Madrasdated High Court · 2005

11597, 14161, 14162, 14196, 15623, 15624, 16963 to 16965, 17127, 17271,17710, 17711, 17725, 17726, 17878, 19669, 19670, 19544, 19545, 20638 to20639, 20745 to 20747, 20748, 20749, 20750, 20751, 21028, 21029, 21147 to21150, 21181 to 21184, 21568, 21569, 21948, 21949, 23018, 23019, 23442 to23446, 23447, 23448, 23580 to 23582, 23602 to 23604, 24202 to 24204, 24209to 24212, 24632, 24633, 24683, 24684 of 2005;and C.M.P.Nos. 14053 to 14057/98, W.P.M.P.Nos. 323/2002 etc. W.A.Nos.1293 to 1297/1998 A. Aariff .. Appellant/Petitioner in WA.1293/98.Sursh Kumar Sharma .. Appellant/Petitioner in WA.1294/98.D.P.Sharma .. Appellant/Petitioner in WA.1295/98.S.Sudhakar,Lakshmi Saraswathi Travels,Pattukottai. .. Appellant/Petitioner in WA.1296/98.G. Vivekanandan .. Appellant/Petitioner in WA.1297/98. Vs.1. The State of Tamil Nadu, represented by Secretary to Government, Home (Transport) Department, Chennai-9.2. The State Transport Authority,Chennai 5. ..Respondents in WA.Nos.1293 to1297/98. Writ Appeal has been filed under Clause 15 of LettersPatent against order of Single Judge dated 24-09-1998 made in WritPetition Nos. 9553 etc., of 1998. Mr.V.T.Gopalan, Senior Counsel for Mrs. Radha Gopalan:- For Appellant in W.A.Nos.1293 to 1297/98 and petitioner in W.P.No.212/2002 etc., Mr. R. Muthukumarasamy, Addl. Advocate General, assisted by Mr. P. Chandrasekaran, Additional Govt., Pleader and Mr. P.P. Shanmugasundaram, Govt., Advocate for Respondents in all Writ Appeals and Writ Petitions. Mr. D. Krishnakumar, Special Government Pleader for Commissioner in all W.Ps. https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGEMENT(Judgement of Court was delivered by P. SATHASIVAM, J.,) Writ Appeal Nos. 1293 to 1297 of 1998 are directed againstcommon order passed in Writ Petition Nos. 9553 of 1998 etc., batch dated24-9-1998 in and by which learned Single Judge had upheld the validity ofthe amendment to First Schedule to the Motor Vehicle Taxation Actenhancing the tax in respect of contract carriages (Omni Buses) fromRs.1,500/- to Rs.2,000/- per seat per quarter. 2. Writ Petitions namely, W.P.Nos. 212/2002 etc., batch havebeen filed questioning the order of the Government in G.O.Ms.No. 1184 Home(Tr.I) Department dated 30-11-2001, increasing the tax in respect ofcontract carriages from Rs.2,000/- to Rs.3,000/- per seat per quarter witheffect from 1-12-2001. 3. Since the contentions and issues raised in Writ Appeals andthe batch of Writ Petitions are common and similar, they are beingdisposed of by the following common order. Brief facts: Motor Vehicle Tax in Tamil Nadu is governed by Tamil Nadu MotorVehicles Taxation Act, 1974 (hereinaftger referred to as “the Act”). Interms of Section 3 (1) of the Act, tax shall be levied on every motorvehicle used or kept for use in the State of Tamil Nadu at the ratespecified for such vehicle in the first Schedule or the Second schedule orin the third Schedule as the case may be. Section 3 (2) of the Actenables the State Government by a notification to increase the rate of taxspecified in the Schedule subject to the condition that the increase doesnot in the aggregate exceed 50% of the rate specified in the schedules. 4. In terms of the provisions of the Act, motor vehicletaxation has been levied in respect of various classes of vehicles atdifferent rates as specified in the schedules. As on 31-3-1990 the motorvehicles tax payable for stage carriages was Rs.200/- per seat perquarter, while motor vehicles tax payable for contract carriages wasRs.500/- per seat per quarter. The Act was amended by Tamil Nadu Act28/90 as per which the rate of taxation for stage carriages was increasedto Rs.230/- per seat per quarter, while in the case of contract carriagesit was increased from Rs.500/- to Rs.2000/- per seat per quarter. The saidAmendment Act was questioned before this Court in a batch of writpetitions in W.P.No. 6733 of 1990 etc., batch. After considering thevarious submissions and after observing that the range of differencebetween the stage carriage on the one hand and the contract carriage onthe other was considerably high, a Division Bench of this Court did notinterfere with the said increase but passed orders taking note of therepresentation of the State Government of its decision to reduce thetaxation from Rs.2,000/- to Rs.1,500/- in so far as contract carriages are https://hcservices.ecourts.gov.in/hcservices/ concerned. It shows that from 1-4-90 contract carriages were paying tax atRs.1,500/- per seat per quarter, while the stages carriage were paying taxat Rs.230/- per seat per quarter. In the year 1998, the Tamil NaduLegislature passed an Act viz., Act 27 of 1998 amending the Schedule tothe Motor Vehicles Taxation Act in terms of which the rate of taxation forcontract carriages was revised from Rs.1,500/- to Rs.2,000/-per seat perquarter. There was also increase of motor vehicle taxation marginally inrespect of other classes of vehicles as well. The aforesaid amendment Actwas questioned in a batch of cases in W.P.No. 9553/98 etc., batch. Alearned Single Judge, after taking note of the earlier Division Benchdecision of this Court rendered in W.P.No.6733/90 etc., batch, dismissedall the writ petitions holding that the amended provision of the MotorVehicles Taxation Act did not offend Article 14 or 19 (1) (g) as well as301 of the Constitution of India and dismissed all the writ petitions. Asagainst the common order of the learned Single Judge, the Writ Appeal Nos.1293 to 1297 of 1998 have been filed. 5. During the pendency of the above Writ Appeals, in theabsence of any order of stay staying the order in W.P.Nos. 9553/98 etc.,of this Court, the Government have issued a notification on 30-11-2001under Section 3 (2) of the Act amending the Schedule to the Motor VehicleTaxation Act as per which the motor vehicle tax for contract carriages hasbeen increased from Rs.2,000/- to Rs.3,000/- per seat per quarter. Thisorder is under challenge in the batch of writ petitions. 6. Heard Mr. V.T. Gopalan, learned senior counsel and Mr. R.Natesan for petitioners and Mr. R. Muthukumarasamy, learned AdditionalAdvocate General for State Government. 