Tvl. Suganthi Educational Trust v. The Regional Transport Officer Chennai (West) Chennai

2In the High Court of Judicature at MadrasDated: 21.01.2008Coram:The Honourable Mr.Justice S.MANIKUMARWrit Petition No.35991 of 2002 Tvl. Suganthi Educational Trust 15, Corporation Colony, Kodambakkam, Chennai.24. .. Petitioner vsThe Regional Transport OfficerChennai (West) Chennai.78 .. RespondentWrit Petition filed under Article 226 of the Constitution of Indiapraying to issue a Writ of Certiorarified Mandamus, calling for therecords of the respondent in R.No.D3/27639/2002 dated 22.07.2002, quashthe same and to direct the respondent to collect tax under item 8(a) ofthe First Schedule to the Tamil Nadu Motor Vehicles Rules, in so far asthe petitioner is concerned.For petitioner : Mrs.Radha GopalanFor respondent : Mr.A.Arumugham, AGP. O R D E RThe petitioner has sought for Writ of Certiorarified Mandamus,calling for the records of the respondent dated 22.07.2002 made inR.No.D3/27639/2002 and quash the same and consequently direct therespondent to collect tax under item 8(a) of the First Schedule to theTamil Nadu Motor Vehicles in so far as the petitioner is concerned.2. The case of the petitioner in brief is as follows:The petitioner trust has established an Engineering College underthe name and style of G.K.M. College of Engineering and Technology,Thiruvenjeri Village, Mopperi Road, Chennai-78 and they have acquired afleet of eight buses and applied for necessary permits for the vehiclesfor the use of the college students and staff. The term "EducationInstitution Bus" is defined under Section 2 (11) of the Motor VehiclesAct, 1988 and the object of the said definition is, that the vehiclesshould be used solely for the purpose of transporting their students andstaff in connection with its activities. Earlier, as per Section 3(h) ofSection 66 of the Motor Vehicles Act, permits were not required foreducation institution vehicles. Subsequently, the said Section 66 (3)(h) https://hcservices.ecourts.gov.in/hcservices/ has been deleted with effect from 14.08.2000 and consequently, permitsare being granted under Section 76 of the Act r/w Rule 169 of the TamilNadu Motor Vehicles Taxation Rules in the prescribed form, under Rule170 (viii)of the Rules. The application of the petitioner for necessarypermits was considered and while issuing permit, the respondentmentioned the name of the petitioner(Trust) as the holder of the permitand it is further stated that the vehicles would be used fortransporting students and staff of the educational institutions owned bythe petitioner. 3. It is further submitted that the Accountant General has pointedout that the buses owned by educational Institutions standing in thename of the Trust should not be granted concessional rate of taxapplicable to educational institution vehicle, as they do not fallwithin Item 8(a) of the First Schedule of the Tamil Nadu Motor VehiclesTaxation Act, 1974. On the objections raised by the Accountant General,the Government had called for remarks from the Transport Commissioner,Chennai and it appears that the Transport Commissioner had concurredwith the objections of the Accountant General and directed the RegionalTransport Officers who had issued permits to the Society/Trust, whoadminister educational institutions, recover the tax with penalty, fromthe date when permits were granted until recovery is made, at the rateapplicable to the private service vehicles, which was Rs.75/- per seatper quarter for sometime and altered at Rs.100/- per seat per quarter onand from 01.12.2001. By order dated 22.07.2002 the Regional TransportOfficer, Chennai (West), Chennai-78 has directed the petitioner tosurrender the Educational Institution Bus Permits issued in Trust's nameand further directed the petitioner to pay the tax with penalty,applicable to "Private Service Vehicles" from the date of issue of"Educational Institution Bus Permits" and apply for "Private ServiceVehicle" Permit for the vehicles mentioned in the annexure enclosedtherein. Aggrieved by the said order, the petitioner has preferred thiswrit petition.4. Mrs.Radha Gopalan, learned counsel appearing for the petitionersubmitted that the impugned order is totally violative of the principlesof natural justice. The petitioner was not given any show cause as towhy the tax for "Private Service Vehicles" should be collected withpenalty. She further submitted that all along the respondent had beenaccepting the tax applicable for educational institution bus i.e., atthe rate of Rs.500/- per quarter and the petitioner had been paying thesame on annual basis, including the current year 2002, without anyobjections. 5. Learned counsel for the petitioner further submitted thatimposing a liability on the petitioner to pay tax with penalty beingquasi judicial, it is incumbent on the part of the respondent to issueshow cause and afford an opportunity of personal hearing to thepetitioner before making demand for tax/penalty. https://hcservices.ecourts.gov.in/hcservices/

6. She further submitted that the Transport Commissioner has failedto consider that the petitioner Trust are the owners of the EngineeringCollege and the vehicles are used exclusively for carrying students andstaff of the educational institution and therefore, the vehicles cannotbe brought under the definition of a "public service vehicle", forwhich, differential rate of tax can be applied and, therefore, thedirections of the respondent to surrender the educational institutionsbus permits issued in the name of the trust and to pay the tax andpenalty applicable to private services vehicle, is liable to be setaside.7. She further submitted that when the trust has been grantedpermission to establish and run colleges and the permits stand in thename of the petitioners' trust for the use of vehicles solely for thepurpose of carrying the students and staff, the trust cannot be deniedthe rate of tax applicable to education institution's bus and it isliable to pay tax only for such use. Finding fault with the Registeringauthority, describing the trust or the society, as the holder of permit,she submitted that the registering authority could have very welldescribed the educational institution, namely G.K.M. College ofEngineering and Technology as the holder of permit and therefore thepetitioner trust, cannot be penalised by demanding rate of taxapplicable to "private services vehicle". 