SHARMA TRANSPORTS BANGALORE Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THESE petitions are directed against the levy and collection of 5% cess-tax levied under Section 3 of the Karnataka Motor Vehicles taxation Act, 1957 and Section 3-A of the Karnataka Act 7 of 1995 as illegal, unconstitutional and void. The petitioner wants a refund of tax made over by the petitioner for the schedule vehicles in terms of the schedule from 1-4-1995 till First Quarter and under Act 4 of 2002 effective from 15-4-2002.

(2.) THE pleadings of the parties are as under: the first respondent introduced an amendment to the Karnataka motor Vehicles Taxation Act, 1957. By an amendment a new power to imposition of cess was statutorily introduced. The amendment by Act no. 7 of 1995 inserted Section 3-A. Annexure-A is the notification. Section 3-A purported to levy and collect by way of cess-tax at the rate of 5% on the Motor Vehicles Tax levied under Section 3 of the Act. The purpose of the cess was for the Bangalore Mass Rapid Transit System. The said amendment was challenged in this Court in several petitions. Petitions were dismissed by this Court. Annexure-D is the order of the division Bench. Thereafter, the first respondent introduced an amendment by Act 4 of 1998 by which the purpose of levy for Bangalore mass Rapid Transit System was sought to be changed to "for a period of two years with effect from 1-4-1998 for equity investment in the karnataka Infrastructure Development Finance Corporation. Annexure-C is the notification. The petitioner states that there has been no such utilisation for the said purpose. Apart from the fact the karnataka Infrastructure Development and Finance Corporation has nothing to do with either the maintenance, improvement or the creation of roads in terms of the Karnataka Motor Vehicles Taxation Act, 1957. Tax is illegal and without authority of law. By Act No. 6 of 2000, the state Government introduced another amendment to Section 3-A. By this there was a substitution of four years for two years. Annexure-D is the notification. In view of the combined operation of Act 4 of 1998 and act 6 of 2000, the authority to levy cess-tax of 5% on the Motor Vehicles tax was to be upto 31-3-2002. By Act 4 of 2002 there has been an amendment to Section 3-A by which it has been extended up to six years. Annexure-E is the notification. The petitioner says that there has been a Repeal Acts 4 of 1998 and 7 of 1995. The petitioner has filed the repealing and Amending Act, 2000 in terms of Annexure-F. According to the petitioner, the levy is illegal and the petitioner is entitled for refund. The petitioner says that the levy of cess can be justified only when it is compensatory. The levy and collection of tax for the purpose of bangalore Mass Rapid Transit System has turned out to be only a mirage. No such Bangalore Mass Rapid Transit System was brought out as a physical fact in Bangalore. The petitioner also asserts that the change of purpose with effect from 1-4-1998 for the collection of cess-tax for "equity investment in the Karnataka Infrastructure Development and Finance Corporation" is unconstitutional. There is no nexus. 'the petitioner further states that there has been a total failure on the part of the first respondent to fulfill the Constitutional obligation of imposition of tax with the authority of law and its utilisation for the proclaimed purpose. The collection of tax under Section 3-A is thus unconstitutional.

(3.) RESPONDENTS have entered appearance. Statement of Objection has been filed on 26-9-2002. In the objection statement, it is stated in para 2 that collection of cess-tax is for the purpose of Development of Bangalore mass Rapid Transit System and is now extended to the entire State. It is also stated that the argument of no nexus is not correct. The respondent further says that the Division Bench ruled that the levy of cess had been for a limited period as per the amended Act, is appropriate. Insofar as repeal is concerned, the respondent justifies that whatever Acts have been repealed as on that date is incorporated in the original Act. With regard to utilisation, it is stated that the funds have been collected by the respondent by way of cess of the rate of 5% from the individuals is utilised in a proper and planned manner and the development work is under progress at Bangalore City as well as in the entire State. The funds which have been collected is only a meager amount and that will not be sufficient to the total works contract engaged by the State under the various Development Works and progress of the entire State work in the interest of public at large. The respondents further states in para 9 that the levy covers the entire state. In respect of the funds collected by way of cess-tax has been utilised for development of various project works in the State including bangalore City Roads Maintenance, fly-over and highways maintenance and other various projects under taken by the Government of karnataka. They justify their action.