7. (a) Mr. V.T. Gopalan, learned senior counsel and Mr. R.Natesan, learned counsel for the petitioners, have raised the followingsubmissions: i) The order passed by the Division Bench of this Court in WritPetition Nos. 6733/90 etc., batch dated 20-12-90 cannot be said to haveconcluded the issues raised by the petitioners and, therefore, theircontention regarding the validity of Tamil Nadu Act 27 of 1998 and thenotification of the Government dated 30-11-2001 increasing the motorvehicle taxation for contract carriages from Rs.1,500/- to Rs.2,000/- andfrom Rs.2,000/- to Rs.3,000/- respectively per seat per quarter stillremain to be considered; ii) The Motor Vehicle Taxation is a Regulatory or Compensatorytax and the impugned enactment and the orders which impose a very heavyburden on the contract carriages, as compared with other class motorvehicles, more particularly stage carriage, amounts to discriminationviolative of Article 14 of the Constitution of India; iii) The increase of motor vehicle tax on contract carriages from https://hcservices.ecourts.gov.in/hcservices/ Rs.1,500/- to Rs.2,000/- and further to Rs.3,000/- per seat per quarterwould result in the annihilation of business of many contract carriageoperators on account of the heavy burden of Taxation; hence liable to bestruck down as arbitrary and violative of Article 14; iv) Relevant facts have not been taken into account whileincreasing the taxation of contract carriages, namely, that there were anumber of categories of contract carriages for different purposes whichought to have been taken into account. b) On the other hand, learned Additional Advocate General for StateGovernment would submit that in the absence of challenge relating tocompetence of State Legislature to pass the amendment Act or the power ofthe Government to amend the Schedule has not been questioned, and that theearlier Division Bench judgement of this Court dated 20-12-90 consideredand concluded all the issues in question. In the Bench judgement, similarcomplaints were urged to the effect that the increase of taxation wouldannihilate their business and that the burden of tax is disproportionateon the contract carriage operators in the State, besides complaint basedon Article 301 and Article 19 (1) (g) of the Constitution of India. Allthe contentions were not accepted by the Division Bench even in 1990. Hefurther contended that the contention of the petitioners based ondiscrimination and violation of Article 14 of the Constitution of India iswithout any merit. According to him, the classification as stage carriagevehicle and contract carriage vehicle have been upheld by the SupremeCourt. He also contended that the complaint of disproportionate burden ofcontract carriages as compared to stage carriages was raised by thepetitioners and rejected by the Division Bench in W.P.No. 6733/90 dated20-12-90. He further contended that the increase of tax in question havebeen made taking into account various factors, including the fact thatcontract carriages have no limitation on the number of miles that it couldrun, the unrestricted roads that it could operate and the unrestrictedrate that it could collect from the public using the vehicle as comparedto the stage carriage vehicle which is bound to collect only the ratefixed by the Government. Coming to the contention relating to destructionof lawful business of tourist bus operation, according to him, havingregard to the rate collected by the contract carriages which is 2 to 3times the rate collected by the stage carriages, it cannot be said thatthe amount increased is exproprietory, when alone the rate of tax can beinterfered with. It is also stated that the tax amount are collected aspart of the rates from the public, inasmuch as the travelling public incontract carriages are from higher economic strata of the society than thetravelling public in stage carriages who cannot pay higher amounts and,therefore, the classification is in furtherance of public interest andprayed for dismissal of all the Writ Appeals and Writ Petitions. 8. We have carefully considered the relevant materials andrival contentions. https://hcservices.ecourts.gov.in/hcservices/

9. Section 2 (7) of the Motor Vehicles Act, 1988 definescontract carriage as follows: "2 (7) "contract carriage" means a motor vehicle whichcarries a passenger or passengers for hire or reward and isengaged under a contract, whether expressed or implied, for theuse of such vehicle as a whole for the carriage of passengersmentioned therein and entered into by a person with a holder ofa permit in relation to such vehicle or any person authorisedby him in this behalf on a fixed or an agreed rate or sum- (a) on a time basis, whether or not with referenceto any route or distance; or (b) from one point to another,and in either case, without stopping to pick up or set downpassengers not included in the contract anywhere during thejourney, and includes- (i) a maxi-cab; and (ii) a motor cab notwithstanding that separate fares arecharged for its passengers; " Additional Secretary (Transport) Home Department, Government of TamilNadu, Chennai-9 in his counter affidavit, which was filed in November,2002, has stated that presently there are 450 Omni Buses (contractcarriages) plying in the State operated by the private bus operators.They have been issued 299 State wide permits and 151 All India Permits.In addition, Omni buses of other States are also coming to this Statedaily. 10. With the above back ground, let us consider the pointsraised. It is seen from the Writ Appeals and the Writ Petitions as wellas the arguments advanced in these cases before us the competence of theLegislature to pass the amendment Act or the power of the Government toamend the Schedule by the notified order have not been questioned. It mayalso be relevant to note that the counsel for the petitioners are notseriously disputing the fact that the receipts by way of motor vehiclestax is less than the expenditure incurred for relevant purposes. Thechallenges have been made only on the grounds of discrimination andarbitrariness amounting to violation of Article 14 of the Constitution ofIndia. In other words, according to them, the increased burden of motorvehicles tax had not been uniformly distributed between the persons,namely, stage carriage and contract carriage operators, both thecategories to be considered as equals with reference to the object soughtto be achieved by the Tamil Nadu Motor Vehicles Act judged by variousnorms and standards relevant to connect the nexus and object for https://hcservices.ecourts.gov.in/hcservices/ classifying them into two categories for the purpose of levy of motorvehicles tax. It is also their claim that though the operators have beencategorised into stage carriage and contract carriage operators, suchclassification only tantamounts to making a distinction without adifference, in that the same does not bear any rational reasonable nexusto the objects sought to be achieved by the Act. The petitioners as wellas Government rely upon the earlier Division Bench decision of this Courtdated 20-12-90 in W.P.Nos. 6733/90 etc., batch in respect of their claim.As a matter of fact, it is the specific stand of the Government that thesaid Division Bench judgement concludes all the issues in question.Division Bench decision dated 20-12-90 in W.P.Nos.6733/90 etc., batch. The contract carriage Omni bus operators in a batch of writpetitions have challenged the amendment to the First Schedule to theMotor Vehicles Taxation Act by which the tax payable in respect of acontract carriage was enhanced from Rs.500/- to Rs.2000/-; andconsequently have prayed for issue of a writ of declaration declaring thatSection 3(2)(b) of the Tamil Nadu Motor Vehicles Taxation Amendment Act,1990 (Act 28 of 1990) amending the provisions of the Tamil Nadu MotorVehicles Taxation Act, 