S.K. Sen, C.J.
1. In the writ petition No. 1025 of 2001 (Tax) and in all the connected writ petitions, common questions of facts and law are involved and, therefore, they are being disposed of by this common judgment. Civil Misc. Writ Petition No. 1025 of 2001 (Tax) is being treated as the leading case, and the final decision in all other connected writ petitions will be governed by the decision in this writ petition (Civil Misc. Writ Petition No. 1025 of 2001(Tax)).
2. The writ petitioners are stage carriage operators. The petitioners are challenging the validity of amendment in Section 6 of the U.P. Motor Vehicles Taxation Act, 1997 (hereinafter referred to as 'the Act') whereby Section 6(1-A), has been added to it on the grounds that (a) the State Legislature is not competent to make this enactment; (b) the amendment is repugnant to the Motor Vehicles Act, 1988 as well as the Act; (c) assent of the President under Article 254(2) of the Constitution of India has not been obtained; and (d) the impugned enactment is punitive in nature.
3. It has been contended on behalf of the writ petitioners that tax under the Act has been enacted by the State Legislature in exercise of power conferred by Entries 56 and 57 of the State List of VIIth Schedule to the Constitution. Entry 56 relates to tax on goods and passengers carried on road or on inland waterways whereas Entry 57 relates to tax on vehicles whether mechanically propelled or not; suitable for use on roads, including tram-car subject to the provisions of Entry 35 of List III. The case of the petitioners is that the tax on Motor Vehicles is compensatory in nature and revenue earned by such imposition of tax is spent by the State in the construction and maintenance of roads to facilitate use of public place by motor vehicles. Thus. Entries 56 and 57 empower the State Government to legislate on the subject, in case of use of public place by a vehicle. However, these Entries do not empower the State Government to levy additional tax. The words 'passenger carried' used In Entry 56 presuppose use of public road and the words 'tax on vehicles whether mechanically propelled or not suitable for use on roads' pre-suppose use of vehicles on roads. According to the petitioners, this view is fortified by decisions of apex Court in Dalmia Cement Bharat Ltd. v. The Regional Transport Officer Bellary (Mysore) AIR 1975 SC 17 (1975 Tax LR 1208) and State of Mysore v. Sundaram Motors Pvt. Ltd. AIR 1980 SC 148.
4. Words 'suitable for use on road' came up for consideration before the Supreme Court in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406 and it was held in that case that the words 'suitable for use on roads' describe the kind of vehicles and not their condition. They exclude from the entry form, machinery, aeroplane, railways etc., whether mechanically propelled or not. Apex Court reiterated this view in Travancore Tea Co. Ltd., etc., v. State of Kerala AIR 1980 SC 1547.
5. Therefore, the petitioners have come before us with a case that user of road is condition precedent for levy of the tax under Entries 56 and 57, referred to above. They have further drew our attention to a decision of the Apex Court in State of Gujarat v. Kaushin Bhai K. Patel AIR 2000 SC 2175.
6. Therefore, It was argued that it is amply clear that tax under the provisions of the Act, as amended, cannot be validly levied merely on possession of a motor vehicle, which is not used in public place. The imposition of such tax is clearly beyond the competence of the State Legislature and against the power conferred on it by virtue of Entries 56 and 57, referred to above. Even otherwise, the impugned enactment is repugnant to Section 6 of the Act and, therefore, the same is void ab initio.
7. According to the petitioners, control of transport vehicles is provided in Chapter V of the Motor Vehicles Act, 1988, Section 66 whereof clearly provides that no owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers or goods have in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or any prescribed authority or authorizing him use of a vehicle in that public place in the manner in which the vehicle is being used. A person using a motor vehicle in a public place, without a valid permit, can be severely punished to the extent of imprisonment under Section 192A of the Motor Vehicles Act, 1988. The petitioners have, therefore, sought the relief of declaring Section (1-A) of the amended Act as well as Section 6 of the Act to be ultra vires.
8. We have heard S/Sri C.P. Ghildyal, H.P. Dubey, A. R. Dubey, A. D. Saunder and B.B. Singh, learned counsel for the petitioners as well as Sri S.C. Misra, learned Advocate General, Sri S.P. Kesarwani and Sri Ranvijai Singh, learned Standing counsel for the State-respondents.
