RAJASHEKARA MURTHY, J. ( 1 ) THE petitioner in W. P. No. 17471 of 1985 is the registered owner of a tourist vehicle bearing regn No. AAG 6111registered in Andhra Pradesh. The said vehicle was being operated at the relevant time on a special permit issued by the Secretary, Regional transport Authority, Chittoor. On 4-11-1985 when the vehicle was checked near Seelnere by the Inspector of Motor Vehicles, Mandya, it was found that tourists from Hoskote were being carried on a special permit issued by the RTA. , Chittoor. The vehicle was seized on the basis of the circular instructions issued by the commissioner for Transport. This Court issued rule on 8-11-1985 and directed release of the vehicle on the petitioner furnishing bank guarantee for a sum of Rs. ( 2 ) 500/ -. THE vehicle of the petitioner in writ Petition No 5555/86 was seized on 15 10 1985 at Nippani Checkpost and on a deposit of Rs. 11,000/- plus rs. 2500/- compounding fee being made, the vehicle was released The seizure was so made on the basis of circular instructions issued by the commissioner for Transport. The question that arises for consideration in these cases is, whether the seizure by the Inspector of Motor vehicles made in these cases relying on the Circular issued by the Commissioner for Transport was with authority of law? the petitioner's contention is that a special permit issued by the Regional transport Authority, Chittoor, under section 63 (6) of the Motor Vehicles act authorised the petitioner to pickup tourists in the State of Karnataka and there was no prohibition in the motor Vehicles Act for issue of such permits by the Regional Transport authorities of one State to operate the vehicle wholly or partly in another state. Sri C. N. Achar, the learned Counsel for the petitioner has brought to my notice the decision of this Court in the case of M. K. Sathyanaraysna Rao v asst. Regional Transport Officer (1987 blj 148) in which the competency of the Rfa, Ananthapur in Andhra pradesh to issue a permit under Section 63 (6) to operate wholly in the State of karnataka. was upheld by this Court (by MPCJ ). This Court held that the provisions of Section 63 (6) do not prohibit issue of a special permit to operate outside the State. was upheld by this Court (by MPCJ ). This Court held that the provisions of Section 63 (6) do not prohibit issue of a special permit to operate outside the State. So holding, this Court further said that the vehicles covered by such permits are entitled for exemption from payment of Motor vehicle Tax to the State of Karnataka by virtue of the Notification dated 22-11-1962 issued by the State Govt. in exercise of the powers conferred by section 16 (1) of the Karnataka Motor vehicles (Taxation) Act. In another decision of this Court (by KASJ) in the case of Narayana Bhalta v Secretary, -Regional Transport Authority (ILR 1985 (2) Karnataka- 4147) similar contention of the State about the validity of such permits was rejected and the secretary, RTA, Bangalore was directed to issue special permit to the petitioner under Section 63 (6) of the molor Vehicles Act, to carry tourists from Madras to Tirupathi and back and for taking the vehicleto Madras empty, for this purpose. Sri Dattu, the learned High Court govt. Pleader has argued that it is not competent for the RTA of one State to grant a special permit under Section 63 (6) of the Motor Vehicles Act to operate wholly or partly outside the region or State and hence the seizure effected by this State was justified. The learned Counsel also brings to my notice that the decision of Andhra pradesh High Court in G. Shaikhshawalli and others v Secretary, RTA. , ananthapur (AIR 1982 A. P. 296) has been approved by the Supreme Court in1988 S. C. 2047 (Achyut Shivaram gokhale v Regional transport Officer and Others ). It is, therefore, argued by Sri Dallu that on the basis of the law laid down by the Supreme Court, the RTA of one State cannot issue special permits authorising the operation of the vehicle in another State mak. ng it the starting point for the journey. It is also brought to my notice that the State Govt. has issued a Notification revoking the concession granted to such vehicles in the year 19g2, by Notification dated 12-8-1938. ng it the starting point for the journey. It is also brought to my notice that the State Govt. has issued a Notification revoking the concession granted to such vehicles in the year 19g2, by Notification dated 12-8-1938. The said Notification reads thus :"in the said notification, the following proviso shall be inserted, at the end, namely, provided that such exemption shall not be available in respect of motor vehicles covered by special permits granted under sub-section (6) of section 63 of the Motor Vehicles Act, 1939 by the Transport Authority of a stale other than the State of Karnataka to pick-up and set down passengers in the State of Karnataka. "in the first case referred to above, the State had relied upon the decision of the Andhra Pradesh High Court in g, Shaikh Shavalli and others v The secretary, R. T. A. Ananthapur (AIR 1932 a P. 296), in support of the contention of the State that the R. T. A,, Ananthapur had no competency to issue a special permit to cater to the needs of the tourists