1974 prescribing the tax for a contract carriage atRs.2000/- per seat per quarter is ultra vires and violative of Articles14, 19(1)(g) and 301 of the Constitution of India. The contention put-forth before the Division Bench was that the amendment Act enhancing thetax is violative of Article 301 of the Constitution and is not saved underArticle 304 (1) (b) of the Constitution, hence the levy is violative ofArticle 19 (1) (g) of the Constitution. It is also stated that even theimpost does not retain its compensatory character, the distribution of theburden of the tax amongst the various categories of road users has norelevance, but it is disproportionate to the essentially relevantcriterion of the extent of the use of the roads in the State and thatthere is no reasonable, fair or equitable basis or principle for thedistribution of the tax and therefore the distribution of the burden isarbitrary and violative of the essential principle against arbitrarinessin Article 14 of the Constitution. On behalf of the State it was statedthat the comparison between the contract carriage omni bus and the ReserveStage carriage is extraneous to the issue on hand, and that the Governmenthave powers to enhance the rates of tax for different classes of motorvehicles. After referring various decisions of the Supreme Court,including decisions in (1) G.K. Krishnan v. State of Tamil Nadu,reported in A.I.R. 1975 S.C. 583; and (2) Malwa Bus Service (Pvt.) Ltd.,etc. v. State of Punjab and others, reported in A.I.R. 1983 S.C. 634, theDivision Bench concluded that there is uniform rate of increase of levy oftax to other classes of vehicles and such a uniform rate of increase oflevy is not manifest in so far as the contract carriages are concerned.They also observed that the contract carriage is entitled to use the roadson the entire length and breadth of the State with greater burden on andwear and tear of the roads in the State and that cannot be the case inrespect of stage carriage and as such even to treat both equally shall bea discrimination. They further concluded that the discrimination cannot be https://hcservices.ecourts.gov.in/hcservices/ said to be arbitrary when it is based on sound reasons of public policy.They finally concluded that "This Court has taken note of the fact thatcaution has to be exercised by the Court by judicial restrains on mattersof this nature. It is in those circumstances, the relief that is soughtfor to declare Section 8 (2) (b) of the Amendment Act No.28 of 1990amending the provisions of the Tamil Nadu Motor Vehicles Taxation Act,1974 prescribing the tax for a contract carriage at Rs.2000/- per seat perquarter as ultra vires and violative of Articles 14, 19(1)(g) and 301 ofthe Constitution cannot be granted for the reasons stated supra." anddisposed of all the writ petitions. Before the Division Bench, the StateGovernment itself decided to reduce the tax from Rs.2000/- to Rs.1500/-per seat per quarter in so far as contract carriages are concerned. TheDivision Bench after recording the above statement, disposed of all thewrit petitions. As rightly pointed out by the learned Additional AdvocateGeneral, the Division Bench accepted the State Government's decision toreduce the tax from Rs.2,000/- to Rs.1,500/-and passed orders. Thus, itis seen that the contentions urged in this batch of writ petitions hadbeen considered and rejected by the earlier Bench as early as in 1990after taking note of the various judgements of the Supreme Court. Theobservations contained in the judgement of the Division Bench dated 20-12-90 which was relied upon by the petitioners, is untenable sincenotwithstanding such observations, the Court held that the issue is amatter of legislative decision and judicial restraint. Though in paragraph28, the Division Bench observed that petitioners therein have establishedthat they were made to bear the burden of heavy increase of tax more thanthat of the owners of other classes of vehicles and ultimately, in thelight of the Scheme of the Act and various decisions of the Supreme Court,has concluded that the distribution of the burden is a matter oflegislative policy and judgement than for judicial evaluation and rejectedthe contentions pertaining to violation of Articles 14 (1) (g) and 301 ofthe Constitution of India. 11. The learned Single Judge in his order dated 24-9-98 inW.P.Nos. 9553/98 etc., which is the subject matter of the Writ Appeals,has mainly relied on all the judgements referred to by the Division Benchin para 16 and the conclusion arrived at therein. The learned Single Judgeafter quoting the Division Bench judgement in extenso, has concluded that"I am of the view that the above referred judgement of the Division Benchwould squarely apply to the facts of this case”. After saying so, hedismissed all the writ petitions. 12. Now let us consider the judgement of the Supreme Court inG.K. Krishnan's case [A.I.R. 1975 S.C. 583: [1975] 1 SCC 375] which isrelied on by the counsel for the petitioners and the respondents. In theCivil Appeals before the Supreme Court, two points have been raised,namely, (1) that the tax imposed is excessive and therefore, it operatesas unreasonable restriction upon the fundamental right of the appellantsto carry on the business; (2) and that the imposition of different ratesof tax on contract and stage carriages is discriminatory and is, https://hcservices.ecourts.gov.in/hcservices/ therefore, hit by Article 14. They also considered the question whetherthe said tax is a compensatory tax. The counsel for appellants contendedbefore the Supreme Court that there was no reason for imposing vehicle taxat a higher rate on contract carriages than on stage carriages. He alsocontended that both stage carriages and contract carriages are similarlysituated with respect to the purpose of vehicle taxation, namlely, the useof the road and, therefore, a higher vehicle tax on contract carriages ismanifestly discriminatory. In other words, the argument was that theclassification of the vehicles as stage carriages and contract carriagesfor the purpose of a higher levy of vehicle tax on contract carriages hasno reasonable relation to the purpose of the Act. Before going into themerits of the claim, Their Lordships have observed: (para 20) "20. It is well to remember the practicaladministrative difficulties in imposing a tax at a rate permile. It is always difficult to evolve a formula which will inall cases ensure exact compensation for the use of the road byvehicles having regard to their type, weight and mileage.Rough approximation, rather than mathematical accuracy, is allthat is required. In all such matters, it is well to rememberthe profound truth of the saying: "it is the mark of aneducated man to look for precision in each class of things justso far as the nature of the subject admits". 