MADHUKAR BALKRISHNA BADIYE Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The subject of imposition of taxes on machanically propelled vehicles is covered by Entry 57 of List II and Entry 35 of List III of the Seventh Schedule of the Constitution of India. Entries respectively read thus :

(2.) The State Legislature introduced on 26th March, 1987 in the Assembly L.A. Bill No. XIV of 1987 as a draft of the Bombay Motor Vehicles Tax (Second Amendment) Act, 1987 (The Amending Act.) The Bill was passed on 6th April, 1987 and the Amending Act was brought into force retrospectively with effect from the date of introduction of the Bill as per the provisions of the Maharashtra Provisional Collection of Taxes Act, 1962. By the Amending Act, one-time tax on the whole life time of a motor cycle and tricycle at the rates specified in the Schedule (which is equivalent to 15 times the earlier annual rate) has been imposed. It takes away the provision of refund of taxes on such vehicles on the ground of non-use and provides for refund only in case of cancellation of registration of the vehicle on account of scrapping of it due to accident or any other reason. Sub-section (1-C) is added after sub-section (1-B) of section 3. Sub-section (4) added after subsection (3). Sub-section (6) is added in section 9. Rest of the amendments are by and large consequential. Sub-section (1-C), sub-section (4) of section 3 and sub-section (6) of section (9) of the Amending Act read thus :

(3.) We will first take up for consideration the challenge to the Amending Act on the ground that it is beyond legislative competence of the State Legislature. Substance of the contention is that imposition of levy which is known as road tax is permissible by the State under Entry 57 if its character is regulatory and compensatory and not otherwise. The impugned provisions are confiscatory and exproietory as a result their link with Entry 57 is snapped. In this connection our attention is invited to the scheme of new taxation in general and the absence of provision for refund even in case of genuine non-use in particular. For vehicles governed by one time tax, provisions of section 3(1-B)(2) and (3) do not apply. The question of enquiry or issuance of prescribed certificate about non-use does not arise whatever be the factual position. Provisions of refund contained in section 9(1) to (5) for the period of non-use do not apply to such vehicles. Refund is permissible in their cases only if (i) registration is cancelled on account of their scrapping due to accident or any other reason, and (ii) removal of vehicle to other State as specified. After some debate it is fairly not disputed before us that registration is cancelled at the volition of the owner there is nothing like re-registration and every fresh registration is treated for all purposes as first registration. Thus it is very plain that the Amending Act imposes road tax on a vehicle even when it does not use the public road. It seems to us that the contention of the petitioners has to be upheld and the levy declared as confiscatory in character and therefore beyond legislative competence of the State Legislature.