from Karnataka. This Court did not express any view of its own regarding the said decision. The Supreme Court in Achyut shivaram Gokhale's case referred to above, has upheld the view of Andhra pradesh High Court expressed in g. Shaikh Shava'li's case and in another decision reported in Mohd. Pasha and ors. v The Secretary RTA and anr. (AIR 1975 A P. 242), as the correct view and declared the law, for the first time, as to the validity of such permits. In Shaikh Shavalli's case, the andhra Pradesh High Court had held that the RTAs of Andhra Pradesh were not competent to issue special permits under Section 63 (6) of the Motor vehicles Act enabling the operators to take their buses empty into the outside states and to fill up passengers there and transport them to the end of their voyage and empty them back at their standing points in those States and drive the buses back to the places within the Andhra State Empty. I have carefully considered the contentions of the learned Counsel for both sides. I have carefully considered the contentions of the learned Counsel for both sides. The Notification of Karnataka government dated 12-8-1988 which is in conformity with the law declared by the Supreme Court can only be enforced prospectively and should not affect the exemption granted by the State relying on the basis of the notification issued in the year 1962 in exercise of its powers under Section 16 (1) of the Motor Vehicles Taxation act. An extreme argument was advanced by the learned Government Pleader to justify the seizures made in these cases on the basis of the Circular issued by the Commissioner for Transport following the instructions of the central Government in the Ministry of shipping and Transport. His argument is that the Central Government is competent to issue such instructions to the State Transport Departments to ensure that such permits are not issued under Section 63 (6) for purposes of plying the vehicles empty from Home state to pick up passengers from other states. This argument has to be rejected in view of the provisions of section 16 of the M V. Taxation Act under which the Government may exempt tho tax payable in respect of special permits issued under Section 63 (6} of the M. V. Act. This Court has, in more than one decision, upheld the validity of such permits referred to supra, and Iboth the decisions,; are accepted by the department. Though the decisions were rendered before the Supreme court declared the law as to the validity of such permits, the fact remains that the State Government had understood and implemented the exemption granted by it under the notification dated 22-11-1962 until the Govt. issued a notification on 12 8-1988 withdrawing the exemption to such vehicles. The argument advanced on behalf of the State that the Circular instructions issued by the State Government and the Centra! Government should prevail over the statutory exemption granted under Section 16 (1) of the Act, has to be rejected as wholly untenable. The operators who plied their vehicles on the strength of the special permits issued prior to the decision of the supreme Court cannot be asked to pay the tax for the entire period/periods prior to 12-8-1988. This argument of the Govt. Pleader if accepted, the effect of the notification of the Government would be undone and there would be a reversal of the exemption retrospectively. This argument of the Govt. Pleader if accepted, the effect of the notification of the Government would be undone and there would be a reversal of the exemption retrospectively. The very fact that the State government issued the notification on 12 8 1988 after the Supreme Court declared the law in Shaikh Shavalli's case is indicative of the intention of the State Government to withdraw the exemption to special permits prospactively. Therefore, this argument is also without any substance and cannot be accepted on any legal principle. Sri Dattu also relied upon the decision of the Supreme Court in k. P. Varghese v ITO, Ernakulam and another (1981) 131 I. T. R. 597, in which it was held that the Circulars issued by the Central Board of direct taxes are binding on the officers of the income-tax Department. Circulars referred to by the Supreme Court had been issued for the purpose of implementation of S. 52 (2) of the Income tax Act 1961 indicating in what type of cases the said provisions should be invoked. This decision does not help the department since since what we are concerned in this case is the exemption granted by Government under section 16 (1) of the Motor Vehicles taxation Act and whether its effect can be taken away by a circular issued by the Commissioner. It does not require any argument to say that the statutory exemption should prevail. The writ petitions are, therefore, allowed and the deposits made in each case are directed to be refunded to the petitioners. The petitioner in W. P. No. 5555/86 has deposited a sum of Rs. 11,000/- by way of tax and Rs. 2,500/- towards compounding fee at the time of seizure and got the vehicle released. His application for refund of the two amounts is pending with R. T. O. Nippani. The respondent is directed to refund the two sums to the petitioner expeditiously. Writ Petitions allowed. --- *** --- .