13. The reason for enhancing the vehicle tax on contractcarriages as stated in the counter affidavit filed before the SupremeCourt is as follows:- “Commercial vehicles consist of public transport passengerbuses, namely stage carriages and contract carriages and goodsvehicles namely, trucks of varying capacity. The tax on lorries isgraduated, based on the permitted laden weight, the higher theladen weight, the higher the amount of tax. So far as thepassenger buses are concerned, the stage carriages cannot dounlimited mileage. But contract carriages, depending upon theorganisational efficiency, can do much more distance of travel perday as there is flexibility of space and time for its operation.The stage carriages have to operate only on fixed time schedulesand on fixed routes and the number of miles they can negotiate islimited by the rule to 400 K.M. Besides, they can operate only onroads duly certified by the concerned authorities as fit for suchoperation. On the other hand, in the case of contract carriages,there is neither any fixed time schedule nor any fixed route; thenumber of miles they can run is also quite unlimited; they are freeto operate on any route whether the road is certified as fit forsuch traffic or not. Hence the contract carriages can run a largernumber of miles than stage carriages and therefore the wear andtear of the road caused would be greater and in the case of roadswhich are not fit for such operation, the damage to the road https://hcservices.ecourts.gov.in/hcservices/ surface due to wear and tear is quite likely to be much larger,involving higher cost of maintenance of such roads; in other words,the contract carriage even with the same passenger seating capacityas a stage carriage can travel on any road and on any type ofsurface at any time of the day, or night, and thus can causegreater damage to roads, especially of the inferior type of roadsurfaces which it traverses. The higher speed of vehicle willinduce correspondingly higher impact stresses on the pavementstructure than the vehicle of the same capacity at lower speeds.These higher stresses in the pavement layers affect the performancecharacteristics and durability of the surface. Also, higher speedsrequire longer accelerating and decelerating distances which bringsin the maximum value of the frictional coefficient causingincreased wear and tear of the road surfaces. Moreover, the loadfactor of a stage carriage including the passenger luggage may becomparatively low. In the counter affidavit it is also stated thatthe rate of tax payable on stage carriage is Rs.65 per seat perquarter and a surcharge of 10 paise per rupee on the farecollected, though there is a provision for compounding the taxcollected at Rs.25 per seat per quarter under the Tamil Nadu MotorVehicles (Taxation of Passengers and Goods) Act, 1952, is alsopayable by their owners and that owners of contract carriages arenot liable to pay the surcharge." Taking note of the stand taken by the Government in the form of counteraffidavit and considering the definition of contract carriage in Section 2(3) and stage carriage in Section 2 (29) of the Motor Vehicles Act, 1939as well as other provisions of the Act, Their Lordships have observed:(para 36 and 39) "36. It cannot be said that a classification madeon the basis of the capacity of the contract carriages to runmore miles is unreasonable because those carriages will beusing the road more than the stage carriages which have got atime schedule, specified routes and minimum and maximum numberof trips. A person who challenges a classification asunreasonable has the burden of proving it. There is always apresumption that a classification is valid, especially in ataxing statute. The ancient proposition that a person whochallenges the reasonableness of a classification, andtherefore, the constitutionality of the law making theclassification, has to prove it by relevant materials, has beenreiterated by this Court recently (Amalgamated Tea Estates v.State of Kerala, (1974) 4 SCC 415 and Murthy Match Works v.Asst. Collector of Central Excise, (1974) 4 SCC 428). In thecontext of commercial regulation, Article 14 is offended onlyif the classification rests on grounds wholly irrelevant to theachievement of the objective and this lenient standard isfurther weighted in the State's favour by the fact that a https://hcservices.ecourts.gov.in/hcservices/ statutory discrimination will not be set aside if a state offacts may reasonably be conceived by the Court to justify it. 39. Judicial deference to Legislature in instancesof economic regulation is sometimes explained by the argumentthat rationality of a classification may depend upon 'localconditions about which local legislative or administrative bodywould be better informed than a court. Consequently, lackingthe capacity to inform itself fully about the peculiarities ofa particular local situation, a court should hesitate to dubthe legislative classification irrational (see CARMICHAEL v.SOUTHERN COAL & COKE Co.,[301 US 495]). Tax laws, for example,may respond closely to local needs and Court's familiarity withthese needs is likely to be limited. Therefore, the Court mustbe aware of its own remoteness and lack of familiarity with thelocal problems. Classification is dependent on peculiar needsand specific difficulties of the community. The needs anddifficulties of a community are constituted out of facts andinformation beyond the easy ken of the Court. It depends to agreat extent upon an assessment of the local condition underwhich these carriages are being run which the Legislature orthe administrative body alone was competent to make [STATE OFGUJARAT v. AMBICA MILLS LTD., (1974) 4 SCC 656]. Therefore,when the Government, in the exercise of its power to tax, madea classification between stage carriages on the one hand andcontract carriages on the other and fixed a higher rate of taxon the latter, the presumption is that the Government made thatclassification on the basis of its information that contractcarriages are using the roads more than the stage carriagesbecause they are running more miles. Therefore, this Court hasto assume, in the absence of any materials placed by theappellants and petitioners, that the classification isreasonable. It was a matter exclusively within the knowledgeof the petitioners and the appellants as to how many miles thecontract carriages would run on an average per day or month.When, in the counter-affidavit the allegation was made that theowners of the contract carriages are free to run at any timethroughout the State, without restrictions the inference whichthe State wanted the Court to draw was that the owners of thecontract carriages were utilizing this freedom for running moremiles than the stage carriages. As to the number of miles runby the contract carriages, it was not possible for the StateGovernment to furnish any statistics. They could only say thatsince there are no restrictions, they must have run more milesand that cannot be said to be a purely speculative assessment.If the petitioners and the appellants had a case that contractcarriages were not running more miles on an average than thestage carriages, it would have been open for them to placerelevant materials before the Court as the materials were https://hcservices.ecourts.gov.in/hcservices/ within their exclusive knowledge and possession. In thesecircumstances, we think there is the presumption that theclassification is reasonable, especially in the light of thefact that the classification is based on local conditions ofwhich the Government was fully cognizant. Since thepetitioners and the appellants have not discharged the burdenof proving that the classification is unreasonable, we holdthat the levy of an enhanced rate of vehicle tax on contractcarriages was not hit by Article 14". The Supreme Court in the above decision has rejected the argument relatingto discrimination in the matter of levy of an enhanced rate of vehicle taxon contract carriages alone. 