HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. CDLOW NO. 19 OF 201.AND LPAOW No. 90 OF 201.State of J&K and ors Petitioners Shishendra Shokeen & Anr Respondent !Mr. Gagan Basotra, Sr. AAG ^Mr. Vijay Gupta, Advocate Honble Mr. Justice M. M. Kumar, Chief Justice. Honble Mr. Justice Hasnain Massodi, Judge Date:
04. 02.2013 :
: M.M. Kumar, CJ CDLOW No. 19/2012 1. For the reasons stated in the application seeking condonation of delay of 226 days in filing the appeal is condoned.
2. Condonation application stands disposed of. LPAOW No. 90/2012 3. The instant appeal under Clause 12 of the Letters Patent is directed against the interim order dated 09.02.2012 restraining the appellant-State from charging Rs. 2000/- per day as tax for using the roads of the State from All India Tourist 2 Vehicles (Deluxe Coaches) belonging to the writ petitioner-respondents.
4. The learned Single Judge has, however, clarified that the writ petitioner-respondents shall continue to pay Rs. 2000/- per quarter of their vehicles for using the roads of the State. In the impugned order, reliance has been placed on a judgment of a Constitution Bench of the Supreme Court rendered in the case of Kunnathat Thathunni Moopil Nair v State of Kerala and another, AIR 196.SC 552.Feeling aggrieved, the State has filed the appeal invoking Clause 12 of the Letters Patent against the aforesaid order.
5. Mr. Gagan Basotra, learned Senior AAG appearing for the State has argued that the Supreme Court has repeatedly passed directions that the revenue shall not be restrained to collect Taxes as per the law by passing interim orders. In support of his submission he has placed reliance on Para 59 of the judgment of Honble the Supreme Court rendered in the case of Empire 3 Industries Ltd. & others v Union of India and others AIR 198.SC 66.and also on Para 7 of the judgment rendered in the case of Assistant Collector of Central Excise Chandan Nagar v Dunlop India Ltd. & others AIR 198.SC 330.
6. According to Mr. Basotra the public works cannot be brought to standstill by restraining the State from collecting its due Taxes until and unless the levy of Taxes is set aside by passing a final judgment. Reading the principle of law from Para 59, Mr. Basotra has argued that once the payment of Tax is stayed then State is left with no liquid cash for running its day to day activities, whereas in the present case, the learned Single Judge has also not thought it prudent to protect the interest of the State by imposing any condition like furnishing of Bank Guarantees in case the writ petition is eventually dismissed. According to him the State interest has been completely ignored by the impugned order”
7. Mr. Vijay Gupta learned counsel for the writ petitioner-respondents has, however, argued that the amendment made by the Act No. XIV of 2002 incorporated a new provision in the form of Clause-E for All India Tourists Vehicles (Deluxe Coaches) imposing Tax liability of Rs. 2000/- per day on the basis of competence conferred by Section 3 of the Jammu and Kashmir Motor Vehicles Taxation Act of 1957 (for brevity the Act) which is directly in conflict with that provisions itself. According to Mr. Gupta the Taxes could be prescribed for collection on quarterly basis not on daily basis and therefore, it is patently against the provisions of Section 3(2) of the Act. Another submission made by Mr. Gupta is that in the reply filed by the appellant-State similar vehicles operated by the local owners of motor vehicles are continuing to pay Rs. 2000/- per quarter, whereas the vehicles coming from U.P, Rajasthan, Punjab & Harayana, Meghalaya etc are taxed at the rate of 5 Rs. 2000/- per day. It is per se discriminatory and cannot be upheld in law.
8. Having heard learned counsel for the parties and perusing the paper books with their able assistance, we are of the considered view that the learned Single Judge has committed patent error in law by staying the payment of tax by way of an interim order chargeable under the Act. The Honble Supreme Court in Dunlop India Limited (Supra) has categorically observed that the State cannot be run by furnishing Bank Guarantees or securities. The various projects initiated by the State are required to be regularly financed which could be done if funds are available by proper collection of taxes. Similar view has been taken in the case of Empire Industries Limited (Supra). We also place reliance on the observations made by Honble Supreme Court in the case of Siliguri Municipality and others v Amalendu Das and others (1984) 2 SCC 436.Discouraging and 6 condemning such like interim orders their Lordship observed in paras 2 & 3 as under:- 2. We are constrained to make the observations which follows as we do feel dismayed at the tendency on the part of some of the High Court to grant interlocutory orders for the mere asking. Normally, the High Courts should not, as a rule, in proceedings under Article 226 of the Constitution grant any stay of recovery of tax save under very exceptional circumstances. The grant of stay in such matters, should be an exception and not a rule.
3. It is needless to stress that a levy or impost does not become bad as soon as a writ petition is instituted in order to assail the validity of the levy. So also there is no warrant for presuming the levy to be bad at the very threshold of the proceedings. The only consideration at that juncture is to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed at the conclusion of the proceedings. This object can be attained by requiring the body or authority levying the impost to give an undertaking to refund or adjust against future dues, the levy of tax or rate or a part thereof, as the case may be, in the event of the entire levy or a part thereof being ultimately held to be invalid by the Court without obliging the tax-payers to institute a civil suit in order to claim the amount already recovered from them. On the other hand, the Court cannot be unmindful of the need to protect the authority levying the tax, for, at that stage the Court has to proceed on the hypothesis that the challenge may or may not succeed. The Court has to show awareness of the fact that in a case like the present a municipality cannot function or meet its financial obligations if its source of revenue is blocked by an interim order restraining the municipality from recovering the taxes as per the impugned provision. And that the municipality has to maintain essential civic services like water supply, street lighting and public streets etc., apart from running public institutions like schools, dispensaries, libraries etc. What is more, supplies have to he purchased and salaries have to be paid. The grant of an interlocutory order of this nature 7 would paralyze the administration and dislocate the entire working of the municipality. It seems that these serious ramifications of the matter were lost sight of while making the impugned order. 10. Similar view has been expressed in the case of P. R. Sinha v. Inder Krishan Raina (1996) 1 SCC 681.
11. We are tempted to rely upon the observations of Honble the Supreme Court in the case of United Bank of India v. Satyawati Tondon (2010) 8 SCC 110.In para 46, following observation fully support our view which read thus:- 46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Therefore, we are left with no doubt that by a laconic interim order recovery of taxes could not have been stayed”
12. The argument of Mr. Vijay Gupta touching the merit of the controversy would not require any detail consideration because in Tax matters prima facie nature of the case would not be considered sufficient for passing any interim order. Even if a citizen has a prima facie good case, the courts are not influenced and no interim order is to be issued for staying payment of taxes. Moreover the appellant-State would face difficulty to make any recovery from vehicles frequenting J&K from various parts of the Country. It would in any case be herculean task if the writ petition is dismissed. Accordingly, we are inclined to allow the appeal.
13. For the reasons aforementioned, the appeal succeeds. The interim order passed by the learned Single Judge is set aside. The appellant-State shall be at liberty to effect recovery of taxes under the J&K Motor Vehicles Taxation Act, in accordance with the law applicable as on today. Let the writ petitions which are stated to be on the board of 9 learned Single Judge be decided at an early actual date.
14. Any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy. Learned Single Judge shall decide the matter without being influenced by this order.
15. Appeal stands disposed of. (Hasnain Massodi) (M. M. Kumar) Judge Chief Justice Jammu, 04.02.2013 Vijay