9. While submissions of the learned counsel for the petitioners have already been stated in the foregoing paragraphs of this judgment, it was contended by the learned Advocate General that the amended provision (1-A) of the Act is perfectly within the four corners of the legislative Entry 57 of List II of the Seventh Schedule of the Constitution. He drew our attention to Travancore Tea Co. Ltd. (supra) and contended that similar provision contained in Kerala Motor Vehicle Taxation Act (24 of 1963) came up for consideration before the apex Court wherein, while explaining the use of the expression Vehicle used or kept for use', the apex Court upheld the levy to be in conformity with the powers of State Legislature under Entry 57, List I! of Seventh Schedule of the Constitution. It was specifically observed by the apex Court that the said provision safeguard the revenue of the State by relieving it from the burden of providing that the vehicle was used or kept for use on the public roads of the State and at the same time, the interest of bona fide owner is safeguarded by enabling him to claim and obtain a certificate of non user from the prescribed authority. He further contended that so far as this State is concerned, in the Act, in question, safeguards are provided under Section 12 of the Act read with Rule 22 of the U.P. Motor Vehicle Taxation Rules, 1998. He also brought to our notice that validity of Section 6 of the Act has already been upheld In H.C. Mishra v. State of U.P. 2000 A. L.J. 2677. Sections 5 and 6 of the Act clearly provide that every motor vehicle falling within the purview of liability to tax under Section 4 is liable to pay additional tax. In support of this contention, he placed implicit reliance on the decisions in Sundaram Finance Ltd. v. Regional Transport Officer 1992 (Supp) 2 SCC 436 (AIR 1992 SC 117) C.I.T. v. Piyara singh 1972 (83) I. T. R.-678 affirmed In C. I. T. v. Piyara Singh 1980 (124) I. T. R. 40 (AIR 1980 SC 1271) (SC). In C. I. T. v. Piyara Singh it has been held that illegal business is business and income from such business is liable to tax. According to learned Advocate General, the ratio down in the decisions cited on behalf of the petitioners, is not, at all, applicable to the facts of the present cases. Much emphasis has been laid by the learned counsel for the petitioners in State of Gujarat (supra), but the said decision has absolutely no application so far as the present cases are concerned in view of the provisions of Section 12 (2) of the Act read with Rule 22 of the Rules framed under the Act. In the Act and U.P. Motor Vehicle Taxation Rules, 1998, there is no restriction or burden, at all. The operator or owner of the motor vehicle, if he does not want to use his motor vehicle, he is required to surrender the registration certificate and the token. If any and if the same is surrendered as per procedure provided under Rule 22 of the Rules read with Section 12(2) of the Act, the owner shall not be liable to pay tax or additional tax. Thus, surrender of all papers is the requirement under the provisions of the Act and Rules to show non-use of the vehicle and exemption from liability to pay tax or additional tax.
10. We have considered the submissions made by the learned counsel for the writ petitioners and also of the learned Advocate General for the State.
11. The amended provision of Section 1-A of the Act, for the sake of convenience, is being quoted hereinbelow :--
'(1-A) : Save as otherwise provided in this Act no motor Vehicle registered or adapted, to carry more than nine persons excluding the driver shall be kept for use without a permit under Section 66 of the Motor Vehicles Act, 1998 unless there has been paid in respect thereof in addition to the Tax payable under Section 4 an additional Tax twenty five per cent more than the additional tax payable in respect of that category of vehicles under Clause (a) of Article V of the Fourth Schedule : Provided that the provisions of this subsection shall not apply to a Motor Vehicle referred to in Sub-section (3) of Section 66 of the said Act.'