14. Inasmuch as similar contentions have been made by thepetitioners regarding discrimination, and violation of Article 14 of theConstitution, in the light of the conclusion arrived at by the SupremeCourt in G.K. Krishnan's case (cited supra), the present contention iswithout any merit. The counsel for the petitioners did not dispute thatthere can be a classification between stage carriage vehicle and contractcarriage vehicle. It is not in dispute that the contract carriages havebeen treated as a separate category from that of the stage carriages inthe Schedule to the Motor Vehicles Taxation Act right from the beginning.The rate of tax for contract carriages was much higher than that of thestage carriages from the beginning. Inasmuch as the classification as‘stage carriages’ and ‘contract carriages’ have been upheld by the SupremeCourt in G.K. Krishnan's case (cited supra), the very same contentionraised once again is also liable to be rejected. No doubt, an argumentwas advanced by Mr. V.T. Gopalan, learned Senior counsel and Mr. R.Natesan, learned counsel that the Supreme Court's decision in G.K.Krishnan's case upholding the classification was on account of the factthat the petitioner did not furnish sufficient material to justify theircomplaint of discrimination regarding the number of miles that each classof vehicles ran and they have now placed materials to show that the stagecarriages ran more number of miles than the contract carriages therebyusing the road more than the contract carriages. As already stated, theclassification between stage carriage and contract carriage for thepurpose of motor vehicle taxation could be made. However, it wascontended that when there was an increase in the taxation, the burdenshould not be very heavy on the contract carriages and sought to comparethem with stage carriages. If there could be a classification betweenstage carriages and contract carriages for different rates of taxation, ashad been conceded to, which had also been the legislative history, itcannot be stated that the increase in the taxation should beproportionate. It is well settled that violation of Article 14 cannot beinvoked in respect of two different classes of objects-vide I.T. Officer,Shillong v. N.T.R. Rymbai [A.I.R. 1976 S.C. 670]. Further, this complaintof disproportionate burden of contract carriages as compared to stagecarriages was raised by the petitioners and rejected by the Division Bench https://hcservices.ecourts.gov.in/hcservices/ of this Court in Writ Petition No. 6733 of 90 dated 20-12-1990. 15. Basing reliance on the decision of the Supreme Court inState of Maharashtra v. Manubhai Pragaji Vashi, reported in (1995) 5Supreme Court Cases 730, it was contended by the counsel for petitionersthat when, prima facie, a plea of discrimination was made out, the burdenof proof is on the State to show that it is not so; or that a valid andpermissible classification exists for the differential treatment. Thereshould be nexus between the basis of classification and the object of theAct under consideration. 16. In Federation of Hotel and Restaurant v. Union of India,reported in (1989) 3 Supreme Court Cases 634, Constitutional Bench of theSupreme Court has held that legislatures have very wide discretion inselection of persons, subject matters, events etc., in formulation offiscal policy for the purpose of taxation. They further held: (para 46) "46. It is now well settled that though taxing lawsare not outside Article 14, however, having regard to the widevariety of diverse economic criteria that go into theformulation of a fiscal policy legislature enjoys a widelatitude in the matter of selection of persons, subjectmatter, events, etc., for taxation. The tests of the vice ofdiscrimination in a taxing law are, accordingly, lessrigorous. In examining the allegations of a hostile,discriminatory treatment what is looked into is not itsphraseology, but the real effect of its provisions. Alegislature does not, as an old saying goes, have to taxeverything in order to be able to tax something. If there isequality and uniformity within each group, the law would notbe discriminatory. Decisions of this Court on the matter havepermitted the legislatures to exercise an extremely widediscretion in classifying items for tax purposes, so long asit refrains from clear and hostile discrimination againstparticular persons or classes". 17. In Malwa Bus Serivice (Pvt.) Ltd., v. State of Punjab,reported in A.I.R 1983 Supreme Court 634, Their Lordships have held thatdifferent rates of tax on stage carriages and public carriers are notdiscriminatory and hit by Article 14 of the Constitution of India. Thefollowing conclusion is relevant: (para 21) "21. The next submission urged on behalf of thepetitioners is based on Article 14 of the Constitution. It iscontended by the petitioners that the Act by levying Rs.35,000/-as the annual tax on a motor vehicle used as a stage carriagebut only Rs.1,500/- per year on a motor vehicle used as a goodscarrier suffers from the vice of hostile discrimination and is,therefore, liable to be struck down. There is no dispute that https://hcservices.ecourts.gov.in/hcservices/ even a fiscal legislation is subject to Article 14 of theConstitution. But it is well settled that a legislature inorder to tax some need not tax all. It can adopt a reasonableclassification of persons and things in imposing taxliabilities. A law of taxation cannot be termed as beingdiscriminatory because different rates of taxation areprescribed in respect of different items, provided it ispossible to hold that the said items belong to distinct andseparate groups and that there is a reasonable nexus between theclassification and the object to be achieved by the impositionof different rates of taxation. The mere fact that a tax fallsmore heavily on certain goods or persons may not result in itsinvalidity. As observed by this Court in KHANDIGE SHAM BHAT v.THE AGRICULTURAL INCOME-TAX OFFICER, (1963) 3 SCR 809: (AIR 1963SC 591), in respect of taxation laws, the power of legislatureto classify goods, things or persons are necessarily wide andflexible so as to enable it to adjust its system of taxation inall proper and reasonable