H K DASS Vs. STATE OF PUNJAB

JUDGEMENT

(1.) THE petitioner is a partner of M/s. Metro Motors located at Ambala Cantonment in the State of Haryana and deals in sale of vehicles known as Tata diesel vehicles and has got an agency of dealership. Various types of vehicles are being sold by the petitioner as a dealer which include TATA-407, TATA-608 and TATA-807, etc. The present petition relates to the sale of TATA-407 only. The case put forth by the petitioner in this writ petition is that before the year 1984, the manufacturers were authorised to manufacture motor vehicles of various specifications and up to a certain capacity like light commercial vehicle, medium commercial vehicle, heavy commercial vehicle, etc. In the year 1984, there was a liberalisation of policy of foreign collaborators in the field of technology by the Government of India with a view that there should be more and more saving of diesel in the country. The motive was that there shall be technological advancement so that carrying capacity vis-a-vis fuel consumption of the vehicles in relation to petrol or diesel, may become much better. Under the policy foreign collaboration was to be introduced in the country. With the liberalisation certain collaborators from Japan entered into the field. These foreign collaborators collaborated with their Indian manufacturer-counterparts to manufacture motor vehicles with the Japanese technology. Foreign collaboration with the Japanese created a competitive market in the country and also resulted to some extent in fuel conservation of petrol and diesel but the Japanese vehicles began to cost more and more because import of spare parts was a very expensive transaction and the net result was that the price escalation of the light/medium vehicles manufactured by the local manufacturers having collaboration with Japan began escalating tremendously; that the local manufacturers having collaboration with the Japanese could not stand in competition with TATAs whose manufacturing technology was quite advance despite being indigenous. TATAs then began manufacturing light/medium commercial vehicles. Under the impact of this competition, the manufacturers who had collaboration with the Japanese began to press the Government of India for giving them certain concessions in order to compete with TATAs. The Government of India granted certain concessions vide notification dated 9th December, 1986, giving certain advantages to the local foreign collaborators in the shape of customs and excise duties. Under the notification, it was declared necessary that their product should have a certain degree of fuel efficiency.

(2.) IT is further alleged that local foreign manufacturers/collaborators still could not compete with TATAs in spite of the concessions given by the Government of India. Consequently, certain local foreign collaborators persuaded the State of Punjab to give some concessions to the local foreign manufacturers in respect of the imposition of sales tax. The Government of Punjab issued a notification dated 30th March, 1988, published in Punjab Government Gazette on 30th March, 1988, copy of which has been annexed as annexure P/2 to the writ petition. The said notification provides for sales tax of 0. 5 per cent for fuel efficient light commercial vehicles of engine capacity of 3200 cubic centimeters to 3500 cubic centimeters as against 4 per cent on other light commercial vehicles which were manufactured by TATAS. Notification dated 30th March, 1988 (annexure P/2) is reproduced below :

(3.) THE State of Punjab in its written statement has controverted the stand of the petitioner and denied the allegations that the notification is arbitrary, discriminatory or violative of articles 14 and 19 (1) (g) of the Constitution. It has further been denied that the impugned notification was issued with a view to grant concession to the local foreign manufacturers/collaborators of Punjab only. On merits, it was stated that cubic capacity is a globally used term in respect of the entire variety of internal combustion engines and applies thereto such as cars, two wheelers and commercial vehicles, etc. ; that Government of India in its various rules relating to customs/excise has used cubic capacity as a factor for passing the customs/excise levies; that cubic capacity of the engine is a commonly used factor in vehicles and Government of Punjab in its wisdom fixed the rate of tax of 0. 5 per cent in respect of fuel efficient light vehicles of engines of 3200 - 3500 cubic capacity and any vehicle irrespective of location/collaboration of the manufacturer, satisfying these two constituents (i. e. , fuel efficiency and engine capacity of 3200 - 3500 cc) is eligible to be taxed at the mentioned rates. It is further stated that the cubic capacity of a vehicle is a very relevant consideration in that, larger the cubic capacity, the higher its horse power. For similar pay loads vehicles fitted with higher cubic capacity engines when compared to lower cubic capacity engines would result in, (i) safety due to higher reserve power, (ii) longer life and improvement in operating economically for the vehicle owners and (iii) better capability to handle sub-mountain areas, desert/kutcha roads, etc. , which are common in Punjab. This aspect particularly weighed with the Punjab Government's mind with its large emphasis on rural/agricultural development, kandi-area (sub-mountain area) development; that both factors are relevant to the furtherance of the Punjab Government's policies and priorities. It is stressed that fuel efficiency is one of the considerations and not the sole consideration for the notification; that the vehicles which are both fuel efficient and having engine capacity between 3200 - 3500 cc constitute a clear and distinct class based on relevant consideration; that the notification has not effected any discrimination and that, if at all, TATA-407 is at a disadvantageous position then it is not because any discrimination has been caused against the said vehicle but because it has failed to satisfy the condition of having engine capacity of 3200 - 3500 cc.