The Statement of Objects and Reasons necessitating the impugned amendment read as follows :
'The Uttar Pradesh Motor Vehicles Taxation Act, 1997 (U.P. Act No. 21 of 1997) has been enacted to provide for the imposition of tax in the State on Motor Vehicles and additional tax on Motor Vehicles engaged in the transport of passengers and goods on hire. The said Act does not provide for effecting control over Motor Vehicles plying in the State without a permit. The said Act, no doubt, provides for restriction on the use of transport vehicles within the State under a temporary permit issued by an authority having jurisdiction outside the State without payment of tax or additional tax under the said Act and in case of default thereof, imposition of penalty equivalent to ten times of tax and additional tax, but there is no such provisions with respect to transport vehicles operating under national or tourist permit'
12. In our view, on proper interpretation of the amended provision of Section 6(1-A) of the Act, there is no reason to doubt that the same squarely comes within the scope of Entry 57, List II of VII Schedule of the Constitution. The aforesaid view finds support from the judgment and decision In the case of Travancore Tea Co. Ltd. Etc. (supra) wherein on consideration of similar provision in Kerala Motor Vehicles Taxation Act (24 of 1963), the Supreme Court upheld the levy to be in conformity with the powers on the State Legislature. While upholding the same, the Supreme Court also observed that the said provision safeguards the revenue of the State by relieving it from the burden of proving that the vehicle was used or kept for use on the public roads of the State and at the same time the interest of the bona fide owner is safeguarded by enabling him to claim and obtain a certificate of non-user from the prescribed Authority. It would be apposite to quote the relevant observation of the apex court, which is as follows :--at page 1549- 1550
'If the words 'used or kept for use in the State' are construed as used or kept for use on the public roads of the State, the Act would be in conformity with the powers conferred on the State Legislature under Entry 57 of List II. If the vehicles are suitable for use on public roads they are liable ;to be taxed. In order to levy a tax on vehicles used or kept for use on public roads of the State and at the same time to avoid evasion of tax the legislature has prescribed the procedure. Sub-section (2) of Section 3 provides that the registered owner or any person having possession of or control of a motor vehicle of which a certificate of registration is current shall for the purpose of this Act be deemed to use or keep such vehicle for use in the State except during any period for which the Regional Transport Authority has certified in the prescribed manner that the motor vehicle has not been used or kept for use. Under this sub-section there is a presumption that a motor vehicle for which the certificate of registration is current shall be deemed to be used or kept for use in the State. This provision safeguards the revenue of the State by relieving it from the burden of proving that the vehicle was used or kept for use on the public roads of the State. At the same time, the interest of the bona fide owner is safeguarded by enabling him to claim and obtain a certificate of non-user from the prescribed authority. In order to enable the owner of the vehicle or the person who is in possession or being in control of the motor vehicle of which the certificate of registration is current to claim exemption from tax he should get a certificate in the prescribed manner from the Regional Transport Officer.'
13. The following observations of the apex Court in Dalmia Cement Bharat Ltd. (supra) are also relevant for the purpose of the present case, at page 28 :
'...............The validity of taxing powerunder Entry 57 of List II of the Seventh Schedule read with Article 201 of the Constitution of India depends upon the regulatory and compensatory nature of taxes. It is not the purpose of the Taxation Act to levy taxes on vehicles, which do not use the roads or in any way from part of flow of traffic on roads which is required to be regulated. The regulations under the Motor Vehicles Act for registration and prohibition of certain categories of vehicles being driven by persons who have no driving licence, even though those vehicles are not plying on the roads are designed to ensure safety of passengers and goods etc., for that purpose, it is enacted to keep control and check on the vehicles. Legislative power under entry 35 of List III (concurrent list) does not bar such a provision. But Entry 57 of List II is subject to the limitations that the power of taxation there under cannot exceed the compensatory nature, which must have some nexus with the vehicles using the road viz., public roads. If the vehicles do not use the roads, notwithstanding the fact that they are registered under the Motor Vehicles Act, they cannot be taxed................'
Likewise, in State of Mysore (supra), the following view of the apex Court is relevant for the purpose of the instant case :--at page 149
'The word 'kept' has not been defined in the Taxation Act. We have, therefore, to interpret it in its ordinary popular sense, consistently with the context. The word 'kept' has been repeatedly used in the section. In Sub-section (1), it occurs in association with the phrase 'for use on road'. In that context, the ordinary dictionary meaning of the word 'kept' is 'to retain', 'to maintain' or cause 'to stay' or 'remain in a place', 'to detain', 'to stay or continue in a specified condition, position etc.' In association with the use of the vehicle, therefore, the work 'kept' has an element of stationariness. It is something different from a mere state of transit or a course of journey through the State. It is something more than a mere stoppage or halt for rest, food or refreshment etc., in the course of transit through the territory of the State.'
