This writ petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Mandamus forbearing the respondents, their men, agents or subordinates in any manner intercepting the petitioner's Benz Car No.PY 01 AY 2405 levying, demanding and collecting entry tax by invoking the power under the provision of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990. W.P.No.3722 of 2012:
This writ petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Mandamus forbearing the respondents, their men, agents or subordinates in any manner intercepting the petitioner's Volkswagon Vento Car bearing No.PY 01 BP 4997 levying, demanding and collecting entry tax by invoking the power under the provision of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
COMMON ORDER
1. Since, the issues involved in both the writ petitions are similar in nature, they have been taken up together and a common order is being passed.
2. Heard the learned counsel appearing for the petitioner and the learned Additional Government Pleader appearing on behalf of the respondents.
3. The above writ petitions have been filed praying that this Court may be pleased to issue writs of Mandamus to forbear the respondents and others from intercepting, levying demanding and collecting entry tax, by invoking the provisions of the Tami Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, in respect of the Benz car belonging to the petitioner, bearing registration No.PY 01 AY 2405 (W.P.No.3721 of 2012) and Volkswagon Vento car, bearing registration No.PY 01 BP 4997 (W.P.No.3722 of 2012).
4. It has been stated that the petitioner is a Doctor by profession. He has established clinics, both in Chennai and in Puducherry. The petitioner had purchased a Benz car, bearing registration No.PY 01 AY 2405 and a Volkswagon Vento car, bearing registration No.PY 01 BP 4997, in the union territory of Puducherry. He had paid the life tax and had registered the vehicles with the registering authority of the union territory of Puducherry, in accordance with Section 46 of the Motor Vehicles Act, 1988. The vehicles had been purchased by the petitioner under a hire purchase agreement entered into with HDFC Bank Limited, at Puducherry.
5. It had been further stated that, even though section 47 of the Motor Vehicles Act, 1988, contemplates the assignment of a new mark on the removal of the vehicles to another State, where they would be kept for use, for a period exceeding 12 months, the assignment of the new mark was not made compulsory, for many years. As such, the vehicles registered in a particular State or a union territory were being used in other States and union territories through out the union of India. While so, the Tami Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, had been enacted with a view to curb evasion of sales tax on the sale of motor vehicles, which had been purchased from other States and union territories, other than the state and union territory in which the vehicles were being used on a regular basis. Based on the directions issued by the Supreme Court, the High Courts had taken up the matter in order to decide as to whether the levy of tax on entry of motor vehicle into the local area was compensatory in nature. Pursuant to the directions issued by the Supreme Court, a Division Bench of this Court had held, in its order, dated 10.7.2007, made in a batch of writ petitions, in W.P.No.15960 of 1996 etc. (batch), wherein it had been held as follows: 13. The roads, bridges expenditure test, which was applied in Automobile Transport case in respect of the vehicle tax cannot be made applicable to the impugned enactment which sought to levy the entry tax on the entry of motor vehicles into the local areas of the State. As to what could satisfy such a test in the context of an entry tax could be gathered from para 28 in the case of State of Karnataka v. Hansa Corporation , (AIR 1981 SC 463) at para 28 p.473, which is extracted below: The State did not attempt in the High Court to sustain the validity of the impugned tax law on the submission that it was compensatory in character. No attempt was made to establish that the dealers in Scheduled goods in a local area would be availing of municipal services and municipal services can be efficiently rendered if the municipality charged with a duty to render services has enough and adequate funds and that the impugned tax was a measure for compensating the municipalities for the loss of revenue or for augmenting its finances. As such a stand was not taken, it is not necessary for us to examine whether the tax is compensatory in character.