8. Learned Additional Government Pleader appearing for therespondent submitted that vehicles registered in the name of the trustcan be used for carrying the students/staff or for any college purposesor for any transporting persons who are engaged in the affairs of thetrust. If the Educational Institution viz., G.K.M. Engineering Collegeand Technology Case uses vehicle only for the purpose of transportingstudents and staff of the College, the Trust could have very wellapproached the registering authority and got the permit changed in thename of Principal or Correspondent of the institution. Since both thevehicles are registered in the name of the Educational Trust, the demandnotice issued by the respondent is fully justified in terms of theprovisions of Motor Vehicles Act and clause 8(a) of the First Scheduleof the Tamil Nadu Motor Vehicle Taxation Act, 1974.9. He further submitted that as per Clause 8 (a) to Schedule I ofTamil Nadu Motor Vehicles Taxation Act, 1974, in respect of vehiclesowned by Educational Institutions (Educational Institution bus), forevery person (other than the driver) which the vehicle is permitted tocarry, the tax payable is Rs.500/- per quarter and for other Transportvehicles it is Rs.150/- per seat per quarter and therefore thepetitioner has to surrender the permits and remit the tax applicable toprivate service vehicle. https://hcservices.ecourts.gov.in/hcservices/

10. Learned Additional Government Pleader further submitted thatthe concession given by the Government in respect of the vehicles ownedby the educational institutions is not applicable to the vehicles ownedby the trust and, therefore, there is no illegality in directing thepetitioner to surrender the educational institution bus permits, issuedin the name of the trust and consequently they are liable to pay taxwith penalty, applicable to private service vehicles, from the date ofissue of the educational institution bus permits.11. He further submitted that as the petitioner is not entitled tothe concession applicable to the educational institution bus permits,there is no need to issue any show cause notice and, therefore, there isno violation of the principles of natural justice. 12. Before adverting to the facts of this case, it is relevant toextract the definition of "owner", as provided under Section 2 (30) ofthe Motor Vehicles Act, 1988."30."owner" means a person in whose name a motorvehicle stands registered,and where such person is aminor, the guardian of such minor, and in relation toa motor vehicle which is the subject of a hire-purchase agreement, or an agreement of lease of anagreement of hypothecation, the person in possessionof the vehicle under that agreement." 13. The provision relating to levy of tax as codified under Section3 of the Tamil Nadu Motor Vehicles Taxation Act is as follows:" 1) Subject to the provisions of sub-section (2) taxshall be levied on every motor vehicle used or kept foruse in the State of Tamil Nadu at the rate specified forsuch vehicle in the First Schedule or in the SecondSchedule or in the Third Schedule, as the case may be, 2) The Government may, by notification, from time totime, increase the rate of tax specified in the Schedules, Provided that such increase, by notification, under thissub-section shall not, in the aggregate, exceed fiftyperson of the rate specified in the First Schedule or inthe Second Schedule or in the Third Schedule, as the casemay be".As per Section 3 of Tamil Nadu Motor Vehicles Taxation Act, the amountof tax is fixed as per clause 8(a) to Schedule 1 of the Act and thequarterly tax is fixed at Rs.150/-14. The rate of tax prescribed in respect of item 8 (a) of the Ischedule under Tamil Nadu Motor Vehicles Act in respect of vehiclesowned by educational institution (educational institution bus), at thetime of registration of vehicle was Rs.500/- per quarter. In respect ofthe other motor vehicles covered by Transport vehicles permit and https://hcservices.ecourts.gov.in/hcservices/ "private services vehicle permit, a separate rate of tax is providedi.e. Rs.150 per seat per quarter.15. Admittedly, though the trust has started the educationalinstitution as per the norms provided by the AICTE, the trust can havevarious other activities, also. The term "Education Institution bus" isdefined under Section 2 (11) of the Motor Vehicles Act, 1988 that thevehicle should be used solely for the purpose of transporting studentsand staff of educational institution, in connection with its activities. 16. A "private service vehicle" is defined under Section 2 (33)of the Act, which means a motor vehicle constructed or adapted tocarry more than six persons excluding the driver and ordinarily used byor on behalf of the owner of such vehicle for the purpose of carryingpersons for, or in connection with, his trade or business otherwise thana for hire or reward but does not include a motor vehicle used forpublic purposes.17. A trust/society can establish an educational institution,engage in charitable activity, promote culture or religious activity orany other activity legally permissible. A Trust/Society can earmark aproperty either movable or immovable for a specific purpose. All theproperties and assets owned by the Trust cannot always be the propertiesof the educational institution. Possession and Management of the trustproperties and administering properties owned or held on behalf of theeducational institution are entirely different. The corpus of the Trustcannot be said to be corpus of the