14. However, the factual position of the cases on hand, is altogether different, in the present cases, Section 12 of the Act read with Rule 22 of the U.P. Motor Vehicle Taxation Rules 1998 clearly provide safeguard both to the revenue as also to the operator or owner of the vehicle. That apart, in the case of H.C. Misra v. State of U.P. reported in 2000 All. L.J. 2627, a Division Bench of this Court on consideration of Sections 5 and 6 of the Act, held that the levy of additional taxes on goods carriages and public service vehicles under Sections 5 & 6 of the Act is covered by Entry 57 of List II of Schedule 7 of the Constitution and, therefore, within Legislative competence of the State. The Division Bench further held that it cannot be said that the additional taxes levied under Sections 5 and 6 of the Act on use of Transport vehicles in any public in Uttar Pradesh in addition to the one time tax payable under Section 4 of the Act is really a confiscation in the guise of taxation. The legislation, in question, does not suffer from the vice of colourable exercise of power nor is it hit by doctrine of 'fraud on Constitution'. Even if it be assumed that the tax liability under the new Act has increased, that by itself would be no ground to hold that the legislation has lost its regulatory and compensatory character. The questions, if the levy of the additional taxes under Sections 5 and 6 of the Act satisfies the test of 'reasonableness' and 'public interest' and if the same are violative of Article 301 and Article 19(1)(g) of the Constitution, were considered in the said decision, and it was held that the said sections and the imposition of the additional taxes were not violative of Article 301 and Article 19(1)(g) of the Constitution. The Division Bench specifically took the view that the said legislation does not result in breach of the freedom guaranteed under Article 301 of the Constitution and further that the levy of additional taxes under the Act is not confiscatory or unreasonable. There was no question of violation of the individual citizens right guaranteed under Article 19(1)(g) of the Constitution. Submission made on behalf of the petitioners to the contrary does not commend itself to be countenanced. The Division Bench was of the considered view that the test of reasonableness and public interest cannot be held to be violative of Article 301 and Article 19(1)(g) of the Constitution. In our view the U.P. Motor Vehicles Taxation Rules, 1998 (hereinafter referred to as the Rules) really do not impose any burden on the owner or operator of the motor vehicle if he does not want to use or he keeps the vehicle not for use or does not use the vehicle on road, he may surrender the registration certificate in accordance with the procedure prescribed under Rule 22 of the Rules read with Section 12 of the Act and in that event the owner shall not be liable to pay tax or additional taxes. What is required under the aforesaid provisions of the Act and Rules is that the owner or operator who intends not to use the vehicle shall surrender the vehicle according to the procedure prescribed and in that event has not to pay tax or additional taxes and non compliance of the procedure for surrender as prescribed, shall really mean that the vehicle has not been surrendered. When the Statute prescribes a procedure and manner to be followed for surrendering the vehicle, the same is required to be done in that manner only. The judgment and decision relied upon by the learned counsel for the petitioners in the case of Sundaram Finance Ltd. v. Regional Transport Officer (Supra) does not, in our view, come in aid of the writ petitioners. The decision, in the case of State of Gujarat v. Kaushikbhai K. Patel (Supra) has also to be taken note of. In the said decision the question of imposition of such tax on motor vehicle not used in a public place was considered. The learned counsel drew our attention to the following observations of the apex Court:--at page 2177
'................It is well settled in law thatthe tax imposed on vehicle under the Act is compensatory in nature for the purpose of raising revenue to meet the expenditure for making and maintaining the rule and Regulation of traffic, To put it differently, the taxes are levied on the vehicles using the roads or in any way forming the part of the flow of traffic on the roads which is required to be regulated and not on the vehicles which do not use the roads at all. What is material and relevant is use of road by vehicles for levy of tax under the Act. The reasons for non-use of roads is immaterial and irrelevant when the nature of the tax itself is compensatory for use of roads. It follows from Sub-section (2) Section 3 of the Act that where a motor vehicle is not using the roads no tax is levied thereon.............. If the vehicles are clandestinely put to use without the certificate or registration, fitness certificate or taxation certificate, it is open to the authorities to take action against the owner in accordance with law. Mere apprehension of clandestine use of a vehicle cannot be a ground for imposing tax on omnibuses which are not put on road or kept away from use ............ looking to the Statement ofObjects and Reasons for the Amendment, it appears that the appellants do not trust the owners of omnibuses or their own officers and machinery. Mere apprehension of the appellants that omnibuses will be clandestinely operated and claim would be made for refund on the ground of their non-use in our opinion, cannot justify for the insistence of satisfaction as to the reasons beyond the control of the owner of person for non-use of a omnibus. This apart, there is no good reason put forward as to why the omnibuses are singled out. Even heavy goods transport vehicles are also purchased by investing heavy amount.'
15. In our view the aforesaid decision does not assist the petitioners for one simple reason that in the instant case, the Act and the Rules as already noted above provide safeguards, both, to the State against the evasion of tax and as also to the bona fide owner or operator to surrender the vehicle by following the procedure under Section 12 of the Act read with Rule 22 of the Rules to claim and obtain a certificate of non user from the Prescribed Authority and thereby to be relieved from payment of tax or additional tax. Accordingly the legislation imposing tax or additional taxes does not become arbitrary or ultra vires. The decisions relied upon by the writ petitioners, in our view, do not really assist them. The reasons assigned by learned Advocate General in his submissions distinguishing the decisions cited by learned counsel for the writ petitioners, in our view, cannot be said to be without any substance.
16. Considering the facts and circumstances of the case, we do not find any merit in the writ petitions. The writ petitions accordingly fail and are dismissed. Interim order, if any stands, vacated.