HINDUSTAN AERONAUTICS LIMITED Vs. REGISTERING AUTHORITY

JUDGEMENT

(1.) THE appellant before us is Hindustan Aeronautics Limited situate at Sunabeda in Koraput District, Orissa State. THEy possess several vehicles which are assessed to tax under Item No. 6 of the Schedule annexed to Orissa Motor Vehicles Taxation Act, 1975 [hereinafter referred to as 'the Act']. In respect of vehicles bearing registration Nos. ORK 3597, ORK 3810, ORK 5638, ORK 5639 and OSK 1563 proceedings were initiated by the Taxing Officer under the Act. On 22/02/1991 the Tax Inspector, Orissa Motor Vehicle Department, stopped and checked the vehicles bearing registration Nos. ORK 3597 and ORK 3810 and the remaining three vehicles on 4/03/1991 while proceeding from Sunabeda to Koraput carrying college students and employees. He issued a vehicle check report stating that the vehicle was being used for hire and reward as contract carriage and seized the vehicle. THE vehicle was released on 4/03/1991 on payment of differential tax for different periods. A notice was issued to the appellant to clarify; (i) the date from which the bus was plying to Koraput or to school at Sunabeda; (ii) amount of fare collected from each student for such journey from time to time on daily/monthly basis, and (iii) number of students performing journey in the bus. THE Administrative Officer of the appellant replied to the said notice stating that the vehicles are used only as an amenity extended to the children of the employees to facilitate them to attend the school or college; that the tax paid earlier was appropriate and sufficient; that the bus was not liable to tax at a higher rate as it does not come within the definition of "contract carriage" and, therefore, he claimed refund of the entire amount collected at the time of release of the vehicle. THE Taxing Officer did not accept the explanation offered by the appellant and took the view that the appellant is realising hire charges at different rates may be at nominal or subsidised rates from the travellers or passengers of vehicle for their journey from Sunabeda to Koraput and vice versa. Although it was made clear that they are not charging any amount from any of the college or school going children to Koraput and back, even then the view was taken that it should be deemed that they were charging money from travellers or passengers for carrying them in their vehicles.

(2.) APPEALS were preferred in respect of each of the said vehicles. It is contended before the appellate authority that the vehicles of the appellant are private service vehicles which are engaged for transporting its employees to different work sites and are also used for providing transport to the school/college going children of the employees and even if any charge was collected it does not amount to plying the buses for hire or reward inasmuch as there was no motive to earn profit. It is contended that there is no contract between the appellant and its employees and, therefore, Section 2(7) of the Motor Vehicles Act, 1988 was not attracted. In the absence of such a contract, it is claimed, the vehicles cannot be termed as "contract carriage" in the light of the decision of this Court M/s. Tata Engineering and Locomotive Co. Ltd. v. Sales Tax Officer and Regional Transport Officer, Poona, AIR 1979 SC 343. Relying upon the decision in Hindustan Zinc Ltd. v. State of Rajasthan, AIR 1989 Raj 124, it was claimed that even if certain collections were made from the children of the company employees, it does not justify to treat the buses as "contract carriage". The appellate authority is of the view that a private service vehicle should be understood to be one which is used for own trade or business but it should not be used for the purpose of hire or reward. On the material on record that the buses were carrying college students and employees by collecting fees and, therefore, were being used for hire or reward as a contract carriage. The appellate authority held that there was overwhelming evidence which showed that the buses were used for hire or reward. That evidence was in the shape of hire charges collected by the appellant under different receipt Nos. 4468 dated 3-12-90 for Rs. 100.00, 3845 dated 25-7-90 for Rs. 50.00, 3967 dated 14-8-90 for Rs. 50.00, 3804 dated 16-7-90 for Rs. 50.00, 3511 dated 14-7-89 for Rs. 100.00, 4025 dated 6-7-88 for Rs. 200.00, 91444 dated 5-8-87 for Rs. 200.00, 91448 dated 5-8-87 for Rs. 100.00, 4283 dated 25-11-88 for Rs. 100.00, 93249 dated 31-1-83 and 92053 dated 10-9-82 for Rs. 30.00 which was held to fully prove that the buses were being used for hire during the period from 1982 to 1990. The circular No. HAL/KPT/CAF/3-3/88/137 issued by the appellant on 27/02/1988 indicated that the revision of hire charges to be levied for use of their vehicles for private purposes. Thus the mode of use of the vehicles was "contract carriage" and, therefore, imposition of higher tax is justified in terms of Entry 4 of the Schedule to the Act and on that basis the appellate authority dismissed the appeals.

(3.) THE contentions urged before the authorities and the High Court are reiterated before us.