14. As per the Statement of Objects and Reasons, the Act has been enacted with a view to curb the tax evasion and the tax recovered under the impugned enactment is liable to be adjusted with the general sales tax payable under the Tamil Nadu General Sales Tax Act, 1959. The additional counter of the State merely gives the statistics with regard to the total cost of building of roads and bridges and on the maintenance of roads that is incurred from year to year by the State. This expenditure only represents the expenditure incurred by the State from its general total tax revenue and other receipts including the World Bank grants and loans. The said roads and bridges which are constructed or maintained by incurring this expenditure cannot possibly be considered to be a facility or convenience of services, which is provided to a particular importer who imports the goods into a particular local area. In ITC Limited v. State of Tamil Nadu, (2007 (2) CTC 577), a Division Bench of this court (to which I am a party) has held that tax levied under the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001, is not compensatory tax within the meaning of Articles 301 and 304 of the Constitution. It was held that applying the principle of equivalence, as set forth by the Supreme Court in Jindal's case , it cannot be said that maintaining of roads, providing bridges, etc., is compensatory in nature so as to meet the outlay incurred for some special advantage to trade, commerce and intercourse. It was held that there is no connection or nexus with the collection of entry tax and its utilisation for the benefit of traders/ manufacturers from whom such tax is collected and consequently the levy of entry tax is unauthorised and violative of Article 301 of the Constitution. To the same effect is the decision of the Division Bench of the Kerala High Court rendered on 18.12.2006 in O.P. No. 434 of 1996 [Thressiamma L. Chirayil v. State of Kerala rep. by the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Kottayam and Another). This is again referred to in the recent decision rendered by a Division Bench of the Jharkhand High Court in Tata Iron & Steel Co. Ltd., Jamshedpur v. State of Jharkhand and others in W.P. (T) No. 5354 of 2004, dated 14.8.2006. A Division Bench of the Bombay High Court in Eurotex Industries and Exports Ltd. v. State of Maharashtra [2004] 135 STC 25 (Bom.) also took a similar view.
15. In view of the foregoing discussion, our finding on the issue is that the tax imposed under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 (Act No. 13 of 1990) is not compensatory in nature.
6. The appeals filed by the State challenging the said order are pending on the file a Larger Bench of the Supreme Court. While so, it is not proper on the part of the respondents to intercept, levy, demand or collect entry tax, in respect of the vehicles registered in the union territory of Puducherry, by invoking the Tami Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
7. It had been further stated that the respondents and their subordinates are harassing the petitioner by stopping the vehicles belonging to the petitioner and by demanding the payment of an exorbitant amount of entry tax. They are also threatening to seize the vehicles in question pending adjudicating proceedings. Such acts of the respondents and their men are causing irreparable harm and mental agony to the petitioner, who is a Doctor by profession.
8. Mr.R.Gandhi, the learned senior counsel appearing on behalf of the petitioner, had submitted that the respondents, their men and agents are not empowered to levy entry tax on the vehicles belonging to the petitioner, in view of the fact that a Division Bench of this Court had held that the entry tax levied, in accordance with the Tami Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, is not compensatory in nature.
9. He had relied on the decision of the Division Bench of this Court, in ITC LIMITED Vs. STATE OF TAMIL NADU (2007 (2) CTC 577) wherein, it had been held that the Tamil nadu tax on Entry of Goods into Local Areas Act, 2001, does not satisfy the tests laid down for compensatory tax. Further, no presidential assent had been obtained, under Article 304(b) of the Constitution of India. Therefore, the provisions of the said Act are utra vires, under article 301 of the Constitution of India. Hence, the levy of entry tax, under the impugned act, is illegal, unauthorized and unconstitutional.
10. Per contra, the learned Additional Government Pleader, appearing for the respondents, had submitted that the writ petitions filed by the petitioner are liable to be dismissed, in limine, as they are premature in nature. Further, the Tami Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, would be made only by the authorities of the Department of Commercial Taxes. The respondents in the present writ petitions are not the proper parties against whom writs of Mandamus could be issued, as prayed for by the petitioner.
11. It has also been submitted that the petitioner has not shown, by way of records, that a formal demand had been made, asking him to pay the entry tax, in respect of the vehicles in question. While so, it is not proper for the petitioner to invoke the extraordinary jurisdiction of this Court, by filing the present writ petitions, under Article 226 of the Constitution of India, to restrain the respondents, who are not the proper parties, from intercepting, levying, demanding or collecting entry tax, in respect of the vehicles in question, as prayed for by the petitioner. As such, it is clear that the writ petitions filed by the petitioner, are devoid of merits and therefore, they are liable to be dismissed.
12. In view of the submissions made by the learned counsels appearing for the parties concerned and on a perusal of the records available, and in view of the decisions cited supra, this Court is of the considered view that the present writ petitions, filed by the petitioner, are devoid of merits.
13. It is a well settled position of law that an omnibus prayer, as in the present writ petitions, cannot be made.
14. Further, the writ petitions have been filed without adding the proper and necessary parties, as respondents. The petitioner has not been in a position to show that the entry tax had been levied or demanded by the authorities concerned, in respect of the vehicles belonging to the petitioner. Further, the respondents are not the proper parties, who are empowered or authorised to levy tax on entry of vehicles. As such, it is clear that the writ petitions filed by the petitioner are premature in nature and therefore, they are liable to be dismissed. Accordingly, the writ petitions stand dismissed. No costs. Connected M.P.Nos.1 and 1 of 2012 are closed.