and more fuel efficient vehicles entering the market, but it may not be wholly correct to say that such cabs are being used only by the less affluent class of people. Because of a variety of reasons including the age of the vehicles used as black and yellow metered taxies, the same are perhaps losing the market share to other cabs. The use of such vehicles is now confined to small distances in the city to and fro the Airport and the Railway Stations. That has however nothing to do with the potential which these vehicles have in terms of the quality of service they provide or the business turnover for the owners. If the Legislature has in its wisdom considered it more appropriate to levy a uniform rate of tax for all types of motor cabs, the classification cannot be said to be per se or palpably discriminatory so as to call for interference from this Court.
10. Coming then to the alternative submissions made on behalf of the petitioners, the question whether a levy of tax would violate the right to carry on their business guaranteed under Article 19(1 )(g) is no longer res integra. A similar contention was urged in federation of Hotel and Restaurant Association of India's case (supra). Repelling the contention, the Court observed:
A taxing statute is not, per se, a restriction on the freedom under Article 19(l)(g). The policy of a tax, in its effectuation, might, of course, bring in some hardship in some individual cases. But that is inevitable, so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor. Then again, the mere excessiveness of a tax or even the circumstance that its imposition might tend towards the diminution of the earnings of profits of the persons of incidence does not, per se, and without more, constitute violation of the rights under Article 19(1)(g).
11. In the light of the above authoritative pronouncement of the Apex Court, I have no difficulty in holding that the levy of tax at a rate higher than what was prescribed earlier does not per se infringe the right vested in the petitioners under Article 19(l)(g) of the Constitution.
12. Before parting, I may point out that the rates, which the black and yellow metered taxies charge from the customers are also prescribed by the State Government. In the ordinary course, when the tax liability on the motor cabs gets enhanced by reason of an amendment or revision, a corresponding enhancement may become necessary even in the fare. The petitioners have not however placed any material on record to show that they had made any representation to the Government seeking an appropriate enhancement in the fare structure having regard to the increased tax liability 'under the impugned amendment. Needless to say that if the petitioners make a representation, the Government is expected to examine the same and pass appropriate orders on the subject having regard to all the relevant factors and considerations.
13. With the above observations, these writ petitions fail and are hereby dismissed but in the circumstances without any orders as to costs.