ways. The Courts lean more readily infavour of upholding the constitutionality of a taxing law inview of the complexities involved in the social and economiclife of the community. It is one of the duties of a modernlegislature to utilise the measures of taxation introduced by itfor the purpose of achieving maximum social goods and one has totrust the wisdom of the legislature in this regard. Unless thefiscal law in question is manifestly discriminatory the Courtshould refrain from striking it down on the ground ofdiscrimination. These are some of the broad principles laiddown by this Court in several of its decisions and it isunnecessary to burden this judgment with citations. Applyingthese principles it is seen that stage carriages which travel onan average about 260 kilometres every day on a specified routeor routes with an almost assured quantum of traffic whichinvariably is over crowded belong to a class distinct andseparate from public carriers which carry goods on undefinedroutes. Moreover the public carriers may not be operating everyday in the State. There are also other economic considerationswhich distinguish stage carriages and public carriers from eachother. The amount of wear and tear caused to the roads by anyclass of motor vehicles may not always be a determining factorin classifying motor vehicles for purposes of taxation. Thereasons given by this Court in G.K. Krishnan's case, (AIR 1975SC 583) (supra), for upholding the classification made betweenstage carriages and contract carriages both of which are engagedin carrying passengers are not relevant to the case of aclassification made between stage carriages which carrypassengers and public carriers which transport goods..." Their Lordships have also rejected the contention that because of theenhanced rate of tax, their business becomes uneconomical. It was urged https://hcservices.ecourts.gov.in/hcservices/ that the levy is almost confiscatory in character and the petitionerswould have to close down their business as stage carriage operators.Rejecting the contention, Their Lordships have concluded: (para 22) "22....Though patent injustice to the operators ofstage carriages in fixing lower returns on the tickets issuedto passengers should not be encouraged, a reasonable return oninvestment or a reasonable rate of profits cannot be the sinequa non of the validity of the order of the Government fixingthe maximum rates which the operators may collect from theirpassengers. It cannot also be said that merely because abusiness becomes uneconomical as a consequence of a new levy,the new levy would amount to an unreasonable restriction onthe fundamental right to carry on the said business. It ishowever, open to the State Government to make anymodifications in the fares if it feels that there is a need todo so. But the impugned levy cannot be struck down on theground that the operation of stage carriages has becomeuneconomical after the introduction of the impugned levy...."The contention that the levy of enhanced tax on passenger vehicles isdiscriminatory or at any rate, the enhanced tax on passenger vehicles isneither regulatory nor compensatory was negatived in the case of Meenakshiv. State of Karnata, reported in AIR 1983 S.C. 1283. 18. In State of Kerala v. Aravind Ramakant Modawdakar, reportedin AIR 1999 S.C. 2970, the arguments on behalf of writ petitioners-respondents have been that both types of contract carriages are covered bya permit issued under Section 74 of the Act and there is hardly anydifference between these two types of carriages with reference to thenature of operation except that in the case of inter-State carriages theyhave the right to go beyond the territorial limits of the State of Keralawhile the intra-State carriages will have to operate within the territoryof the State of Kerala. It was also contended that if at all the usage ofroads is a relevant factor then the intra-State vehicles used the roadswithin the State of Kerala much more than the inter-State vehicles. It wasalso contended that the burden of road usage could be more in the case ofintra-State permit holders and the tax in question being compensatory innature, there is no justification for reducing the tax rate in favour ofthe intra-State contract carriages. Rejecting the said contention, theHonourable Supreme Court has held: (para 9) "9.... We think this argument of long or short usageof road is purely hypothetical and would not be a sole guidelineto test the validity of a taxing Statute; even if such Statuteis a compensatory/regulatory taxation. The tax levied under thelegislative power found in Entry 56 or 57 of List II of the 7thSchedule is primarily a tax, though it may be compensatoryand/or regulatory in nature and, therefore, while testing the https://hcservices.ecourts.gov.in/hcservices/ constitutional validity of a taxing Statute it may not be safeto rely upon the hypothetical factors as against the wisdom ofthe legislature. In regard to measure of road user both thesides can give contrary arguments which may look convincing.Hence the examples of this nature would not carry the argumentto any logical conclusion. Having noticed the fact that thearea of judicial review is considerably limited in testing thevalidity of a taxing Statute and considering the impugnedclassification in its factual background, it seems the twopermits are different from very nature of their operation; whileone allows operation within the State only the other allowsoperation beyond the boundaries of the State. Even though ingeneric terms both are contract carriages, there are individualrestrictions and advantages attached to each of these permitswhich could be exclusively to themselves. As argued on behalfof the respondents, even the types of vehicles used by theholders of these permits, in most cases, if not in all cases,are different. The carrying capacity of the vehicles concernedcovered by these two permits is different. Thus in many factualways these vehicles covered by two different permits do formseparate and distinct class. So long as this classification isnot arbitrary or unreasonable, the courts will not interferewith this classification which is the prerogative of thelegislature...." 19. In State of Tamil Nadu v. M. Krishnappan, reported in(2005) 4 Supreme Court Cases 53, the Supreme Court, while considering thevery same provisions namely, Tamil Nadu Motor vehicles Taxation Act,rejected the similar contentions. The conclusion arrived at by TheirLordships is as under: (paras 24, 25 and 26) "24. We also do not find the impugned levy to bediscriminatory, arbitrary or unreasonable so as to violateArticle 14 of the Constitution as held by the High Court. Inthe case of Municipal Corporation of the City of Ahmedabad v.Jan Mohammed Usmanbhai [(1986) 3 SCC 20] this Court held thatArticle 14 forbids class legislation and not reasonableclassification and in order to pass the test of reasonableclassification, the classification must be founded on anintelligible differentia which distinguishes persons or class ofpersons that are grouped together from the others left out ofthat group and that such differentia must have a rationalrelation to the object sought to be achieved by the statute inquestion. 