educational institution. The right oftransfer is incidental to ownership. Income derived by the trust inletting out the properties either movable or immovable for generatingincome, cannot be the income of the educational institution started orestablished by the trust. The educational laws of the country mandatethat the educational institution, college or school, as the case may be,which received recognition from the competent authority to maintain andsubmit a statement of movables and immovables owned by that college orSchool or Educational institution, to such authorities from whomrecognition is obtained. A trust can start schools, colleges oreducational institution or charitable institution or engage in any otheractivity permissible under law. Each college, school or educationalinstitution is a separate entity by itself and one cannot claim right ofownership or title in respect of movables or immovables held by other.It is the college, school or educational institution, which imparteducation and awards the degree or diploma or certificate through theUniversities or examining bodies are recognised by the competentauthorities and trust is not the educational institution. Merely becausethe trust has started an educational institution, in the instant case,an engineering college, it cannot be called as an educationalinstitution. Trust is only an educational agency and not theinstitution. Only colleges, schools and educational institutions areprovided with the concession in the rate of tax, taking into https://hcservices.ecourts.gov.in/hcservices/ consideration the ownership of the vehicle coupled with the usage of thevehicle.18. Motor Vehicles Act is a codified enactment and it must beconstrued strictly having regard to the purpose it seeks to achieve.Courts have consistently held that interpretation of the Statute shallnot go beyond the object and the rule of purposive construction shouldbe applied. Taxation Act provides for concession only for vehicles ownedby schools, colleges and educational institutions. The concessioncannot be extended to vehicles owned by Trust, which has got a differentconnotation and meaning. Therefore, in my considered opinion vehiclesowned by the Trust or Society cannot be within the definition of"Educational Institutional Vehicle" and consequently the Trust or theSociety is not entitled to claim the concessional rate of tax. 19. In the instant case, the vehicles owned by the trust is usedfor the purpose of trade or business, 'trade' includes the activity doneby a person, for the purpose of generating income. 20. Section 66 of the Motor Vehicles Act deals with necessity forpermits which reads as follows:"(1) No owner of a motor vehicle shall use or permit theuse of the vehicle as a transport vehicle in any publicplace whether or not such vehicle is actually carryingany passengers or goods save in accordance with theconditions of a permit granted or countersigned by aRegional or State Transport Authority or any prescribedauthority authorising him the use of the vehicle in thatplace in the manner in which the vehicle is being used".Since the vehicles used by the petitioner cannot be brought under thedefinition as educational institution, consequently they have to applyfor permits under Section 66 of the Motor Vehicles Act and, therefore,the direction issued by the respondent to surrender the permits of thepetitioner is in accordance with the provisions of the Motor VehiclesAct. As the petitioner is not entitled to the exemption granted for theeducational institution, consequently, the petitioner is liable to paythe deferential rate of tax applicable to the private service vehicle.21. Section 15 of the Tamil Nadu Motor Vehicles Taxation Actprovides for imposition of penalty and it reads as follows: "If the tax due in respect of any motor vehicle has notbeen paid within the period prescribed under Section 8,the registered owner or the person having possession orcontrol thereof shall-- (a) pay, in addition to the tax, a penalty of such sum,not exceeding twice the amount of the quarterly tax or asthe case may be, half of the amount of annual tax payable, https://hcservices.ecourts.gov.in/hcservices/ as may be prescribed, and different sums may b prescribedfor different classes of motor vehicles and for differentperiods; and (b) also be punishable with fine which may extend tofifty rupees, and the amount of the tax due by him inrespect of such vehicle together with penalty referred toin clause (a) shall also be recovered as if such tax andpenalty were a fine".22. Earlier Section 66 (3) (h) of the Motor Vehicles Act, 1988shall not apply to any transport vehicle owned by, and used solely forthe purposes of, any educational institution which recognised by theCentral or State Government or whose managing committee is a societyregistered under the Societies Registration Act, 1860 (21 of 1860) orunder any law corresponding to that Act in force in any part of India".Subsequently the said Section 66 (3)(h) has been deleted with effectfrom 14.08.2000. Consequently, the petitioners ought to have apply tothe Transport Authority for issue of a private service vehicle permit. 23. Since the payment of tax is demanded as per Clause 8(a) toFirst Schedule to the Tamil Nadu Motor Vehicles Taxation Act, 1974,penal provision is automatically attracted as per Section 15 of theTaxation Act and therefore, imposition of penalty is also sustained. 24. In the result, the writ petition is dismissed. The petitionershall make necessary arrangements for surrendering the permits andalso pay the differential rate of tax and the penalty applicable to theprivate service vehicles, within a period of three months from the dateof receipt of this order copy.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarjikrToThe Regional Transport OfficerChennai (West) Chennai.781 cc To M/s.S.Radha Gopalan, Advocate, SR.1934.1 cc To The Government Pleader, SR.2308. W.P.No35991 of 2002 MA(CO)RVL 19.02.2008