25. In the case of State of Gujaraj v. Shri AmbicaMills Ltd., [(1974) 4 SCC 656], this Court held that where sizeis an index, discrimination between large and small ispermissible. Article 14 does not require that every regulatory https://hcservices.ecourts.gov.in/hcservices/ statute should apply to each and every one equally in the samebusiness. 26. Similarly, in the case of State of Maharashtrav. Madhukar Balkrishna Badiya [(1988) 4 SCC 290] this Court hasheld that taxing of a company-owned vehicle at three times therate payable by an individual owner did not make the enactmentviolative of Article 14 as the legislature had the power todistribute the tax burden in a flexible manner and the Courtwould not interfere with the same."Their Lordships have further held that when an economic activity is to bevalued it is open to the lawmaker to take into account various factorsincluding the paying capacity of the user, the value of the vehicle, theeconomic life of the vehicle, etc. They quoted the observations of theDivision Bench of the Kerala High Court in Anas Vs. State of Kerala (1993)3 KLT 147), wherein it was held that legislature is competent to classifypersons or properties into different categories and tax them differently,and if the classification thus made is rational, the taxing statute cannotbe challenged merely because different rates of taxation are prescribedfor different categories of persons or objects. 20. The above decisions make it clear the argument relatingto discrimination and violation of Article 14 of the Constitution of Indiais without any merit. The classification as stage carriage and contractcarriage have been upheld by the Supreme Court and it is permissible forthe purpose of motor vehicle taxation. If there could be a classificationbetween the stage carriage and contract carriage for different rates oftaxation which had also been the rate of history, it cannot be stated thatthe increase in the taxation should be proportionate. The complaint ofdisproportionate burden of contract carriages as compared to stagecarriages raised by the petitioners were considered and rejected by theDivision Bench. In respect of contract carriages, the increase had beenthough disproportionate in 1990 which had been upheld the claim of theState that the present increase in 2001 as compared to that as in 1990would go to show that it is proportionate to the then existing structure.In such circumstances, the contentions relating to discrimination and therate fixed for contract carriages is disproportionate are liable to berejected. 21. It is also the claim of the learned counsel appearingfor the appellants in the Writ Appeals that the issue of burden ofenhanced tax not being equal, uniform distribution between the stagecarriage and contract carriage as found in the earlier Division Benchjudgements has not been considered in the proper perspective by thelearned Single Judge while considering the writ petitions relating toenhancement of tax from Rs.1,500/- to Rs.2,000/- per seat per quarter. Itis also their case that the distribution of enhanced rate burden has notbeen uniform between the stage carriage and the contract carriage, https://hcservices.ecourts.gov.in/hcservices/ resulting in imposition of very heavy burden of enhanced tax which is sixtimes the tax payable in respect of stage carriage, which is tantamount todiscrimination. They pointed out that the chassis for both the categoriesof vehicles are the same. There is only a little difference in theconstruction of the body and in the arrangement of seats. The cost of 35push-back luxury seats in the contract carriages will be offset by thehigher number of ordinary seats that is 60 and above provided in a stagecarriage. Some vehicles are in air-conditioned. Therefore, according tothem, on the ground or factor namely cost of make of vehicles will notagain make any difference between a stage carriage and a contractcarriage. It is further submitted that there is no relevant factor to betaken into account in judging whether classification is reasonable or not.It is also stated that so far as stage carriages are concerned, they arerunning upto 750-800 kms. per day as permitted. So far as the contractcarriages are concerned, special permits issued in respect of suchcontract carriages for a period of three months have been filed in thewrit petitions and also in the writ appeals which have not been disputedby the respondents. It is further projected that a contract carriage atbest cannot run for more than 300 kms. A day, as otherwise the verypurpose of and object of contract carriages will be totally lost.Assuming that a contract carriage can run for all the 24 hours non-stop,legally and theoretically, it cannot run for more than 1000-1200 kms. aday. Therefore, according to them, between such optimum mileage a vehiclecan run either in the case of stage carriage or contract carriage, thedifference between the stage carriage and the contract carriage is onlybetween 750 – 800 kms per day and 1000 kms. to 1200 kms. for a contractcarriage but the distribution of burden of enhanced tax between the stagecarriage and contract carriage is that the contract carriages are made tobear six times the tax of a stage carriage. It is also their claim thatthe State had not discharged its burden of sustaining the impugned levyand it must therefore be declared that the enhancement of tax in respectof contract carriage is plainly arbitrary as such violative of Article 14of the Constitution of India. 22. With reference to the above factual details, it isuseful to refer the information furnished in the common counter affidavitfiled in the earlier batch of writ petitions which are the subject matterof the writ appeals and individual counter affidavits in the present writpetitions. It is stated that by way of increase of tax from Rs.1,500/- toRs.2,000/- per seat per quarter, the additional revenue derived per annumworks out to Rs.3,01,70,000/-. Though the actual amount relating toincrease of tax from Rs.2,000/- to Rs.3,000/- per seat per quarter has notbeen furnished in the counter affidavit, it is stated that the increase inthe rate was made with a view to mobilize additional revenue to the StageGovernment for implementing various welfare schemes which includemaintenance and repairs of roads, laying of new roads, traffic control,halting places for buses and trucks, construction of bridges and pollutioncontrol arising out of motor vehicles. Regarding the comparison, theenhanced rate for contract carriages (omni buses) with that of goods https://hcservices.ecourts.gov.in/hcservices/ carriages and stage carriages, we have already found that the Courts haveheld that such differential treatment is permissible. It is brought toour notice that the goods carriages are taxed on the basis of theregistered laden weight of the vehicle, but the basis for taxation inrespect of stage carriages is with reference to the classification ofservices and also taking into account the permitted passengers in thevehicle. In respect of stage carriage the operation of service is madepossible on the collection of fare from the passengers which is fixed bythe Government from time to time taking into various factors such as costof fuel, cost of tyre and other materials necessitated to operate a stagecarriage service. The omni buses charges fare on their own, 2 to 3 timesabove the stage carriage fare. Regulation of timings with a view to servethe travelling public is also an exercise carried out for operation of theStage carriages. Such formalities of fixation of timings, not to speak ofthe regulation of fares by the Government in respect of omni buses is notavailable for the operation of contract carriages. Comparing the amountof tax payable alone is taken by the petitioners leaving other factors soas to show an un-warranted picture of levy of higher rate of tax inrespect of the omni buses. 23. It is not in dispute that the motor vehicle tax iscompensatory in the sense that the tax is leviable so long as the vehicleis used on the road. Different classes of vehicles attract differentrates of tax as could be seen from the Tax Schedule. Apart from the factsof extent of use of road, other valid factors govern the fixation of rate.There can be no comparison between contract carriage vehicles and theother vehicles, since the permits are granted for different purpose andthat the levy is in the nature of compensatory tax and that identifiableobject exists behind the levy and there is nexus between the subject andobject of the levy. We are satisfied that the statistics furnished by thepetitioners regarding maximum usage of road by contract carriage vehiclesper day are not based on any authorised statistical data. On the otherhand, the contract carriage is entitled to use the roads on the entirelength and breadth of the State with heavy burden on an wear and tear ofthe roads in the State is substantial. Though a statistic was submitted bylearned counsel for the appellants stating that a stage carriage isrunning upto 750-800 kms., per day and contract carriage is running 1000-1200 kms., a day, there is no material to substantiate their contention.On a common parlance, it is difficult for a stage carriage to ply 750-800kms., per day. The stage carriage is permitted to run on a specifiedroute with permissible trips with a charge that was fixed by theGovernment. Whereas for the contract carriage, it can go without anylimit, thus using the roads more than the stage carriages. 24. It is also the claim of the petitioners that if theenhanced rate is implemented, the vehicle operators have to give up theirprofession because of the over burden. The same contention was raisedbefore the Supreme Court in Malwa Bus Service (Pvt.) Ltd.,etc., Vs. Stateof Punjab and others (AIR 1983 SC 634), wherein the contention that https://hcservices.ecourts.gov.in/hcservices/ because of the enhanced rate of tax their business becomes uneconomicaland the levy is almost confiscatory in character and the petitioners wouldhave to close down their business have been rejected as unacceptable. Ithas been held therein that a reasonable return on investment or areasonable rate of profits cannot be the sine qua non of the validity ofthe order of the Government fixing the maximum fares which the operatorsmay collect from their passengers. It has also been held that merelybecause a business becomes uneconomical as a consequence of a new levy,the new levy would amount to an unreasonable restriction on thefundamental right to carry on the said business are all liable to berejected. Though, the Court has observed that it would be open to theaggrieved persons to approach the State Government with necessaryrepresentation, however, Their Lordships have held that the impugned levycannot be struck down on the ground that the operation of stage carriageshas become uneconomical after the introduction of the impugned levy. Thesaid principles and observations are squarely applicable to the contractcarriages also. As rightly pointed out on behalf of the State that thetax amount are collected as part of the rates from the public and thetravelling public in contract carriages are from higher economic strata ofthe society than the travelling public in stage carriages who cannot payhigher amounts and, therefore, the classification is in furtherance ofpublic interest. 25. Under these circumstances, we hold that the amendedprovisions of the Motor Vehicles Taxation Act do not offend Article 14 or19 (1)(g) as well as 301 of the Constitution of India and the enhancedrate of motor vehicle tax in respect of contract carriages cannot be saidto be either discriminatory or unreasonable warranting interference bythis Court, accordingly all the Writ Appeals and Writ Petitions are liableto be dismissed. 26. Considering the fact that in all these cases, theappellants/petitioners secured an order of stay of enhanced rate of taxand in view of our conclusion upholding the validity of imposition of tax,if the appellants/petitioners feel that the same is a burden for them,they are free to approach the Government through their Association orindividually either for reduction of the rate or for payment of arrears ofenhanced tax in easy instalments. With the above observation, all theWrit Appeals and the Writ Petitions are dismissed. No costs.Consequently, all the connected miscellaneous petitions are closed. After pronouncement of the above order, learned counsel appearingfor the appellants/petitioners basing on their claim that payment ofarrears will be a burden for them, prayed reasonable time for makingrepresentation and for direction to the Government for considering theirgrievance. They also prayed that till such order being passed by theGovernment, on the proposed representation, they may be permitted tocontinue to pay the old rate of tax, namely, Rs.2,000/- per seat per https://hcservices.ecourts.gov.in/hcservices/ quarter. 2. On this aspect, we heard learned Additional Advocate General. 3. Considering the difficulties expressed and in view of thefact that the appellants/petitioners had the benefit of interim order allalong, they are permitted to make appropriate representation to theGovernment within a period of two (2) weeks from today and the Governmentis free to consider and pass appropriate orders within a period of four(4) weeks thereafter. Till such order being passed by the Government, onthe proposed representation, the appellants/petitioners are permitted topay the old rate of tax viz., Rs.2,000/- per seat per quarter.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.R.B.To:-1. The Secretary to Government, Home (Transport) Department, Chennai-9.2. The State Transport Authority,Chennai 5. + 1 CC to M/s.Radha Gopalan, Advocate SR NO 47176+ 1 CC to the Government Pleader SR NO 46809gp/